<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 Section 240.14a-11(c) or Section
240.14a-12
S.Y. BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
S.Y. BANCORP, INC.
1040 EAST MAIN STREET
LOUISVILLE, KENTUCKY 40206
(502) 582-2571
____________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
____________
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of S.Y.
BANCORP, INC. ("Bancorp") will be held on Tuesday, April 20, 1999, at 10:00
a.m., at Stock Yards Bank & Trust Company's Exchange Building dining room, 1048
East Main Street, Louisville, Kentucky 40206, for the following purposes:
1. ELECTION OF DIRECTORS. To approve the action of the Board of
Directors fixing the number of directors at fifteen (15) and to
elect four (4) nominees as directors, each named in the accompanying
Proxy Statement.
2. APPROVAL OF AMENDMENTS TO 1995 STOCK INCENTIVE PLAN. To approve
proposed amendments to the 1995 Stock Incentive Plan to reserve an
additional 400,000 shares of Common Stock for issuance under the
Plan and to change certain provisions of the Plan relating to
Change in Control.
3. OTHER BUSINESS. To consider and act upon such other matters as may
properly be brought before the Annual Meeting or any adjournment
thereof.
Information regarding the matters to be acted upon at the meeting is
contained in the Proxy Statement accompanying this Notice.
Only those holders of Bancorp Common Stock of record at the close of
business on March 5, 1999, are entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof.
We hope you will be represented at the meeting. Please sign and return the
enclosed proxy card in the accompanying envelope as promptly as possible,
whether or not you expect to be present in person. Your vote is important. The
Board of Directors of Bancorp appreciates the cooperation of shareholders in
directing proxies to vote at the meeting.
Louisville, Kentucky By Order Of The Board Of Directors
March 17, 1999
/s/ David H. Brooks
David H. Brooks
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT
PLEASE DATE, SIGN, AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE PAID ENVELOPE.
<PAGE>
TABLE OF CONTENTS
Page
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Relationship of Bancorp and the Bank . . . . . . . . . . . . . . . . . . 2
Voting at the Annual Meeting . . . . . . . . . . . . . . . . . . . . . 2
Principal Holders of Bancorp Common Stock . . . . . . . . . . . . . . . 3
Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 4
Meetings and Committees of the Board . . . . . . . . . . . . . . . . . . 8
Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . 8
Report of Compensation Committee on Executive Compensation . . . . . . . 9
Compensation of Executive Officers and Directors . . . . . . . . . . . . 10
Transactions With Management and Others . . . . . . . . . . .. . . . . . 15
Approval of Amendments to 1995 Stock Incentive Plan . . . . . . . . . . . 15
Information Concerning Independent Public Accountants . . . . . . . . . . 19
Submission of Shareholder Proposals . . . . . . . . . . . . . . . . . . 20
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ANNUAL REPORT ON FORM 10-K
A COPY OF S.Y. BANCORP, INC.'S 1998 ANNUAL REPORT ON FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WITHOUT EXHIBITS, WILL BE PROVIDED WITHOUT
CHARGE WITHIN ONE BUSINESS DAY FOLLOWING RECEIPT OF A WRITTEN OR ORAL REQUEST
DIRECTED TO: NANCY B. DAVIS, EXECUTIVE VICE PRESIDENT, TREASURER AND CHIEF
FINANCIAL OFFICER, S.Y. BANCORP, INC., P.O. BOX 32890, LOUISVILLE, KENTUCKY
40232, (502) 625-9176. A COPY OF THE FORM 10-K MAY ALSO BE OBTAINED AT THE
SEC'S INTERNET SITE, HTTP://WWW.SEC.GOV.
<PAGE>
S.Y. BANCORP, INC.
1040 EAST MAIN STREET
LOUISVILLE, KENTUCKY 40206
(502) 582-2571
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 20, 1999
GENERAL
This Proxy Statement is furnished to the shareholders of S.Y. BANCORP,
INC. ("Bancorp") in connection with the solicitation of proxies by Bancorp's
Board of Directors for use at the Annual Meeting of Shareholders (the
"Annual Meeting")to be held on Tuesday, April 20, 1999, at 10:00 a.m., local
time, at Stock Yards Bank & Trust Company's Exchange Building dining room,
1048 East Main Street, Louisville, Kentucky 40206. The approximate date on
which this Proxy Statement and the accompanying proxy are first being sent or
given to shareholders is March 17, 1999. The mailing address of Bancorp's
principal executive offices is P.O. Box 32890, Louisville, Kentucky
40232-2890.
Only shareholders of record at the close of business on March 5, 1999,
are entitled to notice of and to vote at the Annual Meeting.
Any valid and unrevoked proxy will be voted as specified in the proxy.
If a shareholder does not specify otherwise, the shares represented by the
shareholder's proxy will be voted (a) FOR approval of the action of the Board
of Directors fixing the number of directors at fifteen (15) and FOR election
of the persons named in this Proxy Statement as directors of Bancorp, in
accordance with the terms and conditions set forth in this Proxy Statement;
(b) FOR approval of the proposed amendments to the 1995 Stock Incentive Plan
to reserve an additional 400,000 shares of Common Stock for issuance under
the Plan and to change certain provisions of the Plan relating to Change in
Control; and (c) in their discretion, on any other matters that may properly
come before the Annual Meeting, or any adjournment thereof, including matters
incident to its conduct.
All expenses of preparing, printing, mailing, and delivering the proxy
and all materials used in the solicitation thereof will be borne by Bancorp.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telefax by directors and officers of Bancorp, none
of whom will receive additional compensation for such services. Bancorp has
also requested brokerage houses, custodians, and nominees to forward
soliciting materials to the beneficial owners of Bancorp's Common Stock, held
of record by them and will pay the reasonable expenses of such persons for
forwarding such materials.
Proxies may be revoked at any time before the taking of the vote at the
Annual Meeting by written notice of revocation to the Secretary of Bancorp,
by delivery of a later dated proxy or by voting in person at the meeting.
Attendance at the Annual Meeting will not have the effect of revoking a proxy
unless the shareholder so attending so notifies the Secretary in writing
prior to voting of the proxy.
1
<PAGE>
RELATIONSHIP OF BANCORP AND THE BANK
Bancorp is a bank holding company within the meaning of the Bank Holding
Company Act of 1956 and pursuant to that act is registered with the Board of
Governors of the Federal Reserve System. Bancorp has one subsidiary. Stock
Yards Bank & Trust Company ("the Bank") is wholly owned by Bancorp and engaged
in the business of commercial banking. See "MEETINGS AND COMMITTEES OF THE
BOARD".
VOTING AT THE ANNUAL MEETING
On March 5, 1999, the record date for the Annual Meeting fixed by
Bancorp's Board of Directors, there were issued and outstanding, and entitled
to vote at the Annual Meeting, 6,645,562 shares of Bancorp Common Stock.
Bancorp has no class of stock other than Common Stock. The holders of a
majority of the total shares of Bancorp Common Stock issued and outstanding
and entitled to vote, whether present in person or by proxy, will constitute
a quorum for the transaction of business at the Annual Meeting. See note
(3) to the tabulation under the heading, "PRINCIPAL HOLDERS OF BANCORP COMMON
STOCK," for a discussion of shares held by the Bank in fiduciary capacities.
Each share of Bancorp Common Stock is entitled to one vote on all
matters presented to the shareholders with the exception of the election of
directors. In the election of directors, Kentucky's Constitution mandates
that shareholders have cumulative voting rights. Under cumulative voting
rights, each shareholder is entitled to cast as many votes in the aggregate
as equal the number of shares of Bancorp Common Stock owned by him or her
multiplied by the number of directors to be elected. Each shareholder, or
his or her proxy, may cast all of his or her votes (as thus determined) for a
single nominee for director or may distribute them among two or more
nominees, in the shareholder's discretion.
Approval of the proposed amendments to the 1995 Stock Incentive Plan
(Item 2 on the accompanying proxy) requires the affirmative vote of the
holders of a majority of the outstanding shares of Bancorp's Common Stock
present or represented at the Annual Meeting and entitled to vote on the
proposal. Directors will be elected by a plurality of the total votes cast at
the Annual Meeting. Assuming four directors are to be elected, a plurality
means that the four nominees receiving the highest number of votes will be
deemed elected.
Votes cast in person or by proxy at the Annual Meeting will be tabulated
by the judges appointed for the meeting, who will conduct the voting and
certify the results. The judges will also determine whether or not a quorum
is present at the meeting. A shareholder entitled to vote for the election
of directors may withhold authority to vote for all nominees for directors or
may withhold authority to vote for certain nominees for directors. A
shareholder may also abstain from voting on the proposals to fix the number
of directors and amend the 1995 Stock Incentive Plan. Votes withheld from
the election of any nominee for director and abstentions from any other
proposal will be treated by the judges as shares that are present and
entitled to vote for purposes of determining the presence of a quorum, but
will not be counted in the number of votes cast for or against any matter.
If a broker does not receive voting instructions from the beneficial owner of
shares on a particular matter and indicates on the proxy that it does not
have discretionary authority to vote on that matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
2
<PAGE>
PRINCIPAL HOLDERS OF BANCORP COMMON STOCK
At February 26, 1999, Bancorp had 6,645,562 shares of Bancorp Common
Stock issued and outstanding held by 722 shareholders of record. The
following tabulation shows the amount and percent of Bancorp Common Stock
owned beneficially at February 26, 1999, by those persons known by Bancorp to
own, or be deemed to own, beneficially five percent (5%) or more of such
stock. The tabulation also shows the beneficial ownership of Bancorp Common
Stock by all directors, executive officers and employees of Bancorp and the
Bank at February 26, 1999. Unless otherwise noted, the sole voting and
investment power with respect to such stock is held by the beneficial owner
named. For a tabulation of the beneficial ownership of Bancorp Common Stock
by individual directors of Bancorp and nominees for election as directors of
Bancorp at the Annual Meeting, see "ELECTION OF DIRECTORS."
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL BANCORP COMMON
OF BENEFICIAL OWNER OWNERSHIP(1) STOCK(1)(2)
-------------------- ------------------ -----------------
<S> <C> <C>
Stock Yards Bank & Trust Company 631,566(3) 9.53%
1040 East Main Street
Louisville, Kentucky 40206
Directors and executive officers of 932,325 13.64%
Bancorp as a group (17 persons)(4)(5)
Directors, executive officers, and 1,158,856(6) 16.95%
employees of Bancorp and the Bank
as a group (185 persons)(4)(5)
</TABLE>
Notes:
(1) As of February 26, 1999.
(2) Shares of Bancorp Common Stock subject to currently exercisable options
under Bancorp's Stock Option Plan are deemed outstanding for computing the
percentage of Bancorp Common Stock of the person holding such options but
are not deemed outstanding for computing the percentage of Bancorp Common
Stock of any other person.
(3) Held by the Bank as agent, trustee, personal representative and in other
fiduciary capacities, including 76,642 shares and 12,664 shares held as
Trustee under the Bank's Employee Stock Ownership Plan (the "ESOP") and
401(k) plan, respectively. As to 72,162 shares held in the ESOP and 9,549
held in the 401(k) plan, participants direct the Bank, as Trustee, to vote
the vested portion of the participant's account balance attributable to
Bancorp Common Stock. The other 4,480 shares held by the Bank as Trustee
under the ESOP (together with any shares for which no directions are
received from participants in the ESOP) and 3,115 shares held by the Bank
as Trustee under the 401(k) plan (together with any shares for which no
directions are received from participants in the 401(k)) may then be voted
in the same proportions as the directions given to the Bank, as Trustee, by
the respective participants.
(4) "Executive Officer" means the chairman, president, any vice president in
charge of a principal business unit, division or function, or other officer
who performs a policy making function or any other person who performs
similar policy making functions and is so designated by the Board of
Directors.
3
<PAGE>
(5) For a description of the voting and investment power with respect to the
shares beneficially owned by the thirteen directors and nominees for
election as directors of Bancorp, see the table under the heading,
"ELECTION OF DIRECTORS."
(6) The shares held by the group, include 88,426 shares held by nonexecutive
officers and employees of the Bank. In addition, 73,344 shares are subject
to currently exercisable stock options and 64,761 shares are held by
present employees of the Bank in their ESOP and 401(k) accounts at December
31, 1998, with sole voting power and no current investment power. Bancorp
has not undertaken the expense and effort of compiling the number of shares
certain officers and employees of the Bank may hold other than directly in
their own name.
ITEM 1. ELECTION OF DIRECTORS
The Articles of Incorporation and Bylaws of Bancorp provide that the
Board of Directors shall be composed of not less than nine (9) nor more than
twenty-five (25) members. The bylaws provide that the exact number of
members shall be fixed each year by the Board of Directors prior to the
giving of notice of the Annual Meeting, subject to any later resolution
adopted by the shareholders at the Annual Meeting. At its February 9, 1999
meeting, the Board of Directors fixed the number of directors at fifteen
(15). The Board of Directors has recommended that the number of directors
constituting the Board be fixed at fifteen for the ensuing year, subject to
the approval of shareholders at the annual meeting. Assuming four directors
are to be elected, there will be thirteen (13) individuals serving on the
Board as of the date of the 1999 Annual Meeting.
Bancorp's Articles of Incorporation direct the Board of Directors to be
classified into three classes of directors of as nearly equal size as possible
with only one class of directors being elected each year. Accordingly, at the
1999 Annual Meeting, four Directors are to be elected to hold office for
three-year terms, or until their successors are elected and qualified. Unless
otherwise instructed, it is intended that the shares represented by the enclosed
proxy will be voted for the election of the nominees named below. Proxies may
not be voted for a greater number of persons than the number of nominees named
below.
At the Annual Meeting, a resolution will be submitted approving the action
of the Board of Directors fixing the number of directors at fifteen (15), and,
if such resolution is adopted, the four persons named in the following table
will be nominated on behalf of the Board of Directors for election as directors
of Bancorp. The affirmative vote of a majority of the shares of Bancorp Common
Stock represented at the Annual Meeting in person or by proxy will be required
for approval of the resolution fixing the number of directors.
In the event (1) any person or persons other than the following nominees
are nominated as directors, or (2) the number of directors to be elected shall
be less or more than four, the proxies named in the enclosed proxy, or their
substitutes, shall have the right in their discretion to vote for some number
less or more than all the nominees or for less or more than all of the aforesaid
nominees. In the event any of the nominees becomes unwilling or unable to
accept nomination or election, the said proxies shall have the right to vote for
any substitute nominee in place of the nominee who has become unwilling or
unable to accept nomination or election. The Board of Directors has no reason to
believe that any of the nominees will be unavailable to serve as a director.
All of the nominees and continuing directors of Bancorp are currently
serving as directors of the Bank and were elected to that position on April 22,
1998, by the written consent of Bancorp, the sole shareholder of the Bank. It
is anticipated that, if elected as directors of Bancorp at the Annual Meeting,
Bancorp, as the sole shareholder of the Bank, will, by written consent, elect
the following nominees and continuing directors of Bancorp as directors of the
Bank to serve a one year term.
4
<PAGE>
There are no arrangements or understandings regarding the selection or
election of any of the following nominees as directors of Bancorp. All
nominations for membership on the Board of Directors of Bancorp originated
with the Board of Directors.
<TABLE>
<CAPTION>
BANCORP COMMON STOCK
NAME, AGE, AND BENEFICIALLY OWNED
YEAR FIRST BECAME PRINCIPAL OCCUPATION; AT FEBRUARY 26, 1999
DIRECTOR (1) CERTAIN DIRECTORSHIPS(2)(3) AMOUNT(4)(5) % OF CLASS
- -------------------- --------------------------- -------------- -----------
<S> <C> <C> <C>
NOMINEES TO SERVE A THREE YEAR TERM EXPIRING 2002
Charles R. Edinger, III Vice President, 110,483(7) 1.66%
Age 49 J. Edinger & Son, Inc.
Director since 1984
David P. Heintzman President, S.Y. Bancorp, Inc. 66,050(9) (6)
Age 39 and Stock Yards Bank & Trust
Director since 1992 Company(8)
Norman Tasman President, Secretary and 120,328(11) 1.81%
Age 47 Treasurer, Tasman Industries, Inc.;
Director since 1995(10) President, Tasman Hide
Processing, Inc.
Kathy C. Thompson Executive Vice President and 34,098(14) (6)
Age 37 Secretary, S.Y. Bancorp, Inc.;
Director since 1994 (12) Executive Vice President,
Stock Yards Bank & Trust
Company(13)
CONTINUING DIRECTORS - TERM EXPIRING 2001
David H. Brooks Chairman and Chief 87,090(16) 1.30%
Age 56 Executive Officer, S.Y.
Director since 1985 Bancorp, Inc. and Stock
Yards Bank & Trust Company(15)
Carl T. Fischer, Jr. Farmer and 62,464(17) (6)
Age 65 Horse Breeder
Director since 1980
Stanley A. Gall, M.D. Professor and Chairman, 4,390 (6)
Age 62 Department of Obstetrics
Director since 1994 (18) and Gynecology,
University of Louisville
Henry A. Meyer President, Henry 94,388(19) 1.42%
Age 68 Fruechtenicht Co., Inc.;
Director since 1966 Vice Chairman,
S.Y. Bancorp, Inc.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
CONTINUING DIRECTORS - TERM EXPIRING 2000
BANCORP COMMON STOCK
NAME, AGE, AND BENEFICIALLY OWNED
YEAR FIRST BECAME PRINCIPAL OCCUPATION; AT FEBRUARY 26, 1999
DIRECTOR (1) CERTAIN DIRECTORSHIPS(2)(3) AMOUNT(4)(5) % OF CLASS
- -------------------- --------------------------- -------------- -----------
<S> <C> <C> <C>
James E. Carrico President, Acordia of 19,466 (6)
Age 57 Kentucky
Director since 1978
Jack M. Crowner Owner 67,397(20) 1.01%
Age 66 Jack Crowner & Associates
Director since 1979
Leonard Kaufman Retired Chairman and Chief 109,246(22) 1.64%
Age 69 Chief Executive Officer,
Director since 1964 S.Y. Bancorp, Inc. and Stock
Yards Bank & Trust Company(21)
George R. Keller Founder, Tumbleweed 17,516(23) (6)
Age 49 Mexican Food, Inc.
Director since 1991
Bruce P. Madison Vice President and 27,937(24) (6)
Age 48 Treasurer, Plumbers
Director since 1989 Supply Company, Inc.
</TABLE>
Notes:
(1) Ages listed are as of December 31, 1998.
(2) Except as otherwise noted, each director and nominee has been
engaged in his or her principal occupation for five years or more.
(3) No director or nominee holds any directorship in a company with a
class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or subject to the requirements of
Section 15(d) of such act or any company registered as an investment
company under the Investment Company Act of 1940.
(4) This column includes, in some instances, shares in which members of
the nominee's or director's immediate family have a beneficial
interest. The column does not, however, include the interest of
certain of the listed nominees or directors in shares held by other
non-dependent family members in their own right. In each case, the
principal disclaims beneficial ownership of any such shares, and
declares that the listing in this Proxy Statement should not be
construed as an admission that the principal is the beneficial owner
of any such securities.
(5) Includes for each non-employee director except Mr. Tasman, 2,400
shares subject to currently exercisable stock options issued under
Bancorp's stock option plan. Includes for Mr. Tasman, 800 shares
subject to currently exercisable stock options.
(6) Less than one percent (1%) of outstanding Bancorp Common Stock.
(7) Includes 21,016 shares owned by Mr. Edinger's wife and 63,872 shares
owned by a family partnership for which Mr. Edinger shares voting
control and derives 1% economic benefit.
6
<PAGE>
(8) Mr. Heintzman was appointed President of Bancorp and the Bank in
January, 1993. Prior thereto, he was Treasurer of Bancorp and
Executive Vice President of the Bank.
(9) Includes 37,720 shares subject to currently exercisable stock options
issued under Bancorp's Stock Option plans, 2,842 shares owned by Mr.
Heintzman's wife, 1,784 shares held by Mr. Heintzman as custodian for
his minor daughter, and 4,527 shares held in Mr. Heintzman's ESOP and
401(k) account at December 31, 1998.
(10) Mr. Tasman was elected as a director of Bancorp and the Bank at the
meetings of the respective Boards of Directors held on January 10,
1995. Mr. Tasman was re-elected to the Board at the April, 1995
Annual Meeting.
(11) Includes 92,000 shares owned by Mr. Tasman's mother for which Mr.
Tasman shares voting control but from which he derives no economic
benefit. Includes 24,904 shares held jointly by Mr. Tasman and his
wife, and 2,224 shares held as custodian for his minor son.
(12) Ms. Thompson was elected as a director of Bancorp and the Bank at the
meetings of the respective Boards of Directors held in January, 1994.
Ms. Thompson was re-elected to the Board at the April, 1994 Annual
Meeting.
(13) Ms. Thompson joined the Bank in June, 1992 as Senior Vice President
and Manager of the Trust Division. Prior thereto, she was a Vice
President of PNC Bank Kentucky's Trust Division.
(14) Includes 28,800 shares subject to currently exercisable stock options
issued under Bancorp's Stock Option Plans and 1,348 shares held in
Ms. Thompson's ESOP account at December 31, 1998.
(15) Mr. Brooks was appointed Chairman and Chief Executive Officer of
Bancorp and the Bank in January, 1993. Prior thereto he was President
of Bancorp and the Bank.
(16) Includes 52,240 shares subject to currently exercisable stock options
issued under Bancorp's Stock Option Plans, 2,620 shares held by Mr.
Brooks as custodian for his son, 23,128 shares owned by Mr. Brooks's
wife, and 6,987 shares held in Mr. Brooks's ESOP and 401(k) accounts
at December 31, 1998.
(17) Includes 39,232 shares held by Mr. Fischer as trustee under an
irrevocable trust established by his father.
(18) Dr. Gall was elected as a director of Bancorp and the Bank at the
meetings of the respective Boards of Directors held on January 11,
1994. Dr. Gall was re-elected to the Board at the April, 1994 Annual
Meeting.
(19) Includes 43,884 shares owned by Mr. Meyer's wife.
(20) Includes 40,268 shares owned by Mr. Crowner's wife.
(21) Prior to his retirement in January, 1993, Mr. Kaufman was Chairman and
Chief Executive Officer of Bancorp and the Bank.
(22) Includes 51,860 shares owned by Mr. Kaufman's wife, and 156 shares
jointly owned by Mr. Kaufman and his wife.
(23) Includes 2,332 shares jointly owned by Mr. Keller and his wife.
(24) Includes 9,704 shares jointly owned by Mr. Madison and his wife, 804
shares owned by Mr. Madison's wife, and 14,267 shares held by Mrs.
Madison as custodian for their minor children.
7
<PAGE>
Messrs. David H. Brooks and David P. Heintzman and Ms. Thompson are among
Bancorp's executive officers and the above tabulation also includes other
information with respect to them. Bancorp's executive officers serve at the
pleasure of Bancorp's Board of Directors and there are no arrangements or
understandings regarding their selection or appointment as officers of Bancorp.
MEETINGS AND COMMITTEES OF THE BOARD
BOARD MEETINGS
During 1998, the Board of Directors of Bancorp held a total of eight
regularly scheduled and special meetings.
All directors of Bancorp are also directors of the Bank. During 1998, the
Bank's Board of Directors held a total of thirteen regularly scheduled and
special meetings.
All incumbent directors attended at least 75% of the aggregate number of
meetings of the Board and the committees of which they were members.
COMMITTEES OF BANCORP
Bancorp has a standing Audit Committee and Compensation Committee of the
Board of Directors.
Bancorp's Board of Directors considers matters relating to the selection
and nomination of directors, but there is no standing nominating committee of
the Board of Directors. There are no formal procedures whereby a security holder
may recommend nominees to the Board of Directors.
AUDIT COMMITTEE. The Audit Committee consists of four members of Bancorp's
Board of Directors: James E. Carrico, Charles R. Edinger, III, Bertrand A.
Trompeter, and Henry A. Meyer. The committee held four meetings in 1998. The
committee reviews with Bancorp's independent auditors the results of the audit
engagement, other services performed by the auditors, and the audit fees.
Review of internal audit officer's detailed audit plans and reports, regulatory
compliance officer's plans and reports and internal accounting controls are part
of the function of the committee.
COMPENSATION COMMITTEE. The Compensation Committee consists of four
members of Bancorp's Board of Directors. The committee considers matters
relating to the salary and other compensation of officers of the Bank and
Bancorp. The members of the committee are James E. Carrico, Jack M. Crowner,
Bruce P. Madison and Henry A. Meyer. The committee meets at least annually
and held four meetings in 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Bancorp's
directors, certain officers and persons who own more than 10% of the
outstanding Bancorp Common Stock, to file with the Securities and Exchange
Commission reports of changes in ownership of Bancorp Common Stock held by
such persons. Officers, directors and greater than 10% shareholders are also
required to furnish Bancorp with copies of all forms they file under this
regulation. Mr. Tasman, director of Bancorp, failed to file timely four such
reports, covering seven transactions in 1998. Mr. Edinger, director of
Bancorp, failed to file timely one such report covering one transaction in
1998. To Bancorp's knowledge, based solely on a review of the copies of such
reports furnished to Bancorp and representations that no other reports were
required, all Section 16(a) filing requirements applicable to all other of
its officers and directors were complied with during 1998.
8
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is made up of four members of the Board of
Directors who are not, nor have they been, employees of Bancorp or the Bank.
It is the philosophy of the Committee to ensure the compensation of
Bancorp's executive officers is adequate to attract and retain talented
individuals with proven abilities to lead Bancorp and the Bank so growth and
profitability are realized while maintaining stability and capital strength.
Corporate profitability and shareholder value are important performance
measurements; however, executive officer base compensation is not directly
related to either. Compensation levels are determined by a number of factors
including comparisons with companies of similar size and complexity. While
executive base compensation is not quantitatively related to Bancorp's or the
Banks financial performance, there is a qualitative relationship between
performance and executive officer compensation. The salary increases noted in
the Summary Compensation Table under the heading "COMPENSATION OF EXECUTIVE
OFFICERS AND DIRECTORS," were made in light of Bancorp's and the Bank's market
and earnings growth and other favorable factors. Salaries are based on
individual performance contributions within a competitive salary range for each
position. Pay levels are competitive within a range the Committee considers to
be reasonable and necessary.
BASE SALARY. The salaries of the executive officers are determined
substantially as described above with additional considerations. Factors
affecting and considerations made for the Chief Executive Officer's salary are
substantially the same as those for other executive officers. A range of
salaries is determined by gathering information regarding salaries at similarly
sized banks and other businesses. This information is obtained from industry
publications such as SNL EXECUTIVE COMPENSATION REVIEW for banks. The Committee
considers the executive's leadership skills and managerial results. Among these
considerations are consolidated financial performance and condition, growth of
the Bank, regulators' conclusions, community involvement, the executive's
ability to choose and lead his/her respective management teams and the
recommendation of the Chief Executive Officer. Objective, subjective,
quantitative and qualitative measures are used. The Committee reaches a
conclusion as to an appropriate salary and presents it to the Board of Directors
for discussion and approval. While peer group comparisons of salaries include
companies which are also included in the indices used for the shareholder return
performance graph on page 14 there is no direct correlation between the
companies used in CEO compensation and companies included in that graph.
ANNUAL INCENTIVE COMPENSATION. The objective of the Management Incentive
Plan is to deliver competitive levels of compensation for the attainment of
annual financial objectives and operating results. The Committee believes these
to be primary drivers of stock price performance over time. The annual
determination as to whether incentives will be paid is based upon the
achievement of certain set goals for earnings growth, return on average assets
and return on average equity. The Committee feels that in a time of significant
expansion, there is potential for strong earnings growth as long as the process
is managed with adequate focus on cost control. Therefore, the Committee
established a tiered incentive program based upon the achievement of net income
goals.
For the CEO and President, the formula requires a 10% increase in Bancorp's
corporate earnings per share, over the prior year. The maximum available and
actual payment for 1998 was 40% of base pay for attaining a 25% increase in
earnings per share. The incentive determination for Phillip Smith and Nancy
Davis was at a reduced percentage of the aforementioned formula. For Kathy
Thompson the formula was based on the Trust Department's income exceeding the
prior year by a minimum of 20%. The maximum payment available to Ms. Thompson
of 40% of base pay required a 45% increase in departmental income over the prior
year. The maximum payment was made based on 1998 departmental results.
9
<PAGE>
LONG TERM INCENTIVES. The Committee also believes the best interests of
share holders to be served by providing those persons having responsibility for
the management and growth of Bancorp and the Bank with an opportunity to
increase their ownership of Bancorp Common Stock. Executive officers are granted
options, from time to time, giving them the right to purchase Bancorp Common
Stock at a specified price in the future. The number of stock options granted
is based upon individual performance contributions and comparative practices.
See the discussion under "COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS-Stock Incentive Plan" page 11.
In summary, the Committee believes the total compensation program for
Bancorp's executive officers is competitive with programs offered by similar
institutions, and executive compensation is appropriate to further the goals and
objectives of Bancorp and the Bank.
COMPENSATION COMMITTEE
James E. Carrico Jack M. Crowner
Bruce P. Madison Henry A. Meyer
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following table shows the compensation paid by the Bank for the three
years ended December 31, 1998, for services in all capacities to executive
officers of Bancorp.
<TABLE>
<CAPTION>
Summary Compensation Table
-------------------------- Long Term
Annual Compensation Compensation
----------------------------------------- ------------
Name and Other Securities
Principal Annual Underlying All Other
Position Year Salary Bonus(1) Compensation(2) Options(4) Compensation(3)
- ---------- ------- --------- -------- --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
David H. Brooks 1998 $225,000 $90,000 - 2,000 $35,106
Chairman and Chief 1997 195,000 78,000 - 4,000 37,457
Executive Officer 1996 185,000 55,000 - - 35,232
David P. Heintzman 1998 190,000 76,000 - 2,000 34,744
President 1997 159,000 63,600 - 4,000 36,200
1996 150,000 45,000 - - 34,019
Kathy C. Thompson 1998 140,000 56,000 - 2,000 32,327
Executive Vice 1997 108,000 30,000 - 2,000 28,894
President and 1996 100,000 20,000 - - 26,839
Secretary
Phillip S. Smith 1998 95,000 24,000 - 2,000 16,512
Executive Vice 1997 82,000 16,000 - 2,000 14,477
President 1996 74,000 13,000 - - 13,041
Nancy B. Davis 1998 85,000 17,000 - 2,000 14,424
Executive Vice 1997 73,500 15,000 - 2,000 12,643
President, Treasurer 1996 70,000 10,000 - - 12,137
and Chief Financial
Officer
</TABLE>
10
<PAGE>
Notes:
(1) Incentive compensation plan is described in "REPORT OF COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION," page 9.
(2) The aggregate amount of all perquisites and other personal benefits
received by the individuals listed in the above table did not exceed 10
percent of the total annual salary reported for the respective executive
officer.
(3) Includes director compensation (See "COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS-Director Compensation") and contributions by the Bank to the
Bank's defined contribution plans (money purchase, deferred income (401(k))
profit sharing and employee stock ownership plans) as set forth below.
Also includes various payments, primarily life insurance policy premiums.
The officers families are the beneficiaries of these policies.
<TABLE>
<CAPTION>
Mr. Brooks Mr. Heintzman Ms. Thompson Mr. Smith Ms. Davis
---------- ------------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Director compensation $ 7,200 $ 7,800 $ 7,200 $ - $ -
Contribution to money
purchase plan 15,695 15,695 12,959 7,474 6,277
Contribution to 401(k) plan 5,552 5,552 7,144 5,572 4,986
Contribution to ESOP 3,200 3,200 2,753 1,857 1,662
Other 3,459 2,497 2,271 1,609 1,499
</TABLE>
(4) Adjusted for effect of February, 1999 2-for-1 stock split.
STOCK INCENTIVE PLAN
Bancorp has a stock option plan under which options may be granted to
officers, other key employees of the Bank, and non-employee directors. Key
employees are those persons who, in the judgement of the Compensation
Committee, are mainly responsible for the success of the Bank. Options
under this plan are granted at the fair market value of Bancorp's Common
Stock at the time of the grant.
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table summarizes options granted during fiscal 1998 to the
executive officers named in the Summary Compensation Table, and the value of
the options held by such persons at the end of 1998. Share and per share
information has been adjusted for effect of February, 1999 2-for-1 stock
split.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Number of % of Rates of Stock Price
Securities Total Appreciation for
Underlying Options Exercise Option Term(3)
Options Granted Price Expiration ---------------------------
Name Granted in 1998 Per Share Date 5% 10%
- ------ ---------- ------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
David H. Brooks 2,000(1) 4.55% $20.50 1/7/2008 $ 29,872 $ 75,703
David P. Heintzman 2,000(1) 4.55% 20.50 1/7/2008 29,872 75,703
Kathy C. Thompson 2,000(1) 4.55% 20.50 1/7/2008 29,872 75,703
Phillip S. Smith 2,000(2) 4.55% 20.50 1/7/2008 29,872 75,703
Nancy B. Davis 2,000(1) 4.55% 20.50 1/7/2008 29,872 75,703
All Shareholders 6,606,802(3) n/a n/a n/a $98,681,000 $250,077,000
</TABLE>
11
<PAGE>
(1) These options were granted in January, 1998 and became exercisable six
months following the grant date.
(2) These options were granted in January, 1998 and become exercisable in 20%
increments over five years beginning one year after grant date.
(3) All shareholders are shown for comparison purposes only. The potential
realizable value to all shareholders is the aggregate net gain for all
shareholders, assuming a hypothetical ten-year option granted at $23.75 per
share in January, 1998, if the price of Bancorp stock increases at
the assumed annual rates shown in the table. There can be no assurance
that Bancorp's Stock will perform at the assumed annual rates shown in the
table. Bancorp neither makes or endorses any prediction as to future stock
performance. The potential realizable value of stock price appreciation
for the option term for all executive officers of Bancorp at 5% is $149,360
and at 10% is $378,515, which represents .15% of the total potential
realizable value for all shareholders at 5% and 10%.
The following table shows, as to the individuals included in the Summary
Compensation Table, information as to aggregate options exercised in 1998 and
December 31, 1998 year end option values.
AGGREGATED OPTIONS EXERCISED IN 1998 AND 1998 YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN THE MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1998(1) DECEMBER 31, 1998
ON VALUE ----------- ------------- ----------- -------------
NAME EXERCISE(1) REALIZED Exercisable Unexercisable Exercisable Unexercisable
- ------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David H. Brooks - $ - 44,808 12,872 $ 783,202 $ 214,040
David P. Heintzman 5,808 141,105 30,288 12,872 450,861 214,040
Kathy C. Thompson - - 23,040 9,760 345,000 162,500
Phillip S. Smith - - 19,440 13,360 323,700 183,800
Nancy B. Davis - - 18,240 6,560 265,800 109,700
</TABLE>
(1) Adjusted for the effect of February, 1999 2-for-1 stock split.
SENIOR OFFICER SECURITY PLAN
The Bank has established a Senior Officer Security Plan (the "Security
Plan") for a select group of management and highly compensated officers who
contribute materially to the continued growth, development and future business
success of the Bank. Life insurance owned and paid for by the Bank has been
purchased on each covered officer. The Security Plan is designed so that if the
assumptions made as to mortality experience, policy dividends and other factors
are realized, the Bank will recover both the cost of benefits and after tax
costs of the plan. The amount of benefits to be received under the Security
Plan was determined by projecting each participant's current salary amount to
that at his/her retirement date. His/her expected social security benefits and
expected benefits under the defined contribution plans were also estimated. The
Security Plan supplemental retirement benefit amount was determined to be the
amount necessary to bring total retirement payments to an approximate 75% of
his/her projected salary at retirement age.
12
<PAGE>
Under the Security Plan, the following individuals listed in the Summary
Compensation Table at page 10 will receive the following annual supplemental
retirement benefits at their normal retirement age of 65:
<TABLE>
<CAPTION>
<S> <C>
David H Brooks $84,000 each year for 15 years
David P. Heintzman $136,500 each year for 15 years
Kathy C. Thompson $82,000 each year for 15 years
</TABLE>
In addition, there are pre-retirement death and disability benefits
provided by the Security Plan.
SENIOR EXECUTIVE SEVERANCE AGREEMENT
The Bank has established a Senior Executive Severance Agreement (the
"Severance Agreement") for certain Executive Officers of the Bank. Bancorp
and the Bank have concluded it to be in the best interests of Bancorp, its
Shareholders and the Bank to take reasonable steps to help assure key
executives of the Bank that they will be treated fairly in the event of a
tender offer or takeover bid, or an actual Change in Control. It is
important, should Bancorp receive take over or acquisition proposals from
third parties, that Bancorp be able to call upon the key executives of the
Bank for their advice and assessment of whether such proposals are in the
best interests of shareholders, free of the influences of their personal
employment situations. This severance agreement was not entered into because
of any belief by management that a Change in Control of Bancorp was imminent.
The Severance Agreement provides that, in the event (1) an executive is
forced to resign following a Change in Control of Bancorp or (2) an executive
voluntarily terminates employment with the Bank for up to three years following
a Change in Control, the Bank will pay the executive a severance payment equal
to 299 percent of the executive's annual salary. Should voluntary termination
occur between 24 and 36 months following the Change in Control, the executive
will receive only 2/3 of the severance payment. Furthermore, if the executive
is 58 years old or more at the date of the severance payment, the amount of the
payment is reduced. As the executive approaches retirement age of 65 years, the
severance payment decreases proportionately to zero at age 65. The severance
agreement also provides that the Bank pay legal fees and expenses incurred in
contesting any termination or enforcing the severance agreement.
In the event of receipt of severance payments by an executive officer, the
executive officer, for a period of eighteen months will not solicit customers of
the Bank, divert from the Bank any customer of the Bank or solicit for
employment any employee of the Bank.
DIRECTOR COMPENSATION
Directors of Bancorp receive no compensation for attendance at regular or
special meetings of the board if the meetings are held immediately before or
after a regular or special meeting of the Board of Directors of the Bank.
However, Bancorp's directors are paid $700 for each meeting of Bancorp's Board
of Directors attended if the meeting is not held immediately before or after a
meeting of the Board of Directors of the Bank. Bancorp's directors, who
are also directors of the Bank, are paid $700 for each Bank board meeting
attended. Non-employee directors receive an annual retainer of $2,400.
Non-employee directors of Bancorp and the Bank who are members of the
various committees of the Board of Directors are also paid the following fees:
$200 per meeting attended of Bancorp's Audit Committee and the Bank's
Compensation, Loan and Trust Committees.
Non-employee directors receive a one time grant of options to purchase
4,000 shares of Bancorp Common Stock. These options are granted at the fair
market value of Bancorp Common Stock at the time of the grant.
13
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following performance graph compares the performance of Bancorp Common
Stock to the SNL AMEX Bank index, SNL Midwest Bank index, NASDAQ U.S. index and
to the NASDAQ Banking index for Bancorp's last five fiscal years. In December,
1997, Bancorp stock began trading on the American Stock Exchange. Accordingly,
the indices in the performance graph have been changed for 1998. Also included
for comparative purposes are the indices used In the 1997 performance graph.
The graph assumes the value of the investment in Bancorp Common Stock and in
each index was $100 at December 31, 1993, and that all dividends were
reinvested.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
-------- -------- -------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
S.Y. Bancorp, Inc. $ 100.00 $ 114.28 $ 164.32 $ 232.35 $ 340.86 $ 390.12
SNL AMEX Bank Index 100.00 108.21 159.05 205.64 350.99 365.04
SNL Midwest Bank Index 100.00 96.65 142.82 194.30 315.04 335.09
NASDAQ Bank Index 100.00 99.64 148.38 195.91 328.02 324.90
NASDAQ - Total U.S. Index 100.00 97.75 138.26 170.01 208.58 293.21
</TABLE>
14
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with certain directors and
officers of Bancorp and the Bank and their associates, as well as with
corporations or organizations with which they are connected as directors,
officers, shareholders or partners, on substantially the same terms
(including interest rates and collateral) as those prevailing at the time for
comparable transactions with other persons. In the opinion of management of
Bancorp and the Bank, such transactions do not involve more than the normal
risk of collectibility or present other unfavorable features.
At December 31, 1998, loans to directors and officers of Bancorp and the
Bank and their associates totaled $5,215,000, equaling 11.9% of the Bancorp's
consolidated stockholders' equity.
During 1998, Bancorp and the Bank purchased property damage and other
insurance through Acordia of Louisville, a general insurance agency, for
which net premiums aggregating $340,000 were paid to Acordia of Louisville.
Net commissions earned by Acordia of Louisville on account of such insurance
totaled $27,000 in 1998. Included in the above premiums and commissions are
three-year policy premiums for the Bank and Bancorp's primary insurance
policies. Mr. James E. Carrico, a director of Bancorp and the Bank, is a
shareholder, director and President Acordia of Kentucky.
ITEM 2. APPROVAL OF AMEMDMENTS TO 1995 STOCK INCENTIVE PLAN
At its April, 1995 Annual Meeting, Bancorp's shareholders approved the 1995
Stock Incentive Plan (1995 Plan). The 1995 Plan became effective immediately.
Under the 1995 Plan 320,000 shares of stock were reserved and available
for issuance. Grants under the 1995 Plan were made in consideration of
services rendered or to be rendered by officers and key executives of Bancorp
or its subsidiary to encourage them to achieve Bancorp's profit, growth and
performance objectives through Common Stock ownership. Grants under the 1995
Plan also included stock options to nonemployee directors whereby each
nonemployee director who was serving as such following the April 26, 1995
Annual Meeting was granted a nonqualified stock option to purchase 4,000
shares of stock for an exercise price equal to 100% of the fair market value
of the stock. All shares reserved at the 1995 Annual Meeting have been
granted, and the Board of Directors has recommended that 400,000 shares of
Common Stock be reserved and available for issuance under the 1995 Plan.
The Compensation Committee (a committee of directors none of whom are
employees of the Bank or Bancorp) determines the persons to receive awards
under the 1995 Plan and the number of shares to be subject to each award. At
a January, 1999 meeting the Compensation Committee granted to certain
employees options to purchase an aggregate of 33,000 shares of Common
Stock. These grants are subject to shareholder approval of the amendment to
the 1995 Plan. Included in this total are options to purchase shares of
Common Stock granted to individuals listed in the Executive Compensation
Summary Compensation Table as follows.
<TABLE>
<CAPTION>
Total Options Options Granted
Granted Under January, 1999
1995 Stock Incentive Subject to Shareholder
Plan Prior to Amendment Approval
----------------------- ----------------------
<S> <C> <C>
David H. Brooks 43,400 -
David P. Heintzman 39,600 2,200
Kathy C. Thompson 24,000 3,200
Phillip S. Smith 24,000 2,600
Nancy B. Davis 16,000 2,600
All directors, as a group 48,000 -
All executive officers, as a group 147,000 13,200
All employees, excluding
executive officers, as a group 125,000 19,800
</TABLE>
15
<PAGE>
The Board of Directors has also recommended certain changes to the Change
in Control provisions of the Plan. The proposed amendment provides, if there is
a Change in Control of Bancorp, as defined by the Plan, all outstanding unvested
options granted after January 1, 1999 may become immediately exercisable. Under
the Plan as amended by the proposal, upon the occurrence of a Change in Control,
all unvested options granted after January 1, 1999 and prior to the Change in
Control will become immediately exercisable, unless the Change in Control
happens within two years of the date of approval of this amendment to the Plan
by the shareholders of Bancorp and results from a transaction which is intended
to be reflected as a pooling of interests for purposes of accounting, in which
event the Board of Directors may revoke the provisions of the Plan regarding
acceleration of the right to exercise. In addition, if Bancorp engages in a
transaction within two years following adoption of this Plan by the shareholders
of Bancorp, which transaction does not constitute a Change in Control but which
Bancorp intends to reflect as a pooling of interests for accounting purposes,
the Board of Directors may, at any time prior to such transaction, revoke the
provisions regarding acceleration of the right to exercise upon a Change in
Control, with respect to Options granted as of that time if accounting for such
transaction as a pooling of interests would be precluded due to the amendment of
the provisions regarding acceleration of the right to exercise. If the Board of
Directors exercises the right to revoke the provisions regarding acceleration of
the right to exercise, each option previously granted under these amended terms
of the Plan will become exercisable in accordance with the schedule provided for
at the time of granting of that option.
Under current provisions of the Plan, in the event of a sale or merger
of Bancorp which does not provide for assumption or substitution of awards
granted under the 1995 Plan on a basis that is fair and equitable to holders
of such awards, the Board of Directors may cancel the awards in exchange for
shares of stock the holder would have received had he/she exercised his/her
award, or the right to exercise outstanding awards in full before the date as
of which the Board unilaterally cancels such awards. In some circumstances
the Board may unilaterally cancel the awards after having given advance
written notice to the recipients of such awards. Also under current
provisions of the Plan, in the event of a Change in Control of Bancorp, the
Board may take such actions with respect to any unexercised awards granted
under the 1995 Plan as the Board deems appropriate under the circumstances to
protect the interest of Bancorp in maintaining the integrity of such awards.
The proposed amendment to the Change in Control provisions of the 1995 Plan
is designed to help provide an incentive to attract and retain capable personnel
of a caliber required to ensure the continued success of Bancorp and to avoid
impeding a transaction which Bancorp would intend to reflect as a pooling of
interests for accounting purposes.
While the purpose of the proposed amendment to the Change in Control
provisions of the Plan is to promote the interests of Bancorp by attracting,
maintaining and affording an incentive to key management employees, certain
provisions of the amendment may have an anti-takeover effect. In the event
of a Change in Control, the ability to exercise all outstanding unvested
options granted after January 1, 1999 may be accelerated, as described above.
Additionally, in the event of a Change in Control, the Common Stock or other
comparable securities of the acquiring entity may be substituted for the
Common Stock of Bancorp subject to the Plan and outstanding options granted
thereunder.
The effect of this proposed amendment to the Plan may be to discourage an
unsolicited tender offer or other unsolicited takeover bid for Bancorp's Common
Stock. The proposed amendment to the Plan may make Bancorp a less attractive
takeover target. Additionally, these provisions may encourage persons desiring
to take over or control Bancorp to initiate such action through negotiations
with the then incumbent Board of Directors and management instead of through a
direct offer to the shareholders. The proposed provisions of the Plan could
make the accomplishment of a transaction more difficult or more costly even if
the transaction is favorable to the interests of the shareholders. However,
these provisions of the Plan may also encourage management of Bancorp to focus
on the merits and the consummation of the transaction, without being distracted
by any potential negative consequences of the transaction on options granted to
them under the Plan.
16
<PAGE>
This amendment to the 1995 Plan is not being proposed in response to any
actual or contemplated Change in Control of Bancorp.
Under the 1995 Plan, stock appreciation rights may be granted either in
conjunction with all or part of any stock option granted under the Plan or alone
in addition to other awards granted under the Plan.
The number of shares for which stock options may be granted to any
single employee will not be limited by the 1995 Plan, except as may be
required with respect to "incentive stock options" within the meaning of the
Internal Revenue Code of 1986. The total number of persons who may receive
grants under the 1995 Plan is limited to employees who are responsible for or
contribute to the management, growth or profitability of the business of
Bancorp and its subsidiaries. The participants under the 1995 Plan will be
selected, from time to time, by the Compensation Committee. The number of
employees currently eligible to receive awards under the 1995 Plan is
approximately 25. The 1995 Plan provides for adjustments to reflect any
future stock dividends, splits or other relevant capitalization changes.
STOCK OPTIONS
The stock options to be granted under the 1995 Plan may be either
incentive stock options or nonqualified stock options. The terms of any
nonqualified stock option, including without limitation the exercise price
and period of exercise, will be determined by the Compensation Committee in
its sole discretion at the time of grant. Incentive stock options will be
exercisable within ten years after the date of the grant. No incentive stock
option can be granted at an exercise price of less than 100% of fair market
value on the date the stock option is granted. The option price of an option
may be paid in cash or, as determined by the Compensation Committee, in
shares of Common Stock (valued at fair market value on the date of payment).
The Compensation Committee may also (in its discretion) allow an option
holder to pay the exercise price (in whole or in part) by electing to have
Bancorp withhold shares of Common Stock that would otherwise be issuable as a
result of the option exercise. Options will be exercisable on terms to be
determined by the Compensation Committee at the time of grant. In the case
of incentive stock options, the aggregate fair market value (determined as of
the date the stock option is granted) of the stock granted to any option
holder (under all plans of Bancorp or any subsidiary) which may become
exercisable for the first time in any calendar year may not exceed $100,000,
or such other limit as may be imposed under the Internal Revenue Code of
1986. As determined by the Compensation Committee at or after the time of
grant, upon exercise of such stock option, any withholding tax required by
law may be paid in cash, in shares of Common Stock (valued at fair market
value on the date of exercise), including by the withholding of shares
otherwise issuable upon exercise, or by a combination of cash and shares of
Common Stock.
Stock options granted under the 1995 Plan are not transferable except by
will or the by officers and key employees of Bancorp or its subsidiaries to
encourage them to achieve laws of descent and distribution and may be
exercised only by the option holder during his or her lifetime. If the
employment of an option holder terminates by reason of retirement, the option
will expire in three months after the date of termination. In the case of
permanent total disability, the option will continue to be exercisable after
such a termination of employment, but not beyond the term of the option, to
the same extent it could be exercised if the optionee had continued to be
employed. If the employment of an option holder is terminated under mutually
agreeable circumstances, the Compensation Committee, in its discretion, may
grant to the
17
<PAGE>
option holder a period of time from the date of termination, but not beyond the
term of the option, to exercise the option to the same extent the optionee could
if he or she had continued to be employed. If an option holder dies while still
employed, the legal representative of the option holder may exercise the option
within one year of the date of the holder's death, but not beyond the term of
the option, to the same extent the optionee could if he or she had continued to
be employed. If the termination of employment of an option holder occurs after
a Change in Control and is for reasons other than retirement, death, disability
or cause, that individual may exercise the option during the six months
following termination to the extent he/she had the right to exercise such option
at the date of his/her termination.
STOCK APPRECIATION RIGHTS
The stock appreciation rights to be granted under the 1995 Plan may be
granted either in conjunction with all or part of any stock option granted
under the Plan (a related stock appreciation right) or alone (a free standing
stock appreciation right) and, in either case, in addition to other awards
granted under this Plan. The term of a related stock appreciation right will
be the same as the related stock option. The term of a freestanding stock
appreciation right will be fixed by the Compensation Committee, but will be
no more than ten years after the date such right is granted.
Stock appreciation rights will be transferable only when and to the
extent that a stock option would be transferable. In the event of
termination of employment of an employee holding a related stock appreciation
right, such right would be exercisable to the same extent that the related
stock option is exercisable after such termination. In the event of
termination of employment of the holder of a freestanding stock appreciation
right, such right would be exercisable to the same extent that a stock option
with the same terms and conditions as such freestanding stock appreciation
right would have been exercisable in the event of termination of employment
of the holder of such stock option.
DISCONTINUANCE AND AMENDMENT
The Board of Directors may amend, suspend or terminate the 1995 Plan at any
time without restriction. No amendment may, without shareholder approval (to
the extent required), increase the total number of shares which may be issued
under the 1995 Plan (other than in the case of adjustments to reflect future
stock dividends or other relevant capitalization changes), or change the class
of employees eligible to participate in the 1995 Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of transactions under the 1995 Plan based on current federal
income tax laws. This summary is not Intended to be exhaustive and, among
other things, does not describe state, local or foreign tax consequences.
Accordingly, a participant should consult a tax advisor with respect to the
tax aspects of the 1995 Plan.
NONQUALIFIED STOCK OPTIONS. In general, (I) an optionee will not be
subject to tax at the time a nonqualified stock option is granted, and (II)
an optionee will include in ordinary income in the taxable year in which he
or she exercises a nonqualified stock option an amount equal to the
difference between the exercise price and the fair market value of the Common
Stock on the date of exercise. Upon disposition of the Common Stock acquired
upon exercise, appreciation or depreciation after the date ordinary income
is recognized will be treated as capital gain (or loss). Bancorp generally
will be entitled to a deduction in an amount equal to a recipient's ordinary
income in Bancorp's taxable year in which the optionee includes such amount
in income or, under certain circumstances, a later taxable year.
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INCENTIVE STOCK OPTIONS. No taxable income will be realized by an
option holder upon the grant or exercise of an incentive stock option. If
shares are issued to an option holder pursuant to the exercise of an
incentive stock option granted under the 1995 Plan and if no disqualifying
disposition of such shares is made by such option holder within two years
after the date of grant or within one year after the receipt of such shares
by such option holder, then (i) upon a sale of such shares, any amount
realized in excess of the exercise price of the incentive stock option will
be taxed to such option holder as a long-term capital gain and any loss
sustained will be a long-term capital loss and (ii) no deduction will be
allowed to Bancorp. However, if shares acquired upon the exercise of an
incentive stock option are disposed of prior to the expiration of either
holding period described above, generally (i) the option holder will realize
ordinary income in the year of disposition in an amount equal to the excess
(if any) of the fair market value of the shares at exercise (or, if less, the
amount realized on the disposition of the shares) over the exercise price
thereof, and (ii) Bancorp will be entitled to deduct such amount. Any
additional gain or loss recognized by the option holder will be taxed as a
short-term or long-term capital gain or loss, as the case may be, and will
not result in any deduction by Bancorp. If an incentive stock option is
exercised at a time when it no longer qualifies as an incentive stock option,
the stock option will have the same tax consequences as a nonqualified stock
option.
STOCK APPRECIATION RIGHTS. No income will be realized by a recipient in
connection with the grant of any stock appreciation right. The recipient
must include in ordinary income the amount of cash received upon the exercise
of a stock appreciation right. If the recipient receives shares of Common
Stock upon the exercise of a stock appreciation right, the recipient will
incur taxable income to the extent of the aggregate amount of appreciation in
the value of the underlying shares of Common Stock at the time of exercise
over the exercise price. Bancorp will be entitled to a deduction equal to
the amount included in such participant's income by reason of the exercise of
any stock appreciation right.
VOTE REQUIRED
Approval of these amendments to the 1995 Plan requires the affirmative
vote of the holders of a majority of the outstanding shares of Bancorp's
Common Stock present or represented at the Annual Meeting and entitled to
vote on the proposal. Abstentions and broker non-votes will not be counted
as votes cast either for or against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THESE AMENDMENTS TO THE 1995 PLAN.
INFORMATION CONCERNING INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP has been engaged to audit the consolidated financial statements of
Bancorp for the past eight years. Management intends to recommend that KPMG LLP
be engaged to perform the independent audit of Bancorp's consolidated financial
statements for the year ending December 31, 1999, and it is anticipated that
such recommendation will be followed by Bancorp's Board of Directors.
Representatives of KPMG LLP will be present at the Annual Meeting, will
have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
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SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposals by shareholders intended to be presented at Bancorp's 2000
Annual Meeting of shareholders must be received by Bancorp at its principal
executive offices by November 17, 1999, to be included in Bancorp's Proxy
Statement and form of proxy for the 2000 Annual Meeting. The Board of
Directors will decide, subject to the rules of the Securities and Exchange
Commission, whether such proposals are appropriate for inclusion in the proxy
statement and form of proxy.
In addition, Bancorp's Bylaws impose certain advance notice requirements
on a shareholder nominating a director or submitting a proposal to an Annual
Meeting. Such notice must be submitted to the secretary of Bancorp no
earlier than 90, nor later than 60, days before an Annual Meeting, and must
contain the information prescribed by the Bylaws, copies of which are
available from the secretary. These requirements apply even if the
shareholder does not desire to have his or her nomination or proposal
included in Bancorp's proxy statement.
OTHER MATTERS
The officers and directors of Bancorp do not know of any matters to be
presented for shareholder approval at the Annual Meeting other than those
described in this Proxy Statement. If any other matters should come before the
Annual Meeting, the Board of Directors intends that the persons named in the
enclosed form of proxy, or their substitutes, will vote such proxy in accordance
with their best judgment on such matters.
By Order Of The Board Of Directors
/s/ David H. Brooks
David H. Brooks
Chairman and Chief Executive Officer
S.Y. Bancorp, Inc.
Louisville, Kentucky
March 17, 1999
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/X/ PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE S.Y. BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 20, 1999
This undersigned hereby appoints David H. Brooks and David P. Heintzman,
or either of them, attorneys with power of substitution and revocation to
each, to vote any and all shares of Common Stock of S.Y. Bancorp, Inc.
("Bancorp") held of record by the undersigned, in the name and as the proxy
of the undersigned, at the Annual Meeting of shareholders of Bancorp (the
"Annual Meeting") to be held at Stock Yards Bank & Trust Company's Exchange
Building dining room, 1048 East Main Street, Louisville, Kentucky, 40206 on
April 20, 1999 at 10:00 a.m., Eastern Time, or any adjournment thereof,
hereby revoking any prior proxies to vote said stock, upon the following
proposals more fully described in the Notice of and Proxy statement for the
meeting (receipt of which is hereby acknowledged):
Please be sure to sign and date -------------------------
this Proxy in the box below |Date |
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| |
| |
- ---- Shareholder sign above -------- Co-holder (if any) sign above ------------
1. A proposal to approve the action of the Board of Directors fixing the
number of directors at fifteen (15) and electing at the Annual Meeting four
(4) directors.
For Against Abstain
/ / / / / /
2. ELECTION OF DIRECTORS. To elect four (4) nominees as directors listed below
(except as marked to the contrary below).
For Against Abstain
/ / / / / /
Nominees are:
CHARLES R. EDINGER, III, DAVID P. HEINTZMAN, NORMAN TASMAN AND KATHY C.
THOMPSON
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE MARK
"EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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For Against Abstain
3. APPROVAL OF AMENDMENTS TO 1995 STOCK INCENTIVE PLAN. / / / / / /
To approve proposed amendments to the 1995 Stock Incentive Plan to reserve
an additional 400,000 shares of Common Stock for issuance under the Plan
and to change certain provisions of the Plan relating to change in control.
4. OTHER BUSINESS. To consider and act upon such other matters as may
properly be brought before the Annual Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSALS.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
+ +
DETACHED ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
S.Y. BANCORP, INC.
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THIS PROXY, PROPERLY SIGNED AND DATED, WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED
BY THOSE NAMED IN THE PROXY IN THEIR BEST JUDGMENT, AT THE PRESENT TIME. THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
Should the above signed be present and elect to vote at the Annual Meeting
of Shareholders or at any adjournment thereof and after notification to the
Secretary of the Corporation at the Meeting of the shareholder's decision to
terminate this proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect.
The above signed acknowledges receipt from the Corporation, prior to the
execution of this proxy, of the Notice of the Annual Meeting of Shareholders,
a proxy statement for the Annual Meeting of Shareholders, and an Annual
Report to Shareholders.
Please sign exactly as your name appears on this proxy card. When signing
as attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, only one signature is required but
each holder should sign, if possible.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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