<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
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
PINNACLE BANC GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1997
To the Shareholders of PINNACLE BANC GROUP, INC.
Notice is hereby given that the Annual Meeting of Shareholders of Pinnacle
Banc Group, Inc. will be held in the lower level Conference Center of the Drake
Oakbrook Plaza Office Building, 2215 York Road, Oak Brook, Illinois 60521 on
Tuesday, April 15, 1997 at 3:00 p.m. local time, for the following purposes:
1. To elect Directors to hold office until the next annual meeting or
until a successor has been elected.
2. To transact such other business as may properly be brought before the
meeting.
A 1996 Annual Report to Shareholders containing audited financial statements
is included with this notification.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. ALTHOUGH YOU MAY
PLAN TO ATTEND THE MEETING, IT IS IMPORTANT THAT YOU EXECUTE, DATE AND RETURN
PROMPTLY THE ENCLOSED PROXY IN THE PRE-ADDRESSED, POST-PAID ENVELOPE. YOU MAY
REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE MEETING; OR IF YOU DO ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AT THAT TIME, IF YOU WISH.
BY ORDER OF THE BOARD OF DIRECTORS
RICHARD W. BURKE
SECRETARY
March 12, 1997
<PAGE>
PINNACLE BANC GROUP, INC.
2215 YORK ROAD, SUITE 208
OAK BROOK, ILLINOIS 60521
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1997
This Proxy Statement is furnished by the Board of Directors of Pinnacle Banc
Group, Inc. ("Pinnacle"), in connection with Pinnacle's solicitation of proxies
for use at the Annual Meeting of Shareholders to be held in the Lower Level
Conference Center of the Drake Oakbrook Plaza Office Building, 2215 York Road,
Oak Brook, Illinois 60521 on Tuesday, April 15, 1997 at 3:00 p.m. local time and
at any adjournment thereof. The meeting is for the purposes set forth in the
attached notice to shareholders.
This Proxy Statement is being mailed to all holders of the common stock of
Pinnacle as of March 12, 1997 (the "Record Date") and all shares of common stock
represented by properly executed proxies received prior to the Annual Meeting
will be voted in accordance with the instructions therein at the Annual Meeting
or at any adjournment thereof. As of the Record Date there were 7,582,007 issued
and outstanding shares of Common Stock, $3.12 par value, held by approximately
1,350 holders of record eligible to vote. Each shareholder will be entitled to
one vote per share on each proposal presented to the shareholders at the Annual
Meeting.
Proxies will be solicited primarily by mail but, in addition, certain
officers and employees of Pinnacle and its subsidiaries may solicit proxies by
telephone and personally. Pinnacle will request banks, brokerage houses, and
other custodians, nominees or fiduciaries holding shares in their names or in
those of their nominees, to obtain Proxies from and send Proxy material to their
principals. The expense of the solicitation of the Proxies will be paid by
Pinnacle.
ANY PROXY GIVEN PURSUANT TO THIS SOLICITATION MAY BE REVOKED AT ANY TIME
PRIOR TO THE VOTING OF THE PROXY BY GIVING WRITTEN NOTICE TO THE SECRETARY OF
PINNACLE, BY A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE ANNUAL MEETING AND
VOTING THE SHARES REPRESENTED BY THE PROXY IN PERSON.
The proxy provides instructions for voting for all Director nominees or for
withholding authority to vote for one or more Director nominees. Shareholders
have cumulative voting rights in the election of Directors. Accordingly, each
shareholder is entitled to as many votes as shall equal the number of his shares
of Common Stock multiplied by the number of Directors to be elected. It is
expected that these cumulative votes will be divided equally among all Director
nominees for whom authority to vote has not been withheld, unless the
shareholder chooses to allocate his votes otherwise and so indicates on the
proxy. If no preference is stated, the persons named in proxies hereby solicited
reserve the right, exercisable in their sole discretion, to vote proxies
cumulatively so as to elect all or as many as possible of such Director nominees
depending upon circumstances at the meeting.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES CAST IS REQUIRED TO ELECT
EACH INDIVIDUAL NOMINATED TO SERVE AS A DIRECTOR. UNLESS OTHERWISE DIRECTED, ALL
PROXIES WILL BE VOTED FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES.
ELECTION OF DIRECTORS
Each of the sixteen (16) individuals listed below is being nominated to hold
office as a Director of Pinnacle and to serve as a Director of Pinnacle until
the next annual meeting or until his successor has been elected. Each of the
nominees is currently a Director of Pinnacle. The enclosed proxy provides
instructions for voting for all nominees or for withholding authority to vote
for one or more of the nominees.
<PAGE>
Certain Directors have had relationships and related transactions with
Pinnacle during the previous fiscal year. See "CERTAIN RELATIONSHIPS, RELATED
TRANSACTIONS AND OTHER INFORMATION REGARDING MANAGEMENT".
The following listing of each nominee contains information including the
Director's age, original date elected as a director of Pinnacle, and current
positions with Pinnacle or its three subsidiary banks, Pinnacle Bank ("PB"),
Pinnacle Bank of the Quad-Cities ("PBQC"), and Pinnacle Bank, F.S.B. ("FSB").
Information is also included regarding principal occupation for the last five
years. None of the nominees currently serves as a Director of any other company
with a class of publicly traded equity securities.
An asterisk (*) denotes that the individual is an executive officer of
Pinnacle.
RICHARD W. BURKE*, 63, 1979; is Secretary of Pinnacle. He is Chairman and a
Director of the law firm of Burke, Warren & MacKay, P.C., Chicago, Illinois. He
previously was a Partner in the law firm of Burke, Wilson & McIlvaine.
MARK P. BURNS, 61, 1983; is a Director and Vice Chairman of PB and FSB. He
previously was the President of Pinnacle through year-end 1995.
WILLIAM J. FINN, JR., 68, 1983; is President of Finn Insurance Agency, Inc.,
North Riverside, Illinois, insurance brokers. He is a Director of two subsidiary
banks, PB and FSB.
SAMUEL M. GILMAN, 76, 1990; is a Partner in the law firm of Coyle, Gilman &
Stengel, Rock Island, Illinois. He is a Director of PBQC.
ALBERT GIUSFREDI, 68, 1988; is President of Headly Manufacturing Co.,
Cicero, Illinois, a custom metal stamping job shop.
JOHN J. GLEASON*, 65, 1979; is Chairman of the Board and a Director of PB
and FSB. He also is President of Gleason & Associates, Inc., Oak Brook,
Illinois, a bank consulting firm. He previously was the Chief Executive Officer
of Pinnacle through year-end 1995.
JOHN J. GLEASON, JR.*, 41, 1983; is Vice Chairman and Chief Executive
Officer of Pinnacle. He is Chairman of the Board of PB and FSB.
WILLIAM P. GLEASON*, 35, 1995; is President of Pinnacle. He is a Director
and President of PB and a Director of PBQC and FSB. He previously was Executive
Vice President and Treasurer of Pinnacle through year-end 1995.
JAMES L. GREENE, 62, 1983; is a Director of two subsidiary banks, PB and
FSB. He is President of Jim Greene Associates, Inc., Decatur, Georgia. He was a
Director of BMR Financial Group, Inc., Atlanta, Georgia, a bank holding company,
until its sale in 1993. He previously was the Chairman and Chief Executive
Officer of BMR Financial Group, Inc.
DONALD G. KING, 71, 1983; is a Director of PB. He formerly was Chairman of
the Board of First National Bank in Harvey which was merged into PB in 1993.
JAMES A. MADDOCK, 62, 1988; is President of Maddock Industries, Inc.,
Chicago, Illinois, mechanical engineering.
JAMES J. MCDONOUGH, 63, 1988; is President of McDonough Associates, Inc.,
Chicago, Illinois, engineers/architects.
WILLIAM C. NICKELS, 76, 1988; is Chairman of Replogle Globes, Inc.,
Broadview, Illinois, a manufacturer of geographical globes.
JOHN E. O'NEILL, 62, 1995; is President of F. C. Pilgrim & Company, Oak
Park, Illinois, a real estate and insurance brokerage firm.
2
<PAGE>
JAMES R. PHILLIP, JR., 44, 1988; is President of Phillip's Flowers and
Gifts, Westmont, Illinois, florists.
KENNETH C. WHITENER, JR.*, 46, 1983; is Executive Vice President and Chief
Investment Officer of Pinnacle and of each of the three subsidiary banks. He is
a Director of two subsidiary banks, PB and FSB.
John J. Gleason is the father of John J. Gleason, Jr. and William P.
Gleason. John E. O'Neill is the father-in-law of John J. Gleason, Jr.
Pinnacle's Board of Directors meets on a quarterly basis, and five meetings
were held during the last fiscal year. All of the Directors of Pinnacle, with
the exception of Mr. Nickels, attended at least three-fourths of the meetings of
the Board and Committees of which they were members during the past year.
The Board has audit and compensation committees. The Board does not have a
nominating committee. Committee members are designated at the annual
Organizational Meeting of Pinnacle. The individuals listed below have served as
members of these committees since the last Annual Meeting. The Audit Committee,
which met four times in 1996, consists of Messrs. Burke, Finn, Jr., Gilman,
Giusfredi, Maddock, McDonough, Nickels, O'Neill, and Phillip, Jr. Mr. Finn, Jr.
serves as Chairman. The committee meets on a quarterly basis with Pinnacle's
internal auditor and reviews the scope and results of audits and meets on an
annual basis with representatives of Pinnacle's independent public accountants.
The Compensation Committee, which met one time in 1996, consists of Messrs.
Burke, Finn, Jr., Giusfredi, Maddock, and McDonough. Mr. Burke serves as
Chairman. The committee meets on an annual, and as needed basis, to select and
set salaries, bonuses and other compensation for Pinnacle officers and principal
officers of subsidiary banks.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons beneficially own as of March 12, 1997, directly or
indirectly, more than 5% of the outstanding common stock, $3.12 par value, of
Pinnacle.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
John J. Gleason.......................................................... 1,275,978(1) 16.63%
2215 York Road, Suite 208
Oak Brook, Illinois 60521
Kenneth C. Whitener, Jr.................................................. 466,048 6.07
2215 York Road, Suite 208
Oak Brook, Illinois 60521
</TABLE>
- ---------
(1) Includes 592,470 shares owned by Gleason & Associates, Inc., of which Mr. J.
Gleason is President and controlling stockholder. Also includes 281,895
shares held by his wife and a child who reside with Mr. J. Gleason, to which
shares Mr. J. Gleason disclaims beneficial ownership.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth with respect to each Director, and executive
officer (denoted by an asterisk) of Pinnacle, the amount of common shares
beneficially owned and the percentage of such class of shares as of March 12,
1997:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
Richard W. Burke*........................................................ 75,954(1) 0.99%
Mark P. Burns............................................................ 45,018(2) 0.59
William J. Finn, Jr...................................................... 137,911(3) 1.80
Samuel M. Gilman......................................................... 45,498 0.59
Albert Giusfredi......................................................... 105,679 1.38
John J. Gleason*......................................................... 1,275,978(4) 16.63
John J. Gleason, Jr.*.................................................... 213,133(5) 2.78
William P. Gleason*...................................................... 117,457(6) 1.53
James L. Greene.......................................................... 250,176(7) 3.26
Donald G. King........................................................... 235,680 3.07
James A. Maddock......................................................... 112,774(8) 1.47
James J. McDonough....................................................... 79,825 1.04
William C. Nickels....................................................... 94,785(9) 1.24
John E. O'Neill.......................................................... 25,145 0.33
James R. Phillip, Jr..................................................... 77,992(10) 1.02
Kenneth C. Whitener, Jr.*................................................ 466,048 6.07
All Directors and executive officers as a group (16 in total)............ 3,359,053 43.79%
Including all Directors and officers of Pinnacle and subsidiary banks.... 3,712,012 48.37%
</TABLE>
- ---------
(1) Includes 38,289 shares owned by Mr. Burke's wife, to which shares Mr. Burke
disclaims beneficial ownership.
(2) Includes 9,750 shares held by Pinnacle Bank as Custodian.
(3) Includes 16,000 shares held by Mr. Finn, Jr.'s wife, to which shares Mr.
Finn, Jr. disclaims beneficial ownership.
(4) Includes 592,470 shares owned by Gleason & Associates, Inc., of which Mr.
J. Gleason is President and controlling stockholder. Also includes 281,895
shares held by his wife and child who reside with Mr. J. Gleason, to which
shares Mr. J. Gleason disclaims beneficial ownership.
(5) Includes 55,500 shares which Mr. J. Gleason, Jr. has the right to acquire
upon exercise of stock options, and 23,760 shares held by his wife and
children, to which shares Mr. J. Gleason, Jr. disclaims beneficial
ownership.
(6) Includes 30,000 shares which Mr. W. Gleason has the right to acquire upon
exercise of stock options, and 37,914 shares held by his wife and children,
to which Mr. W. Gleason disclaims beneficial ownership.
(7) Includes 27,544 shares held by Mr. Greene's wife, to which shares Mr.
Greene disclaims beneficial ownership. Also includes 103,471 shares owned
by Jim Greene Associates, Inc. Mr. Greene is President and controlling
stockholder of Jim Greene Associates, Inc.
4
<PAGE>
(8) Includes 77,403 shares owned by Maddock Industries, Inc. including its
profit sharing plan. Mr. Maddock is President and controlling stockholder
of Maddock Industries, Inc. Also includes 1,042 shares held by a child of
Mr. Maddock who resides with him, to which shares Mr. Maddock disclaims
beneficial ownership.
(9) All shares are owned by a company of which Mr. Nickels is a controlling
shareholder.
(10) Includes 29,461 shares held by a company of which Mr. Phillip, Jr. is a
controlling shareholder and 3,411 shares held by his wife and children, to
which shares Mr. Phillip, Jr. disclaims beneficial ownership.
EXECUTIVE COMPENSATION
The Summary Compensation Table presented below provides for each of the last
three fiscal years the compensation for each executive officer of Pinnacle whose
total salary and bonus exceeded $100,000 in 1996.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------- ---------------------- PAYOUTS
OTHER RESTRICTED NUMBER OF -------
NAME AND ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS SARS PAYOUTS COMPENSATION(1)
- --------------------------------------- ---- -------- ------- ------------ ---------- --------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John J. Gleason........................ 1996 $200,000 $25,000 -0- -0- -0- -0- $ 7,500
Chairman of the Board 1995 200,000 50,000 -0- -0- -0- -0- 7,500
1994 240,000 -0- -0- -0- -0- -0- 7,500
John J. Gleason, Jr.................... 1996 235,000 50,000 -0- -0- -0- -0- 7,500
Director, Vice Chairman and 1995 220,000 45,000 -0- -0- -0- -0- 7,500
Chief Executive Officer 1994 195,000 -0- -0- -0- -0- -0- 7,500
William P. Gleason..................... 1996 120,000 35,000 -0- -0- -0- -0- 6,450
Director and President 1995 97,000 25,000 -0- -0- -0- -0- 4,850
1994 82,000 6,000 -0- -0- -0- -0- 4,100
Kenneth C. Whitener, Jr................ 1996 140,000 15,000 -0- -0- -0- -0- 8,400
Director, Executive Vice 1995 140,000 25,000 -0- -0- -0- -0- 8,400
President and Chief 1994 135,000 -0- -0- -0- -0- -0- 8,075
Investment Officer
</TABLE>
(Note: SAR's are Stock Appreciation Rights; LTIP is a Long-Term Incentive Plan.)
- ---------
(1) Represents an amount contributed to the individual's account in the Pinnacle
Profit Sharing Plan. The Profit Sharing Plan is a trusteed, tax-qualified
plan which covers substantially all employees of Pinnacle and its subsidiary
banks who have completed age and service requirements. Annual profit sharing
contributions are made to the Plan by Pinnacle or the subsidiary banks in
accordance with resolutions adopted annually by the Boards of Directors of
Pinnacle and each of the subsidiary banks. A 401(k) savings plan is offered
as part of the profit sharing program. A matching contribution equal to a
percentage, as determined by the Board of Directors on an annual basis, of
the amount of the employee's contribution is made by Pinnacle or its
subsidiary banks to the 401(k) savings plan.
5
<PAGE>
INCENTIVE STOCK OPTION PLAN
Pinnacle has an incentive stock option plan under which officers and
employees of Pinnacle and the subsidiary banks may be granted stock options by a
committee of Pinnacle's Board of Directors. The incentive stock option plan is
designed so that options granted thereunder may be treated as "incentive stock
options" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended.
The current plan, the 1990 Incentive Stock Option Plan ("1990 Plan"), was
adopted in April, 1990. Under the provisions of the 1990 Plan, incentive stock
options must be granted at not less than the fair market value of Pinnacle's
common stock on the date of the grant. No options granted under the 1990 Plan
may be exercised after the expiration of ten years from the date of the grant.
Options are non-transferable except in the case of death and may be exercised
only while the optionee is employed by Pinnacle or a subsidiary bank or within
30 days after termination of employment, with certain exceptions in the event of
death or disability. No options may be granted to any employee who owns more
than 10% of the total combined voting power of all classes of Pinnacle's stock
unless the grant is for a period of no more than five years and the purchase
price of the shares covered by the option is not less than 110% of its fair
market value on the date the option is granted. A total of 369,999 shares have
been authorized for issuance under the plan. At December 31, 1996, total shares
subject to option under the 1990 Plan were 65,250.
There were no individual grants of stock options or stock appreciation
rights during 1996 to any of the executive officers named in the Summary
Compensation Table.
The following table provides information concerning the exercise of stock
options during 1996 and the financial value of outstanding and unexercised
options at December 31, 1996 for each of the executive officers named in the
Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/ SARS IN-THE-MONEY
AT OPTIONS/SARS
FY-END AT FY-END
SHARES -------------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------- ------------- --------- -------------- -------------
<S> <C> <C> <C> <C>
John J. Gleason............................................ -0- $ -0- 27,000(1) $ 152,100(1)
John J. Gleason, Jr........................................ -0- -0- 18,000(1) 94,920(1)
William P. Gleason......................................... 1,999 10,197 -0- -0-
Kenneth C. Whitener, Jr.................................... -0- -0- 9,000(1) 61,500(1)
</TABLE>
- ---------
(1) All options are exercisable
COMPENSATION OF DIRECTORS
Directors of Pinnacle having a primary occupation other than with Pinnacle
or its subsidiary banks receive an annual retainer of $2,500 and a fee of $500
per meeting attended. Directors attending separate committee meetings involving
audit and compensation receive a fee of $100 per meeting attended.
EMPLOYMENT AGREEMENTS
Pinnacle has entered into Employment Agreements ("Agreements") in regard to
a change of control in Pinnacle or all of its subsidiaries with John J. Gleason,
Jr., Vice Chairman and Chief Executive Officer and William P. Gleason,
President. The Agreements became effective January 21, 1997 upon approval of the
Board of Directors of Pinnacle and will continue until terminated upon thirty
(30) days prior written notice by either Pinnacle or the executive. The
Agreements provide for employment in the present position
6
<PAGE>
or other senior executive capacity as shall be mutually agreed upon by Pinnacle
and the executive. The Agreements also provide for base salary and incentive
compensation as shall be determined from time to time by the Board of Directors
and for participation in all plans and other benefits generally accorded to
employees of Pinnacle.
If the executive's employment is terminated by the executive, by Pinnacle,
or by Pinnacle's successor company with one year of a change in control, as
defined, the executive will be entitled to immediate receipt from Pinnacle of a
lump sum payment equal to one dollar less than the sum of three times the base
compensation then payable to the executive plus three times the average
incentive compensation paid to the executive during the three previous fiscal
years of Pinnacle plus three times the value of the contributions that have been
made or credited by Pinnacle for the benefit of the executive under all employee
retirement plans maintained by Pinnacle for the completed fiscal year of
Pinnacle immediately preceding the termination. In addition, Pinnacle will
continue to provide coverage for the executive under the health program
maintained by Pinnacle for a period of twelve months following termination of
the executive's employment. If such a change in control and termination would
have taken place on January 21, 1997, the amounts payable to John J. Gleason,
Jr. and William P. Gleason would have been approximately $822,499 and $445,349,
respectively. In the event of a termination payment, the executive agrees that,
except with the express prior written consent of Pinnacle, for a period of one
year after the termination of the executive's employment with Pinnacle, he will
not directly or indirectly compete with the business of Pinnacle within a ten
mile radius of the main office of Pinnacle and any branch office of Pinnacle
existing at the time of termination.
A change of control is defined in the Agreement as (1) the consummation of
the acquisition or acquisitions by any person or affiliated group, other than
any individual holding 10% or greater of the outstanding voting securities of
Pinnacle on January 21, 1997, so that the person or group holds beneficial
ownership of fifty-one percent or more of the combined voting power of the then
outstanding voting securities of Pinnacle; (2) approval of Pinnacle's
stockholders of a merger, consolidation or other transaction involving Pinnacle
in which the persons who are stockholders on the date the transaction is
approved, do not, on the first day following such transaction own, directly or
indirectly, more than 67% of the combined voting power of the then outstanding
securities; (3) a complete liquidation or dissolution or an agreement for the
sale or other disposition of all or substantially all of the assets of Pinnacle
or its subsidiaries; or (4) a sale by Pinnacle of all of the stock of all
banking subsidiaries of Pinnacle and their affiliates.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors of
Pinnacle during the last fiscal year were Messrs. Burke, Finn, Jr., Giusfredi,
Maddock, and McDonough. Mr. Burke is Chairman and a Director of a law firm which
provides legal services to Pinnacle as disclosed in the section entitled
"Certain Relationships, Related Transactions and Other Information Regarding
Management".
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS
The Compensation Committee views the compensation package offered to
executive officers as consisting of three primary components; base salary,
incentive bonus, and longer term compensation. Each of these components is
considered in achieving the committee's objectives of (1) providing a
competitive compensation package in order to attract and retain a high quality
management team; (2) rewarding individual performance and contributions to the
overall performance of Pinnacle; and (3) structuring incentives in order to
align management's goals with maximization of shareholder value.
Base salaries are set consistent with salaries published for comparable
positions in banking industry publications. Primary emphasis is placed on
organizations of a similar size located in a metropolitan area.
7
<PAGE>
Comparison is also made with similarly sized publicly traded banking companies.
Base salary changes are dictated by changes in responsibility such as a
promotion and economic factors such as inflation.
Incentive bonuses are determined strictly based on the performance of the
individual executive officer and that individual's contribution to the overall
profitability of Pinnacle during the fiscal year. The incentive bonus
determination is zero based with previous payment history bearing no weight in
the current year's determination. The determination of incentive bonus payments
are subjective in nature and are not the product of calculations of
pre-determined formulas.
Longer term compensation consists of incentive stock options. These options
are rewarded based on the individual's contribution to the overall financial
performance of Pinnacle and the committee's assessment of potential for
appreciation in common stock value in relation to the base salary of the
executive. Incentive stock options are awarded in order to emphasize the
importance of maximizing shareholder value and to encourage the ownership of
Pinnacle's common stock by management.
The Chief Executive Officer's ("CEO") compensation is determined by overall
corporate performance. Corporate performance is measured primarily by the return
on average equity and additionally by the return on average assets. The
performance of Pinnacle's common stock price is also considered in the
determination of the CEO's compensation. The Committee recognizes, however, that
factors other than CEO performance may dictate changes in market price such as
general market conditions and, in particular to Pinnacle, the thinly traded
nature of Pinnacle's stock. The Committee also considers any specific corporate
objectives for the CEO such as Pinnacle's stated objective that calls for the
utilization of its equity base through acquisitions and repurchases of its
common stock.
The CEO received a base salary increase of 6.8% for the 1996 fiscal year.
The increase was based on guidelines set for annual increases for all Pinnacle
officers and employees and published statistics for total base salaries and
percentage increases for CEO's of similarly sized financial institutions. The
CEO's incentive bonus was determined based on the following factors for 1996.
Net income for 1996 resulted in a return on average equity of 9% and a return on
average assets of 0.82% for the year, each under Pinnacle's corporate
objectives. While these returns failed to meet overall objectives, net income in
1996 did exceed the projected budget set out for the year. Pinnacle's common
stock price declined 16% during the fiscal year. Also, from a financial
perspective, Pinnacle continued its stock repurchase program which enhances
earnings per share and increased the dividend 8% in fiscal 1996. In addition to
financial performance, the Compensation Committee also considered the following
factors. A significant acquisition was negotiated and completed during 1996
increasing total assets to over $1 billion and accomplishing an objective which
was first established in 1993 with a goal of completion by year-end 1996. In
addition, internal loan growth was 14% in 1996, an important component in
increasing the core earnings of the banking function. Marketing efforts were
enhanced and Pinnacle's equity portfolio evolved into a significant component of
future financial performance. Notwithstanding these accomplishments, financial
performance was given a greater weight. The CEO's incentive payment as a
percentage of base salary represented the third lowest percentage paid to a CEO
since Pinnacle became a publicly traded company in 1988.
While overall corporate performance is also considered in determining
compensation for other executive officers, primary consideration is given to
performance of the specific areas of responsibility of each of these
individuals. These specific areas include corporate objectives regarding
acquisitions, performance of banking subsidiaries, including the quality of
assets, regulatory compliance, management of the securities portfolio and other
specific responsibilities. The Committee took each of these factors into
consideration in determining bonuses for each executive officer other than the
CEO for the previous year.
The Compensation Committee did not award incentive stock options to the CEO
or any other executive officer during fiscal 1996, however, incentive stock
options were awarded to the CEO and President during the first quarter of 1997
since neither executive would have continued to have outstanding options at the
end of the quarter as a result of the exercise of expiring options.
8
<PAGE>
The above report is submitted by the Compensation Committee of the Board of
Directors of Pinnacle:
<TABLE>
<S> <C>
Richard W. Burke, Chairman
William J. Finn, Jr. James A. Maddock
Albert Giusfredi James J. McDonough
</TABLE>
PERFORMANCE GRAPH
The following graph provides a comparison of the total return among Pinnacle
common stock, NASDAQ Stocks (U.S.) and NASDAQ Bank Stocks. The graph assumes
that $100 was invested in each category on January 1, 1992. The Pinnacle index
is based on the assumption that dividends received on Pinnacle common stock are
reinvested into shares of Pinnacle common stock.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG PINNACLE COMMON STOCK, NASDAQ STOCKS (U.S.)
AND NASDAQ BANK STOCKS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PINNACLE COMMON STOCK NASDAQ STOCKS (U.S.) NASDAQ BANK STOCKS
<S> <C> <C> <C>
1/1/92 100.00 100.00 100.00
12/31/92 169.80 116.40 145.60
12/31/93 197.30 133.60 166.00
12/31/94 167.20 130.60 165.40
12/31/95 194.20 184.70 246.30
12/31/96 178.60 227.20 325.60
</TABLE>
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS
AND OTHER INFORMATION REGARDING MANAGEMENT
Directors and officers of Pinnacle and its subsidiary banks are customers of
the banks and have had transactions with such banks in the ordinary course of
business and are expected to do so in the future. Such transactions have been
and will continue to be on the same terms as those prevailing at the time for
9
<PAGE>
comparable transactions with other customers. Total loans outstanding to
Directors and executive officers of Pinnacle and its subsidiary banks totalled
$8,472,000 at December 31, 1996. These loans were made by the subsidiary banks
in the ordinary course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with others. Management is of the opinion that these loans did not
involve more than a normal risk of collectibility or other unfavorable features.
Richard W. Burke, a Director and Secretary of Pinnacle, is Chairman and a
Director of the law firm Burke, Warren & MacKay, P.C. which provides legal
services to Pinnacle and its subsidiary banks. Fees for these services totalled
$229,000 in 1996.
Section 16 of the Securities Exchange Act requires Pinnacle's directors,
executive officers or beneficial owners of more than ten percent (10%) of any
class of equity securities of Pinnacle ("Insiders") to file with the Securities
and Exchange Commission and Pinnacle reports of ownership of Pinnacle
securities. Based solely upon a review of reports furnished to Pinnacle by
Insiders, all Section 16 reporting requirements were met by Insiders during
1996.
INDEPENDENT PUBLIC ACCOUNTANTS
Pinnacle's independent public accountants are Arthur Andersen, LLP. A
representative of Arthur Andersen will be present at the Annual Meeting of
Shareholders in order to respond to questions or to make any other statement
which may be deemed appropriate.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the Annual Meeting in
1998 must be received by Pinnacle on or before November 19, 1997, for inclusion
in Pinnacle's Proxy Statement and form of proxy relating to that meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors know of no
matters to be brought before the meeting other than the proposals herein
enumerated. If, however, further business is presented by others, the proxy
holders will act in accordance with their best judgment.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. ALTHOUGH YOU MAY
PLAN TO ATTEND THE MEETING, IT IS IMPORTANT THAT YOU EXECUTE, DATE AND RETURN
PROMPTLY THE ENCLOSED PROXY IN THE PRE-ADDRESSED, POST-PAID ENVELOPE. YOU MAY
REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE MEETING; OR IF YOU DO ATTEND THE
MEETING, YOU MAY REVOKE YOUR PROXY AT THAT TIME, IF YOU WISH.
By Order of the Board of Directors
RICHARD W. BURKE
SECRETARY
March 12, 1997
10
<PAGE>
PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS FOR ANNUAL MEETING OF THE SHAREHOLDERS OF
PINNACLE BANC GROUP, INC.
TO BE HELD ON APRIL 15, 1997
The undersigned hereby appoints James L. Greene and William J. Finn, Jr. or
either of them acting in the absence of the other, with power of substitution,
attorneys and proxies for and in the name and place of the undersigned, to vote
the number of Common Shares that the undersigned would be entitled to vote if
then personally present at the Annual Meeting of the Shareholders of Pinnacle
Banc Group, Inc. ("Pinnacle"), to be held in the Lower Level Conference Center
of the Drake Oakbrook Plaza Office Building, 2215 York Road, Oak Brook,
Illinois, on the 15th day of April, 1997, at 3:00 p.m., local time, or any
adjournment thereof, upon the matters as set forth in the Notice of Annual
Meeting and the Proxy Statement, receipt of which is hereby acknowledged, as
follows:
1. The election of the proposed directors as set forth in the Proxy Statement.
/ / FOR ALL / / WITHHELD ALL / / FOR ALL EXCEPT
(INSTRUCTION: To withhold authority to vote for any individual, draw a line
through the nominee's name below.)
BURKE; BURNS; FINN, JR.; GILMAN; GIUSFREDI; J. GLEASON; J. GLEASON, JR.; W.
GLEASON; GREENE;
KING; MADDOCK; McDONOUGH; NICKELS; O'NEILL; PHILLIP, JR.; WHITENER, JR.
Special voting instructions, if any, in regards to cumulative voting:
-----------------------------------------------------------
2. In accordance with their discretion upon all other matters that may properly
come before the Annual Meeting and any adjournment thereof.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
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 ITEMS 1 AND 2.
Note: Please date Proxy and sign it exactly as name or names appear on the
Pinnacle Banc Group, Inc. stock certificate for which this Proxy is given. All
joint owners of shares should sign. State full title when signing as executor,
administrator, trustee, guardian, etc. Please return signed proxy in the
enclosed envelope.
__________________________________
Signature
__________________________________
Signature
Dated: ____________________ , 1997
