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 Simek Recreational Center, 1037 W.
Broadway Avenue, Medford, Wisconsin, on April 27, 1999, at 5:00 p.m.*
for the following purposes:
1. To elect four Class I directors for terms which will expire at
the annual meeting of shareholders to be held in 2002;
2. To approve the appointment of Wipfli Ullrich Bertelson LLP as
independent auditors for the year ending December 31, 1999;
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 26, 1999
BY ORDER OF THE BOARD OF
DIRECTORS
William A. Weiland
Secretary/Treasurer
____________________________
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 26, 1999
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 Simek
Recreational Center, 1037 W. Broadway Avenue, Medford, Wisconsin, on
April 27, 1999, and at any adjournment thereof (the "Annual Meeting").
In addition to solicitation by mail, officers, directors and
employees of the Company and its subsidiaries, none of whom will be
compensated for such services, may solicit proxies in person or by
telephone, facsimile, electronic mail or other forms of communication.
Expenses in connection with the solicitation of proxies, including the
reasonable expenses of brokers, fiduciaries and other nominees in
forwarding proxy material to beneficial owners of the Company's common
stock, 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, 1999 (the "Record Date") are entitled to notice of and to vote
at the Annual Meeting. Votes cast by proxy or in person at the Annual
Meeting will be tabulated by the Secretary of the Company.
Brokers who are the holders of record of Company common stock for
customers generally have discretionary authority to vote on certain
routine matters. However, such brokers generally will not have
authority to vote on other matters if they have not received
instructions from their customers. In determining the vote of the
shareholders on matters for which the broker does not have the
authority to vote shares held of record by the broker, the shares will
be recorded as a "broker non-vote."
Although there is no controlling Wisconsin precedent regarding the
treatment of broker non-votes, the Company believes Wisconsin law
provides for, and the Company intends to apply, the following
principles with respect to broker non-votes and the other voting
requirements for the matters to be presented to the Annual Meeting.
The discussion of voting
-1-
requirements assumes, with respect to each matter to be presented to
shareholders, that a quorum is present.
<PAGE>
QUORUM. For purposes of determining a quorum, shareholders who
are present in person or are represented by proxy, but who abstain from
voting, are considered present and count toward the determination of
the quorum. Shares reported as broker non-votes are also considered to
be shares present for purposes of determining whether a quorum is
present.
ELECTION OF DIRECTORS. Directors are elected by a plurality of the
votes cast by the shares entitled to vote. For this purpose, a
"plurality" means that the individuals receiving the largest number of
votes are elected as directors, up to the maximum of four directors to
be chosen at the Annual Meeting. Shareholders may vote in favor of the
nominees specified on the accompanying form of proxy or may withhold
their vote as to one or more of such nominees. Shares withheld or not
otherwise voted in the election of directors (because of abstention,
broker non-vote, or otherwise) will have no effect on the election of
directors.
APPROVAL OF AUDITORS. The appointment of auditors will be approved
if more shares are voted in favor of approval than are voted against
approval. Shares not voted (because of abstention, broker non-vote, or
otherwise) will have no effect on the approval of auditors.
A shareholder who executes a proxy may revoke it at any time before
it is voted by giving written notice to the Secretary of the Company at
the Company's principal office, by filing another duly executed proxy
bearing a later date with the Secretary, or by giving oral notice to
the presiding officer at the Annual Meeting.
The persons named in the accompanying form of proxy 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:
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. James N. Dougherty, Roger B. Olson, James R.
Peterson, and Jack E. Wild to terms of office as Class I
directors which will expire at the annual meeting of
shareholders to be held in 2002 (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, 1999 (see "Approval of Appointment of Auditors");
and
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(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.
<PAGE>
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, Messrs. James N. Dougherty, Roger B. Olson,
James R. Peterson, and Jack E. Wild will be candidates for election as
Class I 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 proxies to vote for such
substitute or substitutes as may be designated by the Board. John P.
Selz, a Class II director, has indicated his intention to resign from
the Board effective May 19, 1999. The Board will consider and may
<PAGE>
elect a successor for Mr. Selz to serve a term which will expire at
the annual meeting to be held in 2000.
<TABLE>
The following information is furnished with respect to the nominees
and all other directors:
<CAPTION>
NAME, AGE, CLASS AND
PRINCIPAL OCCUPATION YEAR IN WHICH YEAR FIRST
OR EMPLOYMENT AND TERM WILL BECAME A
OTHER AFFILIATIONS* EXPIRE DIRECTOR
<S> <C> <C>
Nominees
JAMES N. DOUGHERTY, 61 Class I 1991
Retired Veterinarian, formerly a 2002
consultant for Miles Animal Health
ROGER B. OLSON, 64 Class I 1988
Retired, formerly President of Cherokee 2002
Garage, Inc. (implement dealer)
JAMES R. PETERSON, 62 Class I 1986
Chairman of the Board of the Company 2002
and Vice President, James Peterson
Sons, Inc. (road construction)
-3-
JACK E. WILD, 62 Class I 1996
President, Abbotsford Oil, Inc. 2002
CONTINUING DIRECTORS
NORMAN A. HATLESTAD, 57 Class III 1992
President, Medford Auto Supply, Inc./NAPA 2001
RONALD D. ISAACSON, 62 Class III 1986
Vice President of the Company and retired 2001
Chairman of the Board of Mid-Wisconsin Bank
JAMES F. MELVIN, 49 Class III 1996
Vice Chairman of the Board of the Company 2001
and President of the Melvin Companies
GENE C. KNOLL, 45 Class II 1988
President and Chief Executive Officer 2000
of the Company and President and Chief
Executive Officer of Mid-Wisconsin Bank
KURT D. MERTENS, 43 Class II 1997
Secretary and Treasurer, Loos Machine
Shop, Inc. 2000
FRED J. SCHROEDER, 61 Class II 1986
Mayor of City of Medford; formerly 2000
Executive Vice President and
Trust Officer of Mid-Wisconsin Bank
JOHN P. SELZ, 64 Class II 1994
President, Selz Farms, Inc. 2000
<FN>
* Each director of the Company is also a director of Mid-Wisconsin Bank.
</TABLE>
<PAGE>
-4-
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
COMMITTEES
The Board of Directors does not appoint audit, compensation, or
nominating committees. The functions of audit and compensation
committees are fulfilled by committees appointed by the Board of
Directors of Mid-Wisconsin Bank (the "Bank"), the Company's wholly
owned subsidiary. Members of the Company's Board who sit on such
committees do so in their capacities as members of the Bank's Board of
Directors.
During 1998, Messrs. Peterson, Selz, and Mertens and Kathryn M. Hemer,
a director of the Bank, served as members of the Bank's Audit
Committee. The Bank's Audit Committee held six meetings during 1998 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 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.
The Human Resources Committee of the Bank reviews and establishes
executive compensation and recommends the granting of stock options.
Messrs. Peterson, Melvin, and Isaacson and James P. Hager, a director
of the Bank, served on the Committee during 1998. The Committee met
ten times during 1998. See "Committees' Report on Executive
Compensation Policies", page 9.
During 1998, the Board of Directors met eight 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 $150, respectively. Directors were also eligible in 1998 for
special directors' fees under plans of the Company and the Bank which
provide for a maximum payment of 60% of the directors' annual
retainers. Special fees are determined by the extent of the Company's
and Bank's achievement of a targeted return on equity established by
the Board of Directors prior to each fiscal year. In 1998, directors
received special fees equal to 24% of the annual retainers. Amounts
earned by Mr. Knoll are included in the amounts disclosed in the
summary compensation table on page 7; see footnote (3). During 1998,
no director received more than the standard arrangements described
above.
-5-
<PAGE>
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 year. During 1998, Messrs. Dougherty, Isaacson, Schroeder,
Hatlestad, Selz, Wild and Olson participated in the plan and deferred
the director or meeting fees otherwise payable to them.
BENEFICIAL OWNERSHIP OF COMMON STOCK
As of the close of business on the Record Date, the Company had
outstanding 1,821,589 shares of common stock.
Based on information publicly available from the Securities and
Exchange Commission, on the Record Date, 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 on the Record Date 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 Percent
NAME STOCK BENEFICIALLY OWNED OF CLASS
<S> <C> <C>
James N. Dougherty 25,858 1.39%
Norman A. Hatlestad 3,464 *
Ronald D. Isaacson 25,463 1.37%
Gene C. Knoll 5,816 *
James F. Melvin 37,761 2.03%
Kurt D. Mertens 9,616 *
Roger B. Olson 2,956 *
James R. Peterson 18,560 1.00%
John P. Selz 1,200 *
Fred J. Schroeder 18,379 *
Jack E. Wild 610 *
All directors, nominees and
executive officers as a group
(14 persons) 174,492 9.38%
<FN>
*Less than 1%
</TABLE>
-6-
<PAGE>
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 with the SEC. Rhonda R. Kelley, who was appointed
Controller on September 28, 1998, filed a Form 3 on February 18, 1999.
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 1998 fiscal year, all
other filing requirements applicable under section 16 to the reporting
persons were satisfied.
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, 1998, 1997, and 1996 to the
Company's Chief Executive Officer and each other executive officer of
the Company as of December 31, 1998 whose total annual salary and bonus
compensation for the most recent fiscal year exceeded $100,000.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation
Long Term
Compensation
Awards
Securities
Underlying
Name and Other Annual Options All Other
Principal Position Year Salary(1) Bonus(2) Compensation SARs(#) Compensation
<S> <C> <C> <C> <C> <C> <C>
Gene C. Knoll 1998 $120,000 $ 19,344 $0 440 $27,490(3)
President and CEO 1997 $109,720 $ 34,014 $0 457 $23,048
and a director of the 1996 $111,092 $ 27,825 $0 538 $19,974
Company and the Bank
<FN>
(1) Includes amounts deferred under Company's 401(k) plan.
(2) Includes $8,640 earned by Mr. Knoll 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.
(3) Includes director and meeting fees of $9,466 paid by the Company
and the Bank, and contributions of $18,024 under the Company's
retirement plans.
</TABLE>
-7-
<PAGE>
STOCK OPTIONS
OPTION GRANTS. The Company maintains a stock option plan pursuant
to which options to purchase the Company's common stock may be granted
to key employees. The following table presents certain information
with respect to grants of stock options during 1998 to each executive
officer named in the summary compensation table.
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option Term
% of total
Options/
Number of SARs Granted to
Securities Employees in
Underlying Fiscal Year Exercise or
Options/SARs Base Price Expiration 5% 10%
Name Granted (#)(1) ($/Sh) Date ($)(2) ($)(2)
<S> <C> <C> <C> <C> <C> <C>
Mr. Knoll 440 19.00% $27.25 12/31/02 $3,313 $7,320
<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 $34.78 (5%) and $43.89 (10%)
on December 31, 2002. The actual value, if any, an optionee
will realize upon exercise of an option will depend on the
excess of the market value of the Company's common stock over
the exercise price on the date the option is exercised.
There is no assurance that the market price of the common
stock will increase as assumed for purposes of this pricing
model and no projections as to the actual future value of the
Company's common stock are intended or made.
</TABLE>
OPTION EXERCISES AND YEAR END HOLDINGS. The following table sets
forth information regarding the exercise of stock options in 1998 by the
executive officers named in the summary compensation table and the
December 31, 1998 value of unexercised stock options held by such
officers.
-8-
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at FY-
FY-End (#) End ($)
Shares
Acquired on Value
Name Exercise(#) Realized($) Unexercisable* Unexercisable*
<S> <C> <C> <C> <C>
Mr. Knoll 604 $7,248 1,987 $8,569
<FN>
*All options outstanding at December 31, 1998 were unexercisable.
</TABLE>
COMMITTEES' REPORT ON EXECUTIVE COMPENSATION POLICIES
During 1998, compensation policies were established by the Human
Resources Committee of the Bank. See "Committees and Compensation of
the Board of Directors." The Human Resources 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 the 1991 Committee appointed by the
Board of Directors. The Stock Option Plan Committee generally
considers recommendations of the Human Resources 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 Human Resources Committee
and of the Stock Option Plan Committee.
This report describes the policies of the Human Resources Committee,
the stock option plan committee and the Company as in effect in 1998.
Policies in effect from time to time for years after 1998 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 Human Resources 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. In making compensation comparisons, the
<PAGE>
Human Resources Committee attempts to use only those bank holding
companies or banks whose size and operations are
-9-
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 of bank holding companies' stock performance under the heading
"Stock Price Performance Graph." 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 comparisons with the
compensation policies of other bank holding companies or banks. The
determination of appropriate compensation levels by the Human Resources
Committee is, therefore, subjective.
The Bank's overall compensation policy is designed so that
approximately 20% to 35% 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 Human Resources 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 Human Resources Committee in determining appropriate increases
in base compensation.
During 1998, 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 Human Resources
Committee and the Board of Directors of the Company. Based on such
performance evaluations, the CEO made recommendations to the Human
Resources 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 Human Resources Committee
on the same basis as that of the Company's other executive officers,
except that in 1998, it was the Boards of Directors of the Bank and of
the Company which established individual performance objectives for the
<PAGE>
CEO and reviewed his accomplishment of those objectives. The Company's
Board of Directors makes the final determination of the CEO's base
salary.
-10-
INCENTIVE COMPENSATION BASED ON FINANCIAL PERFORMANCE OF THE
COMPANY AND INDIVIDUAL PERFORMANCE. During 1998, executive officers
of the Company participated in two incentive compensation plans of the
Bank 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 for executive officers of the
Bank, 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 the achievement of
four key performance indicators. Maximum bonuses for executive
officers in 1998 ranged from 2% to 14% 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.
Executive officers also participated in the Bank's TeamBank Bonus
Plan which is maintained for all Bank employees. The TeamBank Bonus
Plan is intended to promote shareholder value and bonuses are based on
achievement of four key performance indicators. The bonuses payable
under the TeamBank Bonus Plan are expected to range from approximately
1% to approximately 25% of base salary on an annual basis.
In 1998, a bonus was paid to Mr. Knoll based upon the achievement
of a minimum number of specified criteria involving Bank growth,
personnel costs, and various operational performance criteria. Under
the plan, Mr. Knoll was eligible for a maximum bonus of 7% 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 1998 to participate in the
Company's 1991 Employee Stock Option Plan. 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
<PAGE>
option stock to the Company. See footnote (1) to table entitled
"Option/SAR Grants in Last Fiscal Year," page 8.
-11-
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. During 1998, the
Human Resources Committee consisted of directors of the Bank. The
Human Resources Committee met at various times throughout the 1998
fiscal year to review and establish executive compensation levels and
programs. No member of the Committee or the Stock Option Plan
Committee was an employee of the Company or the Bank in 1998. See
"Committees and Compensation of the Board of Directors."
<TABLE>
<CAPTION>
1991 STOCK OPTION PLAN COMMITTEE HUMAN RESOURCES COMMITTEE
<S> <C>
JAMES R. PETERSON JAMES R. PETERSON
ROGER B. OLSON RONALD D. ISAACSON
KURT D. MERTENS JAMES F. MELVIN
JAMES N. DOUGHERTY JAMES P. HAGER
NORMAN A. HATLESTAD
JOHN P. SELZ
JACK E. WILD
JAMES F. MELVIN
FRED J. SCHROEDER
</TABLE>
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, 1993 with the
University of Chicago Center for Research in Security Prices ("CRSP")
Nasdaq Bank Stock Index, the Media General Financial Services Nasdaq
Stock Market Index, and Media General Financial Services' Russell 2000
Index. The CRSP Nasdaq Bank Stock Index indicates the performance of
the stock of financial institutions or bank holding companies over the
five year period. The Media General Financial Services Nasdaq Stock
Market Index indicates the performance of all stocks which were traded
on the Nasdaq Stock Market (including the Nasdaq National Market and
the Nasdaq SmallCap Market) during the entire five year period. The
Russell 2000 Index includes the 2000 smallest companies in the Russell
3000 Index (which consists of the 3,000 largest companies whose stock
is traded in U.S. markets, based on market capitalization). The
Company's common stock is not included in any of these indices. The
Company believes that a comparison of its common stock with the
performance of the Russell 2000 Index is more appropriate given the
greater disparity in size between the Company and the companies
included in the Nasdaq Stock Market Index. As of January 29, 1999, the
average market capitalization of the Russell 2000 companies was
approximately $1 billion. The market capitalization of the Russell
2000 Index companies on that date ranged from approximately $3.5
million to $6.3 billion. The Company's market capitalization as of
such date was approximately $50 million. The graph and table assume
that the value of an initial investment in the Company's common stock
and each index on December 31, 1993 was $100 and that all dividends
<PAGE>
were reinvested. Prices of the Company's common stock represent the
average of the bid and ask quotations as published in the MILWAUKEE
JOURNAL SENTINEL. The prices reflect bid prices, without retail
mark-up, mark-down or commissions, and may not necessarily represent
actual transactions. There is no active established trading market in
the Company's common stock.
-12-
[Stock Price Performance Graph deleted pursuant to Rule 304(d) of
Regulation S-T. Data reported in the graph is also reported in the
following tabular form in the proxy statement delivered to
shareholders.]
<TABLE>
<CAPTION>
Value of Hypothetical Investment
December 31,
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Mid-Wisconsin Financial Services, $100.00 $117.04 $146.87 $186.08 $217.35 $213.70
Inc.*
MG Nasdaq Market Index $100.00 $104.99 $136.18 $169.23 $207.00 $291.96
CRSP Nasdaq Bank Stock Index $100.00 $ 99.60 $148.40 $195.90 $328.00 $325.40
Russell 2000 Index $100.00 $ 98.19 $126.11 $147.05 $179.90 $174.86
<FN>
*There is no active established trading market in the Company's common
stock. The values represented for the Company common stock are based on
bid and ask quotations as published in the MILWAUKEE JOURNAL SENTINEL.
</TABLE>
-13-
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
During 1998, in the ordinary course of business, directors and
officers of the Company and its subsidiaries and many of their
associates and the firms for which they serve as directors and officers
conducted banking transactions with the Bank. All employees of the
Bank are eligible to borrow up to a maximum of $50,000 at rates that
are adjusted quarterly to an amount equal to the sum of (i) the average
rate paid by the Bank on certificates of deposit, (ii) 1.5%, and (iii)
the FDIC premium rate on deposits. All other loans to directors and
officers and to persons or firms affiliated with such directors and
officers were made at substantially the same interest rates as those
prevailing at the time for comparable transactions with unrelated
persons. All loans made to such directors and officers and their
affiliates were subject to substantially the same collateral
requirements, did not involve more than normal risk of collectability,
and did not present other unfavorable features as compared to loans
made to unrelated persons. Management expects that transactions such
as those described above will continue in the future.
<PAGE>
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 LLP as independent
auditors to audit the books, records and accounts of the Company for
the fiscal year ending December 31, 1999. 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 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 1999 fiscal year if such appointment is deemed in the
best interests of the Company.
Representatives of Wipfli Ullrich Bertelson LLP 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 2000, the proposal must be in proper form and received by
the Company no later than November 27, 1999.
-14-
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.
CORPORATE SUMMARY ANNUAL REPORT
The 1998 Summary Annual Report, which includes condensed
consolidated financial statements for the years ended December 31,
1998, 1997 and 1996, has been mailed concurrently with this proxy
statement to shareholders as of the Record Date. The 1998 Summary
<PAGE>
Annual Report and the 1998 Form 10-K Annual Report do not constitute a
part of this proxy statement.
March 26, 1999
BY ORDER OF THE BOARD OF
DIRECTORS
William A. Weiland
Secretary/Treasurer
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
-15-
<PAGE>
MID-WISCONSIN FINANCIAL SERVICES, INC.
PROXY SOLICITED BY DIRECTORS FOR ANNUAL MEETING
APRIL 27, 1999
The undersigned hereby appoint(s) Norman A. Hatlestad, Kurt D.
Mertens, Fred J. Schroeder, and each of them, with full power of
substitution, proxies of the undersigned to vote all shares of common
stock of Mid-Wisconsin Financial Services, Inc. that the undersigned is
entitled to vote at the annual meeting of shareholders to be held on
April 27, 1999 and at any adjournments thereof (the "Annual Meeting").
The proxies have the authority to vote such stock as directed below
with respect to the proposals set forth in the proxy statement with the
same effect as though the undersigned were present in person and voting
such shares. The undersigned hereby revokes all proxies previously
given to vote at the Annual Meeting.
THE DIRECTORS RECOMMEND A VOTE FOR THE ELECTION OF EACH NOMINEE
AND THE APPROVAL OF AUDITORS.
1. Election of Class I directors: JAMES N. DOUGHERTY, ROGER B.
OLSON, JAMES R. PETERSON, AND JACK E. WILD
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, 1999.
FOR ___ AGAINST ___ ABSTAIN ___
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE PROXIES
SHALL VOTE AT THE ANNUAL MEETING 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 ___________________, 1999
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
