SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No.___)
Filed by the Registrant X
Filed by a Party other than the Registrant ___
Check the appropriate box:
___ Preliminary Proxy Statement
___ Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
X Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to <section> 240.14a-11(c) or <section>
240.14a-12
MID-WISCONSIN FINANCIAL SERVICES, INC.
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(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:
(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: ___________________________
<PAGE>
MID-WISCONSIN FINANCIAL SERVICES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_______________
The annual meeting of shareholders of Mid-Wisconsin Financial
Services, Inc. will be held at Skateway, 829 North Eighth Street, Medford,
Wisconsin, on April 22, 1997, at 5:00 p.m.,* for the following purposes:
1. To elect four Class II directors for terms which will expire at
the annual meeting of shareholders to be held in 2000;
2. To approve the appointment of Wipfli Ullrich Bertelson LLP as
independent auditors for the year ending December 31, 1997; and
3. To transact such other business as may properly come before the
meeting.
PLEASE PROMPTLY VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE.
*Registration will begin at 4:30 p.m. to allow the meeting to begin
promptly at 5:00 p.m.
March 28, 1997
BY ORDER OF THE BOARD OF
DIRECTORS
Ruth M. Zuleger
Secretary
____________________________
A PROXY CARD AND POSTAGE FREE ENVELOPE ARE ENCLOSED.
<PAGE>
PROXY STATEMENT
MID-WISCONSIN FINANCIAL SERVICES, INC.
132 WEST STATE STREET
MEDFORD, WISCONSIN 54451
MARCH 28, 1997
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Mid-
Wisconsin Financial Services, Inc. (the "Company") for use at the annual
meeting of shareholders to be held at 5:00 p.m., at Skateway, 829 North
Eighth Street, Medford, Wisconsin, on April 22, 1997, and at any
adjournment thereof (the "Annual Meeting").
Officers, directors and employees of the Company and its subsidiaries
may solicit proxies by telephone, facsimile, electronic mail or in person.
None of these persons will receive compensation, but will be reimbursed
for actual expenses incurred. Expenses in connection with the
solicitation of proxies, including the reasonable expenses of brokers,
fiduciaries and other nominees in forwarding proxy material, will be borne
by the Company.
VOTING OF PROXIES
Each holder of the Company's common stock is entitled to one vote in
person or by proxy for each share held of record on all matters to be
voted upon at the Annual Meeting. Only shareholders of record on March 3,
1997 are entitled to notice of and to vote at the Annual Meeting.
With respect to the election of directors, shareholders may vote in
favor of the nominees specified on the accompanying form of proxy or may
withhold their vote. Votes that are withheld will be excluded entirely
from the voting for directors and will have no effect. The nominees
receiving the largest number of votes will be elected as directors of the
Company.
On all matters other than the election of directors, shareholders may
vote in favor of a proposal, against a proposal or abstain from voting.
Abstentions on any matter presented to the Annual Meeting will be treated
as shares that are present and entitled to vote for purposes of
determining whether a quorum is present, but such abstentions shall be
treated as unvoted for purposes of determining whether the matter has been
approved by the shareholders. If the votes cast in favor of a proposal
(other than the election of directors) exceed the votes cast against the
proposal, the matter will be approved by the shareholders.
Brokers who hold shares of the Company's common stock in street name
for customers may have discretionary authority to vote on certain matters
when they have not received instructions from beneficial owners, but may
not have authority to vote the shares on other matters. As to matters for
which the broker cannot vote shares held in street name, the shares will
be recorded as a "broker non-vote". Shares reported as broker non-votes
will not be considered present and entitled to vote with respect to the
matter and will not be counted for purposes of determining whether a
quorum is present.
<PAGE>
A shareholder who executes the accompanying form of proxy may revoke
it at any time before it is voted by giving written notice to the
Secretary of the Company or oral notice to the presiding officer at the
Annual Meeting.
The persons named in the accompanying form of proxy, as members of the
Proxy Committee of the Board of Directors, will vote the shares subject to
each proxy. The proxy in the accompanying form will be voted as specified
by each shareholder, but if no specification is made, each proxy will be
voted:
(1) TO ELECT Messrs. Gene C. Knoll, Kurt D. Mertens, Fred J.
Schroeder, and John P. Selz to terms of office as Class II
directors which will expire at the annual meeting of shareholders
to be held in 2000 (see "Election of Directors");
(2) TO APPROVE the appointment of Wipfli Ullrich Bertelson LLP as the
Company's independent auditors for the year ending December 31,
1997 (see "Approval of Appointment of Auditors"); and
(3) IN THE BEST JUDGMENT of those named as proxies on the
accompanying form of proxy on any other matters to properly come
before the Annual Meeting, including approval of minutes of the
prior annual meeting, matters incident to the conduct of the
meeting and any adjournment thereof.
ELECTION OF DIRECTORS
The Company's articles of incorporation, as amended, provide that the
number of directors shall be determined by the Board of Directors pursuant
to the Company's bylaws and that directors shall be divided into three
classes to be as nearly equal in size as possible. The bylaws provide
that there shall be not less than nine nor more than eleven directors,
with the exact number to be set by the Board. One class of directors is
to be elected each year to serve a three-year term and any vacancy may be
filled by the Board until the next succeeding annual meeting of
shareholders. The Board has fixed the number of directors at eleven.
Directors may not continue to serve on the Board beyond the end of the
calendar quarter in which they attain age 65. As presently constituted,
the Board consists of four Class I and Class II directors and three Class
III directors.
At the Annual meeting, Messers. Gene C. Knoll, Kurt D. Mertens, Fred
J. Schroeder, and John P. Selz will be candidates for election as Class II
directors. Each of the nominees for director has consented to serve if
elected, but in case any of the nominees is not a candidate at the Annual
Meeting, it is the intention of the Proxy Committee to vote for such
substitute or substitutes as may be designated by the Board.
The following information is furnished with respect to the nominees
and all other directors:
<PAGE>
<TABLE>
<CAPTION>
CLASS AND YEAR YEAR FIRST
NAME, AGE, PRINCIPAL OCCUPATION OR IN WHICH TERM BECAME A
EMPLOYMENT AND OTHER AFFILIATIONS* WILL EXPIRE DIRECTOR
<S> <C> <C>
NOMINEES
GENE C. KNOLL, 43 Class II 1988
President and Chief Executive Officer of 2000
the Company<dagger> and President and
Chief Executive Officer of Mid-Wisconsin
Bank
KURT D. MERTENS, 41 Class II 1997
Secretary and Treasurer, Loos 2000
Machine Shop, Inc.
FRED J. SCHROEDER, 59 Class II 1986
Mayor of City of Medford; formerly 2000
Executive Vice President and
Trust Officer of Mid-Wisconsin Bank
JOHN P. SELZ, 62 Class II 1994
President, Selz Farms, Inc. 2000
CONTINUING DIRECTORS
JAMES N. DOUGHERTY, 59 Class I 1991
Veterinary Consultant, Miles Animal 1999
Health; previously, Vice President
and Treasurer of Medford Veterinary
Clinic
ROGER B. OLSON, 62 Class I 1988
President of Cherokee Garage, Inc. 1999
(implement dealer)
JAMES R. PETERSON, 60 Class I 1986
Chairman of the Board of the Company 1999
and Vice President, James Peterson
Sons, Inc. (road construction)
JACK E. WILD, 60 Class I 1996
President, Abbotsford Oil, Inc. 1999
NORMAN A. HATLESTAD, 55 Class III 1992
President, Big A Auto Supply 1998
RONALD D. ISAACSON, 60 Class III 1986
Vice President of the Company<dagger> 1998
and Chairman of the Board of Mid-
Wisconsin Bank
JAMES F. MELVIN, 47 Class III 1996
Vice Chairman of the Board of the 1998
Company and President of the Melvin
Companies
<FN>
* Each director of the Company is also a director of Mid-Wisconsin Bank.
<dagger> Mr. Knoll served as Vice President and Mr. Isaacson served as
President and CEO until October, 1996.
</TABLE>
<PAGE>
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
COMMITTEES
The Board of Directors annually establishes an Audit Committee. The
functions of a compensation committee are fulfilled by the Personnel
Committee of the Board of Directors Mid-Wisconsin Bank (the "Bank"), the
Company's wholly owned subsidiary.
During 1996, Messrs. Peterson, Schroeder and Mertens served as members
of the Audit Committee. The Audit Committee held five meetings during
1996 to review the audit of the previous fiscal year, the scope of the
current audit engagement and the range of audit and nonaudit fees.
The Board does not have a standing nominating committee. The
functions of a nominating committee are performed by the Board which will
consider nominations for directors submitted by shareholders.
Recommendations concerning nominations with pertinent background
information should be directed to the Chairman of the Board, in care of
the Company. The Board has not adopted formal procedures with respect to
nominee recommendations.
In 1996, the Personnel Committee of the Bank reviewed and established
executive compensation and recommended the granting of stock options.
Messrs. Peterson, Olson and Isaacson served on the Committee during 1996.
The Committee met six times during 1996 . See "Committees' Report on
Executive Compensation Policies", page 10.
During 1996, the Board of Directors met five times. All of the
directors of the Company attended at least 75% of the aggregate number of
meetings of the Board and meetings of committees of the Board on which
they served.
DIRECTOR COMPENSATION
Directors receive an annual retainer of $1,200 from the Company and
$2,400 from the Bank in addition to board and committee meeting fees of
$250 and $100, respectively. Directors were also eligible for special
directors' fees under a plan which provides for a maximum payment of 60%
of the directors' annual retainer. Special fees are determined by the
extent of the Company's achievement of a targeted return on equity
established by the Board of Directors prior to each fiscal year. In 1996,
directors received special fees equal to 60% of the annual retainer.
Directors received an identical percentage of the retainer paid to Bank
Directors as special fees for service on the Bank's board. Amounts earned
by Messrs. Isaacson and Knoll are included in the amounts disclosed in the
summary compensation table on page 7; see footnote (3). During 1996, no
director received more than the standard arrangements described above.
Under the Directors' Deferred Compensation Plan, directors may elect
each year to defer fees otherwise payable in cash during the year.
Amounts deferred become payable after the director's termination of
service as a director in a lump sum or in monthly installments over a
period not in excess of 10 years. The timing and form of payments are
elected by each participating director based on deferral elections filed
with the Company. During the period of deferral, deferred fees are
credited with interest each fiscal year at a rate equal to 300 basis
points less than the Company's return on equity for the preceding fiscal
<PAGE>
year. During 1996, Messrs. Dougherty, Isaacson, Schroeder, and Hatlestad
participated in the plan and deferred the director or meeting fees
otherwise payable to them. Fees deferred by Mr. Isaacson are included in
the summary compensation table on page 7; see footnote (3).
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of the close of business on March 3, 1997, the record date, the
Company had outstanding 1,871,897 shares of common stock (including 4,679
shares subject to options exercisable within 60 days).
Based on information publicly available from the Securities and
Exchange Commission, as of March 3, 1997, no shareholder was known to the
Company to be the beneficial owner of more than 5% of the outstanding
shares of the Company's common stock.
The following table sets forth, based on statements filed with the
Securities and Exchange Commission or otherwise made to the Company, the
amount of common stock of the Company which is deemed beneficially owned
as of March 3, 1997 by each of the directors and each of the executive
officers of the Company named in the summary compensation table on page 7.
The amounts indicated include, as applicable, shares subject to options
exercisable within 60 days, shares held by spouses and minor children and
shares held indirectly in trust for the benefit of the directors and/or
their spouses, children or parents.
<TABLE>
<CAPTION>
Shares of
Common Stock Percent
Name Beneficially Owned of Class
<S> <C> <C>
James N. Dougherty 25,608 1.37%
Norman A. Hatlestad 3,464 *
Ronald D. Isaacson 39,341 2.10%
Gene C. Knoll 4,660 *
James F. Melvin 32,909 1.76%
Kurt D. Mertens 7,816 *
Roger B. Olson 2,956 *
James R. Peterson 25,160 1.34%
John P. Selz 1,200 *
Fred J. Schroeder 24,428 1.31%
Jack E. Wild 310 *
All directors, nominees
and executive officers
as a group (13 persons) 200,555 10.71%
<FN>
*Less than 1%
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers and persons who own more than 10% of the
Company's common stock ("reporting persons") to file reports of ownership
and changes in ownership with the Securities and Exchange Commission
("SEC"). Reporting persons are also required by SEC regulations to
furnish the Company with copies of all section 16(a) forms filed by them
<PAGE>
with the SEC. Based solely on its review of the copies of the section
16(a) forms received by it or upon written representations from certain of
these reporting persons as to compliance with the section 16(a)
regulations, the Company is of the opinion that during the 1996 fiscal
year, all filing requirements applicable under section 16 to the reporting
persons were satisfied.
<PAGE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth compensation awarded, earned or paid by the
Company and its subsidiaries for services in all capacities during the
three years ended December 31, 1996, 1995 and 1994 to the Company's Chief
Executive Officer and each other executive officer of the Company as of
December 31, 1996 whose total annual salary and bonus compensation for the
most recent fiscal year exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
Long Term
Compen-
sation
Awards
__________
Securities All Other
Underlying Compensa-
Name and Other Annual Options/ tion
Principal Position Year Salary(1) Bonus(2) Compensation SARs(#) (3)(4)
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Ronald D. Isaacson; 1996 $ 31,639 $ 7,080 $0 151 $14,635(5)
Vice President* 1995 $ 40,350 $ 8,327 $0 236 $12,252
and a director; 1994 $ 54,080 $ 9,360 $0 372 $10,614
Chairman of the
Board of the Bank
Gene C. Knoll; 1996 $111,092 $ 27,825 $0 538 $19,974
President and 1995 $ 92,978 $ 19,410 $0 552 $16,265
CEO* and a 1994 $ 87,880 $ 15,210 $0 604 $13,730
director; of the
Company and the Bank
<FN>
* Mr. Isaacson served as President and CEO and Mr. Knoll served as Vice
President until October, 1996.
(1) Includes amounts deferred under Company's profit sharing plan.
(2) Amounts earned under the Senior Officer Incentive Bonus Plan
maintained by the Bank; officers receive 50% of the bonus in cash
and the remaining 50% is deferred and paid in equal annual
installments over a period of 4 years. With respect to Mr. Knoll,
$8,925 was paid under the 1996 Executive Officer Bonus Plan of the
Bank.
(3) Includes directors fees paid by the Company and the Bank to Mr.
Isaacson, $9,890; and Mr. Knoll, $7,790. Mr. Isaacson deferred his
fees under the Directors' Deferred Compensation Plan during 1996.
See "Director Compensation", page 5.
(4) Includes contributions made by the Company in 1996 under the
Company's profit sharing plan to Mr. Isaacson, $4,279 and to Mr.
Knoll, $12,184.
(5) Includes interest of $466 accrued under Directors' Deferred
Compensation Plan for Mr. Isaacson. Interest reported is
attributable to that portion of the rate used under the terms of
the plan in 1996 which was in excess of 120% of applicable federal
long-term rate as of the date plan became effective.
</TABLE>
<PAGE>
STOCK OPTIONS
OPTION GRANTS
The Company maintains a stock option plan pursuant to which options to
purchase the Company's common stock may be granted to key employees. The
following table presents certain information with respect to grants of
stock options during 1996 to each executive officer named in the summary
compensation table.
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Potential Realiz-
able Value at
Assumed Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term
_________________________________________________________________________________________
% of total
Options/
Number of SARs Granted
Securities to Employees Exercise or Expira-
Underlying in Fiscal Base Price tion 5% 10%
Name Granted (#)(1) Year ($/Sh) Date ($)(2) ($)(2)
_________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Mr. Isaacson 151 4.33% $19.50 12/31/00 $ 820 $1,797
Mr. Knoll 538 15.42% $19.50 12/31/00 $2,921 $6,402
<FN>
(1) Options can be exercised only between the fourth anniversary
of the date of grant and the expiration date. Optionees must
enter into an agreement with the Company that provides, among
other things, that the Company has an option to purchase the
option shares (a) during the first 180 days following
termination of employment for a reason other than voluntary
retirement or disability, (b) if the option shares are
transferred by the optionee pursuant to divorce, bankruptcy
or in any other involuntary transfer or (c) if the optionee
wishes to transfer the option shares to a third party. The
optionee has an option to sell the option shares to the
Company (a) during the first 180 days following termination
of employment for any reason or (b) if the optionee
experiences severe financial hardship.
(2) Assumes price of common stock is $24.93 (5%) and $31.40 (10%)
on December 31, 2000. The actual value, if any, an optionee
will realize upon exercise of an option will depend on the
excess of the market value of the Company's common stock over
the exercise price on the date the option is exercised.
There is no assurance that the market price of the common
stock will increase as assumed for purposes of this pricing
model and no projections as to the actual future value of the
Company's common stock are intended or made.
</TABLE>
OPTION EXERCISES AND YEAR END HOLDINGS
The following table sets forth information regarding the exercise of
stock options in 1996 by the executive officers named in the summary
compensation table and the December 31, 1996 value of unexercised stock
options held by such officers.
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares FY-End(#) FY-End($)
Acquired on Value
Name Exercise (#) Realized ($) Unexercisable* Unexercisable*
<S> <C> <C> <C> <C>
Mr. Isaacson 1,024 $15,872 1,597 $14,277
Mr. Knoll 824 $12,772 2,368 $21,170
<FN>
*All options outstanding at December 31, 1996 were unexercisable.
</TABLE>
PENSION PLAN
The Company maintained a noncontributory pension plan covering
substantially all of its employees and those of its subsidiaries through
the 1996 fiscal year. The plan was terminated effective January 1, 1997
and replaced with an individual account plan to which the Company will
contribute 5% of compensation on an annual basis. Benefits under the
pension plan were based upon a participant's highest five consecutive
years of compensation. The table below reflects illustrative estimated
single life retirement benefits payable by the plan on an annual basis to
participants at age 65 in selected average remuneration and years of
service classifications. The present value of benefits accrued under the
plan through December 31, 1996 will be rolled over into the new individual
account plan. Benefits paid to the participants under the plan are not
reduced by participants' Social Security benefits.
<TABLE>
Pension Plan Table
<CAPTION>
Final
Average Years of Service
Earnings 10 15 20 25 30*
________________________________________________________________
<S> <C> <C> <C> <C> <C>
$ 60,000 $ 8,520 $12,780 $17,040 $21,300 $25,560
70,000 10,020 15,030 25,040 25,050 30,060
80,000 11,520 17,280 23,040 28,800 34,560
90,000 13,020 19,530 26,040 32,550 39,060
100,000 14,520 21,780 29,040 36,300 43,560
110,000 16,020 24,030 32,040 40,050 48,060
120,000 17,520 26,280 35,040 43,800 52,560
130,000 19,020 28,530 38,040 47,550 57,060
<FN>
*Maximum number of years credited for benefit accrual purposes.
</TABLE>
The credited years of service and the current average covered
remuneration for the executive officers named in the summary compensation
table as of December 31, 1996 are: Mr. Isaacson, 30 years, $104,617; and
Mr. Knoll, 22 years, $95,133.
EMPLOYMENT CONTRACT
During Mr. Isaacson was employed by the Bank as its Chairman of the
Board under an agreement that provides that he will perform services
<PAGE>
equivalent to one-quarter of full time employment at a base annual salary
of $29,500 per year. Mr. Isaacson is eligible to participate in the
Bank's incentive bonus and fringe benefit plans and the Company's stock
option plan. In the event of early retirement or death during the term of
the agreement, Mr. Isaacson will be entitled to receive a severance
benefit equal to 30 weeks of compensation based upon his highest five-year
average compensation. The employment terms will renew for successive
periods of one-year each unless either Mr. Isaacson or the Bank notifies
the other of an intention to terminate the agreement on or before December
1 of any year. The agreement with Mr. Isaacson remains in effect for 1997
and provides for annual compensation of $15,000.
COMMITTEES' REPORT ON EXECUTIVE COMPENSATION POLICIES
During 1996, compensation policies were established by the
Personnel Committee of the Bank. See "Committees and Compensation of the
Board of Directors". The Personnel Committee established and reviewed
base salaries of executive officers of the Bank and was also responsible
for the administration of executive bonus and incentive programs. No
salaries or bonuses are paid by the Company to executive officers.
The compensation program for executive officers may include various
grants under the Company's stock option plan. The Company's stock option
plan is administered by a separate committee appointed by the Board of
Directors. The stock option plan committee generally considers
recommendations of the Personnel Committee with respect to grants, but the
stock option plan committee has full discretion and control over whether a
grant will be made and the amount and terms of any such grant. Insofar as
this report includes a description of the compensation policies relating
to the stock option plan, this report is a joint report of the Personnel
Committee and of the stock option plan committee.
This report describes the policies of the Personnel Committee, the
stock option plan committee and the Company as in effect in 1996.
Policies in effect from time to time for years after 1996 may change as
circumstances change and the committees deem it appropriate to revise the
Company's compensation programs.
GENERAL
The executive compensation policies are designed to attract and retain
individuals who have experience in banking or who otherwise have
particular training or skills which will satisfy particular requirements
of the Company and the Bank and to reward job performance which the
Personnel Committee believes to be at or above the level expected of the
Bank's executive officers. The total compensation paid to executive
officers and the retirement and other fringe benefit programs are designed
to offer a level of compensation which is competitive with other Wisconsin
banks or bank holding companies of comparable size. Few of the bank
holding companies used for purposes of compensation comparisons are
included in the 322 financial institutions or bank holding companies which
comprise the Nasdaq Bank Stock Index of bank holding companies' stock
performance under the heading "Stock Price Performance Graph". In making
compensation comparisons, the Personnel Committee attempts to use only
those bank holding companies or banks whose size and operations are
similar to the Company. Few, if any, of those bank holding companies or
banks are publicly traded or included in the Nasdaq Bank Stock Index.
Given the disparity in size between financial institutions and the fact
that many, but not all, bank holding company executives also serve as
executive officers of bank subsidiaries, it is difficult to draw exact
<PAGE>
comparisons with the compensation policies of other bank holding companies
or banks. The determination of appropriate compensation levels by the
Personnel Committee is, therefore, subjective.
The Bank's overall compensation policy is designed so that
approximately 20% of each executive officer's maximum compensation is
directly tied to the performance of the Bank through a combination of
annual incentive bonuses which are based on each fiscal year's financial
performance and stock based incentive programs which reflect the
performance of the Company's common stock.
BASE SALARIES
The Personnel Committee considers and reviews a general survey of bank
or financial industry compensation prepared by the Wisconsin Bankers
Association and Sheshunoff Bank Data, an independent provider of data
concerning financial institutions, in order to gauge the relationship of
the Bank's base salary levels to the levels of comparable financial
institutions. Base salaries of the Company's executive officers primarily
reflect the services performed for the respective Bank or holding company
operations for which the individual has principal management
responsibilities.
Annual increases in base salary are determined by the overall
objective of maintaining competitive salary levels, more general factors
such as the rate of inflation and individual job performance. Individual
job performance, including satisfaction of individual performance
objectives and goals and the accomplishment of specified programs in
appropriate cases, is the most important factor considered by the
Personnel Committee in determining appropriate increases in base
compensation.
During 1996, the Company's Chief Executive Officer ("CEO") established
individual performance objectives and goals for executive officers other
than himself, including the accomplishment of specified programs in
appropriate cases, and reviewed each individual's performance in
relationship to those criteria with the Personnel Committee and the Board
of Directors of the Company. Based on such performance evaluations, the
CEO made recommendations to the Personnel Committee with respect to
increases in the base salary of the executive officers. The Company's
Board of Directors makes the final determination of the executive
officers' base salaries.
The CEO's base salary is reviewed by the Personnel Committee on the
same basis as that of the Company's other executive officers, except that
in 1996, it was the Boards of Directors of the Bank and of the Company
which established individual performance objectives for the CEO and
reviewed his accomplishment of those objectives. The Company's Board of
Directors makes the final determination of the CEO's base salary.
INCENTIVE COMPENSATION BASED ON FINANCIAL PERFORMANCE
OF THE COMPANY AND INDIVIDUAL PERFORMANCE
During 1996, senior officers of the Bank participated in an incentive
bonus plan maintained by the Bank. Executive officers of the Company
participated in the plan in their capacities as executive officers of the
Bank. The Company did not maintain a separate incentive program for
executive officers. Under the incentive bonus plan in which they
participated, executive officers were eligible to receive a specified
percentage of base salary as a bonus. The percentage used to determine
the amount of an individual's bonus was based on a schedule of graduated
rates which, in turn, was based upon the Bank's current year return on
<PAGE>
equity and the Bank officer's level of responsibility. Maximum bonuses
for executive officers in 1996 ranged from 12% to 24% of an individual's
base salary, with prorated amounts payable based on the applicable Bank's
return on equity for the year. The criteria of the plan and the amount of
bonuses which may be paid are set annually by the Bank's Board of
Directors. Executive and other Bank officers receive 50% of each bonus in
cash and the remaining 50% is deferred and paid in equal annual
installments over a period of four years.
In 1996, a bonus was paid to Mr. Knoll and one other officer of the
Bank based upon the achievement of a minimum number of specified criteria
involving Bank growth, personnel cost and various operational performance
criteria. Under the plan, Mr. Knoll was eligible for a maximum bonus of
12% of salary based on satisfaction of the specific criteria set forth in
the plan.
STOCK BASED COMPENSATION
Executive officers of the Company and employees of the Bank were
eligible in 1996 to participate in the Company's 1991 Employee Stock
Option Plan. The stock option plan is administered by a committee
appointed by the Board of Directors of the Company. The stock option plan
committee has not established formal criteria by which the size of plan
grants are determined, but does consider the amount and terms of each
grant already held by an executive officer in determining the size and
amount of any new grant. The value of options granted under the plan are
related to the long-term performance of the Company's common stock and
therefore provide an identity of interests between the Company's executive
officers and its shareholders.
The stock option plan committee may impose conditions or restrictions
as to exercise or vesting of grants under the plan. All options must have
an option price equal to the fair market value of the shares on the date
the option is granted. Unless otherwise provided by the committee,
options are not exercisable before the fourth, or after the fifth,
anniversary of the date of grant. Optionees must enter into an agreement
with the Company that provides for certain repurchase rights for the
Company and the right to sell option stock to the Company. See footnote
(1) to table entitled "Option/SAR Grants in Last Fiscal Year", page 8.
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Personnel Committee consisted of directors of the
Bank. The Personnel Committee met at various times throughout the 1996
fiscal year to review and establish executive compensation levels and
programs. No member of the Committee was an employee of the Company or
the Bank in 1996 other than Mr. Isaacson. See "Committees and
Compensation of the Board of Directors".
<TABLE>
<CAPTION>
1991 STOCK OPTION PLAN COMMITTEE
<S> <C>
JAMES R. PETERSON ROGER B. OLSON
RAYMOND F. LANGE JAMES N. DOUGHERTY
NORMAN A. HATLESTAD JOHN P. SELZ
JACK E. WILD JAMES F. MELVIN
</TABLE>
PERSONNEL COMMITTEE
JAMES R. PETERSON
RONALD D. ISAACSON
ROGER B. OLSON
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph and table compares the yearly percentage change in
the cumulative total shareholder return on the Company's common stock for
the five year period beginning December 31, 1991 with two published
indices. The University of Chicago Center for Research in Security Prices
("CRSP") Nasdaq Bank Stock Index indicates the performance of the stock of
322 financial institutions or bank holding companies over the five year
period. The Media General Financial Services Nasdaq Stock Market
indicates the performance of all stocks which were traded on the Nasdaq
Stock Market during the entire three year period. The graph and table
assume that the value of an initial investment in the Company's common
stock and each index on December 31, 1991 was $100 and that all dividends
were reinvested. Prices of the Company's common stock represent the
average of bid and ask quotations from one market maker in the common
stock through August, 1996 and two market makers after such date; there is
no active established trading market in the Company's common stock.
[Stock Price Performance Graph Filed pursuant
to Rule 304(d) of Regulation S-T]
<TABLE>
<CAPTION>
Value of Hypothetical Investment
December 31,
__________________________________________________________________________________
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Mid-Wisconsin Financial
Services, Inc.* $100.00 $103.91 $178.16 $208.52 $261.65 $331.51
MG Nasdaq Market Index $100.00 $100.98 $121.13 $127.17 $164.96 $204.98
CRSP Nasdaq Bank Stock Index $100.00 $145.55 $165.99 $165.39 $246.32 $325.60
<FN>
*There is no active established trading market for the Company's
common stock. The prices listed indicate the average of bid and
ask quotations from the market makers in the Company's stock.
</TABLE>
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
During 1996, in the ordinary course of business, officers and
directors of the Company and its subsidiaries and many of their associates
and the firms of which they serve as officers and directors conducted
banking transactions with the Bank. All loans to officers and directors
and to persons or firms affiliated with officers and directors were made
on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with unrelated
persons and did not involve more than normal risk of collectability or
present other unfavorable features. Management expects that transactions
such as those described above will continue in the future.
APPROVAL OF THE
APPOINTMENT OF INDEPENDENT AUDITORS
At the Annual Meeting, shareholders will be asked to approve the
appointment of the firm of Wipfli Ullrich Bertelson CPAs as independent
auditors to audit the books, records and accounts of the Company for the
fiscal year ending December 31, 1997. The firm has served as the
Company's auditors since 1990. The Company has a policy of reviewing the
provision of professional and other services to the Company based on such
<PAGE>
factors as the cost, timeliness and quality of the services provided.
Pursuant to this policy, the Company has retained the right to appoint a
different firm of independent auditors to audit the Company for the 1997
fiscal year if such appointment is deemed in the best interests of the
Company.
Representatives of Wipfli Ullrich Bertelson CPAs will be present at
the Annual Meeting and will have an opportunity to make a statement or
respond to appropriate questions.
SHAREHOLDER PROPOSALS
If any shareholder desires to submit a proposal for inclusion in the
proxy statement to be used in connection with the Annual Meeting to be
held in 1998, the proposal must be in proper form and received by the
Company no later than November 28, 1997.
OTHER MATTERS
At this date, there are no other matters management intends to present
or has reason to believe others will present to the Annual Meeting. If
other matters now unknown to the management come before the meeting, the
members of the Proxy Committee of the Board of Directors will vote in
accordance with their judgment.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
March 28, 1997
BY ORDER OF THE BOARD OF
DIRECTORS
Ruth M. Zuleger
Secretary
<PAGE>
MID-WISCONSIN FINANCIAL SERVICES, INC.
PROXY SOLICITED BY DIRECTORS FOR ANNUAL MEETING
APRIL 22, 1997
The undersigned, having received the notice of annual meeting, proxy
statement, and annual report for the year ended December 31, 1996, hereby
appoint(s) Norman A. Hatlestad, James F. Melvin and Raymond F. Lange and each
of them, with full power of substitution, proxies of the undersigned to vote
all shares of the undersigned in Mid-Wisconsin Financial Services, Inc. at the
annual meeting of shareholders to be held on April 22, 1997 and at any
adjournments thereof.
THE DIRECTORS RECOMMEND A VOTE FOR THE ELECTION OF EACH NOMINEE AND THE
APPROVAL OF AUDITORS.
1. Election of Class II directors: GENE C. KNOLL, KURT D. MERTENS,
FRED J. SCHROEDER, AND JOHN P. SELZ
FOR each nominee listed above ___ WITHHOLD AUTHORITY ___
(except as marked to the contrary below) to vote for all nominees
listed above
(Instruction: To withhold authority to vote for any individual
nominee(s), print the name of the nominee on the space provided: _________
__________________________________________________________________________
2. Approval of appointment of Wipfli Ullrich Bertelson LLP as independent
auditors for the year ending December 31, 1997.
FOR ___ AGAINST ___ ABSTAIN ___
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE PROXIES SHALL
VOTE FOR THE ELECTION OF THE NOMINEES LISTED ABOVE AND THE APPROVAL OF THE
APPOINTMENT OF AUDITORS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
(CONTINUED FROM OTHER SIDE)
Please sign exactly as name appears below.
When shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title. If a corporation, please sign
in full corporate name by president or
other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
_______________________________________
Signature
_______________________________________
Signature if held jointly
Dated ___________________________, 1997
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
