<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, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
NATIONAL CITY BANCSHARES, INC.
227 MAIN STREET
EVANSVILLE, INDIANA 47708
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1997
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 Casino Aztar
Hotel, Mezzanine Meeting Rooms, 421 N.W. Riverside Drive, Evansville, Indiana,
on Tuesday, April 15, 1997, 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 in Class II, each to serve a term
expiring at the 2000 Annual Meeting of Shareholders.
2. 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, 1997.
3. 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 28, 1997, are the
only shareholders entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
/S/ HAROLD A. MANN
HAROLD A. MANN, Secretary
March 17, 1997
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 15, 1997, in accordance with the foregoing notice.
The Corporation is a bank holding company that owns twelve banks, a leasing
company, and a property management company, all of which are wholly-owned
subsidiaries.
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 17, 1997.
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; 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 28, 1997, will
be eligible to vote at the Annual Meeting or any adjournment thereof. As of
February 28, 1997, the Corporation had outstanding 9,433,046 shares of common
stock, without par value. On all matters including the election of directors,
each shareholder will have one vote for each share held. In electing directors,
each shareholder has the right to cumulate the shareholder's votes. Cumulative
voting permits a shareholder to multiply the number of shares held by the
number of directors to be elected and to cast those votes for one candidate or
spread those votes among several candidates. Unless the shareholder specifies
otherwise, the persons named in the enclosed Proxy will allocate votes in their
discretion among the nominees for director for whom they are authorized to
vote.
A quorum will be present if the holders of one-third of the outstanding shares
of common stock are present at the meeting, in person, or by Proxy. Directors
will be elected by a plurality of the votes cast by the shares entitled to vote
in the election at the meeting. Ratification of the Corporation's accountants
requires that the number of shares voted in favor of the proposal be greater
than the number opposing it.
A Proxy may indicate that all or a portion of the shares represented by such
Proxy are not being voted with respect to a specific proposal. This could
occur, for example, when a broker is not permitted to vote shares held in
street name on certain proposals in the absence of instructions from the
beneficial owner. Shares that are not voted with respect to a specific
proposal will be considered as not present and entitled to vote on such
proposals, even though such shares will be considered present for purposes of
determining a quorum and voting on other proposals. Abstentions on a specific
proposal will be considered as present, but not as voting in favor of such
proposal. Because neither of the proposals to be considered at the meeting
requires the affirmative vote of a specified number of outstanding shares,
neither the non-voting of shares nor abstentions will affect the election of
directors or ratification of accountants.
1
<PAGE> 4
SECURITY OWNERSHIP OF MANAGEMENT
- --------------------------------
Listed in the following table is the number of shares of the Corporation's
common stock beneficially owned 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 53,087 (3) 0.56%
Common Stock Benjamin W. Bloodworth 32,411 (4) 0.34%
Common Stock Michael F. Elliott 307,176 (5) 3.25%
Common Stock Susanne R. Emge 22,770 (6) 0.24%
Common Stock Donald G. Harris 11,230 0.12%
Common Stock H. Ray Hoops 469 0.00%
Common Stock Robert A. Keil 41,939 (7) 0.44%
Common Stock John D. Lippert 72,488 (8) 0.77%
Common Stock Harold A. Mann 31,588 (9) 0.33%
Common Stock Ronald G. Reherman 8,453 (10) 0.09%
Common Stock Laurence R. Steenberg 27,756 0.29%
All Directors and Executive
Common Stock Officers as a Group (11 persons) 609,367 (11) 6.35%
- -------------------------------------------------------------------------------------
</TABLE>
(1) Beneficial ownership includes shares as to which an individual shares
voting or investment power with another. 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 28, 1997.
(3) All shares with shared voting and investment power with spouse.
(4) Includes 52 shares with sole voting and investment power; 2,959 shares
with sole voting and investment power by spouse; and 29,400 shares that
may be purchased pursuant to options exercisable within 60 days.
(5) Includes 238,820 shares with sole voting and investment power; 14,264
shares with shared voting and investment power with spouse; 17,924 shares
with sole voting and investment power by spouse; 3,093 shares held by a
trust with shared voting and investment power; and 33,075 shares that may
be purchased pursuant to options exercisable within 60 days.
(6) Includes 1,855 shares with sole voting and investment power; 13,829
shares with shared voting and investment power with spouse; and 7,086
shares with sole voting and investment power by spouse.
(7) Includes 8,864 shares with shared voting and investment powers with
spouse; and 33,075 shares that may be purchased pursuant to options
exercisable within 60 days.
(8) Includes 23,814 shares with sole voting and investment power; 2,082
shares with shared voting and investment power with spouse; 13,125 shares
with sole voting and investment power by spouse; and 33,467 shares that
may be purchased pursuant to options exercisable within 60 days.
(9) Includes 192 shares with sole voting and investment power; 1,996 shares
with shared voting and investment power with spouse; and 29,400 shares
that may be purchased pursuant to options exercisable within 60 days.
(10) Includes 2,140 shares with sole voting and investment power; and 6,313
shares with shared voting and investment power with spouse.
(11) Includes 158,417 shares that may be purchased pursuant to options
exercisable within 60 days.
2
<PAGE> 5
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.
Each of the nominees below currently serves as a director of the Corporation.
The Board of Directors has no reason to believe that any of the nominees will
be unable to serve if elected. If any nominee is unable to serve, the shares
represented by all valid Proxies will be voted for the election of such other
person as the Board may recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING NOMINEES:
<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- -------------------------------------------------------------------------------------------------------
CLASS II
--------
The following are nominees for directorship in Class II of the Board of Directors, whose terms shall
expire at the Annual Meeting of Shareholders in 2000.
<S> <C> <C>
Susanne R. Emge 55 1985
Executive Director, St. Mary's Medical Center
Foundation (February 1997 to Present);
Senior Vice President - Community Relations
and Trust Manager, The National City Bank of
Evansville (May 1996 to February 1997);
Vice President for Corporate and Community Services,
Deaconess Hospital, Inc. (1990 to 1995);
Treasurer, Emge Realty Company, Inc.; and
Director, The National City Bank of Evansville (1979 to 1995)
Robert A. Keil 53 1993
President (1993 to Present) and Assistant Secretary and
Assistant Treasurer (1985 to 1993) of the Corporation; and
Executive Vice President, The National City Bank of
Evansville and the Corporation (1991 to 1993)
Laurence R. Steenberg 58 1985
President, BST Incorporated (Oil Production);
Assistant Professor of Management, University of Evansville;
Director, Rudolph Construction Company (August 1996 to Present)
Part Owner and Manager, World Connection Services, LLC,
(Internet services provider) (1994 to Present);
and Director, The National City Bank of Evansville (1983 to 1995)
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- -------------------------------------------------------------------------------------------------------
CLASS III
---------
(Continuing Directors with Term to Expire 1998)
<S> <C> <C>
Dr. H. Ray Hoops 57 1996
President, University of Southern Indiana (1994 to Present);
Director, The National City Bank of Evansville (1993 to April 1996);
Director, NCBE Leasing Corp. (1994 to Present); and
Vice Chancellor for Academic Affairs, University of Mississippi,
(1988-1994)
John D. Lippert 63 1985
Chairman of the Board and Chief Executive Officer of
the Corporation (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 (1981 to December 1996)
Ronald G. Reherman 60 1985
Chairman of the Board, President and Chief Executive Officer,
SIGCORP, Inc. (Gas and Electric Public Utility 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>
4
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR OF
NAME AND PRINCIPAL OCCUPATION CORPORATION
(PAST FIVE YEARS) AGE SINCE
- -------------------------------------------------------------------------------------------------------
CLASS I
-------
(Continuing Directors with Term to Expire 1999)
<S> <C> <C>
Janice L. Beesley 43 1995
President and Chief Executive Officer,
United Federal Savings Bank;
President, UniFed, Inc.; and
President and Chief Executive Officer,
United Financial Bancorp, Inc. (1992 to August 1995)
Michael F. Elliott 45 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;
Director, United Federal Savings Bank (1995 to December 1996);
Chairman of the Board (1989 to July 1996) 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 64 1986
Retired President, Mead Johnson Nutritional Group;
President, Mead Johnson Nutritional Group (1989 to 1993); and
Director, The National City Bank of Evansville (1986 to 1995)
</TABLE>
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.
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 1996, the Board of Directors met twelve times. Each of the directors
attended at least 75% of the aggregate number of meetings of the Board and
Committees on which the director served, with the exception of Ronald G.
Reherman who attended 74%.
The duties of the Compensation Committee are explained later under
"Compensation of Executive Officers." 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. During 1996 the Audit Committee met seven times and
was comprised of four outside directors and the members were as follows:
Ronald G. Reherman, Chairperson; Donald G. Harris; H. Ray Hoops; and
Laurence R. Steenberg
The Corporation's nominating function is performed by the Board of Directors.
Shareholders who wish to nominate persons for election as directors must comply
with the advance notice and eligibility requirements contained in Article III,
Section 9 of the Corporation's Bylaws, a copy of which is available on request.
Such request and any nominations should be addressed to the Secretary,
National City Bancshares, Inc., 227 Main Street, P. O. Box 868, Evansville,
Indiana, 47705-0868.
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. Directors who serve as Corporate or subsidiary
officers receive no separate compensation for Board service.
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 four next most highly compensated
executive officers, whose compensation in 1996 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(1) # Shares(2) Compensation
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John D. Lippert 1996 $275,000 $ ----- ----- $128,042 (3,4,5)
Chairman of the Board and 1995 230,000 ----- 66,150 68,969 (3,4)
Chief Executive Officer 1994 210,000 ----- ----- 50,710 (3,4)
Michael F. Elliott 1996 165,000 31,500 10,500 22,500 (3)
Executive Vice President 1995 150,000 23,970 33,075 22,500 (3)
1994 136,400 ----- ----- 18,203 (3)
Robert A. Keil 1996 145,000 26,880 10,500 22,500 (3)
President 1995 128,000 19,222 33,075 22,083 (3)
1994 109,375 ----- ----- 14,618 (3)
Benjamin W. Bloodworth 1996 125,000 23,100 ----- 22,215 (3)
Executive Vice President 1995 110,000 17,394 44,100 19,109 (3)
1994 99,000 ----- ----- 13,232 (3)
Harold A. Mann 1996 85,000 16,800 ----- 15,270 (3)
Secretary and Treasurer 1995 80,000 ----- 44,100 12,000 (3)
1994 70,000 ----- ----- 9,356 (3)
</TABLE>
(1) Amounts shown represent amounts paid under the Management Incentive
Compensation Plan.
(2) Options granted have been adjusted for stock dividends and the
two-for-one stock split issued in April 1996.
(3) Amounts shown represent amounts contributed to the profit sharing plan
provided for all employees who complete one year of service.
(4) Includes a supplemental retirement contribution of $51,547, $46,469, and
$30,662 for 1996, 1995, and 1994, respectively.
(5) Includes $53,995 income realized from the exercise of non-qualified stock
options.
7
<PAGE> 10
1996 STOCK OPTION GRANT TABLE
The following table sets forth the stock options granted to the Named Executive
Officers during 1996 under the Corporation's Incentive Stock Option Plan.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value
---------------------------------------------- at Assumed Annual Rates
% of Total of Stock Price Appreciation
Options Exercise for Option Term (3)
Options Granted to Employees Price(2) Expiration ------------------------------
Name Granted(1) in 1996 Per Share Date 5% 10%
- ------------------ ----------- -------------------- ----------- ---------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Elliott 10,500 11 $26.90 10/15/2006 177,631 450,152
Robert A. Keil 10,500 11 $26.90 10/15/2006 177,631 450,152
</TABLE>
(1) Options granted in 1996 were both incentive stock options and
non-qualified stock options exercisable one year after the date of grant.
These options become immediately exercisable in the event of a change in
control of the Corporation. These options were granted for a term of 10
years, subject to earlier termination in certain events related to
termination of employment. The number of options and exercise prices in
the table have been adjusted for stock dividends.
(2) Exercise price is the fair market value on the date of grant, adjusted
for stock dividends.
(3) The values in the columns below result from calculations based on the 5%
and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, of the Corporation's stock price.
8
<PAGE> 11
1996 STOCK OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth the number and value of all unexercised stock
options held by the Named Executive Officers at year end.
<TABLE>
<CAPTION>
Value ($) of
Number (#) of Unexercised
Unexercised "in-the-money"
Options - Options -
12/31/96 12/31/96(2)
------------- --------------
Shares Acquired Net Value ($) Exercisable/ Exercisable/
Name on Exercise Realized(1) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John D. Lippert 10,633 $103,549 11,417/ $104,808/
44,100 $404,838
Benjamin W. Bloodworth 0 0 14,700/ $134,946/
29,400 $269,892
Michael F. Elliott 0 0 33,075/ $303,628/
10,500 $ 24,675
Robert A. Keil 0 0 33,075/ $303,628/
10,500 $ 24,675
Harold A. Mann 0 0 14,700/ $134,946/
29,400 $269,892
</TABLE>
(1) Value is calculated based on closing market price of the Corporation's
common stock at exercise date, less the exercise price.
(2) Value is calculated based on the closing market price of the common stock
on December 31, 1996, less the option 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 subsidiaries,
based on remuneration that is covered under the plan and years of service.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
- ------------------------------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 87,500 $100,000
150,000 45,000 60,000 75,000 90,000 105,000 120,000
175,000 52,500 70,000 87,500 105,000 122,500 140,000
200,000 60,000 80,000 100,000 120,000 140,000 160,000
225,000 67,500 90,000 112,500 135,000 157,500 180,000
250,000 75,000 100,000 125,000 150,000 175,000 200,000
300,000 90,000 120,000 150,000 180,000 210,000 240,000
350,000 105,000 140,000 175,000 210,000 245,000 280,000
</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. "Average
annual salary" includes salary, bonus, and other amounts paid in cash to an
eligible participant. 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 normal 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.
Covered compensation for John D. Lippert and Michael F. Elliott, as of the end
of the last calendar year, was limited by law and totaled $150,000 each; and
their years of service were seventeen years and two years, respectively. Years
of service for Robert A. Keil, Benjamin W. Bloodworth, and Harold A. Mann were
thirty-one years, sixteen years, and thirty-nine 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
Option Plan
- -----------
On October 18, 1995, the Board of Directors adopted the Corporation's Incentive
Stock Option Plan (the "Option Plan"), which the shareholders approved on
April 16, 1996. The Option Plan authorizes the Compensation Committee to award
incentive and non-qualified stock options to key employees of the Corporation
and its subsidiaries. The total number of shares of common stock reserved for
issuance under the Option Plan is currently 639,450 shares, subject to
antidilution adjustments. The Option Plan will terminate no later than October
18, 2005. At December 31, 1996, options to purchase an aggregate of 357,392
shares had been granted and were outstanding under the Option Plan.
REPORT OF THE COMPENSATION COMMITTEE
Compensation Committee Interlocks and Insider Participation in Compensation
- ---------------------------------------------------------------------------
Decisions
- ---------
The Compensation Committee consists of four outside Directors: Messrs.
Steenberg, Harris, Hoops, and Reherman. None of the committee members is
involved in a relationship requiring disclosure as an interlocking executive
officer/director or under Item 404 of Regulation S-K or as a former officer or
employee of the Corporation.
Compensation Committee Structure and Philosophy
The Compensation Committee has the responsibility for setting executive
salaries and benefits. The Compensation Committee met four 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
- ------
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 1996. 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:
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.
During 1995 the Corporation exceeded its return-on-asset target, and
the named executive officers satisfied their personal performance
goals of asset quality, expense control, and growth of the
Corporation; thus the Committee approved incentive payouts under the
Plan in 1996. Further, based on the purpose of the Plan (encourage a
proprietary interest through stock ownership), past performance of the
recipient, and the ability of the recipient to effect the future of
the Corporation, the Committee awarded incentive stock options,
including awards to Mr. Keil and Mr. Elliott.
In 1996 the Corporation exceeded its return-on-asset target under the
Management Incentive Compensation Plan. The amount of incentive
payouts in 1997 based on 1996 performance is not determinable as of
the current date.
CEO Compensation
- ----------------
John D. Lippert's salary for 1996 was determined by the Compensation Committee
in accordance with the procedures and standards applied to other executive
officers of the Corporation.
Employment and Severance Agreements
- -----------------------------------
The Corporation does not have any employment or severance agreements with its
executive officers.
The above report on compensation is submitted by the Compensation Committee:
Laurence R. Steenberg, Chairperson; Donald G. Harris, H. Ray Hoops, and
Ronald G. Reherman
12
<PAGE> 15
COMPARATIVE STOCK PERFORMANCE
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, 1991, and all dividends are reinvested.
Fiscal year ending December 31 data is used. The shareholder return shown on
the graph is not necessarily indicative of future performance.
PERFORMANCE GRAPH DATA
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
NCBE 100.00 136.09 174.95 223.98 246.58 325.56
NASDAQ BANKS 100.00 145.55 165.99 165.38 246.32 325.62
NASDAQ STOCK MARKET 100.00 116.38 133.59 130.59 184.67 227.16
</TABLE>
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 1996.
These transactions consisted of extensions of credit by the subsidiaries in the
ordinary course of business and were made on substantially the same terms,
including interest rates and collateral, 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.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1996 all Section 16(a) filing requirements
applicable to its officers, directors, and greater than 10% beneficial owners
were complied with, except that one report covering one transaction was filed
late by Robert A. Keil and Ronald G. Reherman, one report covering two
transactions was filed late by John D. Lippert, and two reports covering two
transactions were filed late by Michael F. Elliott.
13
<PAGE> 16
ITEM 2. SELECTION OF AUDITORS
The Board of Directors proposes for ratification 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 1997.
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
ratify the appointment of McGladrey & Pullen, LLP, the Board of Directors will
select the Corporation's independent accountants. A representative of
McGladrey & Pullen, LLP, 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION
OF THE SELECTION OF MCGLADREY & PULLEN, LLP, AS AUDITORS FOR THE CORPORATION
FOR 1997.
ITEM 3. 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 1996 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, 1997. ADDRESS ALL
REQUESTS, IN WRITING, FOR THIS DOCUMENT TO HAROLD A. MANN, SECRETARY, NATIONAL
CITY BANCSHARES, INC., 227 MAIN STREET, 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 1998 must be received by the Corporation no later than November 17,
1997.
INCORPORATION BY REFERENCE
To the extent this Proxy Statement has or will be specifically incorporated by
reference into any filing by the Corporation under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, the sections of
this Proxy Statement entitled "Report of the Compensation Committee" and
"Comparative Stock Performance" shall not be deemed to be so incorporated
unless specifically otherwise provided in any such filing.
By Order of the Board of Directors,
/S/ HAROLD A. MANN
HAROLD A. MANN
Secretary
March 17, 1997
14
<PAGE> 17
PROXY
<TABLE>
<S><C>
NATIONAL CITY BANCSHARES, INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
227 Main Street, P. O. Box 868 The undersigned hereby appoints Waller S. Clements, Ole J. Olsen, Jr., Esq., and
Evansville, IN 47705-0868 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 28, 1997, at the Annual Meeting of Shareholders to be held
on April 15, 1997, or any adjournment thereof.
1. ELECTION OF DIRECTORS - CLASS II (term to expire 2000)
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) / / to vote for all nominees listed below / /
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below.
To distribute your votes on a cumulative basis, write the number of votes you wish to cast for each nominee below
that nominee's name.
Susanne R. Emge Robert A. Keil Laurence R. Steenberg
2. PROPOSAL TO RATIFY THE APPOINTMENT OF MCGLADREY & PULLEN, LLP as the Corporation's Independent Certified Public Accountants
for the fiscal year ending December 31, 1997.
FOR / / AGAINST / / ABSTAIN / /
(continued, and to be signed on the other side)
</TABLE>
<PAGE> 18
<TABLE>
<S><C>
(continued from other side)
3. 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. 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 persons.
DATED ______________________________________, 1997
____________ No. of Shares Voted
__________________________________________________
Signature
__________________________________________________
Signature, if held jointly
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
</TABLE>
