<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:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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] No fee required.
[ ] 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.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[F & M Logo]
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
ON APRIL 22, 1997
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 22, 1997, at
7:00 p.m., Central Daylight Time, for the following purposes:
(1) To elect four directors to the Board of Directors for three-year terms
expiring in the year 2000.
(2) 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 14, 1997, 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,
/s/ Janet M. Lakso
Janet M. Lakso, Secretary
Kaukauna, Wisconsin
March 28, 1997
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
[F & M Logo]
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" or "F & M") for the annual meeting of shareholders on Tuesday,
April 22, 1997. 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 14, 1997,
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 14,
1997, there were 7,606, 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. Except as otherwise indicated,
all share and per share information has been restated to reflect F & M's June
1996 10% stock dividend.
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
attempted to be cast "against" a candidate are not given legal effect and are
not counted as votes cast in an election of directors.
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.
This proxy material is being mailed to shareholders commencing on or
about March 28, 1997.
<PAGE> 4
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 14, 1997, by each
director, each nominee for 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)
Sole Shared Percent
Name Ownership(2) Ownership(3) Total of Class
- ---- ------------- ------------ ----- --------
Otto L. Cox 6,820 6,490 13,310 *
Richard A. Grall 5,313 24 5,337 *
Paul J. Hernke 22,401 0 22,401 *
Gail E. Janssen 72,874 17,098 89,972 1.2%
John W. Johnson 24,387 0 24,387 *
Gary A. Lichtenberg 20,100 0 20,100 *
Douglas A. Martin 8,367 0 8,367 *
Duane G. Peppler 4,400 12,100 16,500 *
Robert C. Safford 130,077 2,926 133,003 1.7%
Glenn L. Schilling 20,521 7,458 27,979 *
Joseph F. Walsh 13,947 13,126 27,073 *
All directors and 357,703 157,453 515,156 6.7%
executive officers
as a group (18
persons)(4)
--------------------
* 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 spouse, individually by the named
person's spouse or for the account of a named person's minor
child. Not necessarily an admission of beneficial ownership.
(4) Shared ownership includes 97,872 shares held by the
Corporation's Employee's Retirement Savings Plan and Trust
("Plan"). Officers Salazar, Verbruggen and Voet are Plan
voting committee members who have shared voting power for the
Common Shares held by the Plan. Directors and officers as a
group share dispositive power as to 1,664 shares held in the
Plan in accounts that may be re-allocated at the discretion of
the individual participants.
-2-
<PAGE> 5
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, the Corporation believes that during 1996, except that Mr.
Lichtenberg made a late filing reporting three transactions, 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. At
its meeting held January 30, 1997, the Board of Directors approved an amendment
to the Corporation's bylaws to increase the number of directors from nine to
ten. As a result, in 1997 four persons are to be elected to the Board of
Directors to serve until the annual meeting in 2000, 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.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE* DIRECTOR SINCE
------------ --------------------------------------------- --------------
NOMINEES FOR TERMS EXPIRING IN 2000
-----------------------------------
<S> <C> <C>
John W. Johnson, 42 (8)(9) Vice President of the Corporation since 1994; 1994
President and Director F & M Bank-Northeast
Gary A. Lichtenberg, 53 (9) President and Chief Operating Officer of the --
Corporation since 1996; Chairman of the Board of
F & M Bank-Appleton and F & M Bank-East Troy
since 1997; Senior Vice President and Banking
Controller Marshall & Ilsley Corporation
(1994-96); Senior Vice President, Chief Financial
Officer and Secretary, Valley Bancorporation,
Inc. (1984-1994)
Duane G. Peppler, 65 (5)(6) Retired Vice President of the Corporation; 1985
Retired President, F & M Bank-Winnebago County;
Director, F & M Bank-Winnebago County
Joseph F. Walsh, 64 (5)(6)(7) Retired in 1993 as President, Hartjes-Walsh 1980
Insurance Management Inc. (insurance sales);
Director, F & M Bank-Kaukauna
</TABLE>
-3-
<PAGE> 6
<TABLE>
<S> <C> <C>
CONTINUING DIRECTORS - TERMS EXPIRE IN
--------------------------------------
1998
----
Paul J. Hernke, 61 (5)(6)(7) Director Internal Audit and Risk Management, 1987
Campus Crusade for Christ (since 1994); Retired
in 1993 as President, Hernke Foods, Inc.,
(manufacturer of cheese and dairy products)
Gail E. Janssen, 66 (9) Chairman of the Board and Chief Executive Officer 1980
of the Corporation; Chairman of the Board of
F & M Bank-Kaukauna
Robert C. Safford, 66 (5)(7)(10) President, R.E. Management, Inc. (real estate 1994
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)
CONTINUING DIRECTORS - TERMS EXPIRE IN
--------------------------------------
1999
----
Otto L. Cox, 56 (5)(6) Hospital Administrator, Affinity Health Systems, 1986
Inc. (health care); Director, F & M Bank-Appleton
Douglas A. Martin, 45 Vice President of the Corporation; President 1990
F & M Bank-Fennimore; Director of F & M
Bank-Fennimore, F & M Bank-Potosi and F & M
Bank-Lancaster
Glenn Schilling, 60 (5) (6) Retired in 1991 as Vice President Thilmany Pulp & 1980
Paper Company (paper manufacturer); Director,
F & M Bank-Kaukauna
- -----------------------
</TABLE>
* Each of the persons has held the positions listed in the table above
for at least five years unless otherwise indicated.
(5) Member of the Compensation Committee in 1996. In 1996, 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.
(6) Member of the Stock Option Committee in 1996. In 1996, 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").
(7) Member of Audit Committee in 1996. In 1996, 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.
-4-
<PAGE> 7
(8) 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 Directors and nominated for re-election
if consistent with safe and sound banking practices and the
Corporation's best interests.
(9) Member of the Corporation's Office of the Chairman, which was
established in 1997. The Office of the Chairman is intended
to assist the Chairman of the Board in performing the duties
of his position and in management planning and succession.
(10) The agreement by which the Corporation acquired First National
Financial Corporation ("FNFC") 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 66,000 Common Shares, subject to
shareholder and regulatory approval.
The Board of Directors held four regular meetings during 1996. 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 1996 for
non-employee directors were $1,100 per quarter and $550 per meeting. For 1997,
directors' fees for non-employee directors have been set at $1,500 per quarter,
$650 per directors' meeting and $500 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.
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 1,100 Common Shares (as a result of the
subsequent stock dividend) on each succeeding January 1 during the term of the
Directors' Plan. On each of January 1, 1996 and 1997, each non-employee
director acquired an option to acquire 1,100 Common Shares at $24.09 per share
and 1,100 Common Shares at $30.125 per share, respectively.
As part of the Corporation's acquisition of FNFC 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 1996.
-5-
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total
compensation of the Corporation's five highest compensated executive officers,
including the chief executive officer, for fiscal year 1996 and for the two
prior fiscal years. The data includes compensation for service in all
capacities to the Corporation and its subsidiaries.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION (11) AWARDS
------------------------- ---------------------
SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (12) OPTIONS/SARS # (13) COMPENSATION(14)
--------------------------- ---- ------ ---------- --------------------- ----------------
<S> <C> <C> <C> <C> <C>
Gail E. Janssen 1996 $242,731 $67,716 6,600 $41,547
Chairman and CEO 1995 233,791 66,000 2,200 47,636
1994 200,187 42,382 4,400 63,269
Gary A. Lichtenberg 1996 $111,055 $21,250 -0- $-0-
President and COO (15)
John W. Johnson 1996 $132,095 $20,262 825 $12,000
Vice-President (16) 1995 127,542 13,294 825 8,223
1994 97,846 12,000 -- 15,897
Douglas Martin 1996 $95,429 $17,560 825 $ 8,804
Vice-President (16) 1995 91,694 14,623 825 9,150
1994 86,857 8,821 1,650 5,921
Richard A. Grall 1996 $106,367 $17,660 825 $ 9,397
President F & M Bank- 1995 99,672 17,282 825 8,008
Appleton (16) 1994 81,223 14,567 1,100 6,858
</TABLE>
_______________________
(11) 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.
(12) Annual bonus amounts are earned and accrued during the years
indicated but paid in the following fiscal year.
(13) Represents options granted under the Option Plan. No SAR's
are granted thereunder.
(14) This column reflects the Corporation's contributions, both
profit sharing and 401(k) matching, 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 1996, the contributions to Mr.
Janssen's Deferred Compensation Plan account were $19,047,
and contributions to the Retirement Savings accounts of
Messrs. Janssen, Johnson, Martin and Grall were $22,500,
$12,000, $8,804 and $9,397, respectively.
(15) Mr. Lichtenberg was elected to his positions and became an
employee and executive officer of the Corporation in April,
1996.
(16) Served as Regional Vice President of the Corporation during
1996.
-6-
<PAGE> 9
STOCK OPTIONS
The following table sets forth information on stock options under the
Option Plan granted in 1996 to the executive officers named in the Summary
Compensation table:
OPTION/SAR GRANTS IN LAST FISCAL YEAR: INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF STOCK
NO. OF SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM
OPTIONS TO EMPLOYEES OF BASE EXPIRATION ---------------------------
NAME GRANTED (17) IN FISCAL YEAR PRICE ($/SH) DATE 5% 10%
---- ------------ -------------- ------------ ------------ --------------------------
-
<S> <C> <C> <C> <C> <C> <C>
Gail E. Janssen 6,600 34.8% $23.8068 1/30/06 $98,818 $250,421
Gary A. Lichtenberg 0 -- -- -- -- --
Richard A. Grall 825 4.3% $23.8068 1/30/06 $12,352 $ 31,302
John W. Johnson 825 4.3% $23.8068 1/30/06 $12,352 $ 31,302
Douglas A. Martin 825 4.3% $23.8068 1/30/06 $12,352 $ 31,302
</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, 1996.
AGGREGATE OPTION/SAR EXERCISED IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS IN-THE-MONEY
AT FISCAL YEAR OPTIONS AT FISCAL
END (19) YEAR END (20)
SHARES ACQUIRED ------------------- --------------------
NAME ON EXERCISE VALUE REALIZED(18) EXERCISABLE (21) EXERCISABLE (21)
---- --------------- ------------------ ------------------- --------------------
<S> <C> <C> <C> <C>
Gail E. Janssen 0 -- 13,200 $111,574
Gary A. Lichtenberg 0 -- -- --
Richard A. Grall 0 -- 2,750 $ 25,859
John W. Johnson 2,200 $40,800 9,521 $180,757
Douglas A. Martin 0 -- 3,300 $ 32,034
</TABLE>
__________________
(18) The Value Realized is based on the average of the high and low
sales prices of Common Stock on the exercise date.
(19) Represents options granted under the Option Plan and also by
PBI in the case of Mr. Johnson. No SAR's are granted under the
Option Plan.
(20) Based upon the $29.75 closing price on the last trading day of
the year.
(21) All options granted prior to December 31, 1996 were
exercisable at that date.
-7-
<PAGE> 10
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 was 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 six 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 (all of whom
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 1996, all of the officers except the Messrs. Grall, Johnson and
Martin (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 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
-8-
<PAGE> 11
different sources and purposes, the group of companies in these surveys is not
the same as the group of 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 Chief Executive Officer and establishes a fund for
salaries for the other executive officers. The Chief Executive Officer 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 1996, 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 1996. The Committee established
a 16.0% target ROOE for 1996 which was selected to complement the Corporation's
internally established goal for the 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 14.0% to 18.0%, the multiplier increases from
0.6 to 1.4. No bonus would be paid if ROOE was not at least 14.0%, 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 1996, an adjusted ROOE was used by
the Committee to reflect certain unusual factors, primarily resulting from the
effects of acquisitions and pooling of interests accounting, which the
Committee felt were appropriate for this calculation.
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 1996, the Option Committee made grants of options under the
Option Plan ranging from 550 to 6,600 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 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 1996, the CEO's base salary
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<PAGE> 12
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 6,600 shares in 1996. The number of shares
subject to options granted by the Option Committee was the result of the
factors discussed above and was increased from prior years' grants in
recognition of the significant responsibilities that the Chief Executive
Officer in particular has undertaken on behalf of the Corporation and his
willingness to remain CEO after his anticipated retirement.
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. The Option Plan was approved by the shareholders and is, therefore,
exempt from the limitation. The Committee intends to continue to monitor this
matter in future years.
Otto L. Cox, Chairman Duane G. Peppler, Member
Paul J. Hernke, Member Joseph F. Walsh, Member
Glenn L. Schilling, Member Robert Safford, Member
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 subsidiary 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.
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 features.
Pursuant to the Corporation's Officers' Stock Purchase Plan (the
"Purchase Plan"), covered executives are expected to own Corporation Common
Shares in recommended minimum amounts. To facilitate ownership, the Purchase
Plan (as approved in 1996 by Corporation shareholders) includes provisions
which permit the Corporation to make loans for the purchase of Common Shares.
Loans are secured by Common Shares with a market value equal to at least 110%
of the loan at the date of the loan and for a term of either three or five
years, as selected by the executive. Loans bear interest at 100% of the
"Applicable Federal Rate" as provided in the Internal Revenue Code to avoid
"unstated interest."
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<PAGE> 13
Under the Purchase Plan, through December 31, 1996, the Corporation
has made loans in excess of $60,000 to executive officers of the Corporation,
as follows:
<TABLE>
<CAPTION>
NAME HIGHEST BALANCE (22) INTEREST RATE MATURITY
---- -------------------- ------------- --------
<S> <C> <C> <C>
Gail E. Janssen $95,000 5.79% 12/18/00
$51,000 5.49% 02/02/01
John W. Johnson $75,000 5.98% 11/20/00
$18,000 5.64% 05/20/99
------------------
</TABLE>
(22) Also year end balance.
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, 1991, in Corporation
Common Stock and in each of the indices, with reinvestment of dividends. As to
the Corporation Common Stock, the graph uses the reported bid price on the
indicated dates, except at December 31, 1995 and 1996. For those dates, the
graph uses the closing price of Corporation Common Stock as reported on NASDAQ
on those dates.
<TABLE>
<CAPTION>
NASDAQ
Measurement Period F&M Ban- NASDAQ Bank Stock
(Fiscal Year Covered) corporation Stock Market Index
<S> <C> <C> <C>
1991 100 100 100
1992 153 116 146
1993 205 134 166
1994 228 131 165
1995 282 185 246
1996 363 227 326
</TABLE>
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<PAGE> 14
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 1997. 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 28, 1997, 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
/s/ Janet M. Lakso
Janet M. Lakso, Secretary
Kaukauna, Wisconsin
March 28, 1997
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, 1996,
WILL BE PROVIDED WITHOUT CHARGE TO EACH RECORD OR BENEFICIAL OWNER OF THE
CORPORATION'S COMMON SHARES AS OF MARCH 14, 1997, 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> 15
F&M BANCORPORATION, INC.
1997 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 22, 1997, 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 2000 (except as marked to
the contrary below)
</TABLE>
JOHN W. JOHNSON GARY A. LICHTENBERG DWAINE G. PEPPLER JOSEPH S. WALSH
(if you wish to withhold authority for a specified nominee, cross out the name
of that nominee)
(2) 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.
Please return promptly in the enclosed
envelope.
Dated this day of , 1997
---- ----------------
-----------------------------------------------
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.
