(Peoples Bancoro logo)
PEOPLES BANCORP
212 West Seventh Street o Auburn, Indiana 46706-1723
Phone: (219)925-2500 o Fax: (219)925-1733
December 11, 1997
Dear Stockholder,
You are cordially invited to attend the Annual Meeting of Stockholders of
Peoples Bancorp, the holding company for Peoples Federal Savings Bank of DeKalb
County. The meeting will be held at the Greenhurst Country Club, located at 1740
North Main Street, Auburn, Indiana 46706, on Wednesday, January 14, 1998, at
2:00 p.m. local time.
As described in the accompanying materials, the stockholders are being asked at
the annual meeting to elect two Directors and approve the appointment of the
Company's independent auditors. During the meeting, members of the Company's
management will also report on operations and other matters affecting the
Company and will be available to respond to stockholders' questions.
Your vote is very important regardless of the number of shares you own. On
behalf of the Board of Directors, I urge you to mark, sign, and date your proxy
card today and return it in the envelope provided, even if you plan to attend
the Annual Meeting. This will not prevent you from voting in person, but will
ensure that your vote is counted if you are unable to attend.
Your continued support of and interest in Peoples Bancorp is sincerely
appreciated.
Sincerely,
Roger J. Wertenberger
Chairman of the Board
<PAGE>
(Peoples Bancorp logo)
PEOPLES BANCORP
212 West 7th Street
Auburn, Indiana 46706
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on January 14, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of the stockholders of
Peoples Bancorp (the "Company"), the holding company for Peoples Federal Savings
Bank of DeKalb County (the "Bank"), will be held at the Greenhurst Country Club,
1740 North Main Street, Auburn, Indiana, on Wednesday, January 14, 1998, at 2:00
p.m., local time, for the following purposes:
1. To elect two directors.
2. To approve the appointment of Geo. S. Olive & Co. LLC, independent
certified public accountants, as the auditors of the Company for the
fiscal year ending September 30, 1998.
3. To transact such other business as may properly come before the annual
meeting or any adjournment thereof.
The Board of Directors has selected November 30, 1997, as the record
date for the annual meeting. Only those stockholders of the Company of record at
the close of business on that date will be entitled to notice of and to vote at
the annual meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Carole J. Leins
Corporate Secretary
Auburn, Indiana
December 11, 1997
<PAGE>
PEOPLES BANCORP
212 West Seventh Street
Auburn, Indiana 46706
Annual Meeting of Stockholders
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Peoples Bancorp (the "Company"), the
holding company for Peoples Federal Savings Bank of DeKalb County (the "Bank"),
for use at the annual meeting of the stockholders of the Company to be held on
Wednesday, January 14, 1998, and at any adjournments thereof. The Annual Report
to Stockholders for the fiscal year ended September 30, 1997, and a form of
proxy to be voted at the meeting are being furnished to stockholders with this
Proxy Statement. The approximate date of mailing of this proxy statement is
December 11, 1997.
The close of business on November 30, 1997, has been selected as the
record date for the determination of stockholders entitled to notice of and to
vote at the annual meeting. On that date, 3,391,953 shares of the Company's
Common Stock, par value $1.00 per share, were outstanding. Stockholders will be
entitled to one vote for each share of the Company's Common Stock held by them
of record at the close of business on the record date on any matter that may be
presented for consideration and action by the stockholders.
A plurality of the votes cast by stockholders in person or by proxy at the
annual meeting will be necessary for approval of Proposal 1 described herein. A
majority of the votes cast by stockholders in person or by proxy at the annual
meeting will be necessary for approval of Proposal 2 described herein.
All valid proxies received in response to this solicitation will be voted
in accordance with the instructions indicated thereon by the stockholders giving
such proxies. If no instructions are given, such proxies will be voted in favor
of the election of the directors named in this proxy statement and in favor of
Proposal 2. Abstentions and broker non-votes (shares as to which a broker
indicates that it does not have authority to vote) are counted for the purpose
of determining the presence of a quorum for the transaction of business at the
annual meeting. Abstentions and broker non-votes will have no effect on the
outcome of the proposals presented herein, since such actions do not represent
votes cast by stockholders.
The Board of Directors does not know of any business, other than that
described herein, to be presented for action at the annual meeting. However, if
any other business is properly presented before the annual meeting and may
properly be voted upon, the proxies solicited hereby will be voted on such
matters in accordance with the best judgment of the proxy holders named therein.
Any stockholder has the power to revoke his proxy at any time before it is voted
at the annual meeting by giving written notice of such revocation (including the
filing of a duly executed proxy bearing a later date) to Carole J. Leins, the
Secretary of Peoples Bancorp, 212 West 7th Street, Auburn, Indiana 46706, or
upon request if the stockholder is present at the annual meeting and chooses to
vote in person.
PROPOSAL 1
ELECTION OF DIRECTORS
Two directors will be elected at the meeting to serve for a three-year
period. Unless authority is withheld, all proxies received in response to this
solicitation will be voted for the election of the nominees listed below. Each
nominee has indicated a willingness to serve if elected. However, if any nominee
becomes unable to serve, the proxies received in response to this solicitation
will be voted for a replacement nominee selected in accordance with the best
judgment of the proxy holders named therein.
The Board of Directors unanimously recommends that stockholders vote "FOR"
each of the named nominees to the Company's Board of Directors.
The following table lists the directors and their terms for both the Bank
and the Company. The table also sets forth the number of shares of the Company's
Common Stock beneficially owned by the directors of the Company and by the
directors and executive officers of the Company as a group as of November 30,
1997.
NOMINEES FOR ELECTION AS DIRECTORS
Shares of
Common
Stock
Director Present Beneficially Percent
Name Position Since Term Expires Owned of class(1)
NOMINEES FOR THREE YEAR TERM:
Bruce S. Holwerda Director - - 1,000(2) .04%
John C. Harvey Director 1990 1998 32,342(3) 1.43
DIRECTORS CONTINUING IN OFFICE:
Douglas D. Marsh Director 1990 2000 17,000(4) .75
Lawrence R. Bowmar Director 1990* 2000 12,917(5) .57
Maurice F. Winkler III Director 1993 2000 35,137(6) 1.54
and President
Robert D. Ball Director 1990 1999 13,200(7) .58
John C. Thrapp Director 1990 1999 31,868(8) 1.41
Roger J. Wertenberger C.E.O. an 1990 1999 90,128(9) 3.96
Chairman
of the Bo
All executive officers and directors of the Company and Bank as a group (13
persons) 295,154(10) 13.05% *Mr. Bowmar retired from the Board in July, 1993
after having served as a director of the Company since 1990. He was reelected to
the Board in 1994.
1. Computed based upon a total of 2,261,324 issued and outstanding shares of
Common Stock as of September 30, 1997. The information presented does not
include the three for two stock split which was effective November 24,
1997.
2. All of the shares owned by Mr. Holwerda are owned jointly with Mr.
Holwerda's wife with shared voting and investment power.
3. Of the shares owned by Dr. Harvey, 29,882 shares are held by Dr. Harvey
with sole voting and investment power and 2,460 shares are held by Dr.
Harvey's wife with sole voting and investment power.
4. Of the shares owned by Mr. Marsh, 11,000 shares are held by Mr. Marsh with
sole voting and investment power and 6,000 shares are held by Mr. Marsh's
wife with sole voting and investment power.
5. All of the shares owned by Mr. Bowmar are held with sole voting and
investment power.
6. Of the shares owned by Mr. Winkler, 14,600 are held by Mr. Winkler with
sole voting and investment power, 17,002 shares are held by Mr. Winkler's
wife with sole voting and investment power, 1,841 shares are held in the
ESOP for the benefit of Mr. Winkler, and 1,694 shares are controlled by Mr.
Winkler as Trustee under a Trust for the benefit of his children, for which
he has sole voting and investment power.
7. Of the shares owned by Mr. Buttermore, 15,006 shares are held by Mr.
Buttermore's wife with sole voting and investment power, and 15,006 shares
are held by Mr. Buttermore with sole voting and investment power.
8. All of the shares owned by Mr.Ball are held with sole voting and investment
power.
9. Of the shares owned by Mr. Thrapp, 21,730 shares are held by Mr. Thrapp
with sole voting and investment power, 325 shares are held in the ESOP for
the benefit of Mr. Thrapp, and 10,567 are held by Mr. Thrapp's wife with
sole voting and investment power.
10. Of the shares owned by Mr. Wertenberger, 51,772 shares are held by Mr.
Wertenberger with sole voting and investment power, 3,889 shares are held
in the ESOP for the benefit of Mr. Wertenberger, 32,000 shares are held by
Mr. Wertenberger's wife with sole voting and investment power, and 2,000
shares are held jointly by Mr.Wertenberger's wife and mother-in-law with
shared voting and investment power.
11. No options are exercisable within 60 days to purchase shares.
The business experience during the past five years of each of the directors is
as follows:
Mr. Wertenberger, 65, has served as a director of the Bank since joining
the Bank in 1954. Mr. Wertenberger became President of the Bank in January 1964
and Chairman of the Board in January 1979. Mr. Wertenberger serves as a director
and CEO of Peoples Financial Services, Inc., the Bank's service corporation
subsidiary ("Peoples Financial"). Mr. Wertenberger became President, Director,
and Chairman of the Board of Peoples Bancorp upon its inception in 1990.
Effective October 1, 1996, Mr. Wertenberger relinquished the title of president
for Peoples Bancorp, Peoples Federal Savings Bank, and Peoples Financial
Services Inc. and remained CEO for those organizations.
Mr. Ball, 71, has served as a director of the Bank since 1982. From
February 1948 to December 1983, Mr. Ball was the president of Ball Brass and
Aluminum Foundry, Inc. in Auburn, Indiana. He is currently retired.
Mr. Bowmar, 69, has served as a director of the Bank from 1974 to 1993 and
was the Bank's Vice President-Consumer Loans from 1986 until his retirement in
1993. In 1993 Mr. Bowmar resigned from the Board of Directors to fulfill an
assignment with the Peace Corps in Romania. Mr. Bowmar was reelected to the
Board in 1994. Mr. Bowmar is currently retired.
Mr. Holwerda, 49, has been nominated by the Board of Directors to fill the
vacancy created by the retirement of Mr. Buttermore. Mr. Holwerda is co-owner of
Ambassador Steel Corporation Auburn, Indiana, and serves as Vice President and
Chief Operating Officer, positions he has held since 1990. Mr. Holwerda has
worked at Ambassador Steel in various capacities since 1979.
Dr. Harvey, 66, has served as a director of the Bank since 1979. He is a
self-employed physician engaged in private practice in Auburn, Indiana. Dr.
Harvey also serves as a director of Peoples Financial.
Mr. Thrapp, 63, served as a director and officer of First Federal Savings
and Loan Association of Kendallville which merged with the Bank in August 1990.
Since 1962, Mr. Thrapp has been an attorney with the firm of Thrapp & Thrapp in
Kendallville, Indiana.
Mr. Marsh, 56, has served as a director of the Bank since 1982. He
currently serves as Chairman of the Board of Applied Innovations Inc. in
Chicago, Illinois, President of Bridgewater Golf Club in Auburn, Indiana,
Regional Director Excel Communications in Dallas, Texas, and Associate of Auburn
Reality in Auburn, Indiana. From 1991 to 1996, Mr. Marsh served as Vice
President of Sales for Superior Chaircraft, which is a division of JSJ Seating
Corporation, Belton, Texas. From 1976 to 1991, Mr. Marsh served as President and
Chief Executive Officer of Garrett Industries of Hudson, Indiana. Mr. Marsh also
serves as a director of Peoples Financial.
Mr. Winkler, 41, was appointed to the Board of Directors of the Bank and
Company in June 1993. Mr. Winkler joined the Bank as an accountant in 1979. From
1981 to 1985, he served as the Bank's Controller and in December 1985 became
Vice President-Operations. From May 1987 to September 1996, Mr. Winkler assumed
responsibilities as the Bank's Vice President-Finance. Mr. Winkler is the
son-in-law of Roger J. Wertenberger. Mr. Winkler also serves as Treasurer of
Peoples Bancorp and as a director of Peoples Financial. Mr. Winkler assumed the
duties of President and Chief Operating Officer of Peoples Bancorp, Peoples
Federal Savings Bank, and Peoples Financial Services, Inc. in October 1996.
Executive Officers of the Company Who Are Not Directors
Carole J. Leins, 59, joined the Bank in 1965 and became Corporate Secretary
of the Bank in January 1983. Mrs. Leins also serves as Vice President and
Treasurer of Peoples Financial and as Corporate Secretary of Peoples
Bancorp.Executive Officers of the Bank Who Are Not Directors
Jeffery L. "Jay" Grate, 34, joined the Bank as a loan counselor in April of
1988. He was promoted to Vice President in October of 1993 and subsequently to
Vice President of Lending Operations in July of 1997.
Herma F. Fields, 59, joined the Bank in 1967 and became Vice
President-Savings in January 1980.
Deborah K. Stanger, 41, is a Certified Public Accountant who joined the
Bank in 1989 as Controller and was promoted to Vice President in September 1995.
Effective October 1996, Mrs. Stanger assumed the duties of Vice President and
Chief Financial Officer for the Bank. Prior to her employment at the Bank, Mrs.
Stanger was employed by Marketing Impact as Controller from 1985 to 1989.
Donald E. Budd, 48, joined the Bank in June of 1997 as Vice President and
Trust Officer. During the period 1995 to 1997, Mr. Budd was Vice President and
Trust Officer for Citizens Trust in Kentucky. During the period of 1976 through
1994, Mr. Budd held various positions with Indiana National Bank.
The term of each executive officer of the Company or Bank is one year,
renewable annually by the Board of Directors.Corporate Governance and Other
Matters The Board of Directors of the Company held thirteen meetings during the
fiscal year ended September 30, 1997. All directors have attended at least 75%
of all Board of Directors' and committee meetings. Four regular members of the
Board of Directors are members of the Executive Committee, which is permitted to
act with any three members present in the absence of regularly scheduled Board
meetings. The Executive Committee exercises all the authority of the Board of
Directors to the extent permitted by the Company's Bylaws. The Executive
Committee consists of Roger J. Wertenberger, Chairman, Maurice F. Winkler, John
C. Thrapp, Douglas D. Marsh, and John C. Harvey. This Committee meets when
needed and held no meetings during the fiscal year ended September 30, 1997. The
Board of Directors has standing Budget, Audit, and Nominating Committees.
The Budget Committee establishes policies and objectives relating to
compensation, reviews compensation costs, and recommends salaries, bonuses, and
ESOP contributions for all employees and executive officers. The members of the
Budget Committee are: Robert D. Ball, Chairman, John C. Harvey, Douglas D.
Marsh, and John C. Thrapp. The Budget Committee held four meetings during the
fiscal year ended September 30, 1997. The Audit Committee reviews and approves
the scope of the audit procedures employed by the Company's independent auditors
and meets with the auditors to discuss the results of their examination of the
Company's financial statements. The Committee reviews the operations of the
Company's internal audits performed by management and the results of its audit
procedures. In addition, the Committee reviews all reports prepared in
connection with the Company's annual examinations by the regulatory authorities.
The members of the Audit Committee are: John C. Harvey, Chairman, Lawrence R.
Bowmar and Robert D. Ball. The Committee held one meeting during the fiscal year
ended September 30, 1997.
The Nominating Committee meets when director vacancies occur and
recommends individuals for nomination to the Company's Board of Directors and to
the governing bodies of its subsidiary corporations. The Nominating Committee
consists of the Board of Directors. The Committee held one meeting during the
fiscal year ended September 30, 1997. The Nominating Committee does not consider
nominees recommended by stockholders. Under the Company's Bylaws, however,
nominations may be made by stockholders and voted upon at an annual meeting if
made in writing and delivered to the Secretary of the Company at least 20 days
prior to the date of the annual meeting. No nominations for directors except
those made by the Nominating Committee or by the stockholders in accordance with
the Bylaws shall be voted upon at the annual meeting.
Securities Ownership of Certain Beneficial Owners
There are no persons known to the Company who own beneficially more than
5% of the Company's common stock as of November 30, 1997.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of equity securities of the Company. Officers,
directors and greater than 10% shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 30, 1997, all
Section 16(a) filing requirements applicable to the Company's officers and
directors were complied with, subject to the following exceptions: Form 4 for
John C. Harvey reporting purchases for August 6, 1996, and May 30, 1997, were
filed late.
Transactions With Certain Related Persons
The Bank has followed the policy of offering loans to the Company's and
the Bank's directors, officers and employees for the financing of their
principal residences. These loans are made in the ordinary course of business on
substantially the same terms and collateral, including interest rates, as those
of comparable transactions prevailing at the time and do not involve more than
the normal risk of collectibility or present other unfavorable features. The
Bank grants consumer loans to directors, officers, and employees at rates and
terms applicable to its other customers.
The following table sets forth certain information with respect to loans
to directors and executive officers whose loans exceeded an aggregate of $60,000
during the past fiscal year.
<TABLE>
Highest Amount
Date of Amount Outstanding During Balance as of Interest
Name and Position Loan of Loan Fiscal 1997 Sept. 30, 1997 Rate Purpose
- ----------------- ---- ------- ----------- -------------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
John Thrapp, Director 10/14/86 $120,000 $80,091 64,511 6.125% 1st Mortgage
Roger J. Wertenberger,
Director, CEO, COB 12/24/96 75,000 75,000 66,101 7.250% 1st Mortgage
Donald E. Budd, VP 07/28/97 155,000 155,000 154,885 7.500% 1st Mortgage
Jeffery Grate, VP 04/09/94 110,400 55,509 54,671 6.750% 1st Mortgage
01/25/96 75,000 71,237 69,081 7.000% 1st Mortgage
05/01/97 23,000 22,978 22,659 10.500% 2nd Mortgage
John C. Harvey, Director 05/27/97 76,000 76,000 75,307 7.500% 1st Mortgage
Maurice Winkler, Director, 07/26/97 $150,000 $150,000 $148,833 7.500% 1st Mortgage
Pres.
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORSOF EXECUTIVE OFFICERS AND
DIRECTORS
Executive Compensation
Summary of Cash and Certain Other Compensation
The following table sets forth summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer. No other executive officers of the Company had an
annual salary and bonus that exceeded $100,000 during each of the last three
fiscal years.
Summary Compensation Table
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation(1) Compensation(2)
--------------------------- ---- ------ ----- ---------------- ---------------
Roger J. Wertenberger 1997 $121,000 $6,050 $10,800 $6,050
Chairman and
Chief Executive Officer 1996 118,000 5,900 10,800 5,900
1995 114,400 8,250 9,600 5,500
(1) The amount shown represents director's fees. Does not include personal
use of an automobile provided by the Bank, which use was valued at
approximately $2,000 for each of the periods indicated.
(2) The amount shown represents that portion of the Bank's ESOP
contribution allocated to the account of Mr. Wertenberger.
Option Exercises and Holdings
On May 19, 1987, the Bank's Board of Directors adopted a Stock Option
Plan (the "Option Plan") which permits the granting of incentive and
non-qualified stock options. Stockholders approved the Option Plan on January
13, 1988. In December, 1991, the Bank's Board of Directors authorized the
amendment and restatement of the Option Plan to provide for the issuance of the
Company's Common Stock, rather than the Bank's stock, upon the exercise of
options, and the Company's Board of Directors consented to this action. Further,
in December 1991, the Bank's Board of Directors adopted amendments to the Option
Plan, which did not require stockholder approval, to conform the Option Plan to
the new rules of the Securities and Exchange Commission under Section 16 of the
Securities Exchange Act of 1934.
Under the Option Plan, options for a maximum of 200,000 shares, after
adjustment for the 1993 stock split, and subject to future adjustments, may be
granted pursuant to the Option Plan. Under the Option Plan, the Board of
Directors, in its sole discretion, may grant options to employees, officers and
consultants who are common law employees of the Company or the Bank at a price
not less than 100% of the fair market value of the Company's Common Stock on the
date of the grant. Options expire on such dates as the Board of Directors or
Stock Option Committee may determine, but not later than 10 years from the date
of grant. No options were granted to any executive officers of the Bank or the
Company during fiscal year 1997. As of September 30, 1997, no options were
outstanding.
During fiscal 1997, the Company's Chief Executive Officer, Roger J.
Wertenberger, did not own or exercise any stock options of the Company.
Defined Benefit Pension Plan
The Bank maintains a defined benefit pension plan (the "Retirement
Plan") for all eligible employees (the "Participants"). In order to be eligible
to participate, an employee must attain age 21 and complete 1,000 hours of
credited service during an eligibility computation period. The Retirement Plan
is funded solely by Bank contributions and generally provides for vested
benefits to Participants with 100% vesting after five years of credited service.
Total Retirement Plan expenses for the fiscal year ended September 30, 1997,
were $10,698. At September 30, 1997, the Retirement Plan was fully funded.
A Participant's benefit at normal retirement age (65) is dependent upon
his total years of credited service and his average annual salary for the five
consecutive years of highest salary during credited service. However, the
benefit so determined is subject to proportionate reduction for credited service
of fewer than 30 years at normal retirement age, and is also subject to
actuarial reduction for commencement of benefit payment prior to normal
retirement age. The Retirement Plan also provides a death benefit payment in the
event of death prior to retirement.
The table below shows estimated annual benefits (computed on the normal
life annuity basis) payable under the Company's Retirement Plan to any employee
upon retirement in 1997 at age 65 after selected periods of service. There is no
benefit reduction for Social Security or other offset amounts. As of September
30, 1997, Roger J. Wertenberger had 43 years of credited service.
Remuneration Years of Service
-----------------------------------------------------------------------
10 Years 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years
-------- -------- -------- -------- -------- -------- -------- --------
50,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
75,000 15,000 22,500 30,000 37,500 45,000 52,500 60,000 67,500
100,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
150,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000 135,000
200,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000
250,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 225,000
Employee Stock Ownership Plan
On November 15, 1988, the Board of Directors of the Bank adopted an
Employee Stock Ownership Plan (the "ESOP") which was approved by the
stockholders on January 11, 1989. The ESOP invests primarily in the common stock
of the Company ("Peoples Stock") which, along with other ESOP assets, is held in
trust by Norwest Bank, Fort Wayne, Indiana, as trustee pursuant to a trust
agreement. The trustee is authorized to invest in and hold up to 100% of the
trust in Peoples Stock but is not required to hold a minimum percentage of ESOP
assets in Peoples Stock. The trustee is also authorized to invest in other
securities, such as certificates of deposit, equity stocks, bonds and other
investments.
From time to time, the ESOP purchases shares of Peoples Stock in open
market transactions. These purchases are made at prices which do not exceed the
fair market value of Peoples Stock. To purchase such Stock, the ESOP is
authorized to borrow funds from an unrelated third-party lender secured by the
purchased shares. Any such loan is to be repaid with funds from the Bank's
contributions to the ESOP and earnings on ESOP assets. The ESOP has not borrowed
funds as of September 30, 1997. Contributions from the Bank to the ESOP are made
out of net operating profits in amounts established by the Board of Directors in
its sole discretion. Such contributions may be made either in cash or in shares
of Peoples Stock.
The ESOP is administered by a committee appointed by the Board of Directors
(the "Committee"). The Committee directs the trustee as to investments that may
be made by the ESOP and loans that may be incurred for the purchase of shares of
Peoples Stock. The members of the Committee are Robert D. Ball, John C. Thrapp,
Douglas D. Marsh and Dr. John C. Harvey.
The ESOP maintains an account for each participant in the ESOP which is
credited annually with his or her allocable shares of Peoples Stock purchased by
the trust, any forfeitures of Peoples Stock (i.e., that portion of a
participant's account that does not vest in and is not paid to a participant who
resigns or is dismissed from the employ of the Bank) and any stock dividends on
Peoples Stock allocated to the participant's account. The amount credited to
each participant's account equals that proportion of the Company's total
contribution plus all forfeitures that such participant's annual compensation
bears to the total annual compensation of all participants for that year. All
participants must be employed on the last day of the plan year (September 30) to
be entitled to share in an allocation for that plan year. Any shares purchased
by the trust with borrowed funds are held in a suspense account and allocated
proportionately to participant accounts as payments of principal and interest
are made on the loan. With respect to shares of Peoples Stock allocated to a
participant's account, each participant is entitled to direct the trustee as to
the manner of voting such shares. If the Participant fails to so direct the
trustee, such unvoted shares will be voted by the trustee only upon instructions
from the Committee. Similarly, unallocated shares will be voted by the trustee
only upon instructions from the Committee. In either case, the voting of unvoted
or unallocated shares is in the Committee's sole discretion.
Any full-time employee of the Bank who has attained the age of 18 is
eligible to become a participant in the ESOP. Each participant becomes vested in
20% of his or her account balance after three years of service and becomes
vested in an additional 20% for each subsequent year of service until fully
vested after seven years of service. Distributions from the ESOP upon
retirement, disability, death or termination of employment may be in the form of
cash or Peoples Stock.
Adoption of the ESOP may be considered an anti-takeover device, since
the ESOP may become the owner of a sufficient percentage of the total
outstanding common stock of the Company so that the vote of the trustee (or of
plan participants) may serve as a defense in a hostile takeover.
As of September 30, 1997, the ESOP held 33,801 shares (1.49%) of the
Company's stock, all of which has been allocated to participant accounts. The
plan contributions charged to ESOP expense totaled $77,932 during the fiscal
year ended September 30, 1997. The ESOP also incurred expenses of $3,304 which,
under the terms of the ESOP, were paid by the Bank.
Insurance Plans
The Bank's officers and employees are provided with hospitalization,
major medical, life, accidental death and dismemberment insurance and long-term
disability insurance under group plans which are available generally and on the
same basis to all full-time employees.
Bonus Plan
The Bank has a bonus plan for all employees of the Bank. The plan does
not apply to employees of subsidiaries or affiliates of the Bank. Under the
plan, bonus money is made available to the extent of the net profits of the Bank
up to 10% of an employee's base annual salary as defined in the plan. The
determination of the amount of a bonus to be paid under the plan is made by the
Board of Directors in its sole discretion, after consideration and
recommendation by the Budget Committee, based on profitability of the Bank.
During the fiscal year ended September 30, 1997, bonuses under this
plan aggregating $80,425 were paid to employees of the Bank. Amounts allocated
under the bonus plan are included in the Summary Compensation Table.
Employment Agreement
On May 19, 1987, the Bank's Board of Directors approved an employment
agreement with Roger J. Wertenberger, President, Chief Executive Officer and
Chairman of the Board of Directors of the Bank. The agreement as subsequently
amended provides for a term of three years, renewable annually for the entire
term. Under this agreement, Mr. Wertenberger receives a base annual salary of
$90,000, subject to an annual cost of living increase. For fiscal year 1998, Mr.
Wertenberger's salary was set by the Board of Directors at $120,000. In
addition, Mr. Wertenberger is entitled to reimbursement for expenses incurred to
carry out his duties under the agreement and to participate in any bonus
programs, incentive compensation programs, profit sharing plans, retirement
plans, stock option plans and stock purchase plans, as may be in effect, as well
as such other fringe benefits as the Bank may make available to its executive
officers. Under the agreement, Mr. Wertenberger also has the use of a new
automobile and receives, at no cost (other than applicable taxes),
hospitalization, major medical, disability and group life insurance. If
disabled, Mr. Wertenberger would be compensated for the greater of the remaining
term of his agreement or two years.
Under the agreement, the Bank may terminate Mr. Wertenberger's
employment for "cause" (which includes incompetence, willful misconduct,
violation of law or a final cease and desist order or a material breach of the
agreement). Upon such termination, all obligations of the Bank under the
agreement will terminate, except for any vested rights of Mr. Wertenberger. The
Bank also would be able to terminate Mr. Wertenberger's employment without
cause, upon payment to him for a period of three years of the benefits that
would be payable to him in the event of a "change in control" (see below). If
Mr. Wertenberger is subject to supervisory suspension, the Bank's obligations
under the agreement would be suspended, although the Bank may pay upon his
reinstatement any amounts withheld during suspension; if he is subject to
supervisory removal, his agreement would terminate automatically, except for any
vested rights.
The agreement also provides that in the event of a "change in control"
of the Bank (defined generally as a substantial change in its board membership
or management, other than by the board's agreement or in the ordinary course of
business), Mr. Wertenberger will have the right to terminate his employment
during the next six months, upon written notice to the Bank. If Mr. Wertenberger
exercises this right, he will receive his base salary for three years, title to
his automobile, complete funding of any unfunded retirement benefits or the
equivalent thereto, complete and immediate vesting of all stock options (and
reimbursement of any adverse tax consequences resulting therefrom), a bonus of
1% of the Bank's pre-tax profits not to exceed 200% of his base salary, and
certain other benefits.
The agreement further provides that, in the event of a change in
control, any benefits payable to Mr. Wertenberger will be reduced so as not to
constitute "excess parachute payments" under Section 280G of the Internal
Revenue Code. That section would disallow a deduction to the corporation of such
payments and impose a 20% nondeductible excise tax on the recipient. Termination
benefits will trigger the unfavorable excess parachute payments rules if their
discounted present value equals or exceeds three times the recipient's average
annualized compensation from the Bank for the five taxable years ending before
the date of the change in control. If Mr. Wertenberger had exercised his
termination rights under the agreement at September 30, 1997, the discounted
present values of his parachute payments would have approximated $350,000 at
that date. Since a portion of these benefits would constitute excess parachute
payments, the payments would have been reduced to lower their discounted present
value to approximately $275,000. A potential acquirer of the Bank might
determine that a proposed acquisition is less attractive because of these
termination benefits. Director CompensationCompensation
Directors do not receive any fees for serving as directors of the
Company. Directors of the Bank currently receive $12,000 per year. For the
fiscal year ended September 30, 1997, directors' fees totaled $86,400. In
addition, Directors Emeritus of the Bank are paid for each meeting at a monthly
fee equal to the fee they received at the time of retirement from the Board. For
the fiscal year ended September 30, 1997, Director Emeritus fees totaled
$19,800.
Report of the Budget Committee
The Budget Committee of the Bank establishes policies and objectives
relating to compensation, reviews compensation costs, and recommends salaries
and bonuses for all employees and executive officers. All decisions of the
Budget Committee are subject to approval by the full Board of Directors. In
fiscal 1997, the Board of Directors made no modifications to the Budget
Committee's compensation recommendations. In recommending the salaries of the
executive officers, the Budget Committee has access to and reviews compensation
data for comparable financial institutions. The officers are also evaluated as
to their performance during the year and compared to the Bank's performance.
In making recommendations with respect to executive compensation, the
Budget Committee attempts to achieve the following objectives while furthering a
policy of cost containment by controlling expenses:
1. Provide compensation comparable to that which is offered by
other similarly situated financial institutions in order to
attract and retain talented executives who are critical to the
Company's success;
2. reward executive officers based upon their ability to achieve
both short- and long-term strategic goals and to enhance
shareholder value; and
3. align the interests of the executive officers with the
long-term interests of the stockholders by granting stock
options and making ESOP contributions.
At the present time, the Company's executive compensation program is
comprised of base salary, annual incentive bonuses and long-term incentive
bonuses in the form of ESOP contributions and stock options. Reasonable base
salaries are awarded based on salaries paid by comparable financial institutions
and individual performance. Annual incentive bonuses are tied to the Company's
net income performance for the current fiscal year. Both the ESOP and the Option
Plan have a direct relation to the long-term enhancement of shareholder value.
These plans are designed to motivate the employee to increase shareholder value.
For fiscal year 1997, the Budget Committee recommended, and the Board
of Directors approved, a salary of $121,000 and a bonus of $6,050 for Mr.
Wertenberger. In addition, Mr. Wertenberger received long-term compensation in
the form of a $6,050 allocation to his account under the ESOP. In recommending
the salary and bonus amounts for Mr. Wertenberger, the Budget Committee
considered the Bank's financial performance, Mr. Wertenberger's operational
performance, and levels of executive compensation at comparable financial
institutions. Although Mr. Wertenberger's compensation is below the median level
for the Bank's peer group, the Budget Committee believes that the compensation
awarded is consistent with the Bank's efforts to reward performance and control
expenses.
Dated: September 16, 1997 BUDGET COMMITTEE
Robert D. Ball Douglas D. Marsh
Jack L. Buttermore John C. Thrapp
John C. Harvey
Compensation Committee Interlocks and Insider ParticipationCommittee Interlocks
and Insider Participation
No person who served as a member of the Budget Committee during the
1997 fiscal year has ever been an officer or employee of the Company or any of
its subsidiaries, except for John Thrapp, who serves as Asst. Trust Officer of
the Bank. During the 1997 fiscal year, no executive officer of the Company or
the Bank served as a director or member of the compensation committee of another
entity, one of whose directors or executive officers served as a director or
member of the Budget Committee of the Company or the Bank.
Performance GraphGraph
The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return on the Common Stock with (i) the
cumulative total return of the NASDAQ market index and (ii) the cumulative total
return of the SNL Midwest Thrift Index comprised of all mid-west publicly traded
savings and loan associations and savings and loan holding companies over the
periods indicated. The graph assumes an initial investment of $100 and
reinvestment of dividends. The graph is not necessarily indicative of future
price performance.
COMPARISON OF THE FIVE YEAR CUMULATIVE TOTAL RETURN AMONG PEOPLES BANCORP,
THE NASDAQ MARKET INDEX, AND THE SNL MIDWEST THRIFT INDEX
The graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
PROPOSAL 2
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Geo. S. Olive & Co. LLC,
independent certified public accountants, to audit the consolidated financial
statements of the Company for the fiscal year ending September 30, 1998. A
proposal to approve the appointment of Geo. S. Olive & Co. LLC, will be
presented to the Company's stockholders at the annual meeting. Representatives
of Geo. S. Olive & Co. LLC, are expected to be present at the annual meeting and
to be available to respond to appropriate questions. The representatives will
also be provided an opportunity to make a statement, if they desire.
The Board of Directors unanimously recommends that stockholders vote "FOR"
the appointment of Geo. S. Olive & Co.
COSTS OF SOLICITATION
The costs of this proxy solicitation will be paid by the Company. To the
extent necessary, proxies may be solicited by personnel of the Company in person
or by telephone, telegram or other means. Company personnel will not receive any
additional compensation for solicitation of proxies unless such solicitation
requires such persons to work overtime. If deemed necessary, the Company may
retain a proxy solicitation firm. The Company will request record holders of
shares beneficially owned by others to forward this proxy statement and related
materials to the beneficial owners of such shares and will reimburse such record
holders for their reasonable expenses incurred therewith.
FORM 10-K ANNUAL REPORT
THE COMPANY WILL PROVIDE (WITHOUT CHARGE) TO ANY STOCKHOLDER SOLICITED
HEREBY A COPY OF ITS 1997 ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER. REQUESTS
SHOULD BE DIRECTED TO THE COMPANY'S SECRETARY, 212 WEST 7TH STREET, AUBURN,
INDIANA 46706.
OTHER MATTERS
The management does not know of any other matters to be presented for
action by the stockholders at the annual meeting. If, however, any other matters
not now known are properly brought before the meeting, the persons named in the
accompanying proxy will vote such proxy in accordance with their judgment on
such matters.
STOCKHOLDERS' PROPOSALS
All proposals of stockholders to be presented for consideration at the
next annual meeting and included in the proxy statement must be received by the
Company no later than August 13, 1998.
December 11, 1997 (Peoples Bancorp logo) PEOPLES BANCORP
