SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [ X ]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
FIRST INDIANA CORPORATION
(Name of Registrant as Specified in its Charter)
FIRST INDIANA CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
...................................................................
2) Aggregate number of securities to which 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
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was paid previously. Identify the previous filing by registration
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4) Date Filed:
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<PAGE>
[First Indiana Corporation Letterhead]
March 13, 1996
Dear Shareholder:
The directors and officers of First Indiana Corporation join
me in extending to you a cordial invitation to attend the annual
meeting of our shareholders. This meeting will be held on
Wednesday, April 17, 1996 at 9:00 a.m., in the First Indiana Plaza
Conference Center, Ohio and Pennsylvania Streets, Seventh Floor,
Indianapolis, Indiana.
First Indiana enjoyed record earnings in 1995 as a strategic
provider of targeted financial services. To share our success with our
shareholders, we recently announced a 20 percent increase in our
dividend payout through a stock split. At the annual meeting, we will
review our achievements in 1995 and share our plans for additional
growth.
The formal notice of this annual meeting and the proxy
statement appear on the following pages. After reading the proxy
statement, please mark, sign, and return the enclosed proxy card
to ensure that your votes on the business matters of the meeting
will be recorded.
We hope that you will attend this meeting. Whether or not
you attend, we urge you to return your proxy promptly in the postpaid
envelope provided. After returning the proxy, you may, of course,
vote in person on all matters brought before the meeting.
We look forward to seeing you on April 17.
Sincerely,
/s/ Robert H. McKinney
Robert H. McKinney,
Chairman and Chief Executive
Officer
First Indiana Plaza
135 North Pennsylvania Street
Indianapolis, IN 46204
317.269.1200 Fax 317.269.1341
<PAGE>
[Form Intentionally Blank]
<PAGE>
FIRST INDIANA CORPORATION
INDIANAPOLIS, INDIANA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of the shareholders of First Indiana
Corporation (the "Corporation") will be held in the First Indiana
Plaza Conference Center, 135 North Pennsylvania Street, Seventh
Floor, Indianapolis, Indiana on April 17, 1996, at 9:00 a.m. EST, to
consider and to take action on the following matters:
1. The election of three (3) directors of the
Corporation; and
2. The transaction of such other business as may
properly come before the meeting and any
adjournments thereof.
Only shareholders of record at the close of business on February 23,
1996 are entitled to notice of and to vote at this meeting and any
adjournments thereof.
By order of the Board of Directors,
/s/ David A. Butcher
David A. Butcher
Secretary
Indianapolis, Indiana
March 13, 1996
<PAGE>
[Form Intentionally Blank]
<PAGE>
FIRST INDIANA CORPORATION
First Indiana Plaza
135 North Pennsylvania Street
Indianapolis, Indiana 46204
PROXY STATEMENT
The accompanying proxy is solicited by the Board of
Directors of First Indiana Corporation (the "Corporation") for use at
the annual meeting of shareholders to be held April 17, 1996 and any
adjournments thereof. When the proxy is properly executed and
returned, the shares it represents will be voted at the meeting in
accordance with any directions noted on that proxy. If no direction
is indicated, the proxy will be voted in favor of the proposals set forth
in the notice attached to this proxy statement.
The election of directors will be determined by a plurality
of the shares present in person or represented by proxy. The holder
of each outstanding share of common stock is entitled to vote for as
many persons as there are directors to be elected. All other matters
to come before the meeting will be determined by a majority of the
shares present in person or represented by proxy. An abstention or
broker non-vote on any matter will not change the number of votes
cast for or against the matter. Any shareholder giving a proxy has the
power to revoke it at any time before it is voted. The approximate
date of mailing of this proxy statement is March 13, 1996.
VOTING SECURITIES AND BENEFICIAL OWNERS
Only shareholders of record as of the close of business on
February 23, 1996 will be entitled to vote at the annual meeting. On
March 1, 1996, the Corporation distributed one additional share of
stock for every five shares owned by shareholders of record on
February 21, 1996 (the "Stock Split"). As a result, the shares issued
in the Stock Split may be voted by the recipients thereof at the annual
meeting. All share information pertaining to the Corporation's
shares of stock has been restated to reflect the Stock Split. The
Corporation has only one class of stock outstanding, its common
stock, of which approximately 8,272,322 shares were outstanding as
of the close of business on February 28, 1996.
The following table shows, as of February 28, 1996, the
number and percentage of shares of common stock held by each
person known to the Corporation who owned beneficially more than
five percent of the issued and outstanding common stock of the
Corporation and by the Corporation's directors and certain executive
officers:
<PAGE> 1
<TABLE>
<CAPTION>
Beneficial Amount and Nature of Percent
Owner Beneficial Ownership of Class
---------- -------------------- ---------
<S> <C> <C>
H. J. Baker 36,446 1, 2 3
Gerald L. Bepko 12,002 1, 4 3
David L. Gray 42,613 5 3
Douglas W. Huemme 6,469 6 3
David A. Lindsey 66,475 8 3
Marni McKinney 2,262,348 7 27.1%
Robert H. McKinney 2,262,348 7 27.1%
Owen B. Melton, Jr. 182,607 9 2.21%
Phyllis W. Minott 13,334 1, 10 3
Timothy J. O'Neill 59,188 11 3
Michael L. Smith 22,314 1, 12 3
The Somerset Group, Inc. 2,262,348 7 27.1%
John W. Wynne 21,740 1, 13 3
All Executive Officers and
Directors as a Group (18 Persons) 2,779,658 14 32.5%
</TABLE>
- ------------
1 Includes 9,993 shares as to which the director has the right to
acquire beneficial ownership as specified in Rule 13d-3(d)(1)
under the Securities Exchange Act of 1934 (the "Exchange
Act").
2 Includes 2,260 shares held in trust under the First Indiana
Bank Employees' Stock Purchase Plan (the "Stock Purchase
Plan").
3 The number of shares represents less than one percent of the
Corporation's common stock outstanding.
4 Includes 1,759 shares held in trust under the Stock Purchase
Plan.
5 Includes 902 shares held in trust under the Stock Purchase
Plan and 32,248 shares as to which there is a right to acquire
beneficial ownership as specified in Rule 13d-3(d)(1) under
the Exchange Act.
6 Includes 130 shares held in trust under the Stock Purchase
Plan, 4,996 shares as to which there is a right to acquire
beneficial ownership as specified in Rule 13d-3(d)(1) under
the Exchange Act and 1,342 shares held in trust under the
Directors' Deferred Fee Plan.
7 These shares are beneficially owned by a group consisting of
The Somerset Group, Inc. ("Somerset"), Robert H. McKinney
and Marni McKinney. Robert H. McKinney owns 411,112
shares of the Corporation, including 1,447 shares held in trust
under the Stock Purchase Plan, and 68,246 shares of the
Corporation as to which Mr. McKinney has the right to
acquire beneficial ownership as specified in Rule 13d-3(d)(1)
under the Exchange Act. Mr. McKinney, his immediate
family, a family limited partnership, and various irrevocable
trusts established by Mr. McKinney for the benefit of his
children together beneficially own, directly or indirectly,
approximately 45% of the outstanding capital stock of
Somerset, which owns of record 1,811,979 shares of the
Corporation. The total held by the group also includes 39,255
shares of the Corporation owned by Mr. McKinney's
daughter, Marni McKinney, including 1,030 shares held in
trust under the Stock
<PAGE> 2
Purchase Plan and 6,870 shares as to
which she has the right to acquire beneficial ownership as
specified in Rule 13d-3(d)(1) under the Exchange Act. Mr.
McKinney is the Chairman and a director of Somerset;
Ms. McKinney is the President and Chief Executive Officer
and a director of Somerset; and Mr. McKinney's son, Kevin
K. McKinney, is Vice President and a director of Somerset.
8 Includes 75 shares held in trust under the Stock Purchase Plan
and 29,848 shares as to which there is a right to acquire
beneficial ownership as specified in Rule 13d-3(d)(1) under
the Exchange Act.
9 Includes 44,498 shares as to which Mr. Melton has the right
to acquire beneficial ownership as specified in Rule
13d-3(d)(1) under the Exchange Act, 5,660 shares held in
trust under the Stock Purchase Plan, and 84,937 shares owned
of record jointly with Mr. Melton's spouse.
10 Includes 2,558 shares held in trust under the Stock Purchase
Plan and 81 shares held under the Corporation's Dividend
Reinvestment and Stock Purchase Plan (the "DR Plan").
11 Includes 9,451 shares held in trust under the Stock Purchase
Plan and 18,448 shares as to which there is a right to acquire
beneficial ownership as specified in Rule 13d-3(d)(1) under
the Exchange Act.
12 Includes 1,686 shares held in trust under the Stock Purchase
Plan.
13 Includes 1,051 shares held in trust under the Stock Purchase
Plan and 72 shares held under the DR Plan.
14 The address of The Somerset Group, Inc. is 135 North
Pennsylvania Street, Suite 2800, Indianapolis, Indiana 46204.
This number includes 1,811,979 shares owned of record by
The Somerset Group, Inc. (see note 7), 32,660 shares held in
trust under the Stock Purchase Plan, 583 shares held under the
DR Plan, and 281,330 shares as to which there is a right to
acquire beneficial ownership as specified in Rule 13d-3(d)(1)
under the Exchange Act.
- -----------
Proposal No. 1: ELECTION OF DIRECTORS
Three directors are to be elected. H. J. Baker, Marni
McKinney and Phyllis W. Minott have been nominated for a term of
three years and until their successors are elected and qualified. All
nominees are members of the present Board of Directors. The other
directors listed in the table below will continue in office until the
expiration of their terms. All of the nominees and the other directors
listed in the table below are also members of the Board of Directors
of First Indiana Bank (the "Bank"), a wholly owned subsidiary of the
Corporation. Except for directors elected after 1986, all of the
nominees and directors were directors of the Bank and became
directors of the Corporation in 1986 when the Corporation was
formed and the stock of the Bank was exchanged for Corporation
stock. If, at the time of the annual meeting, any of the nominees is
unable or declines to serve, the discretionary authority provided in
the proxy may be exercised to vote for a substitute or substitutes.
The Board of Directors has no reason to believe that any substitute
nominee or nominees will be required.
<PAGE> 3
The Board of Directors unanimously recommends the election of the
following nominees.
<TABLE>
<CAPTION>
NOMINEES FOR TERMS EXPIRING IN 1999
Name, Age, Principal
Occupation(s) and
Business Experience Director
During Past 5 Years Since
- ----------------------------------------------------------------------------
<S> <C>
H. J. Baker, Age 68 1966
Chairman Emeritus, BMW Constructors, Inc., industrial mechanical
contractors; Director of The Somerset Group, Inc. and Lilly
Industries, Inc.
Marni McKinney, Age 39 1992
Vice Chairman of the Corporation and the Bank; Director, President,
and Chief Executive Officer, The Somerset Group, Inc., an affiliate
of the Corporation, financial services; previously Executive Vice
President of The Somerset Group, Inc., and Vice President of the
Corporation and the Bank.
Phyllis W. Minott, Age 57 1976
Chairman and Chief Executive Officer, Minott Motion Pictures, Inc.,
commercial movie production; previously General Auditor, Eli Lilly
& Company, a pharmaceutical company; Controller, Accounting and
Chief Accounting Officer, Eli Lilly & Company.
<CAPTION>
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Name, Age, Principal
Occupation(s) and
Business Experience Director
During Past 5 Years Since
- ------------------------------------------------------------------------------
<S> <C>
Robert H. McKinney, Age 70 1954
Chairman and Chief Executive Officer of the Corporation and
Chairman of the Bank; Chairman and Director, The Somerset Group,
Inc., an affiliate of the Corporation, financial services; Director of
Lilly Industries, Inc.; retired partner, Bose McKinney & Evans,
attorneys; Chairman, Federal Home Loan Bank Board, 1977-1979.
Owen B. Melton, Jr., Age 49 1983
President and Chief Operating Officer of the Corporation and
President and Chief Executive Officer of the Bank.
Michael L. Smith, Age 47 1985
President, Somerset Financial Services, a division of The Somerset
Group, Inc.; Director of The Somerset Group, Inc.; formerly
Chairman, President and Chief Executive Officer, Mayflower Group,
Inc., diversified transportation services; Director of Acordia, Inc.
<PAGE> 4
<CAPTION>
DIRECTORS WHOSE TERMS EXPIRE IN 1997
Name, Age, Principal
Occupation(s) and
Business Experience Director
During Past 5 Years Since
- ------------------------------------------------------------------------------
<S> <C>
Gerald L. Bepko, Age 55 1988
Vice President for Long-Range Planning of Indiana University and
Chancellor, Indiana University-Purdue University at Indianapolis;
previously Dean and Professor of Law, Indiana University School of
Law, Indianapolis; Director of Indiana Energy, Inc. and Circle
Income Shares, Inc.
Douglas W. Huemme, Age 54 1994
Chairman, President, and Chief Executive Officer, Lilly Industries,
Inc., industrial coatings; formerly Vice President and Group
Executive, Chemicals Group, Whittaker Corporation; Director of
The Somerset Group, Inc.
John W. Wynne, Age 63 1991
Chairman and Director of Duke Realty Investments, Inc., a real estate
investment trust; partner, Duke Associates, real estate development;
retired as counsel (previously partner), Bose McKinney & Evans,
attorneys.
</TABLE>
The Boards of Directors of the Corporation and the Bank
each met 12 times during the last year. All directors attended in
excess of 75% of the aggregate of (1) the total number of meetings
of the Boards of Directors of the Corporation and the Bank
(considered separately) and (2) the total number of meetings held by
all Corporation and Bank committees (considered separately) on
which he or she served.
Nominees for election as a director of the Corporation are
selected by the full Board of Directors, acting as a nominating
committee. Nominations for directors, other than those made by the
nominating committee, will not be eligible to be voted upon at an
annual meeting unless submitted in accordance with the procedure
set forth under heading "SHAREHOLDER PROPOSALS AND
NOMINATIONS."
Certain Committees of the Boards of Directors of
the Corporation and the Bank
Among other committees, the Board of Directors of the
Corporation has an Audit Committee and a Stock Administration
Committee. The Board of Directors of the Bank has, among other
committees, an Audit Committee, a Compensation Committee, and
a Stock Administration Committee.
The functions of the Audit Committees are to evaluate audit
performance, handle relations with the Corporation's and the Bank's
independent auditors, and evaluate policies and procedures related
to internal audit functions and controls. The members of the
Corporation's and the Bank's Audit Committees in 1995 were
Phyllis W. Minott (Chairperson), Douglas W. Huemme, and John W.
Wynne. The Corporation's and the Bank's Audit Committees met
jointly three times during 1995.
The functions of the Compensation Committee are to
review and make recommendations to the Board of Directors with
respect to the compensation of directors, officers, and employees of
the Bank. Because the officers and employees of the Corporation, all
of whom are officers or employees of the Bank, receive no separate
cash compensation from the Corporation, the Compensation
Committee of the Board of Directors of the Bank effectively
<PAGE> 5
serves as the compensation committee of the Board of Directors of the
Corporation. The members of the Compensation Committee are H.
J. Baker (Chairperson), Gerald L. Bepko, and Phyllis W. Minott.
The Committee met twice during 1995.
The Corporation's Stock Administration Committee
administers and grants options and other such stock awards under the
Corporation's stock option and incentive plans, and, together with
the Bank's Stock Administration Committee, administers the Bank's
Employees' Stock Purchase Plan. The members of the Corporation's
and the Bank's Stock Administration Committees are Gerald L.
Bepko (Chairperson), H. J. Baker and Douglas W. Huemme. The
Corporation's and the Bank's Stock Administration Committees met
jointly three times during 1995.
Compensation of Directors
Directors of the Corporation and the Bank, other than
Robert H. McKinney, Marni McKinney and Owen B. Melton, Jr.,
received in 1995 a quarterly retainer of $1,800, plus $500 per
meeting of the Board of Directors attended and an additional $500
per committee meeting attended.
Under the First Indiana 1992 Director Stock Option Plan,
the Corporation reserved 145,809 shares of its common stock for
issuance upon the exercise of options to be granted under the plan.
The plan provides for the issuance of non-qualified options to
purchase 2,498 shares to each outside director of the Corporation on
the date of each annual meeting of shareholders. The Corporation
granted 2,498 shares to each outside director on April 19, 1995, in
accordance with the plan. No option is exercisable during the period
of one year following the date of grant, and options granted under the
plan must specify an exercise price of not less than 100% of the
market price of the shares at the date of grant.
Under the Directors' Deferred Fee Plan, directors of the
Corporation may elect to defer all or any portion of the fees paid for
attendance at a Board of Directors' or committee meeting. The
deferred fees are then contributed to a trust which buys stock with
such fees or invests such fees in an interest-bearing account.
Directors are not eligible to receive shares or cash held under the
plan until they cease to be a director, officer, or employee of the
Corporation. Amounts deferred are not taxable to the director until
the trust distributes the cash or stock to the director. In the event of
a change in control of the Corporation, amounts held under the plan
are payable immediately in one lump sum.
Directors may also elect to contribute part of their fees to
the Bank's Stock Purchase Plan. As with other participants, the
Bank matches a certain portion of such contributions and purchases
the Corporation's common stock on the open market at the prevailing
market price. The material features of the Stock Purchase Plan are
described under the heading "EXECUTIVE COMPENSATION."
Certain Transactions
The Bank offers its employees and officers (other than
executive officers) a loan plan involving variable-rate mortgages,
lines of credit, home equity loans, credit cards, and various
installment loans with a lower interest rate (not below the Bank's
cost of funds) and waiver of loan origination fees, and fixed-rate
mortgage loans with waiver of loan origination fees only. All
outstanding loans to directors and executive officers have been made
in the ordinary course of business and on substantially the same
terms (including interest rates and collateral) as those prevailing at
the time for comparable transactions with non-affiliated persons.
Management believes that these loans neither involve more than the
normal risk of collectibility nor present other unfavorable features.
<PAGE> 6
EXECUTIVE COMPENSATION
Joint Report of the Compensation Committee and
the Stock Administration Committee
Policy and Performance Measures
In determining the compensation of executive officers, the
Compensation Committee strives to maintain an appropriate balance
between executive pay and the creation of shareholder value.
Executive compensation must attract and retain well qualified
officers while at the same time motivating them to achieve the
short-term and long-term strategic goals of the Corporation. To
achieve this balance, executive officers receive a reasonable base
salary and also have the opportunity to earn bonuses tied to the
Corporation's overall performance.
The Compensation Committee based the 1995 annual
salaries of the Corporation's executive officers on the results of
surveys compiled by an independent consultant. The compensation
consultant began with an analysis of the compensation of the
executive officers of two groups of financial institutions with assets
of up to $2.3 billion. The consultant derived the median salary of the
executive officers of the institutions contained in each of the two
surveys and then calculated an average (mean) salary. The
Compensation Committee relied on this calculation of average
salaries in setting the salaries of the Corporation's executive officers.
In order to more directly tie executive compensation to the
Corporation's overall performance, the Compensation Committee
also administers short-term and long-term bonus plans. These plans
are designed to increase the total compensation of the Corporation's
executive officers, but only if the Corporation's performance merited
such increases. The Compensation Committee is guided by the
principle that when certain corporate goals are achieved, the
compensation of the executive officers who contributed to the
Corporation's success should increase accordingly.
The 1995 One Year Management Incentive Plan (the
"Short-Term Plan") provided for a bonus pool in an amount equal to
between 30% and 50% of the participants' aggregate annual salaries,
with bonuses to be awarded based upon both overall corporate
performance and individual contributions to the Corporation. In the
case of each of the executive officers named in the Summary
Compensation Table, at least 50% of the amount contributed on
behalf of such executive officer to the bonus pool was allocated to
overall corporate performance. The corporate performance
component of the bonuses was to be paid based on the Corporation's
after-tax return on average equity for 1995. Bonuses were paid in
the aggregate of 100% on that portion of the pool allocated to overall
corporate performance because the Corporation achieved the
performance targets for 1995 which were determined in relation to
the Corporation's performance during 1994. The individual
performance component of the bonuses depended on the extent to
which each participant achieved certain individual or division goals
and contributed to the Corporation's overall performance, and
whether or not the corporate performance targets were met.
Under the 1994-1996 Long-Term Plan (the "Long-Term
Plan"), additional performance-based compensation may be awarded
at the end of fiscal year 1996. This plan provides for a bonus pool
in an amount equal to 50% of the average of the aggregate annual
salary of participants over the term of the Long-Term Plan, with
bonuses in an aggregate amount equal to 0% to 100% of the pool to
be paid if the Corporation's average after-tax return on average
equity for the three years 1994-96 compares favorably with the
aggregate reported returns on average equity of publicly traded thrifts
in Indiana and the four contiguous states (the "Midwest Thrift
Group"), and the Corporation achieves specific financial goals, such
as interest-rate margin and asset/liability maturity mix. If the
financial goals set forth in the Long-Term Plan are achieved, the
bonus pool will be allocated among participants according to their
individual contributions to the attainment of the goals. Tying
long-term bonuses not only to the Corporation's attainment of its
own goals, but also to the performance of the Midwest Thrift Group,
enables the Compensation Committee to establish financial goals
which are objective and ambitious when compared with those of
similarly situated institutions. The Midwest Thrift Group serves as
an independent basis for assessing performance-based compensation
of the Corporation's executive officers.
<PAGE> 7
The Stock Administration and Compensation Committees
believe that stock ownership by management and stock-based
performance compensation arrangements are beneficial in aligning
management's and shareholders' interests in the enhancement of
shareholder value, and, typically, consider granting stock options to
various executive officers, including the executive officers named in
the Summary Compensation Table, every two years. Given this two
year cycle, no stock options were awarded in 1995.
Nonetheless, in 1995 the Board of Directors reaffirmed its
position on the merits of stock ownership by management and
instituted specified management stock ownership objectives to be
attained by the end of the year 2000. By the end of that year, each
officer and director of the Bank must own Corporation stock with a
market value equal to a specified multiple of such officer's or
director's compensation. These multiples range from one times base
compensation for vice presidents to three times base compensation
for senior vice presidents, and five times base compensation for the
Bank's Chairman, Vice Chairman and President, as well as for the
Bank's Board of Directors. The Board of Directors believes that
implementing these stock ownership requirements will further align
the interests of the Bank's management with the objectives of the
Corporation's shareholders.
To further encourage Bank officers and employees, as well
as directors, to acquire ownership of the Corporation, such persons
are eligible to contribute a portion of their earnings to the Bank's
Employee's Stock Purchase Plan after completing six months of
service. Such contributions are used to purchase the Corporation's
stock each month at the then prevailing market price. If the
Corporation attains a specified after-tax return on average equity for
a calendar year (as determined by the Bank's Stock Administration
Committee), the Bank will match participant contributions during the
subsequent Plan Year (as defined in the Plan) at a ratio of one to
three. If such after-tax returns are not achieved for a calendar year,
participant contributions during the subsequent Plan Year will be
matched at a ratio of one to four. Because the Corporation failed to
achieve its performance objectives for the year ended December 31,
1994, participant contributions for the Plan Year beginning April 1,
1995 were matched at a ratio of one to four. However, the
Corporation did achieve its performance objectives for the year
ended December 31, 1995, and participant contributions for the Plan
Year beginning April 1, 1996 will be matched at a ratio of one to
three. Contributions by the Bank to the accounts of the executive
officers named in the Summary Compensation Table during the
calendar year ended December 31, 1995 are set forth in the column
entitled "All Other Compensation."
In 1993, the Internal Revenue Code of 1986 (the "Code")
was amended to limit to $1 million the amount of compensation that
may be deducted by the Corporation in any year with respect to
certain of the Corporation's executive officers. While annual salaries
and bonuses of the Corporation's executive officers have generally
been structured so that all compensation will be deductible, the Stock
Administration and Compensation Committees recognize that the
vesting of restricted stock under the Long-Term Plan may, in certain
instances, cause an executive officer to receive annual compensation
which cannot be deducted in full by the Corporation. The
Committees believe that such compensation is appropriate because
the inability to fully deduct compensation will be limited almost
exclusively to situations in which an executive officer has had to bear
the risk of a decline in the market price of the Corporation's stock
and has shared the rewards of an increase in such price with the
Corporation's shareholders. Nonetheless, the Stock Administration
and Compensation Committees intend, from time to time, to explore
the options available to the Corporation in order to qualify all of its
compensation for deductibility under the Code.
CEO Performance
Mr. McKinney serves as the chief executive officer of the
Corporation, and Mr. Melton serves as the chief executive officer of
the Corporation's principal operating unit, the Bank. While Mr.
McKinney devotes a major portion of his time to the operations of the
Corporation and the Bank, Mr. Melton devotes all of his time to
those operations.
Like the salaries of the Corporation's other executive
officers, Mr. Melton's and Mr. McKinney's salaries are also derived
from the data compiled by the independent consultant. Since these
two individuals have the greatest impact on the Corporation's
long-term performance, their salaries are determined based on their
achievement of
<PAGE> 8
certain goals relating to the Corporation's
performance during the prior year, such as return on equity, return on
assets, credit quality, and management of operating expenses.
Because Mr. Melton is the chief executive officer of the
Corporation's sole operating unit and responsible for its day-to-day
activities, the Compensation Committee gives special weight to Mr.
Melton's achievement of these objectives when determining his
salary for the coming year. In addition, the Compensation Committee
meets separately with Mr. McKinney for his candid evaluation of Mr.
Melton's performance during the preceding year and his achievement
of the objectives described above. The Corporation's failure to attain
the 1994 performance goals resulted in no increase in either Mr.
McKinney's or Mr. Melton's salaries for 1995.
Along with the Corporation's other executive officers, Mr.
McKinney and Mr. Melton participate in the Short-Term Plan and
the Long-Term Plan. However, under the Short-Term Plan, 60% of
the amount contributed to the bonus pool on behalf of Mr. McKinney
and Mr. Melton was allocated to the overall corporate performance
component, rather than the 50% contribution used for the remaining
executive officers named in the Summary Compensation Table. The
Compensation Committee believes that such modifications
emphasize Mr. McKinney's and Mr. Melton's leadership roles and
encourage them to manage the Corporation with the shareholders'
long-term interests in mind. Additionally, under the Long-Term
Plan, Mr. McKinney and Mr. Melton received in 1994 a grant of
restricted stock in lieu of their participation in the bonus pool. The
stock will be freed from the restrictions at the end of 1996 if the
Corporation attains the performance objectives set forth in the
Long-Term Plan. Further, if the stock is freed from the restrictions,
the Corporation will pay to Mr. McKinney and Mr. Melton an
amount equal to the tax liability they incur as a result of such vesting.
The Compensation Committee believes that such tax payments are
appropriate given the nature of the stock awards, which required Mr.
McKinney and Mr. Melton to assume for three years the risk of a
decline in the market value of the Corporation's stock, and given that
such tax payments will only be made if the Corporation meets the
performance targets set forth in the Long-Term Plan.
Compensation Committee Stock Administration Committee
---------------------- ------------------------------
H. J. Baker, Chairperson Gerald L. Bepko, Chairperson
Gerald L. Bepko H. J. Baker
Phyllis W. Minott Douglas W. Huemme
<PAGE> 9
Performance Graph
The following line graph compares the cumulative total
shareholder return on the common stock of the Corporation over the
last five fiscal years with the cumulative total return of the NASDAQ
Stock Market Index and the cumulative total return of the NASDAQ
Bank Index over the same period.
<TABLE>
<CAPTION>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
FIRST INDIANA CORPORATION COMMON STOCK, NASDAQ STOCK MARKET INDEX
AND NASDAQ BANK INDEX**
TOTAL RETURN INDEX
----------------------------------------------
First Indiana Nasdaq Stock Nasdaq Bank
Period Corp. Market Index
- ------ ------------- ------------ -----------
<S> <C> <C> <C>
Dec-90 $100 $100 $100
Jun-91 $156 $128 $136
Dec-91 $244 $161 $164
Jun-92 $316 $154 $201
Dec-92 $385 $187 $239
Jun-93 $512 $194 $255
Dec-93 $504 $215 $272
Jun-94 $490 $196 $290
Dec-94 $479 $210 $271
Jun-95 $607 $261 $328
Dec-95 $796 $296 $404
* Assumes that the value of the investment in the Corporation's stock and
each index was $100 on December 31, 1990 and that all dividends were
reinvested.
**The NASDAQ Bank Index contains performance data for banks, savings
institutions and holding companies
<CAPTION>
Percent First Indiana Nasdaq Stock Nasdaq Bank
Change Corp. Market Index
- ------------- ------------- ------------ -----------
<S> <C> <C> <C>
Six Months
Ended 12/31/95 +31.3% +13.4% +23.3%
Twelve Months
Ended 12/31/95 +66.2% +41.3% +49.0%
</TABLE>
<PAGE> 10
Summary
The following table sets forth the compensation awarded
to, earned by, or paid to the chief executive officer and the four most
highly compensated executive officers other than the chief executive
officer (collectively, the "Named Executive Officers") during the last
three fiscal years.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
----------------------
Annual Compensation Awards (1) Payouts
---------------------------- ------------------------ -------
Name and Restricted Securities
Principal Other Annual Stock Awards Underlying All Other
Position Year Salary Bonus Compensation Options (#) LTIP Payouts Compensation
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert H. McKinney 1995 $190,000 $ 95,000 $ -- $ -- -- $ -- $111,230(3)
Chairman and Chief 1994 190,000 -- -- 282,000 (2) -- -- 189,072
Executive Officer 1993 180,000 87,210 347,985 -- 12,000 421,875 136,142
of the Corporation;
Chairman of the Bank
- --------------------------------------------------------------------------------------------------------------------------
Owen B. Melton, Jr. 1995 248,000 126,157 -- -- -- -- 94,848(4)
President and Chief 1994 248,000 -- -- 282,000 (2) -- -- 119,807
Operating Officer of 1993 235,000 113,858 340,790 -- 12,000 421,875 82,733
the Corporation;
President and Chief
Executive Officer of
the Bank
- --------------------------------------------------------------------------------------------------------------------------
Timothy J. O'Neill 1995 137,000 63,705 -- -- -- -- 21,125(5)
Senior Vice President 1994 135,000 -- -- -- -- -- 28,782
Consumer Banking Services 1993 129,000 65,351 -- -- 7,200 59,333 22,908
Division of the Bank
- --------------------------------------------------------------------------------------------------------------------------
David L. Gray 1995 138,000 65,000 -- -- -- -- 17,958(6)
Vice President and 1994 132,000 -- -- -- -- -- 21,520
Treasurer of the Corpor- 1993 126,000 61,208 -- -- 6,000 59,167 18,227
ation; Senior Vice
President-Internal
Support Services Division,
and Chief Financial Officer
and Treasurer of the Bank
- --------------------------------------------------------------------------------------------------------------------------
David A. Lindsey 1995 120,000 60,850 -- -- -- -- 12,610(7)
Senior Vice President- 1994 110,500 -- -- -- -- -- 14,378
Consumer Banking Sales 1993 106,000 51,033 -- -- 7,200 50,167 13,930
Division of the Bank;
President of One Mortgage
Corporation and One
Insurance Agency
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Adjusted for all stock splits.
2 Represents the market value on the date of grant of 19,200 shares of
restricted stock granted to each of Mr. McKinney and Mr. Melton under the
1994-1996 Long-Term Management Incentive Plan. The restricted stock (i)
had a market value of $412,000 on December 31, 1995, (ii) will vest on
December 31, 1996 if the Corporation attains the performance targets described
in the Joint Report of the Compensation Committee and the Stock
Administration Committee, and (iii) earns dividends while restricted.
3 Consists of a $3,319 contribution by the Bank to the Stock Purchase Plan and
the accrual by the Bank of $107,911 for Mr. McKinney's supplemental
pension.
<PAGE> 11
4 Consists of a $1,350 contribution by the Bank to the Stock Purchase Plan and
the accrual by the Bank of $93,498 for Mr. Melton's supplemental pension.
5 Consists of a $2,290 contribution by the Bank to the Stock Purchase Plan, the
payment by the Bank of $1,169 for term life insurance premiums and the
accrual by the Bank of $17,666 for Mr. O'Neill's supplemental pension.
6 Consists of a $3,375 contribution by the Bank to the Stock Purchase Plan, the
payment by the Bank of $1,165 for term life insurance premiums and the
accrual by the Bank of $13,418 for Mr. Gray's supplemental pension.
7 Consists of a $3,192 contribution by the Bank to the Stock Purchase Plan, the
payment by the Bank of $950 for term life insurance premiums and the accrual
by the Bank of $8,468 for Mr. Lindsey's supplemental pension.
Stock Options
The following table sets forth on an aggregate basis each
exercise of stock options during fiscal year 1995 by each of the
Named Executive Officers and the 1995 year-end value of the
unexercised options of each such executive officer. The number of
shares and stock options set forth below have been adjusted to reflect
the Stock Split.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION VALUES
Number of Securities Underlying Value of Unexercised
Unexercised Options at FY-End In-the-Money Options
at FY-End
------------------------------- ---------------------------
Shares
Acquired on
Name Exercise (#) Value Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. McKinney -- $ -- 68,246 -- $1,464,454 --
Owen B. Melton, Jr. 15,000 218,000 44,498 -- 973,402 --
Timothy J. O'Neill -- -- 18,448 -- 395,880 --
David L. Gray -- -- 32,248 -- 692,006 --
David A. Lindsey 1,800 28,035 29,848 -- 640,506 --
</TABLE>
Pension Plans
The following table sets forth, in specified compensation
and years of service classifications, the estimated annual benefits
payable upon retirement at age 65 under the Bank's
non-contributory, qualified defined benefit pension plan (the
"Qualified Plan"), as supplemented by the supplemental benefit plan
adopted by the Bank on January 17, 1992 (the "Supplemental Plan")
(the Qualified Plan and the Supplemental Plan are collectively
referred to as the "Plans"). While the table shows the annual benefit
payable, participants may elect to receive the present value of the
entire benefit in one lump sum.
<PAGE> 12
<TABLE>
<CAPTION>
PENSION PLAN TABLE 1
Covered 10 Years' Benefit 20 Years' Benefit 30 Years' Benefit 40 Years' Benefit
Compensation Service Service Service Service
- ------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$100,000 $ 18,900 $ 37,700 $ 56,600 $ 76,000
120,000 22,900 45,700 68,600 92,000
140,000 26,900 53,700 80,600 108,000
160,000 30,900 61,700 92,600 124,000
180,000 34,900 69,700 104,600 140,000
200,000 38,900 77,700 116,600 156,000
220,000 42,900 85,700 128,600 172,000
240,000 46,900 93,700 140,600 188,000
260,000 50,900 101,700 152,600 204,000
280,000 54,900 109,700 164,600 220,000
300,000 58,900 117,700 176,600 236,000
320,000 62,900 126,700 188,600 252,000
340,000 66,900 133,700 200,600 268,000
360,000 70,900 141,700 212,600 284,000
380,000 74,900 149,700 224,600 300,000
400,000 78,900 157,700 236,600 316,000
500,000 98,900 197,700 296,600 396,000
600,000 118,900 237,700 356,600 476,000
700,000 138,900 277,700 416,600 556,000
</TABLE>
- -----------------------------------------------------------------------------
1 Amounts shown are based on an assumed Social Security integration base of
$22,716 and are not subject to any deduction for Social Security or other
offset amounts.
The annual retirement benefit displayed in the Pension
Plan Table is the product of (i) the participant's number of years of
credited benefit service, multiplied by (ii) the sum of 1.5% of that
portion of the participant's covered compensation that does not
exceed the Social Security integration base for the participant plus
2% of the participant's covered compensation that exceeds such
integration base. Compensation covered by the Plans is the sum of
the average of a participant's annualized rate of base salary (as
reported in the Salary column of the Summary Compensation Table)
for the five consecutive years of employment which produce the
highest such average, plus the annual average of all bonuses
(including both the Bonus and the LTIP Payouts columns as reported
in the Summary Compensation Table, the market value on the date
of vesting of any restricted stock awards made pursuant to the
Long-Term Plan and any tax reimbursements paid in connection with
such vesting) paid to the participant for the three years next
preceding the participant's retirement.
As of January 1, 1996, the number of years of credited
benefit service and the compensation covered by the Plans (based on
average annual salaries for 1991-1995 and average annual bonuses
for 1993-1995) for each of the Named Executive Officers were as
follows: Robert H. McKinney, 40 years - $496,757; Owen B.
Melton, Jr., 16 years - $555,427; David L. Gray, 14 years - $186,791
Timothy J. O'Neill, 23 years - $188,397; David A. Lindsey, 11 years
- - $160,316.
Employment Contracts and Termination of
Employment and Change in Control Arrangements
Special retirement benefits are provided under the
Supplemental Plan to Mr. McKinney. His retirement benefit under
the Supplemental Plan is payable for life and 15 years certain. The
monthly amount of his benefit is the higher of two calculated
amounts. The first is his monthly retirement benefit that would be
payable to him under the Supplemental Plan if such benefit were
determined in the normal way and were payable for life only. The
second is a monthly retirement benefit equal to the excess of (i) 80%
of his adjusted monthly compensation over (ii) the sum of (a) his
monthly retirement benefit under the Qualified Plan (determined as
though such benefit were payable in the form of a straight-line
annuity) plus (b) his primary Social Security benefit payable at age
65. For purposes of the foregoing, Mr. McKinney's adjusted
monthly compensation is one-twelfth of the sum of (i) his
<PAGE> 13
highest annual rate of salary from the Bank plus (ii) the greater of
(a) 37.5% of his highest annual rate of salary from the Bank or (b) the
annual average of all bonuses paid to him by the Bank for the three years
next preceding his retirement.
Special death benefits are provided under the
Supplemental Plan to Mr. McKinney and Mr. Melton. The death
benefit provided to Mr. McKinney equals three times his highest
annual rate of salary, grossed up for income taxes at the highest
applicable marginal rate in effect at the time of his death, and is
payable whether he dies before or after separation from service and,
because he has already attained age 65, without regard to when he
separates from service. The death benefit provided to Mr. Melton
equals three times his highest annual rate of salary, grossed up for
income taxes at the highest applicable marginal rate in effect at the
time of his death, unless his employment terminates prior to age 65
other than by reason of his death or disability or after a change of
control, in which case the death benefit provided to him is $100,000,
grossed up for income taxes.
APPOINTMENT OF AUDITORS
The Corporation's financial statements for the year ended
December 31, 1995 were audited by KPMG Peat Marwick LLP
("Peat Marwick"). The Corporation has selected Peat Marwick as
its independent auditors for the fiscal year ending December 31,
1996. Representatives of Peat Marwick are expected to attend the
annual meeting, will have the opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS AND NOMINATIONS
Any shareholder of the Corporation wishing to have a
proposal considered for inclusion in the Corporation's 1997 proxy
solicitation materials must set forth such proposal in writing and file
it with the Secretary of the Corporation on or before November 13,
1996. In order to be considered in the 1997 annual meeting,
shareholder proposals not included in the Corporation's 1997 proxy
solicitation materials, as well as shareholder nominations for
directors, must be submitted in writing to the Secretary of the
Corporation at least 60 days before the date of the 1997 annual
meeting, or, if the 1997 annual meeting is held prior to March 17,
1997, within ten days after notice of the annual meeting is mailed to
shareholders. The Board of Directors of the Corporation will review
any shareholder proposals that are filed as required, and will
determine whether such proposals meet applicable criteria for
inclusion in its 1997 proxy solicitation materials or consideration at
the 1997 annual meeting. Shareholder nominations must set forth
(a) as to each person whom the shareholder proposes to nominate for
election or re-election as a director, (i) the name, age, business
address and residence address of such person, (ii) the principal
occupation or employment of such person, and (iii) such person's
written consent to serve as a director, if elected; and (b) as to the
shareholder giving the notice (i) the name and address of such
shareholder and (ii) the class and the number of shares of the
Corporation which are owned of record by such shareholder.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Corporation's officers and directors, and
persons who own more than 10% of the Corporation's Common
Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and
greater than 10% shareholders (the "Reporting Persons") are
required by Securities and Exchange Commission 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, the Corporation believes that during
1995 all Reporting Persons complied with the filing requirements of
Section 16(a).
<PAGE> 14
ANNUAL REPORT
A copy of the Corporation's Annual Report for the year
ended December 31, 1995 has been provided to all shareholders as
of the record date. The Annual Report is not to be considered as
proxy solicitation material.
OTHER MATTERS
The Board of Directors knows of no other matters to be
brought before this annual meeting. However, if other matters
should come before the meeting, it is the intention of each person
named in the proxy to vote such proxy in accordance with his or her
judgment on such matters.
EXPENSES OF SOLICITATION
The entire expense of preparing, assembling, printing and
mailing the proxy form and the material used in the solicitation of
proxies will be paid by the Corporation. The Corporation does not
expect that the solicitation will be made by specially engaged
employees or paid solicitors. Although the Corporation might use
such employees or solicitors if it deems them necessary, no
arrangements or contracts have been made with any such employees
or solicitors as of the date of this statement. In addition to the use of
the mails, solicitation may be made by telephone, telegraph, cable or
personal interview. The Corporation will request record holders of
shares beneficially owned by others to forward this proxy statement
and related materials to the beneficial owners of such shares, and will
reimburse such record holders for their reasonable expenses incurred
in doing so.
IT IS IMPORTANT THAT PROXIES BE
RETURNED PROMPTLY. Whether or not you attend the
meeting, you are urged to execute and return the proxy.
For the Board of Directors,
/s/ Robert H. McKinney
Robert H. McKinney
Chairman
March 13, 1996
<PAGE> 15
FIRST INDIANA BANK
Principal Subsidiary of First Indiana Corporation
<PAGE> 16
[FORM OF PROXY CARD]
PROXY FIRST INDIANA PROXY
CORPORATION
This Proxy is solicited on behalf of the Board of Directors
for the Annual Meeting of Shareholders to be held on April 17, 1996
The undersigned appoints Gerald L. Bepko, Douglas W. Huemme, and
John W. Wynne, or any of them, proxies for the undersigned, each with full
power of substitution, to attend the Annual Meeting of Shareholders of
First Indiana Corporation to be held on April 17, 1996 at 9:00 a.m. E.S.T.,
and at any adjournments or postponements of the Annual Meeting, and to vote
as specified in this Proxy and all the Common Shares of the Corporation
which the undersigned would be entitled to vote if personally present. This
Proxy when properly executed will be voted in accordance with your indicated
directions. If no direction is made, this Proxy will be voted FOR the
election of Directors.
The Board of Directors unanimously recommends a vote FOR the election
of Directors.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE
REVERSE SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Continued and to be signed on reverse side)
<PAGE>
FIRST INDIANA CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
1. Election of Directors -- FOR WITHHOLD FOR ALL (Except Nominee(s)
Nominees: H.J. Baker, written below)
Marni McKinney, [ ] [ ] [ ] __________________
Phyllis W. Minott
2. In their discretion, the Proxies
are authorized to vote on such
other business as may come before
the meeting. The undersigned acknowledges receipt
of the Notice of Annual Meeting of
Shareholders and of the Proxy
Statement.
Dated:_________________, 1996
Signature(s)_________________________
_____________________________________
Please sign exactly as your name
appears. Joint owners should each
sign personally. Where applicable,
indicate your official position or
representation capacity.
<PAGE>
