<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
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 204.14a-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| No fee required
|_| Filing 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:
(4) Proposed Maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary proxy 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
F&M BANCORPORATION, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 1999
To the Shareholders of F&M Bancorporation, Inc.:
NOTICE is hereby given that the Annual Meeting (the "Annual Meeting") of
the shareholders of F&M Bancorporation, Inc., a Wisconsin corporation, will be
held at the Paper Valley Hotel and Conference Center, 333 West College Avenue,
Appleton, Wisconsin on Tuesday, April 27, 1999, at 7:00 p.m. local time, for the
purpose of considering and voting upon the following matters:
1. To elect three directors to serve on the Board of Directors for
three-year terms expiring in the year 2002;
2. To transact such other business as may properly be brought before the
Annual Meeting or any adjournment thereof.
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.
The Board of Directors has fixed the close of business on March 16, 1999 as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the Annual Meeting or any adjournment thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ACCOMPANYING POST-PAID
ENVELOPE. IF FOR ANY REASON YOU SHOULD DESIRE TO REVOKE YOUR PROXY, YOU MAY DO
SO AT ANY TIME BEFORE IT IS VOTED.
By order of the Board of Directors,
Janet M. Lakso,
Secretary
April 1, 1999
Kaukauna, Wisconsin
<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 being furnished to the shareholders of F&M
Bancorporation, Inc. ("F&M" or the "Corporation") in connection with the
solicitation of proxies on behalf of F&M's Board of Directors to be voted at the
Annual Meeting of Shareholders of F&M to be held on April 27, 1999 and at any
adjournment thereof (the "Annual Meeting"). 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.
F&M Shareholders of record at the close of business on March 16, 1999,
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 16, 1999,
there were 15,506,076 shares of F&M Common Stock, $1.00 par value ("F&M Common")
outstanding. This is F&M's only class of stock outstanding. 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 F&M Common 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.
Shares represented at the F&M Annual Meeting by properly executed proxy
will be voted in accordance with the specification made on the proxy; if no
specification is made, such shares will be voted FOR the nominees. 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.
The F&M Board of Directors does not intend to present any other matters
before the Annual Meeting. This proxy material is being mailed to shareholders
commencing on or about April 1, 1999.
-1-
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN F&M
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of F&M Common, as of March 16, 1999, by each director, each nominee
for director, each executive officer named in the Summary Compensation Table
below, and all directors and executive officers of F&M as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES AND
NATURE OF BENEFICIAL OWNERSHIP (1)
----------------------------------
Sole Shared Percent
Name Ownership(2) Ownership(3) Total of Class
- ---- ------------ ------------ ----- --------
<S> <C> <C> <C> <C>
Otto L. Cox 10,914 7,852 18,766 *
Paul J. Hernke 26,162 0 26,162 *
Gail E. Janssen 94,294 26,728 121,022 *
John W. Johnson 32,065 719 32,784 *
Douglas A. Martin 14,391 1,534 15,925 *
Ronald E. Fenton 191,517 56,628 248,145 1.6%
Robert C. Safford 126,230 3,871 130,101 *
Glenn L. Schilling 27,492 9,023 36,515 *
Joseph F. Walsh 17,441 13,364 30,805 *
Daniel E. Voet 4,091 12,143 16,234 *
All directors and
executive officers as
a group (18 persons)
(4) 580,069 348,062 928,131 6.0%
- ------------------------------
</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 Joint Proxy Statement Prospectus. 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 a total of 64,411
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. This listing is not necessarily an admission of
beneficial ownership.
(4) Shared ownership includes 192,502 shares held by F&M's
Employee's Retirement Savings Plan and Trust ("Plan") not
allocated to accounts of executive officers. F&M officers John
W. Johnson, Bartholemew Salazar, Constance M. Verbruggen, and
Daniel E. Voet, are Plan voting committee members who have
shared voting power for the F&M Common held by the Plan.
-2-
<PAGE> 5
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that
F&M's executive officers and directors, and persons who own more than 10% of the
F&M Common, file reports of ownership and changes in ownership with the
Commission. Executive officers, directors and greater than 10% shareholders
(collectively "insiders") are required by Commission regulation to furnish F&M
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 F&M, or
written representations that no such forms were required. Based solely on the
filings and written representations received by F&M, except that Constance
Verbruggen (an executive officer) reported one transaction late, F&M believes
that during 1998 F&M's insiders have complied with all Section 16(a) filing
requirements applicable to them.
-3-
<PAGE> 6
ELECTION OF F&M DIRECTORS
F&M 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. 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
- ------------ --------------------------------------------- --------------
<S> <C> <C>
NOMINEES FOR TERMS EXPIRING IN 2002
Otto L. Cox, 58 (1)(2) Hospital Administrator, Affinity Health Systems, 1986
Inc. (health care); Director, F&M Bank-Appleton
Douglas A. Martin, 47 Vice President of F&M; President and Director, 1990
F&M Bank-Grant County
Glenn Schilling, 62 (1) Retired in 1991 as Vice President Thilmany Pulp & 1980
Paper Company (paper manufacturer); Director,
F&M Bank-Kaukauna
CONTINUING DIRECTORS - TERMS EXPIRE IN
2000
Ronald E. Fenton, 70 (2) Former President and Chief Executive Officer of 1998
BancSecurity and Security Bank; Chairman of the
Board of F&M Bank - Iowa Story County and F&M
Bank - Iowa South Central
John W. Johnson, 44 Chief Executive Officer and President of F&M 1994
since 1997; Vice President of F&M from 1994 to
1997; President and Director F&M Bank-Northeast
from 1989 to 1997 (4)
Joseph F. Walsh, 66 (1)(2) Retired in 1993 as President, Hartjes-Walsh 1980
Insurance Management Inc. (insurance sales);
Director, F&M Bank-Kaukauna
CONTINUING DIRECTORS - TERMS EXPIRE
IN 2001
Paul J. Hernke, 62 (1) 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)
</TABLE>
-4-
<PAGE> 7
<TABLE>
<S> <C> <C>
Gail E. Janssen, 68 Chairman of the Board of F&M since 1980; Chief 1980
Executive Officer of F&M from 1980 to 1997, and
President from 1980 to 1996; Chairman of the
Board of F&M Bank-Kaukauna
Robert C. Safford, 68 (1)(2)(3) Real Estate Developer with Realty Development 1994
Corporation; previously, President, R.E.
Management, Inc. (real estate rental and
management) from 1988 to 1996; 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) (4)
</TABLE>
- ----------------------
* Each of the persons has held the positions listed in the table above for at
least five years unless otherwise indicated.
(1) Member of the Compensation Committee in 1998. In 1998, 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 F&M and its
subsidiaries. The Compensation Committee also serves as the
Stock Option Committee, which 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").
(2) Member of Audit Committee in 1998. In 1998, 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 F&M's internal
audit staff and its independent public accountants and makes
recommendations to the Board of Directors with respect
thereto.
(3) The agreement by which F&M acquired First National Financial
Corporation ("FNFC") contemplated that Mr. Safford would be
appointed to F&M's Board of Directors, and renominated to that
position (as he was in 1995) provided he continues to own at
least 66,000 shares of F&M Common, subject to shareholder and
regulatory approval.
(4) The agreement by which F&M acquired Pulaski Bancshares, Inc.
("PBI") contemplated that a designee of PBI (which was Mr.
Johnson) would be appointed to F&M's Board of Directors and
nominated for re-election (as he was in 1997) if consistent
with safe and sound banking practices and F&M's best
interests.
The Board of Directors held four regular meetings and one special
meeting during 1998. 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 1998 for non-employee directors, beginning in April 1998, were $1,900
per quarter, $750 per meeting and $550 per committee meeting. For 1999,
directors' fees for non-employee directors have been set at $2,100 per quarter,
$750 per directors' meeting and $550 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.
-5-
<PAGE> 8
In 1993, F&M's shareholders approved the 1993 Stock Option Plan for
Non-Employee Directors of F&M Bancorporation, Inc. (the "Directors' Plan").
Under the Directors' Plan, F&M's non-employee directors are to receive an option
to acquire 1,331 shares of F&M Common Stock (adjusted as a result of the
subsequent stock dividends) on each succeeding January 1 during the term of the
Directors' Plan. On each of January 1, 1998 and 1999, each non-employee director
acquired an option to acquire 1,331 shares of F&M Common at $36.76 per share and
1,331 shares of F&M Common at $29.875 per share, respectively.
As part of F&M's acquisition of FNFC in February 1994, Mr. Safford
entered into a non-competition agreement with F&M 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 beginning in
February 1994; payments of $100,000 were made in 1998.
-6-
<PAGE> 9
F&M EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the total
compensation of F&M's four highest compensated executive officers who received
salary and bonus in excess of $100,000, including the chief executive officer,
for fiscal year 1998 and for the two prior fiscal years. The data includes
compensation for service in all capacities to F&M and its subsidiaries.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION (1) AWARDS
----------------------- ------
SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (2) OPTIONS/SARS # (3) COMPENSATION(4)
- --------------------------- ---- ------ --------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
John W. Johnson 1998 $ 221,138 $ 83,697 1,650 $ 10,000
President and CEO 1997 157,140 41,801 908 13,225
1996 132,095 20,262 998 12,000
Gail E. Janssen 1998 $ 106,176 $ -0- 3,300 $ 20,516
Chairman 1997 285,497 92,067 3,300 44,571
1996 242,731 67,716 7,260 41,547
Douglas Martin 1998 $ 106,186 $ 19,479 825 $ 9,790
Vice-President 1997 98,905 13,914 908 10,196
1996 95,429 17,560 998 8,804
Daniel E. Voet 1998 $ 94,703 $ 10,816 825 $ 8,674
Chief Financial Officer 1997 66,987 11,000 605 6,657
and Treasurer 1996 57,672 10,000 665 5,179
</TABLE>
- -----------------------
(1) While the named individuals received perquisites or other
personal benefits in the years shown, in accordance with
Commission 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.
(2) Annual bonus amounts are earned and accrued during the years
indicated but paid in the following fiscal year.
(3) Represents options granted under the Option Plan. No SAR's are
granted thereunder.
(4) This column reflects F&M's contributions, both profit sharing
and 401(k) matching, to named officers' accounts (except Mr.
Janssen) in the Employee's Retirement Savings Plan and Trust
and, for Mr. Janssen only, to the Non-Qualified Deferred
Compensation Plan. In 1998 the contributions to Mr. Janssen's
Deferred Compensation Plan account were $20,516. Contributions
to the Retirement Savings accounts of Messrs. Johnson, Martin
and Voet were $10,000, $9,790, and $8,674, respectively, in
1998.
-7-
<PAGE> 10
Stock Options
The following table sets forth information on stock options under the
Option Plan granted in 1998 to the executive officers named in the Summary
Compensation table:
OPTION/SAR GRANTS IN LAST FISCAL YEAR: INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF STOCK
NO. OF SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION -------------------------
NAME GRANTED (1) IN FISCAL YEAR PRICE ($/SH) DATE 5% 10%
---- ----------- -------------- ------------ -------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Gail E. Janssen 3,300 12.9% 35.85 1-28-08 $74,401 $188,548
John W. Johnson 1,650 6.5% 35.85 1-28-08 37,201 94,274
Douglas A. Martin 825 3.2% 35.85 1-28-08 18,600 47,137
Daniel E. Voet 825 3.2% 35.85 1-28-08 18,600 47,137
</TABLE>
- -----------------
(1) Represents options granted under the Option Plan to purchase
shares of F&M Common 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, 1998.
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 (2) YEAR END (3)
SHARES ACQUIRED ------- ------------
NAME ON EXERCISE VALUE REALIZED(1) EXERCISABLE (4) EXERCISABLE (4)
---- ----------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
Gail E. Janssen 17,820 $362,668 3,300 ---
John W. Johnson 3,000 79,439 9,278 $139,856
Douglas A. Martin 0 0 5,724 60,000
Daniel E. Voet 0 0 4,093 39,993
</TABLE>
- ------------------
(1) The Value Realized is based on the closing price of F&M Common
on the exercise date.
(2) 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.
(3) Based upon the $30.25 closing price on the last trading day of
the year.
(4) All options granted prior to December 31, 1998 were
exercisable at that date.
-8-
<PAGE> 11
Compensation/Severance Agreements
In connection with its acquisition by F&M, Pulaski State Bank
("Pulaski") (now part of F&M Bank-Northeast) entered into an employment
agreement with John W. Johnson on November 4, 1993 for a term of three years.
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 shares of
F&M Common at the same conversion ratio that the shares of PBI common stock were
converted into shares of F&M Common in the merger of PBI and F&M. Upon being
designated as President and Chief Operating Officer in July 1997, Mr. Johnson
and F&M entered into an employment agreement, which was amended in November 1997
when Mr. Johnson was designated Chief Executive Officer.
F&M entered into a new employment agreement effective as of August 1,
1998 with Mr. Johnson, pursuant to which Mr. Johnson serves as President and
Chief Executive Officer. The employment agreement has a three year term, unless
earlier terminated voluntarily by Mr. Johnson or upon the occurrence of certain
events by F&M. Under the employment agreement, F&M pays Mr. Johnson a base
salary, subject to adjustment at such intervals and in amounts to be determined
by F&M, consistent with adjustments received by other employees of F&M and the
duties of Mr. Johnson, including, among other things, Mr. Johnson's performance,
the performance of F&M, competitive factors and economic conditions. The
employment agreement also provides that Mr. Johnson is eligible to participate
in the Option Plan, bonuses and other incentive plans of F&M established for
F&M's President and CEO.
F&M also entered into an employment agreement effective as of August 1,
1998 with Daniel E. Voet, pursuant to which Mr. Voet serves as Treasurer and
Chief Financial Officer. The employment agreement has a three year term, unless
earlier terminated voluntarily by Mr. Voet or upon the occurrence of certain
events by F&M. Under the employment agreement, F&M pays Mr. Voet a base salary,
subject to adjustment at such intervals at an amount to be determined by F&M,
consistent with adjustments received by other employees of F&M and the duties of
Mr. Voet, including among other things, Mr. Voet's performance, the performance
of F&M, competitive factors and economic conditions. The employment agreement
also provides that Mr. Voet is eligible to participate in the Option Plan,
bonuses and other incentive plans of F&M established for F&M's Chief Financial
Officer and Treasurer.
Each of the 1998 employment agreements contain severance benefits
should either officer be terminated in connection with a change in control
transaction involving F&M. In such event, Mr. Johnson and Mr. Voet would receive
a severance payment in the amount equal to his average annual compensation
(defined to include his then current base annual salary multiplied by 2.99). In
addition to the severance payment, the officer would also be entitled to
continue receiving, for two years following termination, medical, life and
disability insurance benefits, and vested benefits otherwise payable to him in
the F&M plan or agreement related to retirement or deferred compensation
benefits, if any. The agreements define "change in control" and the
circumstances in which a termination is deemed to have occurred in connection
with the change in control.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The general compensation policies of the Corporation and its
subsidiaries are set by the Compensation Committee (the "Committee"). In 1998,
the Committee was composed of 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 also made by the Committee, which
serves as the board's stock option committee.
In establishing executive compensation, the Committee focuses primarily
on the following considerations:
1. Attraction and retention of qualified personnel;
-9-
<PAGE> 12
2. Providing compensation which is competitive with businesses
similar in size and nature to F&M;
3. General economic conditions;
4. Providing incentives to personnel to achieve F&M's goals,
which include achieving an adequate return on equity to
enhance the ability of F&M to pay dividends and to increase
the value of F&M'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 F&M. The Committee has used published salary
information available from outside sources such as salary survey data, as well
as salary survey information for F&M's market area provided by a consultant
retained by F&M. Because of 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 F&M's performance.
F&M utilizes an incentive bonus plan (the "Bonus Plan") for its
executive officers. In 1998, all executive officers were eligible to participate
in the Bonus Plan (or analogous plans through subsidiary banks). Under the Bonus
Plan, these officers were able to earn a bonus based on the return on opening
equity ("ROOE") achieved by F&M in 1998. The Committee established a 16% target
ROOE for 1998 which was selected to complement F&M'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. Certain adjustments are made for officers
with operational responsibilities at a particular Bank, based upon the Bank's
performance.
As ROOE increases from 14% to 18%, the multiplier increases from 0.6 to
1.4. No bonus would be paid if ROOE was not at least 14%, although the Committee
does have discretion to deviate from the bonus formula if the Committee felt
unusual circumstances justified payment of a bonus. For 1998, 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
F&M's annual goals. The Committee 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 F&M
achieves superior results compared to the targeted ROOE. At the same time, if
F&M falls short of the targeted ROOE but meets a minimum threshold, the Bonus
Plan provides a reduced financial benefit in recognition that F&M performed
acceptably but fell short of its goal. Overall, the Committee believes that this
Bonus Plan is well suited to assist F&M in reaching its target ROOE.
In 1993, F&M'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
F&M by offering increased stock ownership. In 1998, the Committee made grants of
options under the Option Plan ranging from 825 to 3,300 shares.
-10-
<PAGE> 13
The 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 F&M,
and the desire to provide a meaningful incentive to such officers in comparison
to their respective salary levels. With certain exceptions, 1998 awards were
consistent with prior years' awards.
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
shares of F&M Common 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. 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 F&M
Common.
The general factors that are used to determine the CEO's annual base
salaries as well as their incentive compensation are the same as those described
above for all executive officers. Mr. Johnson's salary is determined pursuant to
his employment agreement. The $225,000 base salary was chosen with a desire to
establish a base salary that the Committee believed was both competitive and
consistent with other holding companies, as well as consistent with F&M's
general compensation levels and policies. While Committee members reviewed
salaries at certain other companies, no specific survey was conducted. Mr.
Johnson's bonus was determined in accordance with the Bonus Plan formula set
forth above. Mr. Johnson received an option for 1,650 shares of F&M Common in
1998, consistent with other prior year grants to him.
Because of F&M's current compensation structure, the Committee believes
it unlikely that F&M 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.
Members of the Compensation Committee in 1998:
Otto L. Cox, Chairman Joseph F. Walsh, Member
Paul J. Hernke, Member Robert C. Safford, Member
Glenn L. Schilling, Member
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, there were no members of the Compensation Committee with
reportable interlocks.
TRANSACTIONS WITH F&M
F&M's subsidiary banks have, and expect to continue to have, regular
dealings with directors and officers of F&M 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 F&M's subsidiary banks for loans
made in the ordinary course of business. Except as set forth below, 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. Such loans do not involve more
than the normal risk of collectibility or present other unfavorable features.
Pursuant to F&M's Officers' Stock Purchase Plan (the "Purchase Plan"),
covered executives are expected to own shares of F&M Common in recommended
minimum amounts. To facilitate ownership, the Purchase Plan (as approved in 1996
by F&M shareholders) includes provisions which permit F&M to make loans for the
purchase of shares of F&M Common. Loans are secured by shares of F&M Common with
a market value equal to at least 110%
-11-
<PAGE> 14
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."
Under the Purchase Plan, through December 31, 1998, F&M has made loans
totaling in excess of $60,000 to executive officers of F&M as follows:
<TABLE>
<CAPTION>
NAME HIGHEST BALANCE (1) INTEREST RATE MATURITY
---- --------------- ------------- --------
<S> <C> <C> <C>
John W. Johnson $ 75,000 5.98% 11/20/00
18,000 5.64% 05/20/99
11,595 5.57% 11/11/00
11,595 5.45% 08/04/03
10,545 5.03% 10/19/03
Gail E. Janssen $ 369,627 5.58% 04/29/03
95,000 5.79% 12/18/00
51,000 5.49% 02/02/01
Daniel E. Voet $ 58,000 5.51% 01/31/00
40,250 5.56% 07/28/03
37,450 5.57% 02/02/03
27,500 4.96% 03/29/99
25,750 5.49% 02/01/01
Peter Smaby $ 60,750 4.44% 11/02/03
26,775 5.51% 01/31/00
26,775 5.97% 01/31/02
13,313 4.74% 03/04/04
Douglas A. Martin $ 38,650 5.45% 08/05/03
38,000 5.57% 02/03/03
30,000 5.97% 01/31/02
28,950 6.68% 08/05/01
9,000 5.64% 05/29/99
Linda K. Seefeldt $ 98,900 5.56% 07/28/03
</TABLE>
- ------------------
(1) Also represents the year end balance.
-12-
<PAGE> 15
PERFORMANCE GRAPH
The following graph compares the cumulative total return on F&M Common
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, 1993, in F&M Common and in each of the indices,
with reinvestment of dividends.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
F&M Bancorporation 100.00 111.31 137.74 177.28 268.81 228.40
NASDAQ Stock Market 100.00 97.75 138.26 170.01 208.58 293.21
NASDAQ Bank Stock Index 100.00 99.64 148.38 195.91 328.02 324.90
</TABLE>
AUDITORS
The Board of Directors anticipates reappointing the firm of Wipfli
Ulrich Bertelson LLP as independent auditors to audit the financial statements
of the Corporation for the year 1999. Wipfli Ulrich Bertelson LLP has acted as
F&M's auditor since 1986. Representatives of Wipfli Ulrich Bertelson LLP 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.
SHAREHOLDER PROPOSALS
Shareholder proposals for F&M's 2000 Annual Meeting of Shareholders
must be received no later than January 29, 2000 at the Company's principal
executive offices, One Bank Avenue, Kaukauna, Wisconsin 54130 and directed to
the attention of the Secretary, in order to be considered for inclusion in next
year's annual meeting proxy material under the Securities and Exchange
Commission's proxy rules. Under F&M's Bylaws, written notice of shareholder
proposals for F&M's 2000 Annual Meeting of Shareholders which are not intended
to be considered for inclusion in next year's annual meeting proxy material
(shareholder proposals submitted outside the processes of Rule 14a-8) must be
received no later than January 29, 2000 and no earlier than November 30, 1999 at
such offices, directed to the attention of the Secretary, and such notice must
contain the information specified in F&M's Bylaws.
-13-
<PAGE> 16
OTHER MATTERS
The Board of Directors of F&M has not been informed and is not aware
that any other matters will be brought before the Annual 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.
By Order of the Board of Directors
Janet M. Lakso, Secretary
Kaukauna, Wisconsin
April 1, 1999
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, 1998,
WILL BE PROVIDED WITHOUT CHARGE TO EACH RECORD OR BENEFICIAL OWNER OF THE
CORPORATION'S COMMON SHARES AS OF MARCH 16, 1999, 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.
-14-
<PAGE> 17
F&M BANCORPORATION, INC.
1999 ANNUAL MEETING OF SHAREHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gail E. Janssen, John W. Johnson and Daniel E.
Voet, 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 27, 1999, at 7:00 p.m., Central Time, and
at any adjournment thereof, hereby revoking any and all proxies heretofore
given:
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.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
(1) ELECTION OF DIRECTORS for three-year terms ending in 2002:
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote
(except as indicated) for for all nominees listed
1 - OTTO L. COX 2 - GLENN SCHILLING 3 - DOUGLAS A. MARTIN
(Instructions: To withhold authority for any individual indicated nominee, write
the number(s) of the nominee(s) in the box provided to the right) [ ]
(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.
Address Change?
Mark Box [ ]
Indicate changes below:
Date ________________
NO. OF SHARES
________________________________________________
Signature(s) in box
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.
