<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
F & M BANCORPORATION, INC.
(Name of Registrant as Specified in Its Charter)
_____________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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 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> 2
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
ON APRIL 23, 1996
To Shareholders of F & M Bancorporation, Inc.:
The Annual Meeting of Shareholders of F & M Bancorporation, Inc. (the
"Corporation") will be held at the Paper Valley Hotel and Conference Center,
333 West College Avenue, Appleton, Wisconsin, on Tuesday, April 23, 1996, at
7:00 p.m., Central Daylight Time, for the following purposes:
(1) To elect three directors to the Board of Directors for
three-year terms expiring in 1999.
(2) To authorize loans to officers of the Corporation and its
subsidiaries to foster participation in the Corporation's Stock Purchase Plan,
which loans will be secured by the Corporation's Common Stock; the amounts of
these loans will exceed fifty percent (50%) of the value of the Corporation's
Common Stock given as security.
(3) To amend the Corporation's Articles of Incorporation to
increase the number of shares of Common Stock, $1 par value that the
Corporation is authorized to issue from Ten Million (10,000,000) shares to
Twenty Million (20,000,000) shares.
(4) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record on the books of the Corporation at the
close of business on March 15, 1996, will be entitled to vote at the meeting or
any adjournment of the meeting.
Your attention is called to the Proxy Statement accompanying this
notice for a more complete statement regarding the matters to be acted upon at
the meeting.
By Order of the Board of Directors
Janet M. Lakso, Secretary
Kaukauna, Wisconsin
March 25, 1996
PLEASE INDICATE YOUR VOTING DIRECTIONS, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU LATER FIND THAT YOU CAN BE
PRESENT AT THE MEETING, OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY,
YOU MAY DO SO AT ANY TIME BEFORE IT IS VOTED.
<PAGE> 3
PROXY STATEMENT
F & M BANCORPORATION, INC.
P.O. BOX 410
ONE BANK AVENUE
KAUKAUNA, WISCONSIN 54130-0410
SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of F & M Bancorporation, Inc. (the
"Corporation") for the annual meeting of shareholders on Tuesday, April 23,
1996. Shares represented by properly executed proxies received by the
Corporation will be voted at the meeting and any adjournment thereof in
accordance with the terms of the proxies, unless revoked. Proxies may be
revoked at any time prior to the voting thereof, either by written notice filed
with the Secretary or the acting secretary of the meeting, or by oral notice to
the presiding officer during the meeting.
Shareholders of record at the close of business on March 15, 1996, will
be entitled to one vote on each matter presented for each outstanding share
held. The list of shareholders of record entitled to notice of and to vote at
the meeting will be available for inspection by any shareholder at the
Corporation's principal office at One Bank Avenue, Kaukauna, Wisconsin, prior
to the meeting and will also be available at the meeting. As of March 15,
1996, there were 5,955,108 shares of the Corporation's $1.00 par value voting
common stock ("Common Stock" or "Common Shares") outstanding. This is the
Corporation's only class of stock. Any shareholder entitled to vote may vote
either in person or by a duly-authorized proxy.
A majority of the votes entitled to be cast on a matter, represented in
person or by proxy, constitutes a quorum for action on that matter. Directors
are elected by a plurality of the votes cast by holders of Common Stock
entitled to vote in the election at a meeting at which a quorum is present.
"Plurality" means that the individuals who receive the largest number of votes
are elected as directors up to the maximum number of directors to be chosen at
the meeting. Therefore, any shares not voted, whether by withheld authority,
broker non-vote or otherwise, have no effect in the election of directors
except to the extent that the failure to vote for an individual results in
another individual receiving a larger number of votes. Any votes
<PAGE> 4
attempted to be cast "against" a candidate are not given legal effect and are
not counted as votes cast in an election of directors.
Approval of the lending provisions of the Corporation's Stock Purchase
Plan requires the affirmative vote of a majority of the shareholders voting on
the motion, assuming a quorum is present at the meeting. Therefore,
abstentions and broker non-votes will have no effect on the vote (other than
with respect to establishment of a quorum).
The affirmative vote of the holders of a majority of the outstanding
shares of Corporation's Common Stock outstanding on the record date is required
to adopt the proposed amendment to the Corporation's Articles of Incorporation.
Therefore, any shares not voted, whether by abstention, broker non-vote or
otherwise, will have the affect of a vote AGAINST the proposed amendment.
Expenses in connection with the solicitation of proxies will be paid by
the Corporation. Upon request, the Corporation will reimburse brokers,
dealers, banks and voting trustees, or their nominees, for reasonable expenses
incurred in forwarding copies of the proxy material and the annual report to
the beneficial owners of shares which such persons hold of record.
Solicitation of proxies will be principally by mail. Proxies may also be
solicited in person or by telephone, telecopy or telegraph by officers and
regular employees of the Corporation who will be separately compensated for
such activities.
FOR THE SHAREHOLDERS' MEETING IN 1996, YOU WILL A RECEIVE A SINGLE PROXY
CARD FOR ALL SHARES REGISTERED IN YOUR NAME, INCLUDING THE SHARES YOU HOLD IN
THE DIVIDEND REINVESTMENT PLAN, IF ANY. THIS IS A CHANGE FROM THE PROCEDURE IN
THE PAST.
This proxy material is being mailed to shareholders commencing on or
about March 25, 1996.
-2-
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Shares of the Corporation, as of March 15, 1996, by each
director, each executive officer named in the Summary Compensation Table below
and all directors and executive officers of the Corporation as a group.
NUMBER OF SHARES AND
NATURE OF BENEFICIAL OWNERSHIP (1)
<TABLE>
<CAPTION>
Sole Shared Percent
Name Ownership(2) Ownership(3) Total of class
- ---- --------- --------- ----- --------
<S> <C> <C> <C> <C>
Otto L. Cox 6,200 5,900 12,100 *
Richard Grall 2,231 22 2,253 *
Paul J. Hernke 19,365 --- 19,365 *
Gail E. Janssen 60,527 15,400 75,927 1.3%
John W. Johnson 21,420 --- 21,420 *
Douglas A. Martin 4,994 --- 4,994 *
Duane G. Peppler 3,000 11,000 14,000 *
Robert C. Safford(4) 230,314 3,816 234,130 4.0%
Glenn L. Schilling 17,198 6,743 23,941 *
Joseph F. Walsh 11,625 11,665 23,289 *
All directors and
executive officers
as a group
(18 persons) 392,557 107,385(5) 499,942 8.6%
</TABLE>
- ------------------------------
* Less than 1%
(1) The beneficial ownership information shown is based on
information furnished by the named persons and is determined in
accordance with Rule 13d-3, as required for purposes of this
Proxy Statement. It is not to be construed as an admission of
beneficial ownership for other purposes.
(2) The specified persons have sole powers of voting and disposition
of the shares listed. Includes shares subject to options held by
the named persons which are exercisable currently or within the
next sixty days.
(3) The shares listed in this column are held either jointly by the
named person and his spouse or individually by the named person's
spouse, except as indicated in footnote 4.
(4) Mr. Safford disclaims beneficial ownership of 22,791 shares of
Common Stock, which are owned by his spouse, which are excluded
from the shares reported herein.
(5) This total includes 45,603 shares held by the Corporation's
Employee's Retirement Savings Plan and Trust ("Plan"). Officers
Habert, Lakso and Voet are the trustees of this Plan and have
shared voting power for the Common Shares held by the Plan.
-3-
<PAGE> 6
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Corporation's executive officers and directors, and persons who own more than
10% of the Common Stock, file reports of ownership and changes in ownership
with the Securities and Exchange Commission (the "SEC"). Executive officers,
directors and greater than 10% shareholders (collectively "insiders") are
required by SEC regulation to furnish the Corporation with copies of all
Section 16(a) forms they file.
All publicly-held companies are required to disclose the names of any
insiders who fail to make any such filing on a timely basis during the last
fiscal year, and the number of delinquent filings and transactions, based
solely on a review of the copies of the Section 16(a) forms furnished to the
Corporation, or written representations that no such forms were required.
Based solely on the filings and written representations received by the
Corporation, except that Ms. Verbruggen filed her initial report of beneficial
ownership on Form 3 late as the result of an internal miscommunication, the
Corporation believes that during fiscal year 1995, the Corporation's insiders
have complied with all Section 16(a) filing requirements applicable to them.
ELECTION OF DIRECTORS
The Corporation presently has nine directors who are elected to staggered
three-year terms. Each year, as directors' terms expire, successors are
elected as directors to serve a three-year term to fill expired terms. In
1996, three persons are to be elected to the Board of Directors to serve until
the annual meeting in 1999, and until their respective successors have been
elected. The persons who are nominated as directors and for whom the proxies
will be voted (unless otherwise specified by a shareholder) are named below.
All other directors, whose terms continue, are also listed. If any of the
nominees should decline or be unable to act as director, which eventuality is
not foreseen, the proxies will be voted with discretionary authority for a
substitute nominee designated by the Board of Directors.
-4-
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND AGE AND BUSINESS EXPERIENCE* DIRECTOR SINCE
- ------------ ------------------------ --------------
NOMINEES FOR TERMS EXPIRING IN 1999
<S> <C> <C>
Otto L. Cox, 55(6)(7) Hospital Administrator, 1986
Affinity Health System, Inc.
(health care); Director,
F & M Bank-Appleton
Douglas A. Martin, 44 Regional Vice President- 1990
Southwest of the Corporation
(since 1994); Vice-President
(1991-94); President F & M
Bank-Fennimore; Director
and Chairman of each
Southwest Region bank
Glenn Schilling, 59(7)(8) Retired in 1991 1980
as Vice President
Thilmany Pulp & Paper Company
(paper manufacturer); Director,
F & M Bank-Kaukauna
CONTINUING DIRECTORS - TERMS EXPIRE IN 1997
John W. Johnson, 41(9) Regional Vice President- 1994
Northeast of the Corporation
(since 1994); President and Director
F & M Bank-Northeast
Duane G. Peppler, 64(6)(7) Retired Vice President of the 1985
Corporation; Retired President,
F & M Bank-Winnebago County;
Director, F & M Bank-Winnebago
County
Joseph F. Walsh, 63(6)(7)(8) Retired in 1993 as 1980
President, Hartjes-Walsh
Insurance Management Inc.
(insurance sales); Director,
F & M Bank-Kaukauna
CONTINUING DIRECTORS - TERMS EXPIRE IN 1998
Paul J. Hernke, 60(6)(7)(8) Director Internal Audit and 1987
Risk Management, Campus Crusade
for Christ (since 1994)
Retired in 1993 as President,
Hernke Foods, Inc., (manufacturer
of cheese and dairy products)
</TABLE>
-5-
<PAGE> 8
<TABLE>
<S> <C> <C>
Gail E. Janssen, 65 Chairman of the Board, President 1980
and Chief Executive Officer of
the Corporation; Chairman of the
Board of all subsidiary banks
except Hilbert, Kiel, New London
and the Southwest Region banks(10)
Robert C. Safford, 65(6)(11) President, R.E. Management, Inc. 1994
(real estate rental and
management); Retired in 1994 as
Chairman of the Board, President
and Chief Executive Officer of
First National Financial Corporation
and First National Bank of Wisconsin
(now part of F & M Bank-Northeast)
- -----------------------
</TABLE>
*Each of the persons has held the positions listed in the table above
for at least five years unless otherwise indicated.
(6) Member of the Compensation Committee in 1995. In 1995, the
Compensation Committee held one meeting. The Compensation
Committee reviews and makes recommendations to the Board of
Directors regarding overall compensation policies, salaries,
bonuses and benefits for the employees of the Corporation and
its subsidiaries.
(7) Member of the Stock Option Committee in 1995. In 1995, the
Stock Option Committee held one meeting. The Stock Option
Committee reviews recommendations and makes awards for the
issuance of stock options to the key employee participants in
the F & M Bancorporation, Inc. 1993 Incentive Stock Option
Plan (the "Option Plan").
(8) Member of Audit Committee in 1995. In 1995, the Audit
Committee met quarterly and the results of those meetings were
reported at each subsequent directors' meeting. The Audit
Committee reviews the functions and findings of the
Corporation's internal audit staff and its independent public
accountants and makes recommendations to the Board of
Directors with respect thereto.
(9) The agreement by which the Corporation acquired Pulaski
Bancshares, Inc ("PBI") contemplated that a designee of PBI
(which was Mr. Johnson) would be appointed to the
Corporation's Board of Director's and nominated for
re-election if consistent with safe and sound banking
practices and the Corporation's best interests.
(10) The Corporation has three regions: Fox Valley, Northeast and
Southwest. The Southwest Region includes the subsidiary banks
in Fennimore, Lancaster and Potosi. Hilbert, Kiel and
New London are in the Fox Valley Region. Richard Grall, Vice
President-Fox Valley Region is Chairman of the Board of these
three banks.
(11) The agreement by which the Corporation acquired First National
Financial Corporation contemplated that Mr. Safford would be
appointed to the Corporation's Board of Directors, and
renominated to that position (as he was in 1995) provided he
continues to own at least 60,000 Common Shares, subject to
shareholder and regulatory approval.
The Board of Directors held four regular meetings during 1995. All of the
directors attended at least 75% of the meetings of the Board of Directors and
committees of which they are members. Directors' fees for 1995 for
non-employee directors were $1,050 per quarter and $500 per meeting. For 1996,
directors' fees for non-employee directors have been set at $1,100 per quarter
and $550 per directors' meeting and $450 per committee meeting. Non-employee
directors also receive directors' fees from those subsidiary bank boards on
which they serve. No directors' fees are paid to employee-directors.
-6-
<PAGE> 9
In 1993, the Corporation's shareholders approved the 1993 Stock Option
Plan for Non-Employee Directors of F & M Bancorporation, Inc. (the "Directors'
Plan"). Under the Directors' Plan, the Corporation's non-employee directors
are to receive an option to acquire 1,000 Common Shares on each succeeding
January 1 during the term of the Directors' Plan. On each January 1 for 1995
and 1996, each non-employee director acquired an option to acquire 1,000 common
shares at prices of $21.50 per share and $26.50 per share respectively.
As part of the Corporation's acquisition of First National Bank of
Wisconsin in February 1994, Mr. Safford entered into a non-competition
agreement with the Corporation under which Mr. Safford agreed not to compete
with F & M. Under the agreement, F & M will provide payments in the total
amount of $500,000 to Mr. Safford over a five-year period from February 1994;
payments of $100,000 were made in 1995.
-7-
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total
compensation of Gail E. Janssen, the Corporation's Chief Executive Officer and
John W. Johnson, Regional Vice-President-Northeast, Douglas Martin, Regional
Vice-President-Southwest and Richard Grall, Regional Vice-President-Fox Valley
for fiscal year 1995 and for the two prior fiscal years. No other Corporation
executive officer received a total annual salary and bonus in excess of
$100,000 during the last fiscal year.
<TABLE>
<CAPTION>
Annual Compensation(12)
-------------------
LONG TERM COMPENSATION
----------------------
AWARDS
------
SECURITIES UNDERLYING
NAME AND PRINCIPAL --------------------- ALL OTHER
POSITION YEAR SALARY BONUS(13) OPTIONS/SARS(14) COMPENSATION(15)
- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Gail E. Janssen 1995 $233,791 $66,000 2,000 $47,636
Chairman, President 1994 200,187 42,385 4,000 63,269
and CEO 1993 190,358 50,297 ----- 34,145
Richard Grall(16)
Regional Vice-
President Fox Valley 1995 $ 99,672 $17,282 750 $ 8,008
1994 81,223 14,567 1,000 6,858
1993 71,252 12,660 ----- 6,140
John W. Johnson(16)
Regional Vice-
President Northeast 1995 $127,542 $13,294 750 $ 8,223
1994 97,846 12,000 ----- 15,897
Douglas Martin(16)
Regional Vice-
President Southwest 1995 $ 91,694 $14,623 750 $ 9,150
1994 86,857 8,821 1,500 5,921
1993 84,921 9,681 ----- 6,277
</TABLE>
- -----------------------
(12) While the named individuals received perquisites or other
personal benefits in the years shown, in accordance with SEC
regulations, the value of these benefits are not indicated
since they did not exceed, in the aggregate, the lesser of
$50,000 or 10% of the individual's salary and bonus in any
year.
(13) Annual bonus amounts are earned and accrued during the years
indicated but paid in the following fiscal year.
(14) Represents options granted under the Option Plan. No SAR's
are granted thereunder.
(15) This column reflects the Corporation's contributions to named
officers' accounts in the Employee's Retirement Savings Plan
and Trust and, for Mr. Janssen only, to the Non-Qualified
Deferred Compensation Plan. In 1995, the contributions to
both of Mr. Janssen's accounts and to the accounts of
Messrs. Johnson, Martin and Grall were $47,636, $8,223;
$9,150 and $8,008, respectively.
(16) Mr. Johnson was elected to this position in August, 1994 and
became an F & M employee in 1994, in connection with F & M's
acquisition of PBI; therefore, no information prior to 1994
is provided. Mr. Martin was elected to this position in May,
1994. Mr. Grall was elected to this position in August,
1994.
-8-
<PAGE> 11
STOCK OPTIONS
The following table sets forth information on stock options under the
Option Plan granted in 1995 to the executive officers named in the Summary
Compensation table:
Option/SAR Grants in Last Fiscal Year: Individual Grants
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
No. of Securities % of Total Annual Rate of Stock
Underlying Options Granted Exercise Price Appreciation
Options to Employees of Base Expiration for Option Term
Name Granted (17) in Fiscal Year Price ($/sh) Date 5% 10%
- ---- ------------ -------------- ------------ ---- -------------------
<S> <C> <C> <C> <C> <C> <C>
Gail E. Janssen 2,000 15.1% $21.25 1/30/05 $26,720 $ 67,734
Richard Grall 750 5.7% $21.25 1/30/05 $10,023 $ 25,400
John W. Johnson 750 5.7% $21.25 1/30/05 $10,023 $ 25,400
Douglas A. Martin 750 5.7% $21.25 1/30/05 $10,023 $ 25,400
</TABLE>
- -----------------
(17) Represents options granted under the Option Plan to purchase
Common Shares at their fair market value on the date of option
grant. No SAR's are granted under the Option Plan.
The following table gives information as to the stock options held by
the named executive officers at December 31, 1995.
Aggregate Option/SAR Exercised in Last Fiscal Year and Fiscal Year End
Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Un- In-the-Money
exercised Options at Options at
Shares Acquired Fiscal Year End(19) Fiscal Year End(20)
Name on Exercise(18) Value Realized(18) Exercisable(21) Exercisable(21)
- ---- --------------- ------------------ --------------- ---------------
<S> <C> <C> <C> <C>
Gail E. Janssen --- --- 6,000 $ 32,000
Richard Grall --- --- 1,750 9,188
John W. Johnson 1,500 $19,350 9,905 155,993
Douglas A. Martin --- --- 2,250 12,000
</TABLE>
- ------------------
(18) No stock options were exercised during 1995 by Messrs.
Janssen, Martin or Grall. Mr. Johnson exercised options to
acquire 1,500 shares in August of 1995 as shown above. The
options held at year end by Mr. Johnson included 9,155 shares
for which options were granted by PBI prior to its acquisition
by the Corporation in March 1994. The options were assumed by
the Corporation in that acquisition. The Value Realized is
based on the average bid and asked price of Common Stock on
the exercise date.
(19) Represents options granted under the Option Plan in the case
of Messrs. Janssen, Grall and Martin and by PBI and the
Corporation in the case of Mr. Johnson. No SAR's are granted
under the Option Plan.
(20) Based upon the $26.00 closing price on the last trading day of
the year.
(21) All options granted prior to December 31, 1995 were
exercisable at that date.
-9-
<PAGE> 12
COMPENSATION AGREEMENT
In the acquisition of Pulaski State Bank ("Pulaski") (now part of F & M
Bank-Northeast), the merger agreement contemplated that Pulaski would enter
into an employment agreement with John W. Johnson in a form agreed to by F & M.
Pulaski entered into such an employment agreement with Mr. Johnson on November
4, 1993, subject to consummation of the acquisition (which occurred in March
1994). The employment agreement is for a term of three years from November 4,
1993. Following consummation of the merger, Mr. Johnson also became president
of First National in April, 1994, and of the combined entity resulting from the
merger of First National Bank and Pulaski in September 1994. In anticipation
of this merger, Mr. Johnson's base salary increased to $120,000 per year, upon
assuming the additional responsibilities as president of First National Bank.
The merger agreement also provided that, pursuant to a separate arrangement,
certain options to purchase shares of common stock of PBI, the parent company
of Pulaski, held by Mr. Johnson were converted into options to purchase Common
Shares at the same conversion ratio that the shares of PBI common stock were
converted into Common Shares in the merger of PBI and F & M.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The general compensation policies of the Corporation and its subsidiaries
are set by the Compensation Committee (the "Committee"). The Committee is
composed of four independent non-employee directors.
In addition, decisions as to the grant of options under the Corporation's
1993 Incentive Stock Option Plan (the "Option Plan") are made by the board's
stock option committee (the "Option Committee"). The Option Committee is
composed of five independent non-employee directors (of whom four also serve on
the Committee). Because of the importance of stock options to overall
compensation, the member of the Option Committee who is not a member of the
Committee also joins in this report.
In 1995, all of the officers except the Regional Vice Presidents were
employees of and compensated directly by the Corporation. The Regional Vice
Presidents' salaries were paid by the subsidiary banks for which they served as
President. Although the Regional Vice Presidents' salaries were paid by the
subsidiary banks, the policies used to set those salaries are under the general
supervision and direction of the Compensation Committee. In the case of Mr.
Johnson, certain compensation matters are
-10-
<PAGE> 13
covered in his employment agreement with Pulaski, which was assumed by the
Corporation.
In establishing executive compensation, the Compensation Committee focuses
primarily on the following considerations:
1. Attraction and retention of qualified personnel;
2. Providing compensation which is competitive with businesses similar
in size and nature to the Corporation;
3. General economic conditions;
4. Providing incentives to personnel to achieve the Corporation's goals,
which include achieving an adequate return on equity to enhance
the ability of the Corporation to pay dividends and to increase the
value of the Corporation's stock; and
5. The individual performance of each executive officer, assessed
against the requirements and duties of his or her specific job.
In considering the first two factors, the Committee relies on periodic
compensation surveys and analyses of amounts paid by companies deemed by the
Committee to be comparable to the Corporation. The Committee has used
published salary information available from outside sources such as salary
survey data, as well as salary survey information for the Corporation's market
area provided by a consultant retained by the Corporation. Because of
different sources and purposes, the group of companies in these surveys is not
the same as the companies in the NASDAQ Bank Stock Index used in the
performance graph below. With this information, the Committee sets the base
salary and bonus for its President and Chief Executive Officer and establishes
a fund for salaries for the other executive officers. The President then sets
the salaries for these officers, subject to review and approval by the Board of
Directors.
Once a salary range for a position is set, the Committee determines the
actual base salary to be paid to the specific individual. This decision is
based upon the executive officer's background, experience, skill, demonstrated
expertise and contributions to the Corporation's performance.
The Corporation utilizes an incentive bonus plan (the "Bonus Plan") for
its executive officers. In 1995, all executive officers were eligible to
participate in this plan, except the Regional Vice Presidents. Under the Bonus
Plan, these officers were able to earn a bonus based on the return on opening
equity ("ROOE") achieved by the Corporation in 1995. The Committee established
a 15.0% target ROOE for 1995 which was selected to complement the Corporation's
internally established goal for the
-11-
<PAGE> 14
year, and a target bonus amount which these executive officers could earn if
that target ROOE was achieved. The actual bonus amount is determined by
multiplying the target bonus amount by the bonus multiplier set by the
Committee, based on the actual ROOE.
As ROOE increases from 13.0% to 17.0%, the multiplier increases from 0.6
to 1.4. No bonus would be paid if ROOE was not at least 13.0%, although the
Committee does have discretion to deviate from the bonus formula if Committee
felt unusual circumstances justified payment of a bonus. Although the Regional
Vice Presidents did not participate in the Bonus Plan, they did participate in
a similar incentive bonus plan as Presidents and CEOs of subsidiary banks of
the Corporation. For 1995, the adjusted ROOE which was used by the Committee
to reflect the certain unusual factors, resulting in a bonus of $66,000 for Mr.
Janssen.
The Committee believes that this Bonus Plan encourages achievement of the
Corporation's annual goals. The Corporation strives to set an aggressive
target ROOE. The Committee feels the Bonus Plan provides a strong incentive to
reach this goal by providing a bonus for achieving the targeted ROOE and an
additional bonus if the Corporation achieves superior results compared to the
targeted ROOE. At the same time, if the Corporation falls short of the
targeted ROOE but meets a minimum threshold, the Bonus Plan provides a reduced
financial benefit in recognition that the Corporation performed acceptably but
fell short of its goal. Overall, the Committee believes that this plan is well
suited to assist the Corporation in reaching its target ROOE.
In 1993, the Corporation's shareholders approved the Option Plan,
providing for the grant of options to executive officers and other key
employees. The Option Plan was proposed for the purpose of providing an
additional incentive to those persons which would result in an increased
identification with shareholders of the Corporation by offering increased stock
ownership. In 1995, the Option Committee made grants of options under the
Option Plan ranging from 500 to 2,000 shares. The Option Committee based its
determination on the number of shares to be subject to options for officers
upon the position and duties of the officers within the Corporation, and the
desire to provide a meaningful incentive to such officers in comparison to
their respective salary levels.
In 1995, the Board of Directors approved the Officer's Stock Purchase Plan
(the "Purchase Plan"), intended to increase the identification of officers with
shareholders by establishing guidelines for minimum continuing ownership of
Common Shares by specified officers and employees. To facilitate the holding
of
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<PAGE> 15
shares, the Purchase Plan provides for loans to such persons for the purchase
of shares (subject to shareholder approval). While the Committee does not
consider the Purchase Plan to be a compensation vehicle, it believes that the
ownership and loan provisions of the Purchase Plan will provide a further
incentive to officers based upon corporate performance to the extent it is
reflected in the market price of Common Shares.
The factors that are used to determine the CEO's annual base salary as
well as his incentive compensation are the same as those described above for
all executive officers. In particular, during 1995, the CEO's base salary was
above the mid-point of his salary range because of the Committee's evaluation
of his past performance and the Corporation's performance, including (i) asset
and earnings growth; (ii) returns on equity and assets; (iii) the continued
development of both new and existing markets through acquisitions, expansion of
existing operations and internal growth; and (iv) the willingness of the CEO to
remain involved in the Corporation beyond his anticipated 1995 retirement date
to assist in the transition to his successor. Also, the Committee believes
that the CEO contributed positively to the non-quantifiable factors which
foster employee morale, organizational strength and success of the Corporation
as a whole. The CEO's bonus was determined in accordance with the Bonus Plan
formula set forth above. For the reasons highlighted above, the CEO is also
eligible to participate in the Option Plan. The Chief Executive Officer was
granted an option for 2,000 shares in 1995. The number of shares subject to
options granted by the Option Committee was the result of the factors discussed
above and in recognition of the significant responsibilities that the Chief
Executive Officer in particular has undertaken on behalf of the Corporation and
was the same as the awards for 1993 and 1994, which were granted jointly in
1994.
Because of the Corporation's current compensation structure, the Committee
believes it unlikely that the Corporation will be affected by the provisions of
the Omnibus Budget Reconciliation Act of 1993 which limit the deductibility to
employers of executive compensation in excess of $1 million annually although
the Option Plan was approved by the shareholders and is, therefore, exempt from
the limitation. The Committee intends to monitor this matter in future years.
Otto L. Cox, Chairman Duane G. Peppler, Member
Paul J. Hernke, Member Robert C. Safford, Member
Joseph F. Walsh, Member
(Glenn L. Schilling, Member, Stock Option Committee)
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<PAGE> 16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Peppler, one of the members of the Compensation Committee, is a former
executive officer of the Corporation and former President of one of the
Corporation's subsidiary banks. Mr. Peppler retired as an officer of the
Corporation and as President of the bank in 1991. There are no other members
of the Compensation Committee with reportable interlocks nor do any members of
the Corporation's management participate in Compensation Committee
determinations.
PERFORMANCE GRAPH
The following graph compares the cumulative total return on Corporation
Common Stock with the NASDAQ Stock Market Index for U.S. Companies and the
NASDAQ Bank Stock Index. The values on the graph show the relative performance
of a $100 investment made on December 31, 1990, in Corporation Common Stock and
in each of the indices, with reinvestment of dividends. Comparisons are
affected by the decline in the comparative indexes from 1989 to 1990, which
decline was not experienced by Corporation Common Stock; as a result of those
prior declines, the indexes show a higher rate of appreciation than the Common
Shares, due to their relatively depressed starting point. As to the
Corporation Common Stock, the graph uses the reported bid price on the
indicated dates, except at December 31, 1995. For that date, the graph uses
the closing price of Corporation Common Stock as reported on NASDAQ on that
date.
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<PAGE> 17
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG F & M BANCORPORATION, INC., THE NASDAQ STOCK MARKET
(U.S. COMPANIES) INDEX AND THE NASDAQ BANK STOCK INDEX
FISCAL YEAR ENDING DECEMBER 31
<TABLE>
<CAPTION>
MEASUREMENT PERIOD F&M BAN- NASDAQ STOCK NASDAQ BANK
(FISCAL YEAR COVERED) CORPORATION MARKET STOCK INDEX
<S> <C> <C> <C>
1990 100 100 100
1991 117 161 164
1992 178 187 239
1993 239 215 272
1994 266 210 271
1995 329 295 404
</TABLE>
OFFICERS' STOCK PURCHASE PLAN
The F & M Bancorporation, Inc.'s Officers' Stock Purchase Plan (the
"Purchase Plan") was tentatively adopted by the Board on August 10, 1995; final
approvals by the Board of Directors of the Purchase Plan were received on
November 6, 1995 and January 31, 1996. The Purchase Plan is designed to
encourage members of senior management of the Corporation and its subsidiary
banks to increase their stock ownership in the Corporation and to enhance the
Corporation's business by facilitating that purchase. The Corporation believes
that the Purchase Plan is in the Corporation's and its shareholders' best
interests as it contemplates increased ownership of Corporation Common Stock by
those persons, as it will increase their identification with Corporation
shareholders and provide them additional incentive to maximize value for the
Corporation.
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<PAGE> 18
Under the terms of the Purchase Plan, covered executives (who are persons
in the employment categories below) are expected to own common stock in a
recommended minimum amount as set forth below:
Corporate CEO 4 times annual taxable
compensation
Regional vice presidents 3 times annual taxable
compensation
Other corporate officers 2 times annual taxable
and Bank CEOs compensation
While not establishing mandatory purchase obligations, the level of stock
ownership above is expected to be achieved within 5 years after commencement of
the Purchase Plan, with 20% of the target to be met in the first year and an
additional 20% each following year. In determining compensation, W-2 income
(minus option exercises) from the prior year will be used. For example, 1995
compensation would be used to establish ownership targets for 1996.
Subject to shareholder approval at the meeting, the Purchase Plan provides
for the extension of full recourse, secured loans by the Corporation to enable
covered executives to purchase these shares, by exercise of stock options or by
purchase of shares of Corporation Common Stock at the fair market value in the
open market or otherwise. The Corporation believes this loan program will
assist the executives in acquiring these shares.
Under the terms of the Purchase Plan, an executive participating in the
Purchase Plan may borrow a maximum of the lesser of 100% of the target
ownership set forth above or an amount sufficient to permit the executive to
purchase three (3) times the number of shares of F & M Common Stock which are
owned directly (without pledge hereunder). (In other words, an employee must
own at least 25% of the shares of Corporation Common Stock without financing
under the Purchase Plan.) There is no maximum dollar value of loans to such
executives, subject to the individual limitations set forth above. For
example, based on 1995 compensation, the maximum loan value to Messrs. Janssen,
Grall, Johnson and Martin would be $1,098,668, $338,190, $413,677 and $293,283
respectively. The maximum loan value to all executive officers as a group
would be $2,916,441.
Under the Purchase Plan, the Corporation will finance the full amount to
be borrowed, subject to the limitations described above. This loan must be
secured by shares of the Corporation's Common Stock with a fair market value
equal to at least one hundred ten percent (110%) of the loan as of the date of
the loan.
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<PAGE> 19
At the present time, until receiving shareholder approval for stock acquired
under the Purchase Plan, the maximum loan value of the Corporation Common Stock
under these regulations is 50% of its fair market value.
Loans made under the Purchase Plan will be for a term of either 3 or 5
years, which may be selected by the executive. Loans will bear interest at
100% of the "applicable federal rate" ("APR") as provided in the Internal
Revenue Code to avoid "unstated interest." As of March 1, 1996, the APR for
quarterly interest for a three year term was 4.96% and, for a five year term
was 5.34%. Interest will be payable quarterly. Use of the APR is intended to
avoid imputed compensation income to the executive (which could result from
below market rate interest rates), but also avoid imputed interest income to
the Corporation beyond the amount of interest actually received.
No principal payments will be due under the terms of the loan under the
Purchase Plan, so long as while the individual remains an employee of the
Corporation. Interest and principal is due in full upon normal maturity of the
note in the case of retirement, death or disability, or within 90 days of other
termination of employment.
The Purchase Plan will be administered by the Compensation Committee,
which is composed of three or more members of the board, and none of whom is an
employee of the Corporation or its subsidiaries or eligible to participate in
the Purchase Plan. The Compensation Committee may interpret the Purchase Plan
and, subject to its provisions, may prescribe, amend and rescind rules and make
all other determinations necessary or desirable for the Purchase Plan's
administration. The Board of Directors may also, at any time, terminate or
amend the Purchase Plan. Subject to these limitations, the Committee may also
establish additional terms and conditions, such as collateral provisions,
interest rates or extended repayment terms in response to such factors as
applicable regulations, prevailing market interest rates and unforeseen
personal financial hardships.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF PROVISIONS
OF THE PURCHASE PLAN WHICH ALLOW FOR LENDING, AS IT BELIEVES THAT THESE WILL
ASSIST THE COVERED PERSONS ACHIEVE THE GOAL OF INCREASED OWNERSHIP OF
CORPORATION COMMON STOCK.
Approval of the lending provisions of the Purchase Plan requires the
affirmative vote of a majority of the shareholders voting on the motion,
assuming a quorum is present at the meeting. In the event shareholders do not
approve the lending provisions of the Purchase Plan, the Purchase Plan may be
implemented, but theCorporation will not be permitted to make loans equal to
100% of
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<PAGE> 20
the amount of Corporation Common Stock being purchased to the participants in
the Purchase Plan.
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION REGARDING AUTHORIZED SHARES
The Corporation's Board of Directors recommends the adoption of the
amendment to the Articles of Incorporation to increase the number of authorized
Shares of Common Stock of the Corporation. The proposed amendment was
unanimously supported by all of the directors of the Corporation. The
Corporation's Articles of Incorporation currently authorize up to Ten (10)
Million shares of Common Stock, $1.00 par value. The Board recommends that the
Articles of Incorporation be amended to increase the total number of shares
authorized from Ten (10) Million to Twenty (20) Million.
The proposed amendment provides that more Common Shares will be available
for issuance in the future. The Board believes it is prudent to provide
flexibility by authorizing a sufficient number of shares to avoid the
necessity, as well as delay and expense, of an additional shareholder vote in
the foreseeable future. At March 15, 1996, of the Ten (10) Million authorized
shares, 5,955,108 were issued and outstanding. An additional 789,455 shares
have been allocated (but are as yet unissued) for utilization in the 1993 Stock
Option Plan, the option to John Johnson assumed by the Corporation, the
remaining shares subject to issuance under the F & M Dividend Reinvestment Plan
and the pending acquisition of Community State Bank, leaving only 3,255,437
shares unissued and available for issuance. While none of these actions would
require the amendment, the Board wishes to plan ahead in the event of future
needs for shares.
The Board of Directors has chosen the particular number of shares
primarily to save possible Wisconsin Secretary of State filing fees in the
future. Under Wisconsin statutes, the filing fee for any change in articles of
incorporation increasing the number of authorized shares by one million or more
is $10,000, irrespective of the number of additional shares authorized.
Because the Board of Directors determined that at least one million additional
shares should be authorized to anticipate possible corporate needs, it
determined that it would be advisable at this time to authorize a higher number
to save future filing fees should more shares be required in future years.
While management is actively investigating and expects to continue to
investigate business opportunities and considerations which may require the
issuance of stock for cash or other consideration or in acquisitions or stock
distributions, there are presently no definite plans, commitments or
arrangements for theissuance of additional shares of stock except as described
above.
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<PAGE> 21
The Board believes that it is in the Corporation's best interest to have the
authority to issue additional shares of Common Stock for use in possible
acquisitions, as well as a means of obtaining additional capital and for other
corporate purposes. Although management could use such shares to block an
attempt to take over the Corporation, the increase in authorized shares is not
proposed for that purpose. Although the Corporation has a classified Board of
Directors, neither the Corporation's Articles of Incorporation nor Bylaws
contain any other provisions which are intended to inhibit a takeover of the
Corporation. Certain provisions of the Wisconsin Business Corporation Law may
restrict voting power of any shareholders owning more than 20% of the
Corporation's shares, impose super majority voting requirements in certain
business combinations involving shareholders (or affiliates) owning more than
10% of the Corporation's shares, and impose certain other limitations on
persons taking control of a corporation without the approval of its board.
The Board of Directors has, as to the presently authorized shares, and
will have as to the newly authorized shares, the power to issue shares for such
lawful consideration (not less than the par value) as may be fixed from time to
time by the Board. It is not anticipated that further shareholder approval for
the issuance of additional shares would be solicited or required, except as may
be required by NASDAQ listing requirements in connection with certain
compensation programs or significant acquisitions. No shareholder, as such,
has any preemptive or preferential rights to purchase shares of the Corporation
or any obligations of the Corporation which are convertible into shares.
The affirmative vote of the holders of a majority of Common Shares
outstanding on March 15, 1996 is required to adopt the proposed amendment. THE
BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSED
AMENDMENT.
TRANSACTIONS WITH THE CORPORATION
The Corporation's subsidiary banks have, and expect to continue to have,
regular dealings with directors and officers of the Corporation and its
subsidiaries, as well as their associates and the firms which they serve in
various capacities. Certain of such persons and firms have been indebted to
the Corporation's subsidiary banks for loans made in the ordinary course of
business. Since March 10, 1979, the effective date of the Financial
Institutions Regulatory Interest Rate Control Act, all such loans are required
to be, have been and are made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and do not involve more than the normal risk of
collectibility or present other unfavorable
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<PAGE> 22
features. See also "Officers Stock Purchase Plan" above for proposed lending
arrangements.
AUDITORS
The Board of Directors anticipates reappointing the firm of Wipfli Ullrich
Bertelson as independent auditors to audit the financial statements of the
Corporation for the year 1996. Wipfli Ullrich Bertelson has acted as the
Corporation's auditor since 1986. Representatives of Wipfli Ullrich Bertelson
are expected to be present at the annual meeting of shareholders to respond to
appropriate questions and to make a statement if they so desire.
OTHER MATTERS
The Board of Directors has not been informed and is not aware that any
other matters will be brought before the meeting except as set forth herein.
However, proxies may be voted with discretionary authority with respect to any
other matters that may properly be presented at the meeting.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Corporation no
later than November 29, 1996, in order to be considered for inclusion in the
Proxy Statement for next year's annual shareholders meeting.
By Order of the Board of Directors
Janet M. Lakso, Secretary
Kaukauna, Wisconsin
March 25, 1996
A COPY OF THE CORPORATION'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995, WILL BE
PROVIDED WITHOUT CHARGE TO EACH RECORD OR BENEFICIAL OWNER OF THE CORPORATION'S
COMMON SHARES AS OF MARCH 15, 1996, ON THE WRITTEN REQUEST OF SUCH PERSON
DIRECTED TO: JANET M. LAKSO, SECRETARY, F & M BANCORPORATION, INC., ONE BANK
AVENUE, P.O. BOX 410, KAUKAUNA WI 54130-0410.
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<PAGE> 23
F&M BANCORPORATION, INC.
1996 ANNUAL MEETING OF SHAREHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gail E. Janssen, Duane G. Peppler and Joseph F.
Walsh, and each of them, proxies, with full power of substitution, to represent
and to vote as designated herein all shares of stock the undersigned is
entitled to vote at the Annual Meeting of Shareholders of F&M Bancorporation,
Inc. to be held at the Paper Valley Hotel and Conference Center, 333 West
College Avenue, Appleton, Wisconsin, on Tuesday, April 23, 1996, at 7:00 p.m.,
Central Time, and at any adjournment thereof, hereby revoking any and all
proxies heretofore given:
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS: [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
for three-year terms expiring all nominees listed below
in 1999 (except as marked to
the contrary below)
</TABLE>
OTTO L. COX, DOUGLAS A. MARTIN AND GLENN SCHILLING
(if you wish to withhold authority for a specified nominee, cross out the name
of that nominee)
(2) AUTHORIZATION OF LOANS to officers under the corporation's Officers'
Stock Purchase Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) AMENDMENT OF ARTICLES to increase the number of authorized shares of
Common Stock to 20 million:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) OTHER MATTERS: In their discretion, on such other matters as may
properly come before the meeting or any adjournment thereof;
all as set out in the Notice of Meeting and Proxy Statement relating to the
meeting, receipt of which is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
Please return promptly in the enclosed
envelope.
Dated this day of , 1996
---- ----------------
-----------------------------------------------
Signature of shareholder
-----------------------------------------------
Signature of shareholder
PLEASE SIGN PERSONALLY AS NAME APPEARS AT LEFT.
When signing as attorney, executor,
administrator, personal representative, trustee
or guardian, given full title as such. If
signer is a corporation, sign full corporate
name by duly authorized officer. If stock is
held in the name of two or more persons, all
should sign.
