SCHEDULE 14A
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.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date Filed:
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<PAGE>
NATIONAL CITY BANCSHARES, INC
227 Main Street
EVANSVILLE, INDIANA 47708
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
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 Wednesday, May 19, 1999, at 9:30 a.m., C.D.T., for
the purpose of considering and voting upon the following matters:
1. To elect four directors in Class I, each to serve a term
expiring at the 2002 Annual Meeting of Shareholders.
2. To consider and act upon a proposal to adopt the National City
Bancshares, Inc. 1999 Stock Option and Incentive Plan.
3. To approve or disapprove the appointment of
PricewaterhouseCoopers, LLP as the Corporation's auditors for 1999.
4. To transact such other business that may properly be brought
before the meeting.
Shareholders of record at the close of business on March 22, 1999, are the
only shareholders entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
/S/ STEPHEN C. BYELICK, JR.
STEPHEN C. BYELICK, JR., Secretary
April 21, 1999
IMPORTANT
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK, SIGN, DATE,
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE AS
PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED.
<PAGE>
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
Wednesday, May 19, 1999, in accordance with the foregoing notice.
The solicitation of Proxies on the enclosed form is made on behalf of the
Board of Directors of the Corporation. All costs 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 or about April 21, 1999.
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 by voting
in person 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 four
persons listed in this Proxy Statement, "FOR" the adoption of the National
City Bancshares, Inc. 1999 Stock Option and Incentive Plan, and "FOR" the
appointment of auditors.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only shareholders of record at the close of business on March 22, 1999, will
be eligible to vote at the Annual Meeting or any adjournment thereof. As of
March 22, 1999, the Corporation had outstanding 16,842,456 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.
A quorum will be present if the holders of a majority 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 at the meeting. Approval of Proposal 2 (the National City
Bancshares, Inc. 1999 Stock Option and Incentive Plan) and Proposal 3 (the
appointment of auditors) each require the number of votes 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. The non-voting of shares or abstentions will not affect
the election of directors, Proposal 2, or Proposal 3 because none of these
matters require the affirmative vote of a specified number of shares.
Principal Shareholders
As of March 22, 1999, to the knowledge of the Corporation, there was no
person or group of persons who beneficially owned more than 5% of the
outstanding common stock of the Corporation.
<PAGE> 1
Security Ownership of Management
The following table sets forth as of March 22, 1999, the number of shares of
common stock of the Corporation beneficially owned by the directors, the
Named Executive Officers listed in "Compensation of Executive Officers,"
and all directors and executive officers as a group.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name of Beneficial Owner
Amount and Nature of
Beneficial Ownership (1) Percent of
Class
- --------------------------------------------------------------------------------
<S> <C> <C>
Janice L. Beesley 68,864 (2) *
Ben L. Cundiff 437,824 2.60%
Michael F. Elliott 358,210 (3) 2.12%
Susanne R. Emge 26,004 (4) *
Donald G. Harris 12,829 *
H. Ray Hoops 1,261 *
Robert A. Keil 79,156 (5) *
John D. Lippert 75,391 (6) *
George D. Martin 206,022 1.22%
Ronald G. Reherman 9,571 (7) *
Curtis D. Ritterling 8,294 (8) *
Laurence R. Steenberg 30,872 (9) *
Robert D. Vance 752,208 (10) 4.47%
Richard F. Welp 4,365 (11) *
All Directors and Executive 1,716,196 (12) 10.11%
Officers as a Group (14 persons)
- --------------------------------------------------------------------------------
<FN>
<F*> Represents less than one percent.
<F1> The nature of beneficial ownership, unless otherwise noted, represents
sole voting and investment power.
<F2> Includes 29,764 with sole voting and investment power; 29,511 shares
with sole voting and investment power by spouse; and 9,589 shares that
may be purchased pursuant to options exercisable within 60 days.
<F3> Includes 284,712 shares with sole voting and investment power; 3,410
shares held by a trust with shared voting and investment power; and
70,088 shares that may be purchased pursuant to options exercisable
within 60 days.
<F4> Includes 10,091 shares with sole voting and investment power; 10,414
with shared voting and investment power with spouse; and 5,499 shares
with sole voting and investment power by spouse.
<F5> Includes 14,581 shares with shared voting and investment power with
spouse; and 64,575 shares that may be purchased pursuant to options
exercisable within 60 days.
<F6> Includes 16,479 shares with sole voting and investment power; 8,687
shares with sole voting and investment power by spouse, and 50,225
shares that may be purchased pursuant to options exercisable within 60
days.
<F7> Includes 3,582 shares with sole voting and investment power; and 5,989
shares with shared voting and investment power with spouse.
<F8> Includes 2,783 shares with shared voting and investment power with
spouse; and 5,511 shares that may be purchased pursuant to options
exercisable within 60 days.
<F9> All shares are held in trust for a limited partnership of which Mr.
Steenberg is a general partner with sole voting and investment power.
<F10> Includes 740,591 shares with sole voting and investment power and
11,617 shares with sole voting and investment power by spouse.
<PAGE> 2
<F11> Includes 2,062 shares with sole voting and investment power; and 2,303
shares with shared voting and investment power with spouse.
<F12> Includes 133,206 shares that may be purchased pursuant to options
exercisable within 60 days.
</FN>
</TABLE>
ELECTION OF DIRECTORS
Nominees
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 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
2002.
<S> <C> <C>
Janice L. Beesley 45 1995
Regional President, The National City Bank of Evansville,
(November 1998 to Present);
Chairman and Chief Executive Officer,
Alliance Bank (July 1997 to November 1998);
President and Chief Executive Officer,
United Financial Bancorp, Inc. (1992 to 1995)
Donald G. Harris 66 1986
President and Treasurer, Harris Development Corp.
(1994 to Present)
George D. Martin 51 1998
Member, R.R. Dawson Bridge Co., LLC (1970 to Present);
President, R.R. Dawson Realty, Inc. (1980 to Present);
Member, Dabney Group, LLC (1995 to Present);
and Chairman of the Board, The Progressive Bank, N.A.
(1987 to Present)
Richard F. Welp 57 1998
Southwest Region Manager, Land O'Lakes, Inc.
(1981 to Present)
<PAGE> 3
CLASS II
--------
(Continuing Directors with Term to Expire 2000)
Ben L. Cundiff 50 1998
Chairman, Trigg County Farmers Bank (1991 to Present); and
CEO, Trigg County Farmers Bank (1991 to August 1998)
Susanne R. Emge 57 1985
Executive Director, St. Mary's Medical Center
Foundation of Evansville, Inc. (February 1997 to Present);
Senior Vice President - Community Relations and Trust
Manager, The National City Bank of Evansville
(1996 to February 1997); and Vice President for
Corporate and Community Services,
Deaconess Hospital, Inc. (1990 to 1995)
Robert A. Keil 55 1993
President of the Corporation (1993 to Present)
Laurence R. Steenberg 60 1985
President, BST Incorporated (Oil Production);
CEO, Service Telecom Corporation (October 1998 to Present);
President, Lot Resources (1996 to Present);
Director, J. H. Rudolph & Co., Inc. (1996 to Present);
Part Owner, World Connection Services, LLC,
(Internet services provider) (1994 to 1998),
Manager, World Connection Services, LLC,
(Internet services provider) (1994 to March 1998); and
Assistant Professor of Management, University of Evansville
(1989 to May 1997)
<PAGE> 4
CLASS III
---------
(Continuing Directors with Term to Expire 2001)
Dr. H. Ray Hoops 59 1996
President, University of Southern Indiana (1994 to Present);
Director, The National City Bank of Evansville (1993 to 1996);
Director, NCBE Leasing Corp. (1994 to Present); and
Vice Chancellor for Academic Affairs, University of
Mississippi, (1988-1994)
John D. Lippert 65 1985
Retired; Chairman of the Board and Chief Executive Officer
of the Corporation (1993 to December 1997)
Ronald G. Reherman 63 1985
Chairman of the Board, President and Chief Executive
Officer, SIGCORP, Inc. (Gas and Electric Public Utility
Holding Company) (1996 to Present); Chairman of the Board,
Southern Indiana Gas and Electric Company (SIGECO)
(Public Utility) (1992 to Present); and President and
Chief Executive Officer, SIGECO (1990 to September 1997)
Robert D. Vance 58 1998
Interim Chairman of the Board and Interim Chief Executive
Officer of the Corporation (February 1999 to Present);
Senior Vice President, National City Bancshares, Inc.
(August 1998 to February 1999); and Chairman, Community
First Financial, Inc. (1987 to August 1998)
</TABLE>
<PAGE> 5
COMMITTEES OF THE BOARD OF DIRECTORS
During 1998 the Board of Directors met fifteen 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.
The Corporation has standing Compensation and Audit Committees, but does not
have a nominating committee. 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.
The Audit Committee is currently composed of Ronald G. Reherman,
Chairperson; Susanne R. Emge; Donald G. Harris; H. Ray Hoops; Laurence R.
Steenberg, and Richard F. Welp. During 1998 the Audit Committee met four
times.
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 who are not employees of the Corporation or its
other subsidiaries receive an annual retainer of $8,000 plus $200 for each
Board of Directors' meeting attended and $150 for each committee meeting
attended. In January 1999 the Board of Directors approved an increase in
fees to $500 for each Board of Directors' meeting attended, and $250 for
each committee meeting attended. The annual retainer did not change.
Directors who are corporate or subsidiary employees receive no separate
compensation for Board service.
<PAGE> 6
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation for the Chief Executive
Officer of the Corporation and the Corporation's executive officers whose
compensation exceeded $100,000 for the year ended December 31, 1998,
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>
Michael F. Elliott 1998 $281,300 $18,008 47,249(4) $16,480(5)
Chairman of the Board and 1997 215,929 34,650 22,049 18,397(5)
Chief Executive Officer (3) 1996 165,000 31,500 11,575 22,500(5)
Robert A. Keil 1998 201,650 35,658 26,249 16,480(5,6)
President 1997 169,800 30,450 16,536 18,397(5)
1996 145,000 26,880 11,575 22,500(5)
Curtis D. Ritterling 1998 163,333 0 26,249 0
Executive Vice-President, 1997 25,095 0 5,511 0
Assistant Secretary and 1996 0 0 0 0
Assistant Treasurer
<FN>
<F1> Amounts shown represent amounts paid under the Management Incentive
Compensation Plan.
<F2> Options granted have been adjusted for stock dividends.
<F3> Mr. Elliott resigned his position with the Corporation effective
February 16, 1999.
<F4> Options were forfeited effective February 16, 1999.
<F5> Amounts shown represent amounts contributed to the profit sharing plan
and cash balance plan provided for all employees who complete one
year of service.
<F6> Does not include amount accrued during 1998 under Mr. Keil's deferred
excess benefit agreement because such amount represents the benefit
that would have been paid to him under the Corporation's pension plan
if the plan had not been terminated. See "Compensation Plans."
</FN>
</TABLE>
<PAGE> 7
1998 Stock Option Grant Table
The following table sets forth the stock options granted to the Named
Executive Officers during 1998 under the Corporation's Incentive Stock
Option Plan.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price (2) Expiration Grant Date
Name Granted (1) in 1998 Per Share Date Present Value (3)
---- ----------- ---------- --------- ---------- -----------------
<S> <C> <C> <C> <C> <C>
Michael F. Elliott 47,249(4) 27.4% $35.62 10/21/2008 $546,700
Robert A. Keil 26,249 15.2% $35.62 10/21/2008 303,700
Curtis D. Ritterling 26,249 15.2% $35.62 10/21/2008 303,700
<FN>
<F1> Options granted in 1998 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.
<F2> Exercise price is the fair market value on the date of grant, adjusted
for stock dividends.
<F3> These values were established using the Black Scholes stock option
valuation model, modified to include dividends. Assumptions used to
calculate the Grant Date Present Value for options granted during 1998
were as follows:
(a) Expected Volatility - the variance in the percent change in
stock price during the 20-month period immediately preceding
each grant, which was 25.25%.
(b) Risk Free Rate - the average monthly rate for 10-year
U.S.Treasury zero-coupon obligations during the month of grant
as published in the Wall Street Journal, which was 4.95%.
(c) Dividend Yield - the yield calculated by dividing the
annualized dividend rate of the Corporation's stock in the
amount of $0.80 per share by the fair market value of the stock
on the date of grant, which resulted in an assumed dividend
yield of 2.14%.
(d) Time of Exercise - the maximum exercise period for each grant at
the time of the grant, which was 10 years.
<F4> Options were forfeited effective February 16, 1999.
</FN>
</TABLE>
<PAGE> 8
1998 Stock Option Exercises and Year-End Value Table
The following table sets forth the number and value of all unexercised stock
options held by the Named Executive Officers at year end.
<TABLE>
<CAPTION>
Value ($) of
Number (#) of Unexercised
Unexercised "in-the-money"
Options - Options -
12/31/98 12/31/98 (1)
------------- --------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized ($) Unexercisable Unexercisable
---- --------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Michael F. Elliott 0 0 70,088/47,249(2) 846,260/79,896
Robert A. Keil 0 0 64,575/26,249 846,260/44,380
Curtis D. Ritterling 0 0 5,511/26,249 0/44,380
<FN>
<F1> Value is calculated based on the closing market price of the common
stock on December 31, 1998 ($37.31), less the applicable option
exercise price.
<F2> Options were forfeited effective February 16, 1999.
</FN>
</TABLE>
<PAGE> 9
Compensation Plans
Termination Benefits Agreements
- -------------------------------
During 1998 the Corporation entered into a Termination Benefits Agreement
with each of Messrs. Elliott, Keil, and Ritterling (the "Covered Named
Executive Officers") and another senior officer of the Corporation. The
purpose of the agreements is to encourage them to remain with the
Corporation by assuring them of certain benefits in the event of a "Change
in Control" of the Corporation.
The Termination Benefits Agreements provide for payments to the Covered
Named Executive Officers upon the occurrence of certain events. Each
Termination Benefits Agreement has a term of three years and is
automatically extended annually for an additional one-year period unless
notice is given by the Corporation or the Covered Named Executive Officer.
The Termination Benefits Agreements are designed to protect the Covered
Named Executive Officer against termination of his employment following a
"Change in Control" of the Corporation. For purposes of the Termination
Benefits Agreement, a "Change in Control" is broadly defined to include,
among other things, the acquisition by a person or group of persons of 25%
or more of the combined voting power of the stock of the Corporation, the
replacement of a majority of the current Board of Directors, or the approval
by the shareholders of the Corporation of a merger, consolidation or
reorganization of the Corporation unless more than 60% of the outstanding
share of the Corporation resulting from such transaction are owned by
persons who were shareholders of the Corporation prior to such transaction.
Following a "Change in Control," the Covered Named Executive Officer is
entitled to the benefits provided by the Termination Benefits Agreement if,
after a "Change in Control," he terminates his employment with the
Corporation in response to certain actions by the Corporation which include,
among other things, a substantial reduction in his duties or
responsibilities, a reduction in the level of salary payable to him, the
failure by the Corporation to continue to provide him with benefits
substantially similar to those previously provided to him, the required
relocation of the Covered Named Executive Officer, or the breach by the
Corporation of any of the provisions of the Termination Benefits Agreement.
Upon termination of employment, a Covered Named Executive Officer who is
entitled to the benefits payable under the Termination Benefits Agreement
shall receive within 30 days following the termination all earned but unpaid
salary, bonus, and incentive payouts through the date of his termination.
In addition, he shall be entitled to a lump-sum payment of an amount equal
to 2.9 times the Covered Named Executive Officer's average annual
compensation paid by the Corporation for the past five years, reduced by the
amount of any "excess parachute payment" within the meaning of Section 2806
of the Internal Revenue Code of 1986, as amended (the "Code").
Pension Plan
- ------------
The Corporation maintained a qualified defined benefit pension plan covering
the Corporation and all subsidiaries, based on remuneration that is covered
under the plan and years of service.
Each employee who had completed one year of eligible service was an eligible
participant under the plan. The plan generally provided 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 provided for early retirement at age 55 with
reduced benefits or normal retirement with full benefits starting at age 60.
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.
The plan was curtailed effective December 31, 1997. Employees who
participated in the plan became fully vested at December 31, 1997. The plan
was terminated on October 1, 1998, and distributed to participants on April
15, 1999.
Covered compensation for Messrs. Elliott and Keil, as of the end of the last
calendar year, was limited by law and totaled $160,000 each; and their years
of service were four years and thirty-three years, respectively. Mr.
Ritterling did not become eligible to participate in the plan prior to its
termination.
<PAGE> 10
Profit Sharing Plan
- -------------------
The Corporation maintains a savings and profit sharing plan ("Profit Sharing
Plan") for substantially all full-time employees who have completed one year
of service. Employees may voluntarily contribute to the plan. The
Corporation's contributions to the plan, which is subject to the discretion
of the Board of Directors, cannot exceed 7% of the Corporation's net income
before income taxes.
Cash Balance Plan
- -----------------
The Corporation has a cash balance plan for employees of the Corporation and
its subsidiaries. The plan is a type of defined benefit plan intended to
qualify under section 401(a) of the Code under which participants are
credited with amounts based on annual compensation and interest. Pay-based
credits are equal to 5% of compensation, and interest is based on the annual
rate of interest on 30-year Treasury securities. Compensation generally
includes all W-2 wages plus certain pre-tax deferrals to other plans of the
Corporation up to $160,000, as indexed for cost of living increases. The
normal form of pension payment is a life annuity. For a married
participant, the normal payment is in the form of a qualified joint and
survivor annuity. 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 benefits.
Based on current compensation levels, the estimated annual benefits payable
at normal retirement age for Messrs. Keil and Ritterling are $9,000 and
$30,000, respectively. Mr. Elliott is entitled to a lump sum benefit of
$8,000, computed on the basis of his termination of employment, effective
February 16, 1999.
Supplemental Retirement Benefit Agreement
- -----------------------------------------
The Corporation is a party to a deferred excess benefit agreement with Mr.
Keil. The agreement is intended to compensate Mr. Keil for benefits that
were not available to him under the Corporation's pension plan because of
certain legal limits imposed on the plan and the early termination of the
plan. The agreement calls for a benefit payable in four equal annual
installments upon termination of employment equivalent to a benefit that
would have been paid to Mr. Keil under the pension plan if the plan had not
been terminated and without regard to any legal limitations imposed on the
plan, reduced by the amount of the lump sum benefit actually paid to Mr.
Keil upon termination of the plan. The maximum benefit may not exceed the
amount that would be paid to Mr. Keil under the agreement upon his
termination of employment at age 60.
Management Incentive Compensation Plan
- --------------------------------------
The Board of Directors approved the Management Incentive Compensation Plan
("Incentive Plan") for implementation in 1994. The purpose of the Incentive
Plan is to help improve overall Corporate performance by providing
executives with variable award opportunities in return for outstanding
measured performance. The Incentive Plan provides incentive opportunities
based on the achievement of a combination of corporate, subsidiary, and
individual executive goals. Specific measurable performance goals are
established at the beginning of each year and approved by the Compensation
Committee. At the end of the year, actual performance relative to the
predetermined goals determines earned incentive awards. The Corporation must
exceed a threshold net income percentage before any incentive payments are
provided.
Incentive Stock 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 572,574 shares, subject to antidilution adjustments. The Option
Plan will terminate no later than October 18, 2005. At December 31, 1998,
options to purchase an aggregate of 555,262 shares had been granted and were
outstanding under the Option Plan.
<PAGE> 11
Report of the Compensation Committee
Compensation Committee Structure and Philosophy
- -----------------------------------------------
The Compensation Committee is currently composed of the following: Laurence
R. Steenberg, Chairman; Susanne R. Emge; Donald G. Harris; H. Ray Hoops;
Ronald G. Reherman; and Richard F. Welp.
The Committee met ten times during the year, among other things, to
establish the compensation of the Corporation's executive officers.
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.
Generally, compensation takes several forms, including base salary, cash
bonuses awarded under the Incentive Plan, stock options awarded under the
Option Plan, and Corporate contributions to the Profit Sharing Plan and Cash
Balance Plan.
Base Salary
- -----------
During 1998 the Compensation Committee retained Harding Shymanski & Co., PC
to evaluate the compensation and benefits paid to the Corporation's
executive officers and its subsidiaries' executive officers. The evaluation
included a comparison of compensation paid by the Corporation with
compensation paid by comparable regional financial institutions as published
in established compensation surveys. Based on (i) this evaluation, (ii) the
Committee's assessment of the Corporation's performance relative to its
peers, and (iii) and the executive officers' performance, the Compensation
Committee elected to raise 1998 base salaries for executive officers,
including the Named Executive Officers by an average of 22%.
Incentive Compensation
- ----------------------
During 1997 the Corporation exceeded its net income target, and many
executive officers satisfied their personal performance goals of asset
quality, expense control, and growth of the Corporation; thus the Committee
approved cash bonuses under the Incentive Plan in 1998. Further, based on
the purpose of the Option Plan (encourage a proprietary interest through
stock ownership), past performance of the recipient, and the ability of the
recipient to affect the future of the Corporation, the Committee awarded an
aggregate of 172,725 stock options, including awards to Messrs. Elliott,
Keil, and Ritterling, in the amounts indicated in the 1998 Stock Option
Grant Table.
<PAGE> 12
CEO Compensation
- ----------------
Michael F. Elliott's base salary for 1998 was determined by the Compensation
Committee in accordance with the procedures described above. His base
salary for 1998 was increased 30% to $281,300. Mr. Elliott also
participated in the Incentive Plan until he was named Vice Chairman on June
18, 1997, and received options to purchase 47,249 shares under the Option
Plan. Mr. Elliott received an additional $16,480 in compensation as set
forth in "Compensation of Executive Officers - Summary Compensation Table"
pursuant to the Profit Sharing Plan and Cash Balance Plan.
This report on compensation is submitted by the Compensation Committee:
Laurence R. Steenberg, Chairperson; Susanne R. Emge; Donald G. Harris; H.
Ray Hoops; Ronald G. Reherman, and Richard F. Welp.
Compensation Committee Interlocks and Insider Participation in
- --------------------------------------------------------------
Compensation Decisions
.----------------------
No member of the Compensation Committee 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, except that Mr. Lippert, who served as a member of the
Compensation Committee during 1998, is a former officer of the Corporation.
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 was invested December 31, 1993, and all dividends were
reinvested. Fiscal year ending December 31 data is used. The shareholder
return shown on the graph is not necessarily indicative of future
performance.
<PAGE> 13
[Graph]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NCBE 100.00 128.03 140.94 186.08 304.41 221.97
NASDAQ BANKS 100.00 99.64 148.38 195.91 328.02 324.90
NASDAQ STOCK MARKET 100.00 97.75 138.26 170.01 208.58 293.21
</TABLE>
TRANSACTIONS WITH MANAGEMENT
Directors and officers of the Corporation and its subsidiaries and their
associates were customers of, and have had transactions with, the
Corporation's subsidiary banks in the ordinary course of business during
1998. 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, officers, 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, as amended (the
"Exchange Act"), requires the Corporation's executive 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. Executive 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 1998 all Section 16(a) filing requirements
applicable to its executive officers, directors, and greater than 10%
beneficial owners were complied with, except that one report covering one
transaction was filed late by Richard F. Welp, and one report covering one
transaction was filed late by Robert A. Keil.
<PAGE> 14
PROPOSAL 2: ADOPTION OF THE CORPORATION'S 1999
STOCK OPTION AND INCENTIVE PLAN
On April 5, 1999, the Board of Directors of the Corporation unanimously
adopted the 1999 Stock Option and Incentive Plan (the "Plan"), and directed
that the Plan be submitted to the shareholders for consideration at the
Annual Meeting. The following is a summary of the principal features of the
Plan. The summary is qualified in its entirety by reference to the complete
text of the Plan as set forth as Exhibit A to this Proxy Statement.
Shareholders are urged to read the actual text of the Plan.
If approved, the Plan will replace the Corporation's current Option Plan.
As of December 31, 1998, the Corporation had only 17,312 shares of common
stock available for issuance under the current Option Plan. If the Plan is
approved, no further awards will be made under the current Option Plan.
The Board of Directors recommends a vote FOR adoption of the Plan.
Purpose
- -------
The purpose of the Plan is to promote the long-term interests of the
Corporation and its shareholders by attracting and retaining directors,
officers and key employees of the Corporation. Further, the Corporation
believes that directors and employees who own shares of the Corporation's
common stock will have a closer identification with the Corporation and
greater motivation to work for the Corporation's success because, as
shareholders, they will participate in the Corporation's growth and
earnings.
Administration of the Plan
- --------------------------
The Plan will be administered by a Committee of three or more members of the
Corporation's Board of Directors (the "Committee"). Subject to the terms of
the Plan, the Committee has the sole discretion to: (a) select award
recipients, grant awards, and provide the terms and conditions of all awards
(which need not be identical among recipients); (b) interpret the Plan and
awards; and (c) adopt rules and procedures for the administration,
interpretation, and operation of the Plan.
Eligible Persons
- ----------------
Recipients of incentive awards under the Plan must be directors or employees
of the Corporation or its subsidiaries, as determined by the Committee. The
Corporation presently has approximately 1,059 directors and employees who
fall within the category of people who may be considered for incentive
awards under the Plan.
Shares Subject to the Plan
- --------------------------
The Plan permits the granting of awards of stock options and performance
shares. The total number of shares of common stock that may be issued under
the Plan is 750,000, subject to adjustment as provided in the Plan. The
source of shares may be authorized and unissued shares or shares acquired by
the Corporation and held as treasury shares.
The number of shares covered by an award under the Plan reduces the number
of shares available for future awards under the Plan. However, if any award
expires, terminates, or is surrendered for cancellation without having been
exercised in full, or if shares are withheld by the Corporation to pay the
exercise price of options, the number of such shares are added back to the
number of remaining available shares under the Plan.
The total number of shares of common stock that may be granted to any
individual during any calendar year under all forms of awards may not exceed
75,000 shares.
<PAGE> 15
Stock Options
- -------------
With respect to the stock options under the Plan that are intended to
qualify as "incentive stock options" under section 422 of the Code, the
option price will be at least 100% (or, in the case of a holder of 10% or
more of the Corporation's voting stock, 110%) of the mean between the
highest and lowest sales price for one share on the day before the grant of
the stock option (the "Market Value"). The aggregate Market Value
(determined on the date of grant) of the shares subject to incentive stock
options that become exercisable for the first time by a grantee in any
calendar year may not exceed $100,000.
The Committee will establish the exercise price of options that do not
qualify as incentive stock options ("non-qualified stock options") at the
time the options are granted; however, the exercise price may not be less
than 85% of the Market Value on the date of the grant.
No incentive stock option granted under the Plan may be exercised more than
ten years (or, in the case of a holder of 10% of the Corporation's voting
stock, five years) from the date it is granted. The Committee may provide
for a shorter period. Non-qualified stock options may be exercised during
such period as the Committee determines at the time of grant.
Stock options granted under the Plan become exercisable in one or more
installments in the manner and at the time or times specified by the
Committee at the time of the grant. Generally, and unless provided
otherwise in an award, if a grantee's employment or service with the
Corporation or a subsidiary is terminated for any reason other than death,
disability, or involuntary termination for cause, such grantee's options
expire three months after termination. Unless the terms of an award provide
otherwise, in the event of involuntary termination for cause, the grantee's
options will expire on the date of termination.
The exercise price of each option must be paid in full at the time of
exercise. The Committee may permit payment through the tender of shares of
common stock already owned by the participant, withholding of shares
issuable under the award or by any other means which the Committee
determines to be consistent with the Plan's purpose.
Adjustments in Awards
- ---------------------
In the event of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or any
change in the corporate structure of the Corporation affecting shares of
common stock, the Committee may adjust the number and class of shares that
may be delivered under the Plan, and the number and class of shares subject
to outstanding awards, in such manner as the Committee (in its sole
discretion) shall determine to be appropriate.
<PAGE> 16
PROPOSAL 3: APPOINTMENT OF AUDITORS
The appointment of PricewaterhouseCoopers, LLP ("PricewaterhouseCoopers") as
auditors for the Corporation during 1999 will be submitted to the meeting in
order to permit shareholders to express their approval or disapproval. In
the event of a negative vote, a selection of other auditors will be made by
the Board of Directors.
On May 20, 1998, the Corporation engaged the accounting firm of
PricewaterhouseCoopers as auditors for 1998. McGladrey & Pullen, LLP
("McGladrey") had served as the Corporation's auditors for 1997 and earlier
years. The change in auditors occurred as a result of a formal proposal
process involving three accounting firms, including PricewaterhouseCoopers. The
decision was approved by the Board of Directors. During the period from
January 1, 1997 through May 20, 1998, there were no disagreements with
McGladrey on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, or any reportable events.
McGladrey's report on the consolidated financial statements of the Corporation
for the years ended December 31, 1997, contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope, or accounting principles.
The Board of Directors recommends a vote FOR the appointment of
PricewaterhouseCoopers, LLP.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The date by which shareholder proposals must be received by the Corporation for
inclusion in the proxy materials relating to the 2000 annual meeting of
shareholders is December 23, 1999. The Corporation's By-Laws provide that
shareholders are required to give advance notice to the Corporation of any
nomination by a shareholder of candidates for election as directors and of any
business to be brought by a shareholder before a shareholders' meeting. With
respect to annual meetings, the By-Laws generally provide that a shareholder of
record entitled to vote at such meeting may nominate one or more persons for
election as director or directors or properly bring business before such
meeting only if the shareholder gives written notice thereof to the Secretary
of the Corporation not less than 90 days prior to the annual meeting. The
notice must contain specified information about each nominee or the proposed
business and the shareholder making the nomination or proposal. These advance
notice and eligibility provision are set forth in Article II, Section 9, and
Article III, Section 8 of the Corporation's By-Laws, a copy of which is
available upon request. Such requests and any shareholder proposals should be
sent to Stephen C. Byelick, Jr., Secretary, National City Bancshares, Inc., 227
Main Street, P. O. Box 868, Evansville, Indiana 47705-0868.
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.
<PAGE> 17
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 1998 annual report on
Form 10-K filed with the Securities and Exchange Commission is available
without charge to shareholders upon request (except that a reasonable fee
will be charged for copies of exhibits, if requested). Address all
requests, in writing, for this document to Stephen C. Byelick, Jr.,
Secretary, National City Bancshares, Inc., 227 Main Street, P. O. Box 868,
Evansville, Indiana 47705-0868.
By Order of the Board of Directors,
/S/ STEPHEN C. BYELICK, JR.
STEPHEN C. BYELICK, JR.
Secretary
April 21, 1999
<PAGE> 18
EXHIBIT "A"
NATIONAL CITY BANCSHARES, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Company and its shareholders by providing a means for
attracting and retaining Employees and Directors who provide services to the
Company and its Affiliates.
2. Definitions. The following definitions are applicable to the
Plan:
"Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Company as such terms are defined in Code
Sections 424(e) and (f), respectively.
"Award" means the grant by the Committee of Incentive Stock
Options, Nonqualified Stock Options or any combination of the
foregoing, pursuant to the terms of the Plan.
"Award Agreement" means the written agreement setting forth the
terms and provisions applicable to an Award granted under the Plan.
"Board" means the Board of Directors of the Company.
"Cause" means, in connection with a Participant's Termination of
Service, theft or embezzlement from the Company or any Affiliate,
violation of a material term or condition of employment, disclosure of
confidential information of the Company or any Affiliate, conviction
of the Participant of a crime of moral turpitude, stealing of trade
secrets or intellectual property owned by the Company or any
Affiliate, any act by the Participant in competition with the Company
or any Affiliate, or any other act, activity or conduct of a
Participant which in the opinion of the Board is adverse to the best
interests of the Company or any Affiliate.
"Change in Control" means any one of the following events: (a)
any third person, including a "group" as defined in Section 13(d)(3)
of the Exchange Act after the date of the adoption of the Plan by the
Board, first becomes the beneficial owner of shares of the Company
with respect to which 25% or more of the total number of votes for the
election of the Board of Directors of the Company may be cast, (b) as
a result of, or in connection with, any cash tender offer, exchange
offer, merger or other business combination, sale of assets or
contested election, or combination of the foregoing, the persons who
were Directors of the Company shall cease to constitute a majority of
the Board of the Company or (c) the shareholders of the Company shall
approve an agreement providing either for a transaction in which the
Company will cease to be an independent publicly owned entity or for a
sale or other disposition of all or substantially all the assets of
the Company; provided, however, that the occurrence of any of the
foregoing events shall not be deemed a Change in Control if, prior to
occurrence, a resolution specifically approving the occurrence shall
have been adopted by at least a majority of the Board.
"Code" means the Internal Revenue Code of 1986, as amended, and
interpretive rules and regulations thereunder.
"Committee" means the Committee appointed by the Board to
administer the Plan.
"Company" means National City Bancshares, Inc., an Indiana
corporation.
"Date of Grant" means the date on which an Award is granted, as
determined by the Committee; provided, however, that in the absence of
a Committee determination, the date on which the Committee adopts a
resolution granting the Award.
<PAGE> A-1
"Director" means any individual who is a member of the Board
regardless of whether the Director is an Employee of the Company or
any Affiliate.
"Disability" means total and permanent disability as determined
by the Committee pursuant to Code Section 22(e)(3).
"Employee" means any person employed by the Company or an
Affiliate, or expected to be employed by the Company or Affiliate,
provided the individual becomes actually so employed.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Price" means the price per Share at which the Shares
subject to an Option may be purchased upon exercise of the Option.
"Incentive Stock Option" means an Option to purchase Shares
which is intended to qualify under Code Section 422.
"Market Value" as of a specified date means the mean between the
highest and the lowest sales prices as reported by the Nasdaq National
Market for one Share for the date immediately preceding the date as of
which Market Value is being determined (or, if there were fewer than
two sales transactions reported on such date, on the last preceding
date on which there were two or more transactions reported), or if the
Shares are not listed for trading on the Nasdaq National Market, the
mean between the highest bid and the lowest asked quotations of one
Share for the date immediately preceding the date as of which Market
Value is being determined (or, if there were no reported bid and asked
quotations on such date, on the last preceding date) as reported by
NASDAQ or any similar quotation system then in use, or, if no such
quotations are available, the fair market value of one Share as the
Committee shall determine.
"Nonqualified Stock Option" means an Option to purchase Shares
which is not intended to qualify under Code Section 422.
"Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
"Participant" means an individual selected by the Committee to
receive an Award.
"Plan" means the National City Bancshares, Inc., 1999 Stock
Option and Incentive Plan.
"Reorganization" means the liquidation or dissolution of the
Company or any merger, consolidation or combination of the Company
(other than a merger, consolidation or combination in which the
Company is the continuing entity and which does not result in the
outstanding Shares being converted into or exchanged for different
securities, cash or other property or any combination thereof).
"Retirement" means, with respect to an Employee, Termination of
Service with the Company or any Affiliate after completing ten (10)
years of service and attaining age sixty (60).
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means the shares of common stock, no par value, of the
Company.
"Termination of Service" means, in the case of an Employee, the
termination of the employment relationship between the Employee and
the Company and all Affiliates; and in the case of an individual that
is not an Employee, the termination of the service relationship
between the individual and the Company and all Affiliates.
<PAGE> A-2
3. Administration. The Plan shall be administered by a Committee,
which shall consist of three or more members of the Board. The members of
the Committee shall be appointed by the Board. A majority of the Committee
shall constitute a quorum, and the 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 without a meeting, shall be acts of the
Committee.
Except as expressly limited by the Plan, the Committee shall have
all powers and discretion necessary or appropriate to administer the Plan
and control its operation, including, but not limited to, the power to (a)
select Participants, grant Awards and provide the terms and conditions of
all Awards (which need not be identical among Participants); (b) interpret
the Plan and Awards; and, (c) adopt rules and procedures for the
administration, interpretation and operation of the Plan. All
determinations and decisions made by the Committee pursuant to the
provisions of the Plan shall be final, conclusive, and binding on all
persons, and shall be given the maximum deference permitted by law.
4. Participants. The Committee, in its sole discretion, may select
from time to time Participants in the Plan from those Employees and
Directors who, in the opinion of the Committee, have the capacity for
contributing in a substantial measure to the successful performance of the
Company or its Affiliates; provided, however, Incentive Stock Options may be
granted only to Employees of the Company or its Affiliates.
5. Substitute Options. In the event the Company or an Affiliate
consummates a transaction described in Code Section 424(a), persons who
become Employees or Directors on account of such transaction may be granted
Options in substitution for Options granted by the former employer. The
Committee, in its sole discretion and consistent with Code Section 424(a)
shall determine the Exercise Price of the substitute Options.
6. Award Agreement. Each Award shall be evidenced by an Award
Agreement containing the terms and the conditions of the Award, as
determined by the Committee, in its sole discretion. With respect to Awards
of Options, in addition to any other terms and conditions the Committee
establishes, the Award Agreement shall specify the Exercise Price, the time
or times at which an Option will vest or become exercisable, the term of the
Option, the number of Shares to which the Option pertains, any conditions to
exercise of the Option, and whether the Option is intended to be an
Incentive Stock Option or a Nonqualified Stock Option.
7. Shares Subject to Plan, Limitations on Grants and Exercise Price.
Subject to adjustment by the operation of Section 11 of the Plan:
(a) The maximum number of Shares which may be issued under
Awards under the Plan shall not exceed 750,000 Shares. The Shares may
be either authorized and unissued Shares or Shares acquired by the
Company and held as treasury Shares. Shares that are withheld to
satisfy payment of the Exercise Price or any tax withholding
obligation and any Shares subject to an Award which expires,
terminates or is surrendered for cancellation may be subject to new
Awards under the Plan.
(b) The number of Shares which may be issued hereunder to any
Employee during any calendar year under all forms of Awards shall not
exceed 75,000 Shares.
(c) The Exercise Price for Shares awarded under Incentive Stock
Options may not be less than the Market Value of the Shares on the
Date of Grant; provided, however, the Exercise Price may not be less
than 110% of Market Value with respect to Incentive Stock Options
granted to any Employee who, together with persons whose stock
ownership is attributed to the Employee pursuant to Code Section
424(d), owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any of its
Affiliates. The Exercise Price for Shares awarded under Nonqualified
Stock Options may not be less than 85% of the Market Value of the
Shares on the Date of Grant.
<PAGE> A-3
8. Term of Options. Unless otherwise provided in the Award
Agreement, Options shall expire on, and may not be exercised after, the
earliest to occur of the following events:
(a) the tenth anniversary of the Date of Grant;
(b) three (3) months after a Participant's Termination of
Service by reason of Retirement, except that any Nonqualified Stock
Options shall expire, and may not be exercised after, five (5) years
after a Participant's Termination of Service by reason of Retirement;
(c) one (1) year after a Participant's Termination of Service
by reason of Disability;
(d) one (1) year after a Participant's death while employed or
within three (3) months after Termination of Service by reason of
Retirement or Disability;
(e) one (1) year after a Participant's death within three (3)
months after Termination of Service for reason other than Retirement
or Disability; provided, however, an Option may be exercised only to
the extent exercisable by the Participant immediately prior to the
Participant's death;
(f) three (3) months after a Participant's voluntary
Termination of Service; provided, however, an Option may be exercised
only to the extent exercisable by the Participant immediately prior to
the Participant's Termination of Service;
(g) three (3) months after involuntary Termination of Service
for reason other than Cause; and
(h) the date of involuntary Termination of Service for Cause.
9. Method of Exercise of Options. To exercise an Option under the
Plan, the Participant must give written notice to the Company (which shall
specify the number of Shares with respect to which the Participant elects to
exercise the Option) together with full payment of the Exercise Price. The
date of exercise shall be the date on which the notice and payment are
received by the Company. Payment of the Exercise Price shall be made in
cash (including check, bank draft or money order), or with the consent of
the Committee, in whole or in part through the surrender of shares of common
stock the Participant has owned for more than six months.
10. Incentive Stock Options - Additional Provisions. Any provisions
of the Plan to the contrary notwithstanding, Incentive Stock Options shall
be subject to the following:
(a) The aggregate Market Value (determined on the Date of
Grant) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Employee during any calendar
year (under all plans of the Company and its Affiliates) shall not
exceed $100,000.
(b) No Incentive Stock Option may be exercised more than three
(3) months after the Participant's Termination of Service for any
reason other than Disability or death, unless (a) the Participant dies
during such three-month period, and (b) the Award Agreement or the
Committee permits later exercise.
(c) No Incentive Stock Option may be exercised after the
expiration of ten (10) years from the Date of Grant; provided,
however, that if the Option is granted to an Employee who, together
with persons whose stock ownership is attributed to the Employee
pursuant to Code section 424(d), owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the
Company or any of its Affiliates, the Option may not be exercised
after the expiration of five (5) years from the Date of Grant.
<PAGE> A-4
Unless otherwise provided by the Committee in the Award Agreement, to the
extent that an Option does not qualify as an Incentive Stock Option, because
of its provisions, the time and manner of its exercise or otherwise, the
Option or portion thereof which does not so qualify, shall constitute a
separate Nonqualified Stock Option.
11. Adjustments Upon Changes in Capitalization. In the event of any
change in the outstanding Shares subsequent to the effective date of the
Plan by reason of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or any
change in the corporate structure or Shares of the Company, the maximum
aggregate number and class of shares as to which Awards may be granted under
the Plan and the number and class of shares and Exercise Price of Options
with respect to Awards previously granted under the Plan may be adjusted by
the Committee, in its sole discretion, and the Committee's determination
shall be conclusive.
12. Effect of Reorganization. Except as otherwise specifically
provided in the Award Agreement, Awards will be affected by a Reorganization
as follows:
(a) If the Reorganization is a dissolution or liquidation of
the Company, then each outstanding Option shall terminate, but each
Participant to whom the Option was granted shall have the right,
immediately prior to such dissolution or liquidation to exercise his
Option in full, notwithstanding the provisions of Section 9, and the
Company shall notify each Participant of the Participant's right
within a reasonable period of time prior to any dissolution or
liquidation.
(b) If the Reorganization is a merger or consolidation, other
than a Change in Control subject to Section 13 of this Plan, upon the
effective date of the Reorganization, each Optionee shall be entitled,
upon exercise of his Option in accordance with all of the terms and
conditions of the Plan, to receive in lieu of Shares, shares of stock
or other securities or consideration as the holders of Shares shall be
entitled to receive pursuant to the terms of the Reorganization.
The adjustments contained in this Section and the manner of
application of its provisions shall be determined solely by the Committee.
13. Effect of Change of Control. Upon a Change in Control, unless
the Committee shall have otherwise provided in the Award Agreement, all
Options theretofore granted and not fully exercisable shall become
exercisable in full upon the happening of the event and shall remain
exercisable in accordance with their terms; provided, however, no Option
which has previously been terminated shall become exercisable.
14. Assignments and Transfers. Except as expressly authorized by the
Committee in the Award Agreement, Awards may not be assigned, encumbered or
transferred otherwise than by will or the laws of descent and distribution,
and during the Participant's lifetime, may be exercisable only by the
Participant.
15. Participant Rights Limited. No Employee, Director or other
person shall have a right to be selected as a Participant nor, having been
so selected, to be selected again as a Participant, and no Employee,
Director or other person shall have any claim or right to be granted an
Award under the Plan or under any other incentive or similar plan of the
Company or any Affiliate. Neither the Plan nor any action taken pursuant to
the Plan shall be construed as giving any person any right to be retained in
the employ or service of the Company or any Affiliate.
16. Shareholder Rights. No Participant or other person shall have
any of the rights or privileges of a shareholder of the Company with respect
to any Shares issuable pursuant to an Award unless and until certificates
representing the Shares shall have been issued, recorded on the records of
the Company or its transfer agents or registrars, and delivered to the
Participant or other person entitled to the Shares.
<PAGE> A-5
17. Withholding Tax. Prior to the delivery of any Shares or cash
pursuant to an Award, the Company shall have the right and power to deduct
or withhold, or require the Participant to remit to the Company, an amount
sufficient to satisfy all applicable tax withholding requirements. The
Committee, in its sole discretion, and pursuant to such procedures as it may
establish from time to time, may permit a Participant to satisfy all or part
of the tax withholding obligations in connection with an Award by (a) having
the Company withhold otherwise deliverable Shares, or (b) delivering to the
Company Shares already owned for more than six months having a Market Value
equal to the amount required to be withheld. The amount of the withholding
requirement shall be the applicable statutory minimum federal, state or
local income tax with respect to the Award on the date that the amount of
tax is to be withheld. For these purposes, the value of the Shares to be
withheld or delivered shall be equal to the Market Value as of the date that
the taxes are required to be withheld.
18. Settlement of Awards. The Company's obligation to deliver Shares
with respect to an Award shall be subject to such conditions, restrictions
and contingencies as the Company may establish, including but not limited
to, the receipt of a representation as to the investment intention of the
person to whom Shares are to be delivered, in such form as the Company shall
determine to be necessary or advisable to comply with the provisions of the
Securities Act or any other applicable federal or state securities
legislation. It may be provided that any representation requirement shall
become inoperative upon a registration of the Shares or other action
eliminating the necessity of a representation under the Securities Act or
other securities legislation. The Company shall not be required to deliver
any Shares under the Plan prior to (a) the admission of the Shares to
listing on any stock exchange or system on which the Shares may then be
listed, and (b) the completion of any registration or other qualification of
the Shares under any state or federal law, rule or regulation, as the
Company shall determine to be necessary or advisable.
19. Termination, Amendment and Modification of Plan. The Board may
at any time terminate, and may at any time and from time to time and in any
respect amend or modify, the Plan; provided however, that to the extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act or
Code Section 422 (or any other applicable law or regulation, including
requirements of any stock exchange or quotation system on which the Shares
are listed or quoted) shareholder approval of any Plan amendment shall be
obtained in such a manner and to such a degree as is required by the
applicable law or regulation; and provided further, that no termination,
amendment or modification of the Plan shall in any manner affect any Award
theretofore granted pursuant to the Plan without the consent of the
Participant to whom the Award was granted or transferee of the Award.
20. Effective Date and Term of Plan. The Plan shall become effective
upon its adoption by the Board, subject to approval and ratification by the
shareholders of the Company at the next annual meeting of shareholders.
Awards may be granted prior to shareholder approval and ratification, but
shall become null and void if the Company's shareholders fail to approve and
ratify the Plan as provided in this Section. After approval by the
Company's shareholders, the Plan shall continue in effect for a term of ten
(10) years from the date of adoption by the Board of Directors unless sooner
terminated pursuant to Section 19 of the Plan.
21. Governing Law. The Plan and Award Agreements shall be construed
in accordance with and governed by the laws of the State of Indiana.
Adopted by the Board of Directors of
National City Bancshares, Inc.
as of April 5, 1999
Adopted by the Shareholders of
National City Bancshares, Inc.
as of ___________ __, 1999
<PAGE> A-6
PROXY THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
National City Bancshares, Inc. The undersigned hereby appoints Waller
227 Main Street, P.O. Box 868 S. Clements, Ole J. Olsen, Jr., Esq.,
Evansville, IN 47705-0868 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 March
22, 1999, at the Annual Meeting of Shareholders to be held on May 19, 1999,
or any adjournment thereof.
1. ELECTION OF DIRECTORS-CLASS I (term to expire 2002)
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the all nominees listed below
contrary below)
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.
Janice L. Beesley Donald G. Harris George D. Martin Richard F. Welp
2. To consider and act upon a proposal to adopt the National City
Bancshares, Inc. 1999 Stock Option and Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve the appointment of PricewaterhouseCoopers, LLP as the
Corporation's auditors for 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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.
(continued, and to be signed on the other side)
National City Bancshares, Inc.
c/o Corporate Trust Services
Mail Drop 10AT66-4129
38 Fountain Square Plaza
Cincinnati, OH 45263
fold and detach here
- --------------------------------------------------------------------------
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.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.
Dated:______________________, 1999
__________________________________
Signature
__________________________________
Signature, if held jointly
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.
