<PAGE>
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
Investors Bank Corp.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rule 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:
_________________________________________________________________________
*/ Set forth the amount on which the filing fee is calculated and state
how it was determined.
[X] 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: $125
_________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
Preliminary Proxy Statement
_________________________________________________________________________
(3) Filing Party: Investors Bank Corp.
__________________________________________________________________________
(4) Date Filed: March 18, 1994
__________________________________________________________________________
<PAGE>
INVESTORS BANK CORP.
200 EAST LAKE STREET
WAYZATA, MINNESOTA 55391
-------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 3, 1994
TO THE SHAREHOLDERS OF INVESTORS BANK CORP.:
Notice is hereby given that the Annual Meeting of Shareholders of Investors
Bank Corp. (the "Company") will be held on Tuesday, May 3, 1994, at the
Minneapolis Club, 729 Second Avenue South, Minneapolis, Minnesota at 3:30 p.m.,
Minneapolis, Minnesota time, for the following purposes:
1. To elect two directors to serve on the Board of Directors until the
annual meeting of shareholders to be held in 1997;
2. To approve an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of Common Stock, $.01 par
value, from 5,000,000 to 10,000,000 shares;
3. To approve the adoption of a 1993 Stock Incentive Plan; and
4. To consider and act upon any other matters that may properly come
before the meeting or any adjournments thereof.
Only holders of record of the Company's Common Stock at the close of
business on March 23, 1994 will be entitled to receive notice of and to vote at
the meeting or any adjournment thereof.
You are cordially invited to attend the meeting. WHETHER OR NOT YOU PLAN
TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. If you
later desire to revoke your proxy, you may do so at any time before it is
exercised.
BY ORDER OF THE BOARD OF DIRECTORS
John G. Lohmann, Jr., Secretary
Minneapolis, Minnesota
April 1, 1994
____________________
IMPORTANT - PLEASE MAIL YOUR PROXY CARD PROMPTLY
IN ORDER THAT THERE MAY BE A PROPER REPRESENTATION
AT THE MEETING, YOU ARE URGED, WHETHER YOU OWN ONE
SHARE OR MANY, TO COMPLETE, SIGN AND MAIL YOUR PROXY.
____________________
<PAGE>
P R E L I M I N A R Y
INVESTORS BANK CORP.
200 EAST LAKE STREET
WAYZATA, MINNESOTA 55391
--------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 3, 1994
This Proxy Statement is furnished in connection with the solicitation of
the enclosed proxy by the Board of Directors of Investors Bank Corp. (the
"Company") for use at the Annual Meeting of Shareholders to be held on May 3,
1994, at 3:30 p.m. Minneapolis time, at the Minneapolis Club, 729 Second Avenue
South, Minneapolis, Minnesota, and any adjournments thereof (the "Annual
Meeting"). Expenses in connection with the solicitation of proxies will be paid
by the Company. Proxies are being solicited primarily by mail, but, in
addition, officers and regular employees of the Company who will receive no
additional compensation for their services may solicit proxies by telephone,
telegraph or in person. This Proxy Statement and form of proxy enclosed are
being mailed to shareholders on or about April 1, 1994.
Those shares of the Company's Common Stock, $.01 par value (the "Common
Stock"), represented by proxies in the form solicited will be voted in the
manner directed by the holder of such shares, and, if no direction is made, such
shares will be voted for the election of the nominees for director named in this
Proxy Statement and for the approval of the other proposals discussed herein.
If a shareholder abstains from voting as to any matter, then the shares held by
such shareholder shall be deemed present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote with respect to
such matter, but shall not be deemed to have been voted in favor of such matter.
If a broker returns a "nonvote" proxy, indicating a lack of authority to vote on
such matter, then the shares covered by such nonvote shall be deemed present at
the meeting for purposes of determining a quorum but shall not be deemed to be
represented at the meeting for purposes of calculating the vote with respect to
such matter. Proxies may be revoked at any time before being exercised by
delivery to the Secretary of the Company of a written notice of termination of
the proxies' authority or a duly executed proxy bearing a later date.
A copy of the Company's Annual Report for the year ended December 31, 1993
is being furnished to each shareholder with this Proxy Statement.
Only the holders of the Common Stock whose names appear of record on the
Company's books at the close of business on March 23, 1994 will be entitled to
vote at the Annual Meeting. At the close of business on March 23, 1994, a total
of 3,425,563 shares of such Common Stock were outstanding, each share being
entitled to one vote. The Company declared a dividend of one share for every
three shares held, effective December 31, 1993, for shareholders of record as of
December 1, 1993, and all references to shares in this Proxy Statement reflect
this dividend.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 1, 1994, information about
the ownership of Common Stock by each director, by each executive officer named
in the Summary Compensation Table and by all directors and executive officers
(including the named individuals) as a group and by any other shareholder who is
known by the Company to own beneficially more than 5% of the outstanding Common
Stock of the Company. Except as otherwise indicated, the shareholders listed in
the table have sole voting and investment powers with respect to the shares
indicated.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER(1) PERCENT
- -----------------------------------------------------------------------------
<S> <C> <C>
James M. Burkholder. . . . . . . . . . . . . . 260,999(1) 7.6%
200 East Lake Street
Wayzata, Minnesota 55391
John G. Lohmann, Jr. . . . . . . . . . . . . . 268,808(2) 7.9%
200 East Lake Street
Wayzata, Minnesota 55391
E. Thomas Binger . . . . . . . . . . . . . . . 209,025(3) 6.2%
5775 Wayzata Boulevard
St. Louis Park, Minnesota 55416
George Maas . . . . . . . . . . . . . . . . . 174,000 5.2%
P.O. Box 7
Watertown, South Dakota 57201
First Bank System, Inc.. . . . . . . . . . . . 177,909(4) 5.3%
601 Second Avenue South
Minneapolis, MN 55402-4302
Alice D. Mortenson . . . . . . . . . . . . . . 57,464(5) 1.7%
Graham N. Heikes . . . . . . . . . . . . . . . 19,997(6) *
Leonard E. Brown . . . . . . . . . . . . . . . 17,331(7) *
Daniel A. Arrigoni . . . . . . . . . . . . . . 46,090(8) 1.4%
Lynn V. Bueltel. . . . . . . . . . . . . . . . 68,559(9) 2.0%
All directors and executive officers
as a group (9 persons) . . . . . . . . . . . 1,122,273(10) 31.3%
<FN>
_______________________
* Less than 1%.
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
(1) Includes 22,347 shares held in the Company's 401(k) plan, 58,999 shares
purchasable upon exercise of options currently exercisable or options which
become exercisable within 60 days and 31,389 shares subject to Restricted
Stock Agreements and certain forfeiture provisions.
(2) Includes 21,205 shares held in the Company's 401(k) plan, 57,999 shares
purchasable upon exercise of options currently exercisable or options which
become exercisable within 60 days, 2,044 shares held in a custodial account
for such officer and director's children of which such officer and director
is custodian, 933 shares held by such officer and director's spouse and
31,389 shares subject to Restricted Stock Agreements and certain forfeiture
provisions.
(3) Includes 3,999 shares purchasable upon exercise of options currently
exercisable or options which become exercisable within 60 days.
(4) Based on information in a Schedule 13G Report dated February 10, 1994,
delivered to the Company and indicating that First Bank Systems is the
beneficial owner of such shares. Includes 169,792 shares for which First
Bank System, Inc. exercises sole dispositive power and 6,696 shares for
which it exercises shared dispositive power. Such shares are held by the
banking affiliates of such entity in a fiduciary capacity on behalf of
various customers.
(5) Includes 13,331 shares purchasable upon exercise of options currently
exercisable or options which become exercisable within 60 days and 24,800
shares held by such director's spouse.
(6) Includes 13,331 shares purchasable upon exercise of options currently
exercisable or options which become exercisable within 60 days and 2,000
shares purchasable upon exercise of warrants.
(7) Includes 15,998 shares purchasable upon exercise of options currently
exercisable or options which become exercisable within 60 days.
(8) Includes 1,015 shares held in the Company's 401(k) plan, 26,665 shares
purchasable upon exercise of options currently exercisable or options which
become exercisable within 60 days and 10,400 shares purchasable upon
exercise of exercisable warrants.
(9) Includes 15,744 shares held in the Company's 401(k) plan, 12,032 shares
purchasable upon exercise of options currently exercisable or options which
become exercisable within 60 days, 4,000 shares purchasable upon exercise
of warrants and 2,000 shares subject to a Restricted Stock Agreement and
subject to forfeiture.
(10) Includes 60,311 shares held in the Company's 401(k) plan as of December 31,
1993, 202,354 shares purchasable upon exercise of options currently
exercisable or options which become exercisable within 60 days, 16,400
shares purchasable upon exercise of warrants, 2,044 shares held in a
custodial account for children of an officer and director, 64,778 shares
subject to Restricted Stock Awards, and 25,733 shares held by the spouses
of officers and directors.
</TABLE>
The Company also has outstanding 303,640 shares of Cumulative Perpetual
Preferred Stock, Series 1991, a non-voting, nonparticipating preferred stock.
None of the executive officers or directors held any shares of such series of
preferred stock as of February 1, 1994, except Mr. Burkholder who held
-3-
<PAGE>
60 shares through an IRA account and whose spouse held 500 shares directly and
60 shares through an IRA account and Mr. Maas who holds 4,000 such shares.
Under federal securities laws, the Company's directors and officers, and
any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities and Exchange
Commission (the "Commission") and the securities exchange on which the equity
securities are registered. Specific due dates for these reports have been
established by the Commission, and the Company is required to disclose in this
Proxy Statement any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended December 31, 1993. All of the
required reports were timely filed by each of the directors and officers of the
Company during 1993.
ELECTION OF DIRECTORS
NOMINEES
Approximately one-third of the directors are elected at each annual meeting
of shareholders and serve for terms of three years or until their successors are
elected and qualified. Accordingly, directors whose terms are scheduled to
expire at the annual meeting of shareholders in 1994 will be scheduled for
reelection at the meeting to be held May 3, 1994.
Two persons have been nominated for election to the Company's Board of
Directors at the Annual Meeting for terms expiring in 1997. James M. Burkholder
has been a director since the Company's formation in 1983 and Leonard E. Brown
has been a director since 1988. Should any nominee for director become
unavailable for any reason, the proxies will be voted in accordance with the
best judgment of the persons named therein. The Board of Directors has no
reason to believe that any nominee will be unavailable.
The following information is furnished with respect to each nominee and
director as of February 1, 1994:
PRINCIPAL OCCUPATION AND BUSINESS
NAME AGE EXPERIENCE FOR PAST FIVE YEARS
---- --- ---------------------------------
NOMINEES - TERM EXPIRING 1997
James M. Burkholder. . . . . 51 President and Chief Executive Officer
of the Company and Investors Bank,
F.S.B. since September 1990 and Chairman
since December 1990. Executive Vice
President and Chief Financial Officer of
the Company and Investors Savings Bank,
F.S.B. from 1983 to September 1990.
-4-
<PAGE>
Leonard E. Brown . . . . . . 59 Partner with the accounting firm of
KPMG Peat Marwick, Minneapolis,
Minnesota for over five years until his
retirement in August 1988. Member of the
Board of Directors of Gate City Federal
Savings Bank, Fargo, North Dakota and
Brainerd Savings and Loan Association,
Brainerd, Minnesota.
INCUMBENT DIRECTORS -TERM EXPIRING 1995
John G. Lohmann, Jr. . . . . 54 Executive Vice President and Secretary
of the Company and Executive Vice
President, Chief Lending Officer and
Secretary of Investors Savings Bank,
F.S.B. since 1983.
Graham N. Heikes . . . . . . 57 Sole practitioner since January 1994.
Partner with Rice & Heikes, Ltd., a law
firm he founded, from October 1989 to
January 1994. Partner with the law firm
of Jardine, Logan & O'Brien, St. Paul,
Minnesota for over five years prior
thereto.
George E. Maas 56 Director of Simon-Telelect Inc. ("Simon-
Telelect"). Chairman of the Board of
Directors of Simon-Telelect from 1991 to
1993, and President of Simon-Telelect from
1979 to 1991.
INCUMBENT DIRECTORS - TERM EXPIRING 1996
Alice D. Mortenson . . . . . 54 Director of Community Relations of
M.A. Mortenson Co., a construction
company, since 1989. Trustee of
Westminister Presbyterian Church. Member
of the Board of Directors of Courage
Center, Dunwoody Institute and the Greater
Minneapolis Council of Churches.
Homemaker and community volunteer for
at least five years.
E. Thomas Binger . . . . . . 71 General Partner in Pittsburgh Pacific
Company, Ltd., a general partnership with
interests in the iron ore business, since
1970. Member of the Board of Directors of
MTS Systems Corp. and Bemis Company Inc.
During the fiscal year ended December 31, 1993, the Board of Directors of
the Company held ten meetings. All incumbent directors attended at least 75% of
the meetings of the Board, and all incumbent directors attended at least 75% of
those meetings of the committees of which they were members. The Company's
Board of Directors and committees also act from time to time by written action
in lieu of meetings.
The Board of Directors of the Company has an audit committee which met
three times, an executive committee which met two times and a compensation
committee which met four times during
-5-
<PAGE>
the fiscal year ended December 31, 1993. The audit committee reviews the
Company's arrangements with its auditors, the substance of the audits, and
interested party transactions. Messrs. Heikes, Maas and Brown (who is also the
chairperson) serve on the audit committee. The executive committee, composed of
Messrs. Burkholder, Lohmann and Binger, may exercise the power of the Board of
Directors on many matters between board meetings. The Company's compensation
committee, composed of Messrs. Brown, Binger and Heikes and Ms. Mortenson,
establishes policy regarding executive compensation, specifically reviews and
approves the compensation to the Company's two principal executive officers,
reviews overall compensation policy, and administers the Company's stock
incentive plans. The Board of Directors has no standing nominating committee.
Each of the directors of the Company also serves as a director of Investors
Savings Bank, F.S.B., a wholly owned subsidiary of the Company (the "Bank") and
serves on similar committees with the Bank.
For fiscal year 1993, the directors of the Company (other than executive
officers) were compensated at a rate of $12,000 plus $500 per Board meeting
attended, $250 per committee meeting associated with a Board meeting and $500
per committee meeting not associated with a Board meeting. With the exception
of annual grants (on July 1 of each year) of nonqualified stock options to
purchase 2,000 shares of common stock of the Company at fair market value,
directors who are not officers or employees receive no other compensation from
the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS ELECT THE NOMINEES
NAMED HEREIN TO THE TERMS AS DIRECTORS OF THE COMPANY DESCRIBED ABOVE. THE
PERSONS NAMED IN THE ACCOMPANYING PROXY INTEND TO VOTE THE PROXIES HELD BY THEM
IN FAVOR OF SUCH NOMINEES, UNLESS OTHERWISE DIRECTED. IF NO INSTRUCTION IS
GIVEN, THE ACCOMPANYING PROXY WILL BE VOTED FOR SUCH ELECTION. THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK REPRESENTED AT THE MEETING IS
REQUIRED FOR THE ELECTION OF EACH DIRECTOR.
CERTAIN TRANSACTIONS
The following table sets forth certain information relating to mortgage and
line of credit loans aggregating more than $60,000 made to executive officers
named in the Summary Compensation Table and directors of the Company since
December 31, 1992:
<TABLE>
<CAPTION>
LARGEST AMOUNT
INDEBTEDNESS OUTSTANDING
NAME OF EXECUTIVE INTEREST SINCE AT
OFFICER OR DIRECTOR RATE JANUARY 1, 1993 DECEMBER 31, 1993
- ----------------------------- -------------------------------------------
<S> <C> <C> <C>
James M. Burkholder . . . 7.5% $95,000 0
11.9% $ 2,000 0
Daniel A. Arrigoni(1) . . 8.7% $620,747 $612,350(1)
Graham N. Heikes. . . . . 7.4% $128,562 127,225
- --------------------------------
<FN>
__________________
(1) Mr. Arrigoni was retained as Executive Vice President and a member of the
Executive Management Committee of the Bank on September 30, 1991, and the
loans set forth above were incurred prior to his employment with the
Bank. At December 31, 1991, Mr. Arrigoni had sold his interest in the
property
</TABLE>
-6-
<PAGE>
securing the mortgage loan set forth above. The property was purchased by
the buyer but Mr. Arrigoni remains personally liable to the Bank for its
repayment.
All of the loans set forth in the table above were made in the ordinary
course of business and on substantially the same terms as those prevailing at
the time for comparable transactions with other persons, and did not involve
more than the normal risk of collection or present other unfavorable features.
Thomas R. Lohmann leases property constituting two banking offices to the
Bank pursuant to leases expiring in 2010 and 2012. Thomas R. Lohmann is the
brother of John G. Lohmann, Jr., an executive officer of the Company. Monthly
net lease payments under such leases total approximately $38,540 (subject to
adjustment for changes in price indices).
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors, a committee consisting of four
independent, nonemployee directors. The Compensation Committee establishes and
administers salary levels and other compensation plans for James M. Burkholder
and John G. Lohmann, Jr. and reviews and, where appropriate ratifies,
determinations of the Executive Committee relative to compensation to other
officers of the Company. The Executive Committee, a committee composed of Mr.
Burkholder, Mr. Lohmann and E. Thomas Binger, a nonemployee director, makes
determinations as to the compensation levels of Messrs. Arrigoni and Bueltel and
other officers of the Bank for ratification by the Compensation Committee.
COMPENSATION PHILOSOPHY
It is the Company's policy to link executive compensation to achievement of
the Company's strategic objectives. Value to shareholders is of primary
importance in these objectives. In addition, however, it is the Company's
policy to promote internally generated growth while minimizing the cyclical
risks to which financial institutions are subject. In furtherance of such
objectives, the Company attempts to design its compensation programs for
executive officers to focus not only on short-term profitability and return, but
to consider the longer-term value created by minimizing interest rate risk,
maximizing asset quality, and increasing the Company's ability to generate
stable and growing income through retail banking and mortgage banking
operations. Accordingly, the Company's compensation programs are highly
incentive based, with compensation designed to further both short-term and long-
term strategic objectives while attracting and retaining executives capable of
achieving those objectives.
-7-
<PAGE>
In 1991, the Company retained a compensation consultant from its
independent accounting firm to review and compare its executive compensation
programs to those of similarly sized financial institutions. The report
resulting from this study, released in July 1991 was updated in December 1992
and the Compensation Committee was advised by its compensation consultant that
executive compensation to financial institution executives was increasing at an
annualized rate of approximately five percent. These reports were examined by
and served in part as a basis for the decisions of the Compensation Committee
and the Executive Committee relative to executive compensation during 1993. The
Compensation Committee also examined data relating to publicly traded savings
institutions provided by other independent reports.
PAY MIX AND MEASUREMENT
Each executive's compensation consists of three principal components: an
annual salary that is primarily cash-based; an annual performance-based cash
bonus; and longer-term incentive compensation that includes equity
participation.
BASE SALARY. Each executive's base salary is reviewed annually at the
beginning of each fiscal year. In establishing annual salary, the compensation
committee considers (1) the executive's performance, (2) the executive's
responsibilities and compensation relative to similarly situated executives, and
(3) increases in median competitive pay levels.
For 1993, the Compensation Committee examined an updated report that
presented information on six different statistical compilations of executive
compensation at national and regional thrifts as well as specific data on five
comparable financial institutions. In addition, because the Company's
operations involve a greater deal of residential lending and mortgage banking
activity than most thrifts, the compensation of some executives, such as Mr.
Lohmann who is responsible not only for lending but mortgage banking and
secondary marketing, was compared to compensation of similar executives at
mortgage banking companies.
The Company sets executive salaries at approximately the mean salary level
of equivalent executives in similarly sized savings institutions and mortgage
banking companies. The Chief Executive's salary is generally set at
approximately the national average of salary level for the chief executive of
similarly sized savings institutions, but his overall compensation may exceed
the mean aggregate compensation to such executives because it contains a great
deal of short and long-term incentive compensation.
Based upon these considerations, Mr. Burkholder's base salary was increased
to $195,000 in 1993, an increase of approximately 11.4% over his salary level
for 1992. The increase in Mr. Burkholder's salary was slightly more than the
average increase of executive officer salaries in the industry during 1992
(which averaged approximately 5%). The greater increase was based, in large
part, upon exceptional earnings, return on assets and return on equity during
the 1992 fiscal year as well as a large increase in off-balance sheet assets
(servicing rights). At such level Mr. Burkholder's salary in 1993 was
approximately equal to the mean salary of executives at similarly sized thrift
institutions in the national surveys for thrifts and mortgage companies set
forth in the statistical compilations noted above.
-8-
<PAGE>
ANNUAL INCENTIVE COMPENSATION. Annual incentive compensation to executive
officers of the Company, as well as other officers of the Company and the Bank,
is intended to reflect the value created by the Company for its shareholders, as
well as management's ability to achieve longer-term strategic objectives,
including objectives relative to risk exposure, asset quality, growth and
regulatory compliance. Consistent with such policy, the Company's Performance
Bonus Policy allows officers of the Company and the Bank to receive annual cash
bonuses based upon the Company's achievement of preestablished goals as to
profitability and based on individual achievement of specific individual
performance goals.
The Company's Compensation Committee establishes at or prior to the
beginning of each year a matrix consisting of a range of goals in terms of
return on assets, return on equity and net earnings. Officers are assigned to
different tiers within the matrix and become eligible for a cash bonus equal to
a percentage of their base salaries, ranging for calendar 1992 from 0% to up to
a maximum of 90%, depending upon the achievement during the year of such
financial goals.
The achievement by the Company of any goal in the matrix, however, will not
necessarily result in any bonus to any particular officer. The Company also
establishes a number of specific individual performance objectives for each of
its officers in terms of their responsibilities within the Company. Each
officer is rated at the end of each year based on the achievement of such
objectives, and based on such ratings, may receive all, a portion, or none of
the bonus allocable based on achievement of financial goals.
Bonuses for the Company's two principal executive officers (Messrs.
Burkholder and Lohmann) are determined by the Compensation Committee annually in
January based on performance against the objectives set forth in the matrix and
individual objectives in the previous year. The Company's financial performance
as to net earnings, return on assets and return on equity, when adjusted for the
value of servicing rights retained during 1993 far exceeded the highest
strategic objectives established by the Board of Directors in early 1993. The
compensation committee further noted that the Company had increased its
portfolio of servicing rights by more than $300 million during the year.
Management's individual performance objectives were exceeded during the fiscal
year. Because of this extraordinary performance, the Compensation Committee in
January 1994 determined to allocate bonuses that exceeded the highest category
of bonus in the matrix. Mr. Burkholder received a bonus equal to 95% of his
base salary for 1993.
LONG-TERM INCENTIVE COMPENSATION. The Company believes that return to
shareholders can be maximized by creating a similarity of economic interest
between shareholders and executive management. Historically, the Company has
granted options under its Restated Stock Option Plan to provide an incentive to
maximize the value of the Company's equity securities. Because options have not
always resulted in the most advantageous tax consequences and incentive to
officers, however, the Company adopted the 1993 Stock Incentive Plan (the
"Plan") in 1993 (subject to shareholder approval--see "Proposal to Adopt 1993
Stock Incentive Plan"). In addition to stock options, the Company may grant
restricted stock, stock appreciation rights, performance awards and other stock-
based compensation under the Plan. The Plan, including decisions regarding who
receives awards under the Plan, is administered by the Compensation Committee.
-9-
<PAGE>
Options to purchase 13,333, 13,333 and 4,000 shares were granted to Messrs.
Burkholder, Lohmann and Bueltel, respectively, in January 1993 under the
Restated Stock Option Plan. These options were granted in part because
substantial options held by such officers had become fully vested and expire in
1994. The new options granted vest over a period of two years, and like other
options granted to officers and employees, are exercisable at a price equal to
the fair market value of the common stock on the date of grant.
In connection with the adoption of the Plan, the Committee granted, subject
to shareholder approval, 13,000, 13,000 and 2,000 shares of restricted stock to
Messrs. Burkholder Lohmann and Bueltel, respectively, in January 1994. Although
the Committee granted a similar number of shares to Mr. Burkholder and Mr.
Lohmann in 1992, those restricted shares were in lieu of a contractual
obligation of the Company to establish a retirement plan for such officers.
With the exception of option grants in early 1993, the Company had not granted
significant stock based incentives to such executives since 1989. Options
initially to purchase over 88,000 shares of Common Stock held by such officers,
of which options to purchase 66,532 remained outstanding at the time of such
grants, expire in 1994. The shares of restricted stock were granted in
recognition of the extraordinary performance in recent periods, the lapse of
significant stock based incentives held by such executives, and the significant
tax penalties that such executives will have to recognize to exercise expiring
options.
EMPLOYEE BENEFITS
The executive officers of the Company also receive customary health and
insurance benefits and may participate in the Company's 401(k) plan. Messrs.
Burkholder and Lohmann also receive, in accordance with a contractual obligation
of the Company, life insurance benefits under policies funded by the Company and
for which their legatees are beneficiaries and payments to compensate them for
income taxes incurred on restricted stock granted in 1992 in lieu of a
contractual obligation to develop retirement plans for such officers. The
aggregate amount of payments on behalf of Mr. Burkholder for life insurance
benefits and for tax liability related to 1993 was $34,189.
CONCLUSION
Overall, approximately 42% of the annual compensation to the four executive
officers of the Company during 1993 consisted of incentive compensation based on
earnings performance. The Chairman, Chief Executive Officer and President of
the Company received 45% of his cash compensation from incentive programs that
are based on performance.
The undersigned members of the Compensation Committee believe that the
foregoing compensation programs, which intricately tie executive compensation to
the Company's performance, are consistent with the Company's overall
compensation policies and reflect the Company's extraordinary performance during
the 1993 fiscal year.
Alice D. Mortenson (Chairperson)
E. Thomas Binger
Leonard E. Brown
Graham N. Heikes
-10-
<PAGE>
SHAREHOLDER RETURN
The graph set forth below compares the cumulative total shareholder return
on the common stock of the Company for the last five fiscal years with the
cumulative total return on a broad market index and a peer group index. The
broad market index is an index prepared by Media General Corporation of all
companies that have been listed on the NASDAQ National Market System for the
entire 5 year period ended December 31, 1993. The peer group index is an index
of 283 savings and loan institutions that have been listed on the New York Stock
Exchange, American Stock Exchange and Nasdaq National Market System for the
entire 5 year period that is also prepared by Media General Corporation. In
each case, the cumulative return is calculated assuming an investment of $100 on
December 31, 1988, and reinvestment of all dividends.
-11-
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the three executive officers of the Company (there
being no other executive officers of the Company) whose salary and bonus earned
in the fiscal year ended December 31, 1993 exceeded $100,000 for services
rendered.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------ ----------------------
AWARDS PAYOUTS
NAME OTHER ------ ------- ALL
AND ANNUAL RESTRICTED OTHER
PRINCIPAL COMPEN- STOCK LTIP COMPEN-
POSITION YEAR SALARY BONUS(1) SATION(2) AWARDS(3) OPTIONS PAYOUTS SATION(4)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
JAMES M. BURKHOLDER
President, Chief 1993 $195,000 $185,000 $34,189 13,333 $9,612
Executive Officer 1992 175,000 125,000 14,597 $249,980 8,670
and Chairman of 1991 160,000(5) 100,000 7,115
the Company and
the Bank
JOHN G. LOHMANN, JR.
Executive Vice 1993 161,000 140,000 34,189 13,333 8,643
President and 1992 155,000 105,000 14,597 249,980 8,340
Secretary of the 1991 148,000 70,000 7,055
Company and the Bank;
Chief Lending Officer
of the Bank
LYNN V. BUELTEL
Senior Vice 1993 100,000 57,000 4,000 6,397
President and 1992 96,000 52,000 5,780
Chief Financial 1991 93,000 40,000 3,938
Officer of the
Company and Bank;
Treasurer of the Bank
DANIEL A. ARRIGONI (6)
Executive Vice 1993 141,000 110,000 7,272
President of the 1992 135,000 81,000
Company and 1991 34,298 10,000 53,332
Executive Vice
President of the Bank-
Mortgage Production
- -------------------
</TABLE>
-12-
<PAGE>
<TABLE>
<FN>
<S> <C>
(1) Represents cash bonuses paid in the following year with respect to services
performed in the years indicated.
(2) Amounts shown as Other Annual Compensation are payments made in the
following year for the benefit of certain named executive officers for
federal and state withholding taxes in the preceding year arising from the
lapse of restrictions on restricted stock held by such named executive
officers.
(3) The amounts reported in this column represent the market value on the date
of grant, without giving effect to the diminution in value attributable to
the restrictions on such stock. In fiscal 1993, the Company awarded 22,986
shares of restricted stock to each of Messrs. Burkholder and Lohmann, with
vesting occurring at the rate of 10% per year beginning on the date of
grant. Regular dividends are paid on the restricted stock reported in this
column.
(4) The total amounts shown in this column for the last fiscal year consist of
the following: (i) Mr. Burkholder: $7,445- Company contributions to the
Company's 401(k) plan; $2,167- Benefit attributable to employee-owned life
insurance policy; (ii) Mr. Lohmann: $7,445 - Company contributions to the
Company's 401(k) plan; $1,198-Benefit attributable to employee-owned life
insurance policy; (iii) Mr. Bueltel and Mr. Arrigoni- all amounts are
Company contributions to the Company's 401(k) plan.
(5) Includes amounts deferred under the Company's Deferred Compensation Plan.
(6) Mr. Arrigoni became an employee and officer of the Company on September 30,
1991.
</TABLE>
STOCK OPTIONS
The Company maintains a Restated Stock Option Plan pursuant to which
executive officers, and other employees and consultants of the Company, may
receive options to purchase the Company's common stock.
OPTION GRANTS IN FISCAL YEAR 1993
The following table provides information on grants of stock options for
fiscal year 1993 to the Chief Executive Officer and the executive officers named
in the Summary Compensation Table. The hypothetical present values on date of
grant of stock options granted in 1993 shown below are presented pursuant to the
Commission rules and are calculated under the Black-Scholes Model for
pricing options. This hypothetical value of options trading in the stock
markets bears little relationship to the compensation cost to the Company or
potential gain realized by an executive. The actual amount, if any, realized
upon exercise of stock options will depend upon the market price of the
Company's Common Stock relative to the exercise price per share of Common Stock
of the stock option at the time the stock option is exercised. There is no
assurance that the hypothetical present values of stock options reflected in
this table actually will be realized.
-13-
<PAGE>
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
% OF TOTAL
OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION GRANT DATE
NAME GRANTED FISCAL YEAR PRICE DATE PRESENT VALUE(1)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mr. Burkholder 13,333 41.7% $10.6875 1/5/2000 51,900
Mr. Lohmann 13,333 41.7% 10.6875 1/5/2000 51,900
Mr. Bueltel 4,000 12.5% 10.6875 1/5/2000 15,570
Mr. Arrigoni -0- - - - -
<FN>
______________
(1) The present values on grant date are calculated under the Black-Scholes
Model. The Black-Scholes Model is a mathematical formula used to value
options traded on stock exchanges. This formula considers a number of
factors to estimate the option's present value, including the stock's
historical volatility, dividend rate, exercise period of the option and
interest rates.
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1993
AND FISCAL YEAR-END OPTION VALUES
The following table summarizes option exercises during 1993 by
the Chief Executive Officer and by the executive officers named in the Summary
Compensation Table, and the value of the options held by such persons at the end
of 1993.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END(1) AT FISCAL YEAR-END(2)
ACQUIRED VALUE ----------------------------------------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------- ---------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Burkholder 2,666 $37,333 52,333 13,333 $897,285 $132,497
Mr. Lohmann 2,666 43,333 51,333 13,333 879,160 132,497
Mr. Bueltel 1,200 16,842 14,198 4,000 233,049 39,750
Mr. Arrigoni - - 19,999 33,333 292,485 487,495
<FN>
____________
(1) All of such options, with the exception of the options granted to Mr.
Arrigoni, are exercisable at a price equal to the fair market value of
the common stock on the date of grant.
(2) Represents the difference between the closing price of the Company's
Common Stock as reported on the Nasdaq National Market System on December
31, 1993 and the exercise price of the options.
</TABLE>
-14-
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS
Other than its Restated Stock Option Plan and newly adopted 1993 Stock
Incentive Plan, the Company does not maintain any long-term incentive plans.
CHANGE IN CONTROL ARRANGEMENTS
In addition to the employment and severance pay agreements discussed below,
the Company has certain other compensatory arrangements with its executive
officers which will result from a change in control of the Company. All
outstanding stock option agreements provide for the acceleration of
exercisability of options upon a change in control. The restricted stock award
agreements also provide for the full vesting of all outstanding shares of
restricted stock if the holder is terminated following a change in control.
EMPLOYMENT AGREEMENTS
The Company has Employment Agreements with Messrs. Burkholder and Lohmann
terminating December 31, 1996 but renewing annually thereafter. The employment
agreements provide that the annual salaries of Messrs. Burkholder and Lohmann
will be at least $195,000 and $161,000, respectively, that such officers shall
be entitled to participate in incentive and other plans of the Company, and that
the Company will establish and maintain disability insurance, term life
insurance and retirement plans for such officers. See "Compensation Committee
Report on Executive Compensation--Long-Term Incentive Compensation." Both
agreements also contain confidentiality obligations and covenants not to compete
for one year after termination of employment. The agreements provide for
severance pay on failure to renew in certain instances and provide that under
certain circumstances (including a change in control) in the event of
termination of employment prior to the termination of the agreements, the
Company will pay to Messrs. Burkholder and Lohmann severance pay in an amount
equal to three times and two times, respectively, the average annualized cash
compensation (based on the last five years) of such officers.
The Company also has entered into severance pay agreements with Messrs.
Arrigoni and Bueltel terminating on May 15, 1994. The severance pay agreements
provide that under certain circumstances (including a change in control) in the
event of termination during the term of such agreements, the Company will pay
the two executive officers as severance pay an amount equal to one year's
compensation.
-15-
<PAGE>
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
On January 25, 1994, the Board of Directors approved amendments to the
Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 5,000,000 to 10,000,000, subject to approval by the
shareholders at the Annual Meeting. If the amendment is approved by the
Company's shareholders, the first sentence of Article 5 of the Company's
Certificate of Incorporation will read as follows:
The aggregate number of shares of stock which
this corporation is authorized to issue is 11,000,000
shares, par value $.01 per share, of which 10,000,000
shares are designated Common Stock and 1,000,000 shares
are designated Preferred Stock.
The additional shares of Common Stock for which authorization is sought
would be a part of the existing class of Common Stock and, if and when issued,
would have the same rights and privileges as the shares of Common Stock
presently outstanding. Such additional shares would not (and the shares of
Common Stock presently do not) entitle the holders thereof to preemptive or
cumulative voting rights.
The Board of Directors believes that the additional authorized shares of
Common Stock are necessary to provide the Company with flexibility to structure
future transactions, to provide for future issuance under the Company's 1993
Stock Incentive Plan (if approved by the shareholders) and to meet any future
needs to raise capital. There are, however, no present plans for issuing a
material number of additional shares of Common Stock from the currently
authorized shares of Common Stock or the additional shares of Stock proposed to
be authorized pursuant to the amendment.
The issuance by the Company of shares of Common Stock may dilute the
present equity ownership position of current holders of Common Stock. Unless
required by law or by the rules of any stock exchange on which the Company's
Common Stock may in the future be listed, no further authorized vote by the
shareholders will be sought for any issuance of shares of Common Stock. Under
existing National Association of Securities Dealers, Inc. regulations, approval
by a majority of the holders of Common Stock would nevertheless be required in
connection with a transaction or series of related transactions that would
result in the original issuance of additional shares of Common Stock, other than
in a public offering for cash, (i) if the Common Stock (including securities
convertible into or exercisable for Common Stock) has, or will have upon
issuance, voting power equal to or in excess of 20% of the voting power
outstanding before the issuance of the Common Stock; or (ii) if the number of
shares of Common Stock to be issued is or will be equal to or in excess of 20%
of the number of shares outstanding before the issuance of the Common Stock; or
(iii) if the issuance would result in a change in control of the Company.
-16-
<PAGE>
The authorized but unissued shares of Common Stock could make a change in
control of the Company more difficult to achieve. Under certain circumstances,
such shares of Common Stock could be used to create voting impediments to
frustrate persons seeking to effect a takeover or otherwise gain control of the
Company. Such shares could be sold privately to purchasers who might side with
the Board in opposing a takeover bid that the Board determines is not in the
best interests of the Company.
The amendment also may have the effect of discouraging an attempt by
another person or entity, through acquisition of a substantial number of shares
of Common Stock, to acquire control of the Company with a view to effecting a
merger, sale of assets or a similar transaction, since the issuance of new
shares could be used to dilute the stock ownership of such person or entity.
Although the Board of Directors has concluded that the potential benefits
of the proposed amendment outweighs its possible disadvantages, the Board asks
shareholders to consider, as the Board has done, those possible disadvantages.
Shareholders may find the issuance of shares of Common Stock disadvantageous to
the extent that it may be used to discourage takeovers which are not approved by
the Board but in which shareholders may receive for some or all of their shares
a substantial premium above market value at the time a tender offer is made.
Thus, shareholders who may wish to participate in such a tender offer may be
restricted in their opportunity to do so. In addition, because the proposed
amendment may enable the Company to discourage tender offers, the amendment may
make removal of the Board of Directors or management more difficult. To the
extent that the adoption of the proposed amendment renders less likely a merger
or other transaction opposed by the Company's incumbent Board of Directors, the
effect of such adoption may be to assist the Board of Directors and management
in retaining their existing positions.
If the amendment to the Company's Certificate of Incorporation is approved
by the shareholders at the Annual Meeting, such amendment will become effective
when a Certificate of Amendment of the Certificate of Incorporation is filed for
record with the Secretary of State of the State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES AS DESCRIBED ABOVE. THE PERSONS NAMED IN THE
ACCOMPANYING PROXY INTEND TO VOTE THE PROXIES HELD BY THEM IN FAVOR OF SUCH
PROPOSAL, UNLESS OTHERWISE DIRECTED. AN AFFIRMATIVE VOTE OF THE HOLDERS OF A
MAJORITY OF THE SHARES OF COMMON STOCK REPRESENTED AT THE MEETING IN PERSON OR
BY PROXY IS REQUIRED FOR THE APPROVAL OF THE PROPOSAL.
-17-
<PAGE>
PROPOSAL TO APPROVE THE 1993 STOCK INCENTIVE PLAN
On October 5, 1993, the Board of Directors voted for a resolution
authorizing the adoption of the "Investors Bank Corp. 1993 Stock Incentive Plan"
(the "1993 Plan"), subject to approval by the shareholders of the Company. The
1993 Plan, if approved, will have the effect of amending the Company's Restated
Stock Option Plan, by eliminating the authority to grant any further options
thereunder.
The purpose of the Plan is to promote the interests of the Company and its
shareholders by attracting and retaining employees and members of the Board who
are not also employees of the Company, by stimulating the efforts of such
employees and nonemployee directors to contribute to the current and long-term
success of the Company, and by providing an opportunity for such employees and
nonemployee directors to increase their proprietary interests in the Company.
These goals are consistent with the principles of the Company's executive
compensation program described above in the Committee's Report and, if approved
by the Company's shareholders, the 1993 Plan will become an important component
of that program.
The 1993 Plan is administered by the Company's Compensation Committee (the
"Committee"). The Committee has the authority to select the individuals to whom
awards are granted, to determine the types of awards to be granted and the
number of shares of Common Stock covered by such awards, to set the terms and
conditions of such awards, and to determine whether the payment of any amounts
received under any award shall or may be deferred. The Committee has the
authority to establish rules for the administration of the 1993 Plan, and
determinations and interpretations with respect to the 1993 Plan are at the sole
discretion of the Committee, whose determinations and interpretations are
binding on all interested parties. The Committee may delegate to one or more
officers, or the Board of Directors may exercise, the Committee's powers and
duties under the 1993 Plan with respect to individuals who are not subject to
Section 16 of the Exchange Act.
The 1993 Plan permits the granting of a variety of different types of
awards: (a) stock options, including incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), stock options that do not meet such
requirements ("Nonqualified Stock Options") and restoration options; (b) stock
appreciation rights ("SARs"); (c) restricted stock and restricted stock units;
(d) performance awards; (e) dividend equivalents; and (f) other awards valued in
whole or in part by reference to or otherwise based upon the Company's stock
("other stock-based awards"). Awards may be granted alone, in addition to, in
tandem with or in substitution for any other award granted under the 1993 Plan
or any other plan. Awards may be granted for no cash consideration or for such
minimal cash consideration as may be required by applicable law. Awards may
provide that upon the grant or exercise thereof the holder will receive cash,
shares of Common Stock, or other securities, awards or property, or any
combination thereof, as the Committee shall determine. The exercise price per
share under any stock option, the grant price of any SAR, and the purchase price
of any security which may be purchased
-18-
<PAGE>
under any other stock-based award may not be less than 100% of the fair market
value of the Company's Common Stock on the date of the grant of such option, SAR
or right. Determinations of fair market value under the 1993 Plan are made in
accordance with methods and procedures established by the Committee.
Options may be exercised by payment in full of the exercise price, either
in cash or, at the discretion of the Committee, in whole or in part by the
tendering of shares of Common Stock or other consideration having a fair market
value on the date the option is exercised equal to the exercise price.
The 1993 Plan provides for "formula" grants to directors who are not
employess of options to purchase 2,666 shares of Common Stock on the date of
each annual meeting of shareholders. All of such options will have an exercise
price equal to the fair market value on the date of grant, will vest in annual
increments of 50% of the shares subject to the option commencing one year from
the date of grant, and will expire seven years from the date of grant. The
terms of these options may not be altered without shareholder vote.
The 1993 Plan provides that the Committee may grant restoration options,
separately or together with another option, and may establish the terms and
conditions of such restoration options. Pursuant to a restoration option, the
optionee would be granted a new option when the payment of the exercise price of
the option to which such restoration option relates is made by using shares of
Common Stock owned by the optionee. The new option granted upon such exercise
would be an option to purchase the number of shares not exceeding the sum of (i)
the number of shares of Common Stock tendered as payment upon the exercise of
the option to which such restoration option relates and (ii) the number of
shares of the Company's Common Stock tendered or withheld as payment of the
amount to be withheld under applicable tax laws in connection with the exercise
of the option to which such restoration option relates. Restoration options may
be granted with respect to options previously granted under the 1993 Plan or any
other stock option plan of the Company, and may be granted in connection with
any option granted under the 1993 Plan or any other such plan at the time of
such grant.
The holder of an SAR is entitled to receive the excess of the fair market
value (calculated as of the exercise date or, if the Committee shall so
determine, as of any time during a specified period before or after the exercise
date) of a specified number of shares over the grant price of the SAR.
Shares of restricted stock and restricted stock units will be subject to
such restrictions as the Committee may impose (including any limitations on the
right to vote or the right to receive dividends), which restrictions may lapse
separately or in combination at such time or times, in such installments or
otherwise as the Committee may determine. Restricted stock may not be
transferred by the holder until the restrictions established by the Committee
lapse. Holders of restricted stock units have the right, subject to any
restrictions imposed by the Committee, to receive shares of Common Stock at some
future date. Upon termination of the holder's employment during the
-19-
<PAGE>
restriction period, restricted stock and restricted stock units are forfeited,
unless the Committee determines otherwise.
Performance awards provide the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such goals during such
performance periods as the Committee shall establish. A performance award
granted under the 1993 Plan may be denominated or payable in cash, shares of
Common Stock or restricted stock, or other securities, awards or property.
Dividend equivalents entitle the holder thereof to receive payments (in cash,
shares or otherwise, as determined by the Committee) equivalent to the amount of
cash dividends with respect to a specified number of shares. The Committee is
also authorized to establish the terms and conditions of other stock-based
awards.
No award granted under the 1993 Plan may be assigned, transferred, pledged
or otherwise encumbered by the individual to whom it is granted, otherwise than
by will, by designation of a beneficiary, or by laws of descent and
distribution. Each award is exercisable, during such individual's lifetime,
only by such individual, or, if permissible under applicable law, by such
individual's guardian or legal representative.
The aggregate number of shares of the Company's Common Stock which may be
issued under all awards granted pursuant to the 1993 Plan is 350,000 (subject to
adjustment as described below). If any shares of Common Stock subject to any
award or to which an award relates are not purchased or are forfeited, or if any
such award terminates without the delivery of shares, the shares previously used
for such awards will be available for future awards under the 1993 Plan.
Notwithstanding the forgoing, no executive officer of the Company may receive in
any single calendar year options under the plan to purchase more than 50,000
shares of Common Stock. Except as otherwise provided under procedures adopted
by the Committee to avoid double counting with respect to awards granted in
tandem with or in substitution for other awards, all shares relating to awards
which allow the holder to receive or purchase shares will be counted against the
aggregate number of shares available for granting awards under the 1993 Plan.
If any dividend or other distribution, recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of shares of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
shares of Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the shares of Common Stock so that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the 1993
Plan, the Committee may, in such manner as it deems equitable, adjust (a) the
number and type of shares (or other securities or property) which thereafter may
be made the subject of awards, (b) the number and type of shares (or other
securities or property) subject to outstanding awards, and (c) the exercise
price with respect to any award.
-20-
<PAGE>
The 1993 Plan terminates on May 3, 2004, and no awards may be made after
that date. However, unless otherwise expressly provided in the 1993 Plan or an
applicable award agreement, any award granted may extend beyond the end of such
period.
The Board of Directors may amend, alter or discontinue the 1993 Plan at any
time, provided that stockholder approval must be obtained for any such action
that, absent such stockholder approval, (i) would cause Rule 16b-3 under the
Exchange Act to become unavailable with respect to the 1993 Plan; (ii) would
violate the rules or regulations of the New York Stock Exchange, any other
securities exchange or the National Association of Securities Dealers, Inc.
applicable to the Company; or (iii) would cause the Company to be unable, under
the Code, to grant Incentive Stock Options under the 1993 Plan. The Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
the 1993 Plan or any award agreement in the manner and to the extent it shall
deem desirable to carry the 1993 Plan into effect. The Committee may waive any
condition of, or rights of the Company under any outstanding award,
prospectively or retroactively, but the Committee may not amend, suspend or
terminate any outstanding award, prospectively or retroactively, without the
consent of the holder or beneficiary of the award.
The following is a summary of the principal federal income tax consequences
generally applicable to awards under the 1993 Plan. The grant of an option or
SAR is not expected to result in any taxable income for the recipient. The
holder of an Incentive Stock Option generally will have no taxable income upon
exercising the Incentive Stock Option (except that a liability may arise
pursuant to the alternative minimum tax), and the Company will not be entitled
to a tax deduction when an Incentive Stock Option is exercised. Upon exercising
a Nonqualified Stock Option, the optionee must recognize ordinary income equal
to the excess of the fair market value of the shares of Common Stock acquired on
the date of exercise over the exercise price, and the Company will be entitled
at that time to a tax deduction for the same amount. Upon exercising an SAR,
the amount of any cash received and the fair market value on the exercise date
of any shares of Common Stock received are taxable to the recipient as ordinary
income and deductible by the Company. The tax consequence to an optionee upon a
disposition of shares acquired through the exercise of an option will depend on
how long the shares have been held and upon whether such shares were acquired by
exercising an Incentive Stock Option or by exercising a Nonqualified Stock
Option or SAR. Generally, there will be no tax consequence to the Company in
connection with disposition of shares acquired under an option, except that the
Company may be entitled to a tax deduction in the case of a disposition of
shares acquired under an Incentive Stock Option before the applicable Incentive
Stock Option holding periods set forth in the Code have been satisfied.
With respect to other awards granted under the 1993 Plan that are payable
either in cash or shares of Common Stock that are either transferable or not
subject to substantial risk of forfeiture, the holder of such an award must
recognize ordinary income equal to the excess of (a) the cash or the fair market
value of the shares of Common Stock received (determined as of the date of such
receipt) over (b) the amount (if any) paid for such shares of Common Stock by
the holder of the award, and the Company will be entitled at that time to a
deduction for the same amount. With respect to an
-21-
<PAGE>
award that is payable in shares of Common Stock that are restricted as to
transferability and subject to substantial risk of forfeiture, unless a special
election is made pursuant to the Code, the holder of the award must recognize
ordinary income equal to the excess of (i) the fair market value of the shares
of Common Stock received (determined as of the first time the shares become
transferable or not subject to substantial risk of forfeiture, whichever occurs
earlier) over (ii) the amount (if any) paid for such shares of Common Stock by
the holder, and the Company will be entitled at that time to a tax deduction for
the same amount.
Special rules may apply in the case of individuals subject to Section 16 of
the Exchange Act. In particular, unless a special election is made pursuant to
the Code, shares received pursuant to the exercise of a stock option or SAR may
be treated as restricted as to transferability and subject to a substantial risk
of forfeiture for a period of up to six months after the date of exercise.
Accordingly, the amount of any ordinary income recognized, and the amount of the
Company's tax deduction, are determined as of the end of such period.
Under the 1993 Plan, the Committee may permit participants receiving or
exercising awards, subject to the discretion of the Committee and upon such
terms and conditions as it may impose, to surrender shares of Common Stock
(either shares received upon the receipt or exercise of the award or shares
previously owned by the optionee) to the Company to satisfy federal and state
tax obligations.
The 1993 Plan is intended to qualify for an exemption from Section 162(m)
of the Internal Revenue Code of 1986, as amended. If the 1993 Plan so
qualifies, income created by options granted to executive officers under the
1993 Plan would not be included in income paid to the executive for purposes of
determining whether the Company is entitled to a deduction for payments to the
executive under section 162(m). If an executive's income from the Company
exceeds $1,000,000 and an exemption is not available under Section 162(m), the
Company would not be entitled to a deduction for the compensation paid to the
executive. Although the Company does not believe that any executive officer is
currently, or will be in the foreseeable future, entitled to income related to
the Company in an amount that would approach $1,000,000, appreciation in the
market value of certain stock related benefits, such as nonqualified stock
options, could create income that would normally be deductible by the Company
but excludeable under Section 162(m). Accordingly, the Board of Directors
believes that an amendment designed to qualify the 1993 Plan under 162(m) is in
the best interests of the Company.
Any employee, officer, consultant, independent contractor or non-employee
director of the Company and its affiliates selected by the Committee is eligible
to receive awards under the 1993 Plan. There were approximately 509 persons
employed by the Company and its subsidiaries as of February 1, 1994 who would be
eligible as a class to receive awards under the 1993 Plan. The amount, type and
recipients of awards under the 1993 Plan have not yet been determined.
-22-
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE 1993 STOCK
INCENTIVE PLAN. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON
STOCK REPRESENTED AT THE MEETING IN PERSON OR BY PROXY IS REQUIRED FOR APPROVAL
OF THE 1993 PLAN.
RELATIONSHIP WITH ACCOUNTANTS
KPMG Peat Marwick have served as the Company's independent public
accountants since August 1990 and will serve as the Company's auditors for the
year ending December 31, 1993. Representatives of KPMG Peat Marwick are
expected to be present at the Annual Meeting, will have an opportunity to make a
statement if they desire to do so and will be available to respond to questions
from shareholders.
GENERAL
The Board of Directors of the Company does not know of any matters other
than those described in this Proxy Statement which will be acted upon at the
Annual Meeting. In the event that any other matters properly come before the
meeting calling for a vote of shareholders, the persons named as proxies in the
enclosed form of proxy will vote in accordance with their best judgment on such
other matters.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder to be presented at the next annual meeting
must be received at the Company's principal executive offices, 200 East Lake
Street, Wayzata, Minnesota 55391, no later than December 2, 1994.
BY ORDER OF THE BOARD OF DIRECTORS
John G. Lohmann, Jr., Secretary
Dated: April 1, 1994
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INVESTORS BANK CORP.
Proxy for the 1994 Annual Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James M. Burkholder and John G.
Lohmann, Jr., and each of them, with full power to appoint a substitute, to vote
all shares the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Investors Bank Corp. to be held on May 3, 1994, and at all
adjournments thereof, as specified below on the matter referred to, and, in
their discretion, upon any other matters which may be brought before the
meeting:
1. ELECTION OF DIRECTORS: / / FOR all nominees / / WITHHOLD AUTHORITY
(except as marked to to vote for all nominees
the contrary below)
To withhold authority to vote for a specific nominee, place a line through
such nominee's name below:
James M. Burkholder; Leonard E. Brown
2. AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES:
/ / FOR / / AGAINST / / ABSTAIN
3. TO APPROVE ADOPTION OF A 1993 STOCK INCENTIVE PLAN:
/ / FOR / / AGAINST / / ABSTAIN
4. TO VOTE WITH DISCRETIONARY AUTHORITY ON ANY OTHER BUSINESS AS MAY PROPERLY
BE PRESENTED AT THE MEETING.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL DIRECTORS NAMED IN ITEM 1, FOR THE AMENDMENT IN ITEM
2 AND FOR THE ADOPTION OF THE 1993 STOCK INCENTIVE PLAN.
________________________________________________________
When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
___________________________________
Signature
___________________________________
Signature if held jointly
Dated: ____________, 1994
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
<PAGE>
INVESTORS BANK CORP.
1993 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of the Plan is to aid in attracting and retaining
personnel and members of the Board of Directors who are not also employees
("Non-Employee Directors") of Investors Bank Corp. (the "Company") capable of
assuring the future success of the Company, to offer such personnel incentives
to put forth maximum efforts for the success of the Company's business and to
afford such personnel an opportunity to acquire a proprietary interest in the
Company.
SECTION 2. DEFINITIONS.
As used in the Plan, the following terms shall have the meanings set
forth below:
(a) "Affiliate" shall mean (i) any entity that, directly or
indirectly through one or more intermediaries, is controlled by the Company and
(ii) any entity in which the Company has a significant equity interest, in each
case as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent
or Other Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean a committee of the Board of Directors of
the Company designated by such Board to administer the Plan, which shall consist
of members appointed from time to time by the Board of Directors and shall be
comprised of not less than such number of directors as shall be required to
permit the Plan to satisfy the requirements of Rule 16b-3. Each member of the
Committee shall be a "disinterested person" within the meaning of Rule 16b-3.
(f) "Company" shall mean Investors Bank Corp., a Delaware
corporation, and any successor corporation.
(g) "Dividend Equivalent" shall mean any right granted under
Section 6(e) of the Plan.
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(h) "Eligible Person" shall mean any employee, officer, consultant or
independent contractor providing services to the Company or any Affiliate who
the Committee determines to be an Eligible Person. Eligible Person shall not
include any Non-Employee Director, who shall receive Awards only pursuant to
Section 6(h) of the Plan.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee or, in the case of grants
pursuant to Section 6(h), the Board of Directors.
(j) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code or any successor provision.
(k) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan, or Section 6(h) of the Plan in the case of grants to
Non-Employee Directors, that is not intended to be an Incentive Stock Option.
(l) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option, and shall include Restoration Options.
(m) "Other Stock-Based Award" shall mean any right granted under
Section 6(f) of the Plan.
(n) "Participant" shall mean an Eligible Person designated to be
granted an Award under the Plan.
(o) "Performance Award" shall mean any right granted under
Section 6(d) of the Plan.
(p) "Person" shall mean any individual, corporation, partnership,
association or trust.
(q) "Plan" shall mean this 1993 Stock Incentive Plan, as amended from
time to time.
(r) " Reload Option" shall mean any Option granted under
Section 6(a)(iv) of the Plan.
(s) "Restricted Stock" shall mean any Share granted under
Section 6(c) of the Plan.
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(t) "Restricted Stock Unit" shall mean any unit granted under
Section 6(c) of the Plan evidencing the right to receive a Share (or a cash
payment equal to the Fair Market Value of a Share) at some future date.
(u) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
or any successor rule or regulation.
(v) "Shares" shall mean shares of Common Stock, $.01 par value, of
the Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.
(w) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
SECTION 3. ADMINISTRATION.
(a) POWER AND AUTHORITY OF THE COMMITTEE. The Plan shall be
administered by the Committee; PROVIDED, HOWEVER, that Section 6(h) of the Plan
shall not be administered by the Committee but rather by the Board of Directors
subject to the provisions and restrictions of such Section 6(h). Subject to the
express provisions of the Plan and to applicable law, and except with respect to
Section 6(h) of the Plan, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to each Participant under the Plan; (iii) determine the number of Shares
to be covered by (or with respect to which payments, rights or other matters are
to be calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock, Restricted Stock Units
or other Awards; (vi) determine whether, to what extent and under what
circumstances Awards may be exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (vii) determine
whether, to what extent and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award under the Plan shall be deferred either automatically or at the
election of the holder thereof or the Committee; (viii) interpret and administer
the Plan and any instrument or agreement relating to, or Award made under, the
Plan; (ix) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (x) make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding
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upon any Participant, any holder or beneficiary of any Award and any employee of
the Company or any Affiliate.
(b) DELEGATION. The Committee may delegate its powers and duties
under the Plan to one or more officers of the Company or any Affiliate or a
committee of such officers, subject to such terms, conditions and limitations as
the Committee may establish in its sole discretion; PROVIDED, HOWEVER, that the
Committee shall not delegate its powers and duties under the Plan with regard to
officers or directors of the Company or any Affiliate who are subject to Section
16 of the Securities Exchange Act of 1934, as amended.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section
4(c), the number of Shares available for granting Awards under the Plan shall be
350,000 shares. If any Shares covered by an Award or to which an Award relates
are not purchased or are forfeited, or if an Award otherwise terminates without
delivery of any Shares, then the number of Shares counted against the aggregate
number of Shares available under the Plan with respect to such Award, to the
extent of any such forfeiture or termination, shall again be available for
granting Awards under the Plan.
(b) ACCOUNTING FOR AWARDS. For purposes of this Section 4, if an
Award entitles the holder thereof to receive or purchase Shares, the number of
Shares covered by such Award or to which such Award relates shall be counted on
the date of grant of such Award against the aggregate number of Shares available
for granting Awards under the Plan.
(c) ADJUSTMENTS. In the event that the Committee (or, in the case of
grants under Section 6(h) of the Plan, the Board of Directors) shall determine
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee (or,
in the case of grants under Section 6(h) of the Plan, the Board of Directors) to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee (or, in the case of grants under Section 6(h) of the Plan, the Board
of Directors) shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and type of Shares (or other securities or other property)
which thereafter may be made the subject of Awards, (ii) the number and type of
Shares (or other securities or other property) subject to outstanding Awards and
(iii) the purchase or exercise price with respect to any Award; PROVIDED,
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HOWEVER, that the number of Shares covered by any Award or to which such Award
relates shall always be a whole number.
(d) LIMITATION ON ANNUAL AWARDS TO INDIVIDUALS. Notwithstanding any
other provision in this Plan, no Participant may be granted an Award or Awards
under the Plan, the value of which is based solely on an increase in the value
of the Shares after the date of grant of such Award or Awards, for more than
50,000 Shares in the aggregate in any one calendar year period beginning with
the period commencing on January 1, 1994 through December 31, 1994. The
foregoing annual limitation specifically includes the grant of any "performance-
based" awards within the meaning of Section 162(m) of the Code.
SECTION 5. ELIGIBILITY.
Any Eligible Person, including any Eligible Person who is an officer
or director of the Company or any Affiliate, shall be eligible to be designated
a Participant. In determining which Eligible Persons shall receive an Award and
the terms of any Award, the Committee may take into account the nature of the
services rendered by the respective Eligible Persons, their present and
potential contributions to the success of the Company or such other factors as
the Committee, in its discretion, shall deem relevant. Notwithstanding the
foregoing, an Incentive Stock Option may only be granted to full or part-time
employees (which term as used herein includes, without limitation, officers and
directors who are also employees) and an Incentive Stock Option shall not be
granted to an employee of an Affiliate unless such Affiliate is also a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code or any successor provision. Non-Employee Directors shall receive
Awards of Non-Qualified Stock Options as provided in Section 6(h) of the Plan.
SECTION 6. AWARDS.
(a) OPTIONS. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) EXERCISE PRICE. The purchase price per Share purchasable under
an Option shall be determined by the Committee.
(ii) OPTION TERM. The term of each Option shall be fixed by the
Committee.
(iii) TIME AND METHOD OF EXERCISE. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including,
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without limitation, cash, Shares, promissory notes, other securities, other
Awards or other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant exercise price) in which,
payment of the exercise price with respect thereto may be made or deemed to
have been made.
(iv) RELOAD OPTIONS. The Committee may grant Reload Options,
separately or together with another Option, pursuant to which, subject to
the terms and conditions established by the Committee and any applicable
requirements of Rule 16b-3 or any other applicable law, the Participant
would be granted a new Option when the payment of the exercise price of the
option to which such Reload Option relates is made by the delivery of
Shares owned by the Participant pursuant to the relevant provisions of the
plan or agreement relating to such option, which new Option would be an
Option to purchase the number of Shares not exceeding the sum of (A) the
number of Shares so provided as consideration upon the exercise of the
previously granted option to which such Reload Option relates and (B) the
number of Shares, if any, tendered or withheld as payment of the amount to
be withheld under applicable tax laws in connection with the exercise of
the option to which such Reload Option relates pursuant to the relevant
provisions of the plan or agreement relating to such option. Reload
Options may be granted with respect to options previously granted under the
Plan or any other stock option plan of the Company, and may be granted in
connection with any option granted under the Plan or any other stock option
plan of the Company at the time of such grant.
(b) STOCK APPRECIATION RIGHTS. The Committee is hereby authorized to
grant Stock Appreciation Rights to Participants subject to the terms of the Plan
and any applicable Award Agreement. A Stock Appreciation Right granted under
the Plan shall confer on the holder thereof a right to receive upon exercise
thereof the excess of (i) the Fair Market Value of one Share on the date of
exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the grant price
of the Stock Appreciation Right as specified by the Committee, which price shall
not be less than 100% of the Fair Market Value of one Share on the date of grant
of the Stock Appreciation Right. Subject to the terms of the Plan and any
applicable Award Agreement, the grant price, term, methods of exercise, dates of
exercise, methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.
(c) RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee is
hereby authorized to grant Awards of Restricted Stock and Restricted Stock Units
to Participants with the following terms and conditions and with such additional
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terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) RESTRICTIONS. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share
of Restricted Stock or the right to receive any dividend or other right or
property with respect thereto), which restrictions may lapse separately or
in combination at such time or times, in such installments or otherwise as
the Committee may deem appropriate.
(ii) STOCK CERTIFICATES. Any Restricted Stock granted under the Plan
shall be evidenced by issuance of a stock certificate or certificates,
which certificate or certificates shall be held by the Company. Such
certificate or certificates shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock. In the
case of Restricted Stock Units, no Shares shall be issued at the time such
Awards are granted.
(iii) FORFEITURE; DELIVERY OF SHARES. Except as otherwise
determined by the Committee, upon termination of employment (as determined
under criteria established by the Committee) during the applicable
restriction period, all Shares of Restricted Stock and all Restricted Stock
Units at such time subject to restriction shall be forfeited and reacquired
by the Company; PROVIDED, HOWEVER, that the Committee may, when it finds
that a waiver would be in the best interest of the Company, waive in whole
or in part any or all remaining restrictions with respect to Shares of
Restricted Stock or Restricted Stock Units. Any Share representing
Restricted Stock that is no longer subject to restrictions shall be
delivered to the holder thereof promptly after the applicable restrictions
lapse or are waived. Upon the lapse or waiver of restrictions and the
restricted period relating to Restricted Stock Units evidencing the right
to receive Shares, such Shares shall be issued and delivered to the holders
of the Restricted Stock Units.
(d) PERFORMANCE AWARDS. The Committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation,
Restricted Stock), other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive payments, in whole or in
part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan and
any applicable Award Agreement, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted, the amount of any payment or transfer to be made
pursuant to any
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Performance Award and any other terms and conditions of any Performance Award
shall be determined by the Committee.
(e) DIVIDEND EQUIVALENTS. The Committee is hereby authorized to
grant to Participants Dividend Equivalents under which such Participants shall
be entitled to receive payments (in cash, Shares, other securities, other Awards
or other property as determined in the discretion of the Committee) equivalent
to the amount of cash dividends paid by the Company to holders of Shares with
respect to a number of Shares determined by the Committee. Subject to the terms
of the Plan and any applicable Award Agreement, such Dividend Equivalents may
have such terms and conditions as the Committee shall determine.
(f) OTHER STOCK-BASED AWARDS. The Committee is hereby authorized to
grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible into Shares), as
are deemed by the Committee to be consistent with the purpose of the Plan;
PROVIDED, HOWEVER, that such grants must comply with Rule 16b-3 and applicable
law. Subject to the terms of the Plan and any applicable Award Agreement, the
Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including without limitation,
cash, Shares, promissory notes, other securities, other Awards or other property
or any combination thereof), as the Committee shall determine, the value of
which consideration, as established by the Committee, shall not be less than
100% of the Fair Market Value of such Shares or other securities as of the date
such purchase right is granted.
(g) GENERAL. Except as otherwise specified with respect to Awards to
Non-Employee Directors pursuant to Section 6(h) of the Plan:
(i) NO CASH CONSIDERATION FOR AWARDS. Awards shall be granted for
no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in
the discretion of the Committee, be granted either alone or in addition to,
in tandem with or in substitution for any other Award or any award granted
under any plan of the Company or any Affiliate other than the Plan. Awards
granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or
any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.
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(iii) FORMS OF PAYMENT UNDER AWARDS. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of
an Award may be made in such form or forms as the Committee shall determine
(including, without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any combination thereof), and
may be made in a single payment or transfer, in installments or on a
deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents with respect to installment or deferred payments.
(iv) LIMITS ON TRANSFER OF AWARDS. No Award and no right under any
such Award shall be transferable by a Participant otherwise than by will or
by the laws of descent and distribution; PROVIDED, HOWEVER, that, if so
determined by the Committee, a Participant may, in the manner established
by the Committee, designate a beneficiary or beneficiaries to exercise the
rights of the Participant and receive any property distributable with
respect to any Award upon the death of the Participant. Each Award or
right under any Award shall be exercisable during the Participant's
lifetime only by the Participant or, if permissible under applicable law,
by the Participant's guardian or legal representative. No Award or right
under any such Award may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company or any
Affiliate.
(v) TERM OF AWARDS. The term of each Award shall be for such period
as may be determined by the Committee.
(vi) RESTRICTIONS; SECURITIES EXCHANGE LISTING. All certificates for
Shares or other securities delivered under the Plan pursuant to any Award
or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee (or, in the case of grants under 6(h)
of the Plan, the Board of Directors) may deem advisable under the Plan or
the rules, regulations and other requirements of the Securities and
Exchange Commission and any applicable federal or state securities laws,
and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. If the
Shares or other securities are traded on a securities exchange, the Company
shall not be required to deliver any Shares or other securities covered by
an Award unless and until such Shares or other securities have been
admitted for trading on such securities exchange.
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(h) NON-QUALIFIED STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS. The Board
of Directors shall issue Non-Qualified Stock Options to Non-Employee
Directors in accordance with this Section 6(h).
Non-Qualified Stock Options to purchase 2,000 shares of Common Stock
(subject to adjustment in accordance with section 4(c)) shall be granted
automatically as of the date of each Annual Meeting of Shareholders of the
Company (the "Annual Option Grant Date") held during the term of the Plan
(beginning with the 1994 Annual Meeting of Shareholders if the Plan becomes
effective pursuant to Section 10 hereof at such meeting) to each Non-
Employee Director in office on such Annual Option Grant Date.
Each Non-Qualified Stock Option granted to a Non-Employee Director
pursuant to this Section 6(h) shall not be exercisable as of the date of
grant but shall become exercisable with respect to 50% of the shares
subject thereto on the first annual anniversary of the date of grant and
with respect to the remaining 50% on the second annual anniversary of the
date of grant. Each such option shall have an exercise price equal to the
Fair Market Value of a Share on the date of grant and shall expire on the
seventh anniversary of the date of grant, except as provided below. Reload
options may not be granted to any Non-Employee Director. This Section 6(h)
shall not be amended more than once every six months other than to comport
with changes in the Code, the Employee Retirement Income Security Act or
the rules and regulations thereunder.
All grants of Non-Qualified Stock Options pursuant to this Section
6(h) shall be automatic and non-discretionary and shall be made strictly in
accordance with the foregoing terms and the following additional
provisions:
(i) Non-Qualified Stock Options granted to a Non-Employee Director
hereunder shall terminate and may no longer be exercised if such Director
ceases to be a Non-Employee Director of the Company, except that:
(A) If such Director's term shall be terminated for any reason other
than gross and willful misconduct, death, disability, or retirement, such
Director may at any time within a period of three months after such
termination, but not after the termination date of the Option, exercise the
Option.
(B) If such Director's term shall be terminated by reason of gross
and willful misconduct during the course of the term, including but not
limited to, wrongful appropriation of funds of the Company or the
commission of a gross misdemeanor or felony, the Option shall be terminated
as of the date of the misconduct.
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(C) If such Director's term shall be terminated by reason of
disability or retirement, such Director may exercise the Option in
accordance with the terms thereof as though such termination had never
occurred. If such Director shall die following any such termination, the
Option may be exercised in accordance with its terms by the personal
representatives or administrators of such Director or by any person or
persons to whom the Option has been transferred by will or the applicable
laws of descent and distribution.
(D) If such Director shall die while a Director of the Company or
within three months after termination of such Director's term for any
reason other than disability or retirement or gross and willful misconduct,
the Option may be exercised in accordance with its terms by the personal
representatives or administrators of such Director or by any person or
persons to whom the Option has been transferred by will or the applicable
laws of descent and distribution.
(ii) Non-Qualified Stock Options granted to Non-Employee Directors
may be exercised in whole or in part from time to time by serving written
notice of exercise on the Company at its principal executive offices, to
the attention of the Company's Secretary. The notice shall state the
number of shares as to which the Option is being exercised and be
accompanied by payment of the purchase price. A Non-Employee Director may,
at such Director's election, pay the purchase price by check payable to the
Company, by promissory note, or in shares of the Company's Common Stock, or
in any combination thereof having a Fair Market Value on the exercise date
equal to the applicable exercise price. If payment or partial payment is
made by promissory note, such note shall (A) be secured by the Shares to be
delivered upon exercise of such Option (other than those withheld in
payment of taxes as set forth below), (B) be limited in principal amount to
the maximum amount permitted under applicable laws, rules and regulations,
(C) be for a term of six years and (D) bear interest at the applicable
federal rate (as determined in accordance with Section 1274(d) of the
Code), compounded semi-annually.
(iii) In order to comply with all applicable federal or state income
tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Non-Employee Director, are withheld or collected from
such Director. At any time when a Non-Employee Director is required to pay
the Company an amount required to be withheld under applicable income tax
laws in connection with an Option granted pursuant to this Section 6(h),
such Director may (A) elect to have the Company withhold a portion of the
Shares otherwise to be delivered upon exercise of such Option with a Fair
Market
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Value equal to the amount of such taxes (an "Election") or (B) deliver to
the Company shares other than Shares issuable upon exercise of such Option
with a Fair Market Value equal to the amount of such taxes. An Election,
if any, must be made on or before the date that the amount of tax to be
withheld is determined. The Board of Directors may disapprove of any
Election, may suspend or terminate the right to make Elections, may limit
the amount of any Election, and may make rules concerning the required
information to be included in any Election. Non-Employee Directors may
only make an Election in compliance with the Rules established by the
Company to comply with Section 16(b) of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
SECTION 7. AMENDMENT AND TERMINATION; ADJUSTMENTS.
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) AMENDMENTS TO THE PLAN. The Board of Directors of the Company
may amend, alter, suspend, discontinue or terminate the Plan; PROVIDED, HOWEVER,
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the stockholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that,
absent such approval:
(i) would cause Rule 16b-3 to become unavailable with respect to the
Plan;
(ii) would violate the rules or regulations of the New York Stock
Exchange, any other securities exchange or the National Association of
Securities Dealers, Inc. that are applicable to the Company; or
(iii) would cause the Company to be unable, under the Code, to grant
Incentive Stock Options under the Plan.
(b) AMENDMENTS TO AWARDS. Except with respect to Awards granted
pursuant to Section 6(h) of the Plan, the Committee may waive any conditions of
or rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
herein provided.
(c) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The
Committee (or, in the case of grants under Section 6(h) of the Plan, the Board
of Directors) may correct any defect, supply any omission or reconcile any
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inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
SECTION 8. INCOME TAX WITHHOLDING; TAX BONUSES.
(a) WITHHOLDING. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable federal or state payroll,
withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of the
federal and state taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an Award, the Committee, in its
discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the Shares otherwise to be delivered upon
exercise or receipt of (or the lapse of restrictions relating to) such Award
with a Fair Market Value equal to the amount of such taxes or (ii) delivering to
the Company Shares other than Shares issuable upon exercise or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes. The election, if any, must be made on or before
the date that the amount of tax to be withheld is determined.
(b) TAX BONUSES. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of federal and state taxes due
as a result of such exercise or receipt (or the lapse of such restrictions).
The Committee shall have full authority in its discretion to determine the
amount of any such tax bonus.
SECTION 9. GENERAL PROVISIONS.
(a) NO RIGHTS TO AWARDS. Except as otherwise provided in Section
6(h) of the Plan, no Eligible Person, Participant or other Person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Eligible Persons, Participants or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to any Participant or with respect to different
Participants.
(b) AWARD AGREEMENTS. No Participant will have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company.
(c) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
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continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(d) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ, or as
giving a Non-Employee Director the right to continue as a Director, of the
Company or any Affiliate, nor will it affect in any way the right of the Company
or an Affiliate to terminate such employment at any time, with or without cause.
In addition, the Company or an Affiliate may at any time dismiss a Participant
from employment, or terminate the term of a Non-Employee Director, free from any
liability or any claim under the Plan, unless otherwise expressly provided in
the Plan or in any Award Agreement.
(e) GOVERNING LAW. The validity, construction and effect of the Plan
or any Award, and any rules and regulations relating to the Plan or any Award,
shall be determined in accordance with the laws of the State of Minnesota.
(f) SEVERABILITY. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee (or, in the case of grants under Section 6(h) of the Plan, the Board
of Directors), such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee (or, in the case of grants under Section 6(h)
of the Plan, the Board of Directors), materially altering the purpose or intent
of the Plan or the Award, such provision shall be stricken as to such
jurisdiction or Award, and the remainder of the Plan or any such Award shall
remain in full force and effect.
(g) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee (or, in the case
of grants under Section 6(h) of the Plan, the Board of Directors) shall
determine whether cash shall be paid in lieu of any fractional Shares or whether
such fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
(i) HEADINGS. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be
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deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
SECTION 10. EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective as of the date on which it is approved by
the shareholders of the Company.
SECTION 11. TERM OF THE PLAN.
Unless the Plan shall have been discontinued or terminated as provided
in Section 7(a), the Plan shall terminate on the date which is ten years after
the date on which the Plan receives shareholder approval. No Award shall be
granted after the termination of the Plan. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond the termination of the Plan, and the authority of the
Committee provided for hereunder with respect to the Plan and any Awards, and
the authority of the Board of Directors of the Company to amend the Plan, shall
extend beyond the termination of the Plan.
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