<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
NATIONAL CITY BANCSHARES, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NATIONAL CITY BANCSHARES, INC.
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
NATIONAL CITY BANCSHARES, INC.
227 MAIN STREET
EVANSVILLE, INDIANA 47708
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1996
TO THE HOLDERS OF SHARES OF COMMON STOCK:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of NATIONAL
CITY BANCSHARES, INC. (the "Corporation") will be held in the Greenhouse Lobby
at the RiverHouse Hotel, 20 Walnut Street, Evansville, Indiana, on Tuesday,
April 16, 1996, at 9:30 a.m., C.D.T., for the purpose of considering and voting
upon the following matters:
1. The election of three directors (to comprise Class I of the Corporation's
staggered Board of Directors), each to serve a term of three years, or until
their successors shall have been duly elected and qualified.
2. To consider and act upon a proposal to adopt the National City Bancshares,
Inc. Incentive Stock Option Plan.
3. To ratify the appointment of McGladrey & Pullen, LLP as the independent
certified public accountants for the Corporation and its subsidiaries for the
fiscal year ending December 31, 1996.
4. Whatever other business that may be brought before the meeting or any
adjournment thereof. The Board of Directors at present knows of no other
business to be presented by or on behalf of the Corporation.
Shareholders of record at the close of business on February 29, 1996, are the
only shareholders entitled to notice of and to vote at the Annual Shareholders
Meeting.
By Order of the Board of Directors,
HAROLD A. MANN, Secretary
March 18, 1996
IMPORTANT
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK, SIGN, DATE, AND
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED SELF-ADDRESSED ENVELOPE AS
PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED.
<PAGE> 3
NATIONAL CITY BANCSHARES, INC.
EVANSVILLE, INDIANA
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of National City Bancshares, Inc. (the "Corporation") of
Proxies to be voted at the Annual Meeting of Shareholders to be held on
Tuesday, April 16, 1996, in accordance with the foregoing notice.
The Corporation is a multi-bank holding company consisting of the following ten
banks and a leasing company, all of which are wholly owned subsidiaries:
<TABLE>
<S> <C>
The Bank of Mitchell, Mitchell, Indiana The Peoples National Bank of Grayville, Grayville, Illinois
The Farmers and Merchants Bank, Fort Branch, Indiana Pike County Bank, Petersburg, Indiana
First Kentucky Bank, Sturgis, Kentucky The State Bank of Washington, Washington, Indiana
Lincolnland Bank, Dale, Indiana United Federal Savings Bank, Vincennes, Indiana
The National City Bank of Evansville, Evansville, Indiana White County Bank, Carmi, Illinois
NCBE Leasing Corp., Evansville, Indiana
</TABLE>
The solicitation of Proxies on the enclosed form is made on behalf of the Board
of Directors of the Corporation. All cost associated with the solicitation
will be borne by the Corporation. The Corporation does not intend to solicit
Proxies other than by use of the mails, but certain officers and employees of
the Corporation or its subsidiaries, without additional compensation, may use
their personal efforts by telephone or otherwise, to obtain Proxies. The Proxy
materials are first being mailed to shareholders on March 18, 1996.
Any shareholder executing a Proxy has the right to revoke it by the execution
of a subsequently dated Proxy, by written notice delivered to the Secretary of
the Corporation prior to the exercise of the Proxy or in person by voting at
the meeting. The shares will be voted in accordance with the direction of the
shareholder as specified on the Proxy. In the absence of instructions, the
Proxy will be voted "FOR" the election of the three persons listed in this
Proxy Statement; "FOR" the adoption of the National City Bancshares, Inc.
Incentive Stock Option Plan; and "FOR" the ratification of the Corporation's
accountants described in the Proxy Statement.
VOTING SECURITIES
Only shareholders of record at the close of business on February 29, 1996, will
be eligible to vote at the Annual Meeting or any adjournment thereof. As of
February 29, 1996, the Corporation had outstanding 4,611,137 shares of common
stock, without par value. Shareholders are entitled to one vote for each share
of common stock owned as of the record date, and shall have the right to
cumulate votes in the election of directors, in accordance with Article IX,
Section 4 of the Corporation's Amended Articles of Incorporation. Cumulative
voting permits a shareholder to multiply the number of shares held by the
number of directors to be elected, and cast those votes for one candidate or
spread those votes among several candidates as he or she deems appropriate.
As of February 29, 1996, the Corporation's subsidiary banks held 406,594
shares of the Corporation's outstanding shares in their trust departments in
regular or nominee accounts. This total represents 8.82% of the outstanding
shares. Any shares voted by the trustee are voted only in accordance with
directions received from beneficial owners.
1
<PAGE> 4
SECURITY OWNERSHIP OF MANAGEMENT
Listed in the following table is the number of shares owned of the
Corporation's outstanding common stock by directors and executive officers of
the Corporation:
<TABLE>
<CAPTION>
TITLE OF AMOUNT AND NATURE OF PERCENT OF
CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS (2)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Janice L. Beesley 24,905 (3) 0.54%
Common Stock Benjamin W. Bloodworth 8,374 (4) 0.18%
Common Stock N. Ann Cavis 37 (5) 0.00%
Common Stock Michael F. Elliott 127,838 (6) 2.77%
Common Stock Mrs. N. Keith Emge 10,614 (7) 0.23%
Common Stock Nancy G. Epperson 21 (3) 0.00%
Common Stock Donald G. Harris 5,236 0.11%
Common Stock Byron W. Jett 904 0.02%
Common Stock Robert A. Keil 3,390 (3) 0.07%
Common Stock John D. Lippert 26,689 (8) 0.58%
Common Stock Harold A. Mann 8,019 (9) 0.17%
Common Stock Ronald G. Reherman 3,793 (10) 0.08%
Common Stock Laurence R. Steenberg 12,942 0.28%
All Directors and Executive
Common Stock Officers as a Group (13 persons) 232,762 5.05%
</TABLE>
(1) Beneficial Ownership includes those shares over which an individual has
sole or shared voting, or investment powers, such as beneficial interest
of the spouse, minor children, and other relatives living in the home of
the named person. The nature of beneficial ownership, unless otherwise
noted, represents sole voting and investment power.
(2) The calculations of percent of class is based on the number of shares of
common stock outstanding as of February 29, 1996.
(3) All shares with shared voting and investment power with spouse.
(4) Includes 50 shares with sole voting and investment power; 1,324 shares
with shared voting and investment power with spouse; and 7,000 shares
in exercisable options upon shareholder approval of the Incentive Stock
Option Plan.
(5) All shares with shared voting and investment power with daughter.
(6) Includes 112,885 shares with sole voting and investment power; 6,324
shares with shared voting and investment power with spouse; 6,442 shares
with sole voting and investment power by spouse; and 2,187 shares held by
a trust with shared voting and investment power.
(7) Includes 722 shares with sole voting and investment power; 6,448 shares
with shared voting and investment power with spouse; 2,814 shares with
sole voting and investment power by spouse; 105 shares with investment
power only; and 525 shares with investment power only by spouse.
(8) Includes 8,968 shares with sole voting and investment power; 971 shares
with shared voting and investment power with spouse; 6,250 shares
with sole voting and investment power by spouse; and 10,500 shares in
exercisable options upon shareholder approval of the Incentive Stock
Option Plan.
2
<PAGE> 5
(9) Includes 89 shares with sole voting and investment power; 930 shares
with shared voting and investment power with spouse; and 7,000 shares in
exercisable options upon shareholder approval of the Incentive Stock
Option Plan.
(10) Includes 998 shares with sole voting and investment power; 2,321 shares
with shared voting and investment power with spouse; and 474 shares with
investment power only.
ITEM 1. ELECTION OF DIRECTORS AND
INFORMATION WITH RESPECT TO DIRECTORS AND OFFICERS
The following information is provided with respect to each nominee for director
and each present continuing director whose term of office extends beyond the
meeting of the Corporation's shareholders. The affirmative vote of the holders
of at least a majority of the outstanding shares of common stock voted is
required for the election of any director.
<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS I
The following are nominees for directorship in Class I of the Board of
Directors, whose terms shall expire at the Annual Meeting of Shareholders in
1999.
Janice L. Beesley 42 1995
President and Chief Executive Officer,
United Federal Savings Bank; and
President and Chief Executive Officer,
United Financial Bancorp, Inc. (1992 to August 1995)
Michael F. Elliott 44 1994
Executive Vice President of the Corporation (1993 to Present);
Chairman of the Board (January 1996 to Present),
President (1994 to January 1996), and
Chief Executive Officer (1994 to Present),
The National City Bank of Evansville;
Chairman of the Board (1989 to Present) and Chief Executive
Officer, The State Bank of Washington (1989 to 1994); and
Chairman of the Board (1990 to 1993) and
President and Chief Executive Officer, Sure Financial
Corporation (1988 to 1993)
Donald G. Harris 63 1986
Retired President, Mead Johnson Nutritional Group;
President, Mead Johnson Nutritional Group (1989 to January 1993); and
Director, The National City Bank of Evansville (1986 to 1995)
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS II
(Continuing Directors with Term to Expire 1997)
Susanne R. Emge 54 1985
Vice President for Corporate and Community Services,
Deaconess Hospital, Inc. (1990 to 1995);
Treasurer, Emge Realty Company, Inc.;
Permanent Director, United Way of Southwestern Indiana; and
Director, The National City Bank of Evansville (1979 to 1995)
Robert A. Keil 52 1993
President (June 1993 to Present) and Assistant Secretary and
Assistant Treasurer (1985 to June 1993) of the Corporation;
Executive Vice President, The National City Bank of
Evansville and the Corporation (1991 to June 1993); and
Senior Vice President, The National City Bank
of Evansville (1987 to 1991)
Laurence R. Steenberg 57 1985
President, BST Incorporated (Oil Production);
Assistant Professor, University of Evansville;
Part Owner, World Connection Services, LLC (1994 to Present);
Treasurer, Rickrich Surgical Supplies, Inc. (1988 to 1991); and
Director, The National City Bank of Evansville (1983 to 1995)
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS III
(Continuing Directors with Term to Expire 1998)
John D. Lippert 62 1985
Chairman of the Board and Chief Executive Officer of
the Corporation (June 1993 to Present);
Chairman of the Board, The National City Bank of
Evansville (1994 to January 1996);
Chairman of the Board and Chief Executive Officer,
The National City Bank of Evansville (1993 to 1994);
Chairman of the Board, President, and Chief Executive Officer
of the Corporation and The National City Bank of Evansville
(1992 to 1993);
President of the Corporation (1985 to 1992);
President and Chief Executive Officer, The National City
Bank of Evansville (1989 to 1992); and
Director, The National City Bank of Evansville
Ronald G. Reherman 59 1985
Chairman of the Board, President and Chief Executive Officer,
SIGCORP, Inc. (Holding Company) (January 1996 to Present);
Chairman of the Board, President and Chief Executive
Officer, Southern Indiana Gas and Electric Company (SIGECO)
(Public Utility) (1992 to Present);
President and Chief Executive Officer, SIGECO (1990 to 1992); and
Director, The National City Bank of Evansville (1985 to 1995)
</TABLE>
The business experience of each of the above-listed nominees and directors
during the past five years was that typical to a person engaged in the
principal occupation listed. Unless otherwise indicated, each of the nominees
and directors has had the same position or another executive position with the
same employer during the past five years.
The following director of National City Bancshares, Inc. held a directorship in
a company with a Class of Securities registered pursuant to Section 12 or
Section 15(d) of the Securities Exchange Act of 1934:
NAME REGISTERED COMPANY
Ronald G. Reherman SIGCORP, Inc.
Evansville, Indiana
5
<PAGE> 8
COMMITTEES OF THE BOARD OF DIRECTORS
The Corporation has standing Compensation and Audit Committees, but does not
have a nominating committee.
In addition to the regular monthly meetings of the Board of Directors, some of
the directors also serve on one or more of the various Board committees.
During 1995, the Board of Directors met thirteen times. All of the directors
attended at least 75% of the regular Board and Committee meetings with the
exception of Donald G. Harris who attended 71%.
The Compensation Committee is explained later under "Compensation of Executive
Officers." Following is a brief explanation of the Audit Committee:
The Audit Committee approves and reviews the internal audit programs of the
Corporation and its subsidiaries. The Audit Committee reviews the results of
the independent accountant's audit and reports to the Board of Directors. The
Audit Committee met thirteen times during 1995. The Audit Committee was
comprised of four outside directors and the members were as follows:
Susanne R. Emge, Chairperson; Donald G. Harris; Ronald G. Reherman; and
Laurence R. Steenberg
The Corporation's nominating function is performed by the Board of Directors.
Shareholders are entitled to nominate any candidate for election by notifying
the Corporation no less than ninety days prior to the Annual Meeting date and
by following the procedures outlined in the Corporation's bylaws requiring
advance notice to the Corporation of such nomination and certain information
regarding the proposed nominee, and provided that such shareholder is the owner
of shares of the Corporation as of the date such nomination is made.
Directors of the Corporation, other than those who also serve as a Corporate or
subsidiary officer, received for their services an annual retainer of $8,000
plus $200 for each Board of Directors' meeting attended and $150 for each
committee meeting attended.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation for the Chief Executive Officer
of the Corporation and the Corporation's and its subsidiaries' executive
officers, whose compensation in 1995 exceeded $100,000, hereinafter the "named
Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------- ------------------
Securities
Underlying Options All Other
Name and Principal Position Year Salary Bonus # Shares (6) Compensation
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John D. Lippert 1995 $230,000 $ ------ 31,500 $68,969 (1,2)
Chairman of the Board and 1994 210,000 ------ ------ 50,710 (1,2)
Chief Executive Officer 1993 200,000 ------ ------ 23,646 (1)
Michael F. Elliott 1995 150,000 23,970 (3) 15,750 22,500 (1)
Executive Vice President 1994 136,400 ------ ------ 18,203 (1)
1993 156,400 (4) 45,000 (4) ------ 16,964 (5)
Robert A. Keil 1995 128,000 19,222 (3) 15,750 22,083 (1)
President 1994 109,375 ------ ------ 14,618 (1)
1993 87,750 ------ ------ 10,375 (1)
Benjamin W. Bloodworth 1995 110,000 17,394 (3) 21,000 19,109 (1)
Executive Vice President 1994 99,000 ------ ------ 13,232 (1)
1993 99,000 ------ ------ 11,705 (1)
</TABLE>
(1) Amounts shown represent amounts contributed to the profit sharing plan
provided for all employees of the Corporation and its subsidiaries who
complete one year of service.
(2) Includes a supplemental retirement contribution of $46,469 and $30,662
for 1995 and 1994, respectively.
(3) Amounts shown represent amounts paid under the Management Incentive
Compensation Plan.
(4) Michael F. Elliott was President and Chief Executive Officer of Sure
Financial Corporation (Sure) during 1993. Sure was acquired by the
Corporation on December 17, 1993. Salary and bonus were paid by Sure.
(5) Amount shown represents amount contributed to the profit sharing
401(k) plan provided for all employees of Sure Financial Corporation and its
subsidiaries.
(6) Options granted have been adjusted for stock dividends.
7
<PAGE> 10
1995 STOCK OPTION GRANTS TABLE
The following table sets forth stock options granted to the Corporation's named
executive officers during 1995 under the Corporation's Incentive Stock Option
Plan. Under Securities and Exchange Commission regulations, companies are
required to project an estimate of appreciation of the underlying shares of
stock during the option term. The Corporation has chosen the "five percent/ten
percent" formula approved by the SEC. However, the ultimate value will depend
on the market value of the Corporation's stock at a future date, which may not
correspond to the following projections.
<TABLE>
<CAPTION>
Potential Realizable Value
Individual Grants at Assumed Annual Rates
--------------------------------------- of Stock Price Appreciation
% of Total for Option Term
Options Granted Exercise ------------------------------
Options to Employees Price (2) Expiration
Name Granted (1) in 1995 Per Share Date 5% 10%
- ---------------------- ----------- --------------- --------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
John D. Lippert 31,500 24 $42.14 10/18/2005 $834,858 $2,115,693
Benjamin W. Bloodworth 21,000 16 $42.14 10/18/2005 $556,572 $1,410,462
Michael F. Elliott 15,750 12 $42.14 10/18/2005 $417,429 $1,057,847
Robert A. Keil 15,750 12 $42.14 10/18/2005 $417,429 $1,057,847
</TABLE>
(1) Options granted in 1995 are incentive stock options, including both
qualified and nonqualified stock options, which are first exercisable by
Mr. Lippert and Mr. Bloodworth in installments, one-third upon approval
of the Plan by shareholders, one-third each on January 1, 1997 and 1998,
respectively. Mr. Elliott's and Mr. Keil's options are all exercisable one
year after the date of grant. All options become immediately exercisable
in the event of a change in control of the Corproation. These options were
granted for a term of 10 years, subject to earlier termination in certain
events related to termination of employment. Options granted have been
adjusted for stock dividends.
(2) Exercise price is the fair market value on the date of grant, adjusted
for stock dividends.
8
<PAGE> 11
1995 STOCK OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth the number and value of all unexercised stock
options held by the Corporation's named Executive Officers at year end. The
value of "in-the-money" options refers to options having an exercise price
which is less than the market price of the Corporation's stock on December 31,
1995. On that date, the Corporation's named Executive Officers held
exercisable options which were "in-the-money" as discussed in the following
table. In addition, the table sets forth the number of options exercised by
each of the named Executive Officers during 1995 and indicates the amount of
value realized upon such exercise.
<TABLE>
<CAPTION>
Number (#) of Value ($) of
Unexercised Unexercised
Options - Options -
12/31/95 12/31/95(2)
------------- -------------
Shares Acquired Net Value($) Exercisable/ Exercisable/
Name on Exercise Realized (1) Unexercisable Unexercisable
- ---------------------- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
John D. Lippert 0 0 0/ 0/
31,500 $168,750
Benjamin W. Bloodworth 0 0 0/ 0/
21,000 $112,500
Michael F. Elliott 0 0 0/ 0/
15,750 $84,375
Robert A. Keil 0 0 0/ 0/
15,750 $84,375
</TABLE>
(1) Represents estimated market value of the Corporation's common stock at
exercise date, less the exercise price.
(2) Represents estimated market value of the Corporation's common stock at
December 31, 1995, less the exercise price.
9
<PAGE> 12
PENSION PLANS
Qualified Retirement Plan
The following table shows the estimated annual pension benefit payable to a
covered participant at normal retirement age (age 60) under the qualified
defined benefit pension plan covering the Corporation and all subsidiary banks,
based on remuneration that is covered under the plan and years of service with
the Corporation and its subsidiaries. In addition to the pension benefit
reflected in this table, John D. Lippert will receive a supplemental retirement
benefit which is discussed on page 12 in the Report of the Compensation
Committee.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 $37,500 $ 50,000 $ 62,500 $ 75,000 $ 87,500
150,000 45,000 60,000 75,000 90,000 105,000
175,000 52,500 70,000 87,500 105,000 122,500
200,000 60,000 80,000 100,000 120,000 140,000
225,000 67,500 90,000 112,500 135,000 157,500
250,000 75,000 100,000 125,000 150,000 175,000
</TABLE>
(The benefits shown above may be limited by law.)
Each employee who completes one year of eligible service is an eligible
participant under the plan. The plan generally provides for a prospective
benefit calculated as follows: 2% of the average annual salary of the five
highest consecutive years within the last ten calendar years of credited
service for each year of credited service up to 40 years' maximum. The plan
provides for early retirement at age 55 with reduced benefits or normal
retirement with full benefits starting at age 60. Employees who participate in
the plan become fully vested with the completion of 5 years of eligible
service. The normal form of pension payment is in the form of a life annuity.
For a married participant, the payment is in the form of a qualified joint and
survivor annuity benefit. Participants may elect to receive their accrued
retirement benefit in a single lump sum. The annual pension benefit is not
subject to any deduction for social security.
The OMNIBUS Budget Reconciliation Act of 1993 limited annual compensation to
$150,000 for purposes of pension calculations under tax-qualified pension plans
effective January 1, 1994. Covered compensation for John D. Lippert and
Michael F. Elliott, as of the end of the last calendar year, was $150,000 each;
and their years of service were sixteen years and one year, respectively. Years
of service for Robert A. Keil and Benjamin W. Bloodworth were thirty years and
fifteen years, respectively.
Supplemental Retirement Benefit Agreement
During 1994 a supplemental retirement benefit agreement was signed between John
D. Lippert and The National City Bank of Evansville. The annual retirement
benefit of the Corporation's Chairman, John D. Lippert, was affected by recent
limitations imposed by the Internal Revenue Service. To compensate for this,
upon recommendation of the Corporation's Compensation Committee, the Board of
Directors of The National City Bank of Evansville established a supplemental
retirement plan for Chairman Lippert. This plan was moved to the Corporation
during 1995. The plan calls for annual payments to Chairman Lippert of $25,000
upon his retirement from the Corporation, but not sooner than his sixty-fifth
birthday.
10
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
In compliance with the Securities and Exchange Commission Regulation
S-K, the Corporation is required to provide certain data and information
regarding compensation and benefits provided to the Corporation's Chief
Executive Officer and each of the four most highly paid executive officers whose
compensation exceeded $100,000. The disclosure requirements as applied to the
Corporation include John D. Lippert, Chairman of the Board and Chief Executive
Officer; Michael F. Elliott, President and Chief Executive Officer of The
National City Bank of Evansville and Executive Vice President of National City
Bancshares, Inc.; Robert A. Keil, President; and Benjamin W. Bloodworth,
Executive Vice President.
The Corporation had no named executive officers as defined in Regulation S-K to
retire or leave the Corporation for other reasons during 1995.
Compensation Committee Structure and Philosophy
The Corporation's Board of Directors has a standing Compensation Committee for
the purpose of setting executive salaries and benefits. The Compensation
Committee was comprised of four outside directors. The Compensation Committee
directors do not share any for-profit Board positions with any inside director
or executive officer. The Compensation Committee met five times during the
year to establish, among other actions, the compensation of John D. Lippert,
the Corporation's Chairman and Chief Executive Officer, and other executive
officers.
Essentially, the executive compensation program of the Corporation has been
designed to:
- - Support a pay-for-performance policy that awards executive officers for
corporate performance.
- - Motivate key senior officers to achieve strategic goals.
- - Provide compensation opportunities which are comparable to those offered
by other comparable companies, thus allowing the Corporation to compete
for and retain talented executives who are critical to the Corporation's
long-term success.
Salary
In December 1993 two regional bank holding companies were acquired by the
Corporation, Sure Financial Corporation (with four subsidiaries: The Bank of
Mitchell, Pike County Bank, The Spurgeon State Bank and The State Bank of
Washington) and Lincolnland Bancorp, Inc. (with two subsidiaries: Lincolnland
Bank and Ayer-Wagoner-Deal Insurance Agency, Inc.). Compensation of executive
officers of these two named corporations was the responsibility of the Boards
of Directors of those corporations during 1993 and for 1994 base salary.
Compensation is determined by the Compensation Committee of National City
Bancshares, Inc. for all chief executive officers of the Corporation's
subsidiaries, in addition to all Corporate executive officers.
The Compensation Committee retained the services of McGladrey & Pullen, LLP,
Certified Public Accountants and Consultants, to advise the Compensation
Committee in their process of establishing adequate, fair compensation and
benefits for the Corporation's and its member banks' executive officers. The
consultant provided, among other information, current recognized compensation
studies. The data gave the Compensation Committee comparisons of compensation
and benefits for like positions among various peer groups. The Compensation
Committee increased the salary of each named executive for 1995. It was
determined that the base compensation of these officers was not within an
acceptable percentile of competitive base compensation from available data.
The Compensation Committee, with the assistance of its consultant, reviewed the
following published compensation surveys to establish competitive compensation
data: Illinois Banker's Association Midwest Bank Holding Company Compensation
Survey, Cole Survey (National), Wyatt Data Services (National), Indiana Bankers
Association Survey, Illinois Bankers Association Survey, Kentucky Bankers
Association Survey, Bank Administration Institute (Regional) Compensation
Survey and the Community Bankers Association of Illinois Survey.
11
<PAGE> 14
Management Incentive Compensation Plan
Additionally, the Compensation Committee, with the further assistance
from McGladrey & Pullen, LLP, designed a Management Incentive Compensation
Plan. The plan was subsequently approved by the full Board of Directors for
implementation in 1994, with the first possible payout to be in 1995 based on
1994 performance. A brief summary of the Plan follows:
In 1994 the Corporation implemented an annual Management Incentive
Compensation Plan (the Plan) covering certain key Corporate and subsidiary
executives. The purpose of the Plan is to help improve overall Corporate
performance by providing executives with variable award opportunities in
return for outstanding measured performance.
The Plan provides incentive opportunities based on the achievement of a
combination of Corporation, member subsidiary, and individual executive
goals. Specific measurable performance goals are established at the
beginning of each year and approved by the Compensation Committee of the
Board of Directors. At the end of the year, actual performance relative to
the predetermined goals determine earned incentive awards. The Corporation
must exceed a threshold return on assets percentage to provide an incentive.
The Plan is designed to pass the majority of incremental income to
shareholders' equity. The Compensation Committee approves all incentive
payouts.
The first payout under this Plan was in 1995. Although there will be a
payout under this Plan during 1996 based on 1995 performance, the amount of
this payout is not calculable as of the current date.
Employment and Severance Agreements
The Corporation does not have any employment or severance agreements with its
executive officers.
Compensation Committee Members
The above report on compensation was submitted by the Compensation Committee,
whose members were as follows:
Laurence R. Steenberg, Chairperson; Susanne R. Emge; Donald G. Harris; and
Ronald G. Reherman
STOCK PERFORMANCE GRAPH
The following is a line graph comparing the cumulative total shareholder return
among National City Bancshares, Inc. (NCBE); the Center for Research in
Securities Prices (CRSP), at the University of Chicago, Total Return Index for
Nasdaq Bank Stocks (NASDAQ BANKS); and the CRSP Total Return Index for The
Nasdaq Stock Market, U.S. Companies only, (NASDAQ STOCK MARKET). It assumes
that $100 is invested December 31, 1990, and all dividends are reinvested.
Fiscal year ending December 31 data is used.
GRAPH
<TABLE>
<CAPTION>
NASDAQ
NASDAQ STOCK
YEAR NCBE BANKS MARKET
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 95.74 164.09 160.56
1992 130.30 238.85 186.87
1993 167.51 272.39 214.51
1994 214.45 271.41 209.69
1995 236.08 404.35 296.30
</TABLE>
12
<PAGE> 15
TRANSACTIONS WITH MANAGEMENT
Directors and principal officers (of the Corporation and its
subsidiaries) and their associates were customers of, and have had transactions
with, the Banks in the ordinary course of business during 1995.
These transactions consisted of extensions of credit by the subsidiaries in the
ordinary course of business and were made on substantially the same terms as
those prevailing at the time for comparable transactions with other persons.
In the opinion of the management of the subsidiaries, those transactions do not
involve more than a normal risk of being collectible or present other
unfavorable features. The subsidiaries expect to have, in the future,
financial transactions in the ordinary course of its business with directors
and their associates on the same terms, including interest rates and collateral
on loans, as those prevailing at the time on comparable transactions with
others.
COMPLIANCE WITH SECTION 16 (A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
officers and directors, and persons who own more than 10% of a registered class
of the Corporation's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the Nasdaq
National Market. Officers, directors, and greater than 10% shareholders are
required by SEC regulation to furnish the Corporation with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Corporation, or written representations that no Forms 5 were required, the
Corporation believes that during 1995 all Section 16(a) filing requirements
applicable to its officers, directors, and greater than 10% beneficial owners
were complied with, except for the failure to timely file a required Form 4
reporting a single purchase transaction involving a $2,500 voluntary cash
contribution to the Dividend Reinvestment Plan by John D. Lippert.
ITEM 2. PROPOSAL FOR ADOPTION OF THE
NATIONAL CITY BANCSHARES, INC. INCENTIVE STOCK OPTION PLAN
The Board of Directors of the Corporation is proposing that the shareholders of
the Corporation approve an Incentive Stock Option Plan (the "Plan"), the
general terms of which are summarized below. This summary is qualified in its
entirety by, and reference is made to, the full text of the Plan which is
attached to this Proxy Statement as Exhibit A. Shareholders are strongly urged
to read the Plan in its entirety. The Board of Directors of the Corporation is
proposing the adoption of the Plan under which certain Key Employees (as
hereinafter defined) of the Corporation would be eligible to receive Options to
purchase a certain number of the shares of the Corporation's Common Stock (the
"Stock"), subject to certain conditions. The purpose of the Plan is to advance
the interests of the Corporation by giving Key Employees of the Corporation
additional incentive to promote the success of the Corporation and to remain in
the Corporation's employ. It is believed this can be accomplished by providing
such persons the opportunity to maintain an equity interest in the Corporation
and therefore aligning their interest with that of the other shareholders.
Under the Plan, officers and other executive, supervisory, and management
employees of the Corporation, who, in the sole discretion of the Board of
Directors, have substantial responsibility for the direction and management of
the Corporation or are in a position to materially contribute to the
Corporation's continued growth, development, and long-term success ("Key
Employees"), may, from time to time, be granted options ("Options") to purchase
a given amount of shares of the Corporation's Stock, subject to certain terms
and conditions.
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<PAGE> 16
The Plan contemplates the award of both qualified stock options under the
Internal Revenue Code of 1986, as amended (hereinafter ISOs) as well as
nonqualified stock options (NQSOs). The classification of an option as an ISO
provides certain tax benefits to the Key Employee, most notably a deferral of
taxation from the date of exercise (when nonqualified options
would ordinarily be taxable) to the date of sale of the underlying shares
acquired by the exercise of such Option. When exercised, the holder of an ISO
recognizes no taxable income and the Corporation can claim no deduction. NQSOs
are options which do not receive special tax treatment under the Internal
Revenue Code. When exercised, the holder of a NQSO recognizes taxable income
on the difference between the price paid for the option shares pursuant to the
option and the fair market value of the shares purchased pursuant to the option
on the date of exercise.
The term of the Plan would run for a period of ten (10) years (the "Plan
Period") beginning on the date of approval of the Plan by the Board of
Directors (the "Effective Date"). All Options granted under the Plan will be
required to be exercised within ten (10) years of the date granted.
The Compensation Committee of the Board of Directors of the Corporation shall
have full authority and sole discretion with respect to administration of the
Plan. In this regard, the Compensation Committee will have sole discretion to;
(a) the persons to whom Options will be granted, when such options shall be
granted, and the number of shares and terms with respect to each such option,
(b) prescribe rules and regulations for administering the Plan, and (c) decide
any questions arising as to the interpretations or application of any provision
under this Plan.
Under the Plan, the Compensation Committee may grant options on up to two
hundred ninety thousand (290,000) shares (before adjustment for stock
dividends) which are available to be optioned under the Plan. The price to be
paid under the Plan is the fair market value per share of the Corporation's
common stock on the date the Option is granted. No person who owns greater
than 10 percent of the shares of the Corporation is eligible to receive options
under the Plan. No person presently owns 10 percent of the Corporation's
shares. No Option shall be exercisable after the expiration of ten years after
the date of grant of such option. These stock Options are not transferable
other than by will or by the laws of descent and distribution. In addition,
the Plan contains a limitation which provides that the aggregate fair market
value, as determined at the time of such grant of Option, for which ISOs are
exercisable for the first time under the terms of the Plan, by the employee
during any calendar year, cannot exceed $100,000.
Except in certain limited circumstances set forth in the Plan, grantees of
Options must be employees of the Corporation at the time of exercise of any
Options, and all Options not exercised at the time that any such grantee ceases
to be an employee of the Corporation, shall be canceled and the shares subject
to such Options shall be made available to again be optioned under the Plan.
Further, any person eligible for participation in the Plan, notwithstanding
such status, will not acquire any rights, as a result of such eligibility, to
retain their employee status with the Corporation for any specific period of
time.
All persons to which Options are granted under the Plan will be given written
notice of such grant and will be required to execute a separate Stock Option
Agreement with the Corporation before such Options will take effect. In order
to exercise the Options, the grantee will be required to provide a written
Notice of Exercise to the Corporation accompanied by full payment for the
shares being acquired. No grantee will acquire any shareholder rights with
respect to the shares purchased pursuant to the exercise of such Options until
the Corporation has issued a certificate or certificates evidencing those
shares to the exercising Option holder.
Options granted under the Plan are intended to qualify for exemptive relief
from the short-swing profit recapture provisions of Section 16(b) of the
Securities and Exchange Act of 1934, pursuant to Rule 16b-3 of the Securities
and Exchange Commission.
In the event shareholders fail to approve the Plan, the Plan will be
automatically terminated and the options granted pursuant to it will be void.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ADOPTION OF THE
NATIONAL CITY BANCSHARES, INC. INCENTIVE STOCK OPTION PLAN.
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<PAGE> 17
ITEM 3. SELECTION OF AUDITORS
The Board of Directors proposes for the approval by the shareholders at
the Annual Meeting the appointment of McGladrey & Pullen, LLP, Certified Public
Accountants and Consultants as independent accountants to audit the financial
statements of the Corporation and its subsidiaries for the year 1996. Although
approval of the shareholders of the Corporation's independent accountants is not
required, the Corporation deems it desirable to submit such selection to the
shareholders. McGladrey & Pullen, LLP has audited the books and records of the
Corporation and its subsidiaries since 1993. In the event that the
shareholders do not approve the selection of McGladrey & Pullen, LLP, the Board
of Directors will reconsider the selection of such accounting firm to act as the
Corporation's independent accountants. A representative of this firm is
expected to be present at the Annual Meeting and will have the opportunity
to make a statement if desired and to respond to appropriate questions from
shareholders.
ITEM 4. OTHER MATTERS
The Board of Directors of the Corporation is not aware of any other matters
that may come before the meeting. 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 printing hereof and which may properly come
before the meeting. A copy of the Corporation's 1995 report filed with the
Securities and Exchange Commission, on Form 10-K, will be available without
charge to shareholders upon request on or after March 31, 1996. Address all
requests, in writing, for this document to Harold A. Mann, Secretary, National
City Bancshares, Inc., P. O. Box 868, Evansville, Indiana 47705-0868.
SHAREHOLDER PROPOSALS
Any proposals to be considered for inclusion in the Proxy material to be
provided to shareholders of the Corporation for its next annual meeting to be
held in 1997 must be made by a qualified shareholder and must be received by
the Corporation no later than November 21, 1996.
By Order of the Board of Directors,
HAROLD A. MANN
Secretary
March 18, 1996
15
<PAGE> 18
EXHIBIT "A"
NATIONAL CITY BANCSHARES, INC.
INCENTIVE STOCK OPTION PLAN
ARTICLE I. PURPOSE.
The purpose of this Incentive Stock Option Plan (the "Plan") is to
encourage stock ownership by certain executive employees of NATIONAL CITY
BANCSHARES, INC., an Indiana corporation and its "subsidiary corporations"
(collectively the "Corporation"), so that they may acquire a proprietary
interest in the success of the Corporation. The term "subsidiary corporation"
shall be defined in the same manner as such term is defined in Section 424(f)
of the Internal Revenue Code of 1986, as amended (the "Code") and shall include
subsidiary corporations which become such after the adoption of the Plan. The
Plan is intended to provide an incentive for maximum effort in the successful
operation of the Corporation and to encourage certain employees of the
Corporation to remain in the employ of the Corporation. It is further intended
that the options granted pursuant to the Plan shall constitute "Incentive Stock
Options" within the meaning of Section 422 of the Code, except as specifically
provided herein.
ARTICLE II. ADMINISTRATION.
The Plan shall be administered by the Compensation Committee (the
"Committee") which shall consist of three or more members of the Board of
Directors of National City Bancshares, Inc. (the "Board of Directors") who are
not employees of the Corporation and who are appointed to the Committee from
time to time by the Board of Directors. If any member of the Committee becomes
an executive employee of the Corporation, his or her membership on the
Committee shall automatically terminate. No Director may be appointed to the
Committee who has, during the one year period immediately preceeding his or her
prospective appointment date, been granted options under the Plan. Members of
the Committee shall be appointed by and shall serve at the pleasure of the
Board of Directors. A majority of the Committee shall constitute a quorum and
acts of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by all members of the Committee, shall be
deemed to be valid acts of the Committee. No member of the Committee shall be
eligible to receive an option under the Plan.
The Committee shall select one of its members to serve as Chairman, shall
appoint one of its members as Secretary, who shall maintain a record of its
actions and decisions, and shall hold meetings from time to time as it may
determine. The Committee shall have authority to:
(a) Determine which of the eligible employees of the Corporation
(determined under Article III hereof) shall be granted options, when
such options shall be granted and the number of shares and terms with
respect to each such option;
(b) Prescribe rules and regulations for administering the Plan; and
(c) Decide any questions arising as to the interpretation or application
of any provision under this Plan.
The determination of the Committee as to any of these matters shall be final
and binding upon all persons whomsoever and shall be reported to the Board of
Directors at its next ensuing meeting.
16
<PAGE> 19
ARTICLE III. ELIGIBILITY.
The persons who shall be eligible to receive options pursuant to the
Plan shall be such of the key employees of the Corporation, including but not
limited to officers (whether or not they are also directors of the Corporation),
as the Committee shall select from time to time. A grantee of an option under
this Plan (an "Optionee") may hold more than one option hereunder, but only on
the terms and conditions hereinafter set forth. Notwithstanding any of the other
provisions of this Plan, options shall not be granted hereunder to an individual
who then owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of National City Bancshares, Inc., or of a
parent or a subsidiary corporation (as those terms are defined in Section 424 of
the Code) of National City Bancshares, Inc., such ownership to be determined by
application of the applicable attribution rules under the Code.
ARTICLE IV. STOCK TO BE ISSUED UNDER THIS PLAN.
The stock to be issued upon the exercise of options granted under the Plan
shall be shares of the common stock without par value of National City
Bancshares, Inc. ("Common Stock") which may either be authorized and unissued
shares or issued shares held in or hereafter acquired for the treasury of
National City Bancshares, Inc. The aggregate number of shares of Common Stock
which may be issued under options granted hereunder shall not exceed Two
Hundred and Ninety Thousand (290,000) shares. In the event that any outstanding
option under the Plan expires or is terminated, the shares of Common Stock
allocable to the unexercised portion of such option may again be subject to an
option under the Plan.
National City Bancshares, Inc. shall not be required to issue or deliver
any certificate for shares of its Common Stock purchased upon the exercise of
all or any part of an option before completion of any registration or other
qualification of such shares under any state or federal law or ruling or
regulation of any governmental regulatory body that National City Bancshares,
Inc. shall, in its sole discretion, determine is necessary or advisable.
ARTICLE V. TERMS AND CONDITIONS OF OPTIONS.
Each option granted under the Plan shall be evidenced by an agreement in
writing which shall be subject to such amendment and modification from time to
time as the Committee shall deem necessary to comply with applicable law or
regulation, and which shall contain, in such form and with such other
provisions as the Committee shall from time to time determine, provisions which
comply with the following terms and conditions:
(A) THE NUMBER OF SHARES. Each option shall state the number of shares of
Common Stock to which it pertains.
(B) OPTION PRICE. Each option shall state the option price per share of
Common Stock which shall be equal to the fair market value of one share
of Common Stock on the date of the granting of the option. The Committee
shall have full authority to determine the fair market value of a share
of Common Stock. If the Common Stock is traded in the over-the-counter
market, such fair market value shall be deemed to be the arithmetical
mean between the asked and the bid prices between the opening of the
market and noon on such date as reported by NASDAQ. If the Common Stock
is traded on an exchange, such fair market value shall be deemed to be
the arithmetical mean of the high and low prices at which it is quoted
or traded between the opening of the market and noon on such day on the
exchange on which it generally has the greatest trading volume.
(C) MEDIUM AND TIME OF PAYMENT. The option price shall be payable in
United States dollars, or, if authorized by the Committee in the option
grant, in whole or in part in common shares of the Corporation valued at
fair market value, as determined by the Committee. The option price
shall be payable in full upon the exercise of the option, and the
exercise of any option and the delivery of the optioned shares shall be
contingent upon receipt by National City Bancshares, Inc. of the full
purchase price paid in cash, check, or, if authorized, common shares of
the Corporation.
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<PAGE> 20
(D) TERM AND EXERCISE OF OPTIONS. Each option shall state the period of
time during which the option may be exercised; provided, however that,
anything contained herein to the contrary notwithstanding, no option
granted hereunder shall be exercisable after the expiration of ten years
after the date of grant of such option. Subject to the terms of the Plan
and the individual agreement granting a particular option, any option
may be exercised, in whole or in part, from time to time, as to one or
more whole shares of Common Stock covered by the option, during its
period of exercise.
(E) MAXIMUM VALUE OF STOCK WITH RESPECT TO WHICH OPTIONS ARE EXERCISABLE
FOR FIRST TIME IN ANY CALENDAR YEAR. In the event the aggregate fair
market value (determined at the time the option is granted) of Common
Stock with respect to which options are exercisable hereunder for the
first time by any eligible employee during any one calendar year (under
the Plan and all other incentive stock option plans of National City
Bancshares, Inc. or any parent or subsidiary corporation of National
City Bancshares, Inc.) shall exceed One Hundred Thousand Dollars, such
options shall, to the extent of such excess, be treated as options which
are not incentive stock options, taking options into account in the
order in which they were granted. In the case of an option that is to be
treated in part as an incentive stock option and in part as a
nonincentive stock option, National City Bancshares, Inc. may designate
the shares of Common Stock that are to be treated as stock acquired
pursuant to exercise of an incentive stock option by issuing a separate
certificate for such shares and identifying the certificate as incentive
stock option shares in the stock transfer records of National City
Bancshares. The remaining shares of Common Stock shall be treated as
stock acquired pursuant to the exercise of a nonincentive stock option
and identified as such in the stock transfer records of National City
Bancshares.
(F) TRANSFER OF OPTION. Neither the whole nor any part of any option
shall be transferable by an Optionee or by operation of law during said
Optionee's lifetime and at said Optionee's death an option or any part
thereof shall only be transferable by said Optionee's will or by the
laws of descent and distribution. An option may be exercised during the
lifetime of the Optionee only by the Optionee. Any option, and any and
all rights granted to an Optionee thereunder, to the extent not
theretofore effectively exercised shall automatically terminate and
expire upon any sale, transfer or hypothecation or any attempted sale,
transfer or hypothecation of such option or rights, or upon the
bankruptcy or insolvency of the Optionee.
(G) TERMINATION OF EMPLOYMENT. No option may be exercised after the
termination of the employment of the Optionee with the Corporation
except as hereinafter provided, specifically subject, however, to the
provisions of paragraph (d) of this Article V:
(1) Retirement. Options granted under the Plan may be
exercised within three (3) months after the Retirement (as
hereinafter defined) of the Optionee and the options shall be
exercisable for all of the shares covered thereby. For purposes of
the Plan, "Retirement" shall mean any termination of employment
with the Corporation occurring after the completion of not less
than ten (10) years of service with the Corporation and the
attainment of age sixty (60) years by the Optionee.
(2) Disability. Options granted under the Plan may be
exercised within one (1) year after the termination of the
employment of the Optionee by reason of the Disability (as
hereinafter defined) of the Optionee and the option shall be
exercisable for all of the shares covered thereby. For purposes of
the Plan, an Optionee shall be deemed have incurred a "Disability"
if a disinterested duly licensed medical doctor appointed by the
Corporation determines that the Optionee is totally and
permanently prevented, as a result of physical or mental
infirmity, injury, or disease, either occupational or
nonoccupational in cause, from holding the job or position with
the Corporation or engaging in the employment activity, or a
comparable job or employment activity with the Corporation, which
the Optionee held or customarily engaged in prior to the
occurrence of the disability (provided, however, that disability
hereunder shall not include any disability incurred or resulting
from the Optionee's having engaged in a criminal act or
enterprise, or any disability consisting of or resulting from the
Optionee's chronic alcoholism, addiction to narcotics or an
intentionally self-inflicted injury).
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<PAGE> 21
(3) Death
(i) If an Optionee shall die while employed by
the Corporation or within three (3) months after termination
of employment with the Corporation by reason of Retirement
or Disability, the options granted under this Plan to such
deceased Optionee shall be exercisable within one (1) year
after the date of the Optionee's death and the options shall
be exercisable for all of the shares covered thereby.
(ii) If an Optionee shall die within three (3) months after
termination of employment with the Corporation for a reason
other than Retirement or Disability, the options granted
under this Plan to such deceased Optionee shall be
exercisable within one (1) year after the date of the
Optionee's death but the options may not be exercised for
more than the number of shares, if any, as to which the
options were exercisable by the Optionee immediately prior
to his or her death.
(iii) The legal representative, if any, of the
deceased Optionee's estate, otherwise the appropriate
legatees or distributees of the deceased Optionee's estate,
may exercise the option on behalf of such a deceased
Optionee.
(4) Involuntary Termination of Employment. Options granted
under the Plan may be exercised within three (3) months after the
Involuntary Termination of Employment (as hereinafter defined) of
the Optionee with the Corporation and the options shall be
exercisable for all of the shares covered thereby. For purposes of
the Plan, "Involuntary Termination of Employment" shall mean any
termination of an Optionee's employment with the Corporation by
reason of the discharge, firing or other involuntary termination
of an Optionee's employment by action of the Corporation other
than an involuntary termination for cause as described in
subparagraph (6) of this paragraph (g).
(5) Voluntary Termination of Employment. Options granted
under the Plan may be exercised, if otherwise timely, within three
(3) months after the Voluntary Termination of Employment (as
hereinafter defined) of the Optionee with the Corporation but the
options may not be exercised for more than the number of shares,
if any, as to which the options were exercisable by the Optionee
immediately prior to such termination of employment. For purposes
of the Plan "Voluntary Termination of Employment" shall mean any
voluntary termination of employment with the Corporation by reason
of the Optionee's quitting or otherwise voluntarily leaving the
Corporation's employ other than a voluntary termination of
employment by reason of Retirement or a voluntary termination of
employment constituting a termination for cause as described in
subparagraph (6) of this paragraph (g).
(6) Termination for Cause. Anything contained herein to the
contrary notwithstanding, if the termination of an Optionee's
employment with the Corporation is as a result of or caused by the
Optionee's theft or embezzlement from the Corporation, the
violation of a material term or condition of his or her
employment, the disclosure by the Optionee of confidential
information of the Corporation, conviction of the Optionee of a
crime of moral turpitude, the Optionee's stealing trade secrets
or intellectual property owned by the Corporation, any act by the
Optionee in competition with the Corporation or any other act,
activity or conduct of the Optionee which in the opinion of the
Board of Directors is adverse to the best interests of the
Corporation, then any options and any and all rights granted to
such Optionee thereunder, to the extent not yet effectively
exercised, shall become null and void effective as of the date of
the occurrence of the event which results in the Optionee ceasing
to be an employee of the Corporation and any purported exercise of
an option by or on behalf of said Optionee following such date
shall be of no effect.
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<PAGE> 22
(7) A transfer of employment between the Corporation and any
subsidiary of the Corporation, or between any subsidiaries of the
Corporation, shall not be deemed to be a termination of employment
under the Plan.
(H) CHANGE OF CONTROL. Upon the occurrence of a Change of Control (as
defined below), each option granted hereunder shall immediately become
exercisable in full by the optionee notwithstanding the option period
specified in such option, but subject to the other terms and provisions
of such option. As used herein, the term "Change of Control" means the
acquisition of direct or indirect beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934 [the
"Exchange Act"] of 25% or more of the then outstanding shares of Common
Stock of the Corporation generally entitled to vote in the election of
directors of the Corporation by any person or persons who constitute a
group (within the meaning of Section 13(d)(3) of the Exchange Act) or
the consummation of any merger, consolidation, share exchange, or other
extraordinary corporate transaction involving the Corporation and in
which the shareholders of the Corporation immediately prior to
consummation of such transaction do not own, in the aggregate,
immediately after consummation of such transaction, at least a majority
of the voting stock of the Corporation or the entity which survives or
results from such transaction.
(I) ACCELERATION. The Committee may, in the case of merger, consolidation,
dissolution or liquidation of National City Bancshares, Inc.,
accelerate the expiration date of any option for any or all of the
shares covered thereby (but still giving Optionees a reasonable period
of time to exercise any outstanding options prior to the accelerated
expiration date) and may, in the case of merger, consolidation,
dissolution or liquidation of National City Bancshares, Inc., or in any
other case in which it feels it is in the Corporation's best interest,
accelerate the date or dates on which any option or any part of any
option shall be exercisable for any or all of the shares covered
thereby.
(J) RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a
stockholder with respect to any shares covered by any of said Optionee's
options until the date that National City Bancshares, Inc. receives
payment in full for the purchase of said shares pursuant to the
effective exercise of said option. No adjustment shall be made for
dividends or distributions or other rights for which the record date is
prior to the date such payment is received by National City Bancshares,
Inc., except as provided in Article VII hereof.
(K) COMPLIANCE WITH SECURITIES EXCHANGE ACT. Notwithstanding anything
herein to the contrary, options shall always be granted and exercised in
such a manner as to conform to the provisions of Rule 16b-3 or any
replacement rule, adopted pursuant to the provisions of the Securities
Exchange Act of 1934 as the same now exists or may, from time to time,
be amended.
(L) OTHER PROVISIONS. The option agreements authorized under the Plan
shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the option, as the Committee shall
deem advisable and, in any event, all option agreements shall contain
such limitations upon the exercise of the option (other than the
$100,000.00 limitation as to the maximum value of shares with respect to
which options are exercisable for the first time in any calendar year,
which limitation may be exceeded as provided in Article V (e)) as shall
be necessary in order that each such option will be an "incentive stock
option" as defined in Section 422 of the Code or to conform to any
change in the law.
ARTICLE VI. NOTICE OF INTENT TO EXERCISE OPTIONS.
An Optionee desiring to exercise an option granted hereunder as to one or
more of the shares covered thereby must, in order to so exercise the option,
notify the Corporation in writing to that effect, specifying the number of
shares of the Common Stock to be purchased.
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<PAGE> 23
ARTICLE VII. STOCK DIVIDEND--RECAPITALIZATION-CONSOLIDATION.
If any stock dividend shall be declared upon the Common Stock or if the
Common Stock shall hereafter be subdivided, consolidated, or changed into other
securities of National City Bancshares, Inc., or a successor corporation to
National City Bancshares, Inc., then in each such event, shares of Common Stock
which would be delivered pursuant to exercise of any options shall, for the
purpose of adjusting the number and kind thereof, be treated as though
outstanding immediately prior to the occurrence of such event and the purchase
price to be paid therefor shall be appropriately adjusted to give effect
thereto.
The grant of an option pursuant to the Plan shall not affect in any way
the right or power of National City Bancshares, Inc. to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
ARTICLE VIII. EXPIRATION AND TERMINATION OF PLAN.
Options may be granted pursuant to the Plan only within ten (10) years
following the earlier to occur of the date on which the Plan is originally
adopted by the Board of Directors and the date on which the Plan is originally
approved by stockholders of National City Bancshares, Inc.
Options may be granted under the Plan at any time until the Plan is
terminated by the Board of Directors or until such earlier date when
termination of the Plan shall be required by applicable law. If not sooner
terminated, the Plan shall terminate ten years from the date on which the Plan
is originally approved by the Board of Directors.
ARTICLE IX. AMENDMENT OF THE PLAN.
The Board of Directors may, insofar as permitted by law, from time to
time, with respect to any shares of Common Stock at the time not subject to
outstanding options, suspend or discontinue the Plan or revise or amend it in
any respect whatsoever except that, without approval of the holders of a
majority of the Common Stock of National City Bancshares, Inc., no such
revision or amendment shall change the number of shares of Common Stock subject
to the Plan (except as may occur as a result of an occurrence described in
Article VII), change the designation of the class of employees eligible to
receive options, remove the administration of the Plan from the Committee, or
render any member of the Committee eligible to receive an option under the Plan
while serving thereon. Furthermore, the Plan may not, without the approval of
the holders of a majority of the Common Stock of National City Bancshares,
Inc., be amended in any manner that will cause options issued under it to fail
to meet the requirements of "incentive stock options" as defined in Section 422
of the Code (except as provided in paragraph (e) of Article V) or which would
result in a failure to comply with Section 16(b)(3) of the Securities Exchange
Act of 1934 or similar statute(s) or rules or regulations adopted thereunder.
ARTICLE X. GRANTING OF OPTIONS.
The granting of any option pursuant to the Plan shall be entirely in the
discretion of the Committee and nothing herein contained shall be construed to
give any employee any right to participate under the Plan or to receive any
option under it. The granting of an option shall impose no duty upon the
Optionee to exercise such option.
Neither the adoption and maintenance of the Plan nor the granting of an
option pursuant to the Plan shall be deemed to constitute a contract of
employment between the Corporation and any employee or to be a condition of the
employment of any person. Nothing herein contained shall be deemed to (a) give
to any employee the right to be retained in the employ of the Corporation; (b)
interfere with the right of the Corporation to discharge or retire any employee
at any time; (c) be deemed to give to the Corporation the right to require an
employee to remain in its employ; or (d) interfere with the employee's right to
terminate his or her employment at any time.
21
<PAGE> 24
ARTICLE XI. GOVERNMENT REGULATIONS.
The Plan and the granting and exercise of any option hereunder and the
obligations of National City Bancshares, Inc. to sell and deliver shares under
any such option shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies as may be required.
ARTICLE XII. PROCEEDS FROM SALE OF STOCK.
Proceeds from the purchase of Common Stock by any Optionee under the Plan
shall be for the general business purposes of National City Bancshares, Inc.
ARTICLE XIII. REPORTING REQUIREMENTS.
The Committee shall furnish each Optionee hereunder with such information
relating to the exercise of any option granted hereunder to said Optionee as is
required under the Code and applicable State and Federal Security laws.
ARTICLE XIV. EFFECTIVE DATE; APPROVAL OF STOCKHOLDERS.
The Plan shall become effective as of the date of its adoption by the
Board of Directors, but only if it shall be approved within twelve months
thereafter by the shareholders of National City Bancshares, Inc. as required by
the Code and the regulations issued thereunder and no option granted hereunder,
if any, after such effective date but prior to such approval may be execised
unless and until such approval shall have been granted.
ARTICLE XV. INTERPRETATION.
The terms of this Plan are subject to all present and future regulations
and rulings of the Secretary of the Treasury or his or her delegate relating to
the qualification of Incentive Stock Options under Section 422 of the Code. If
any provision of the Plan conflicts with any such regulation or ruling, that
provision of the Plan shall he void and of no effect.
22
<PAGE> 25
PROXY
NATIONAL CITY BANCSHARES, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
227 Main Street, P.O. Box 868 OF DIRECTORS
Evansville, IN 47705-0868 The undersigned hereby appoints Waller S.
Clements, Ole J. Olsen, Jr., Esq., and
David L. Woll, Esq., Proxies, each with the
power to appoint his or her substitute, and
hereby authorizes them to represent and to
vote as below, all the shares of Common Stock
of National City Bancshares, Inc., held of
record by the undersigned on February 29,
1996, at the Annual Meeting of Shareholders
to be held on April 16, 1996, or any
adjournment, thereof.
1. ELECTION OF DIRECTORS -- CLASS I (term to expire 1999)
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) / / listed below / /
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.
Janice L. Beesley Michael F. Elliott Donald G. Harris
2. TO CONSIDER AND ACT UPON A PROPOSAL TO ADOPT THE NATIONAL CITY BANCSHARES,
INC. INCENTIVE STOCK OPTION PLAN.
FOR / / AGAINST / / ABSTAIN / /
3. PROPOSAL TO RATIFY THE APPOINTMENT OF MCGLADREY & PULLEN, LLP as the
Corporation's Independent Certified Public Accountants for the fiscal year
ending December 31, 1996.
FOR / / AGAINST / / ABSTAIN / /
(continued, and to be signed on other side)
(FACE OF PROXY CARD)
<PAGE> 26
(continued from other side)
4. The Proxies are authorized to vote in accordance with the recommendations
of the Board of Directors upon such other business as may properly come
before the Meeting.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" EACH PROPOSITION LISTED ABOVE UNLESS
OTHERWISE INDICATED. (IF ANY OTHER BUSINESS IS PRESENTED AT SAID MEETING, THIS
PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
DIRECTORS.)
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign.
____________ No. of Shares Voted When signing as an attorney,
executor, administrator,
trustee, or guardian, please
give full title as such. If a
corporation, please sign full
corporate name by president or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
DATED_____________________, 1996
________________________________
SIGNATURE
________________________________
SIGNATURE IF HELD JOINTLY
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
(REVERSE OF PROXY CARD)
