<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
Covest Bancshares, 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>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
------------------------------------
TO THE HOLDERS OF COMMON STOCK OF COVEST BANCSHARES, INC.
Notice is hereby given that the Annual Meeting of Stockholders of CoVest
Bancshares, Inc. (the "Company") will be held at the Casa Royale Banquets
located at 783 Lee Street, Des Plaines, Illinois, on Tuesday, April 27, 1999 at
10:00 a.m., for the purpose of considering and voting upon the following
matters:
1. the election of two (2) Class I directors of the Company.
2. the ratification of the appointment of Crowe, Chizek and Company LLP
as auditors for the Company for the fiscal year ending December 31,
1999.
3. the transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors is not aware of any other business to come before
the meeting. Stockholders of record at the close of business on March 5, 1999,
are the stockholders entitled to vote at the meeting and any adjournments or
postponements thereof.
By Order of the Board of Directors
/s/ Paul A. Larsen
Paul A. Larsen
CORPORATE SECRETARY
Des Plaines, Illinois
March 17, 1999
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of CoVest Bancshares, Inc. (the "Company")
of proxies to be used at the meeting which will be held at the Casa Royale
Banquets, located at 783 Lee Street, Des Plaines, Illinois, on Tuesday,
April 27, 1999, at 10:00 a.m., and all adjournments or postponements of the
meeting. The Proxy Statement and the accompanying Notice of Meeting and Proxy
are first being mailed to holders of shares of common stock, par value $.01
per share, of the Company (the "Common Stock") on or about March 17, 1999.
Certain of the information in the Proxy Statement relates to CoVest Banc,
N.A., Des Plaines, Illinois (the "Bank"), a wholly owned subsidiary of the
Company.
VOTING RIGHTS AND PROXY INFORMATION
All shares of Common Stock represented at the meeting by properly executed
proxies received prior to or at the meeting, and not revoked, will be voted at
the meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the nominees and for
adoption of the proposals set forth in this Proxy Statement. A majority of the
shares of the Common Stock, present in person or represented by proxy, shall
constitute a quorum for purposes of the meeting. Abstentions and broker
non-votes will be counted for purposes of determining a quorum.
Only holders of record of the Common Stock at the close of business on
March 5, 1999, will be entitled to vote at the meeting and at all
adjournments or postponements of the meeting. On March 5, 1999, the Company
had 4,210,615 shares of Common Stock outstanding. Directors are elected by a
plurality of the votes cast in person or by proxy with a quorum present. For
all other matters, the affirmative vote of a majority of the votes cast in
person or by proxy with a quorum present shall constitute stockholder
approval. Abstentions and broker "non-votes" will be considered in
determining the presence of a quorum but will not affect the vote required
for approval of the proposal or the election of directors.
The Company does not know of any matters, other than as described in the
Notice of Meeting, that are to come before the meeting. If any other matters
are properly presented at the meeting for action, the persons named in the
enclosed form of proxy and acting thereunder will have the discretion to vote on
such matters in accordance with their best judgment.
The Board of Directors would like to have all stockholders represented at
the meeting. Whether or not you plan to attend, please complete, sign and date
the enclosed proxy and return it in the accompanying postpaid return envelope as
promptly as possible. A proxy given pursuant to this solicitation may be
revoked at any time before it is voted. Proxies may be revoked by: (i) duly
executing and delivering to the Secretary of the Company a later dated proxy
relating to the same shares prior to the exercise of such proxy, (ii) filing
with the Secretary of the Company at or before the meeting a written notice of
revocation bearing a later date than the proxy, or (iii) attending the meeting
and voting in person (although attendance at the meeting will not in and of
itself constitute revocation of a proxy). Any written notice revoking a proxy
should be delivered to Mr. Paul A. Larsen, Corporate Secretary, at 749 Lee
Street, Des Plaines, Illinois, 60016.
3
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting of the Stockholders to be held on Tuesday, April 27,
1999, the stockholders will be entitled to elect two (2) Class I directors for a
term expiring in 2002. The directors of the Company are divided into three
classes having staggered terms of three years. Both of the nominees for
election as Class I directors are incumbent directors. The Company has no
knowledge that any of the nominees will refuse or be unable to serve, but if any
of the nominees becomes unavailable for election, the holders of the proxies
reserve the right to substitute another person of their choice as a nominee when
voting at the meeting.
Set forth below is information concerning the nominees for election and for
the other directors whose terms of office will continue after the meeting,
including the age, year first elected a director and business experience of each
during the previous five years. The nominees, if elected at the Annual Meeting
of Stockholders, will serve as Class I directors for three year terms expiring
in 2002. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF
THE NOMINEES FOR DIRECTOR.
NOMINEES
<TABLE>
<CAPTION>
DIRECTOR OF THE
PRESENT POSITION WITH THE COMPANY OR THE
NAME AND AGE COMPANY AND THE BANK BANK SINCE
- ------------ ------------------------- ---------------
<S> <C> <C>
CLASS I
(Term Expires 2002)
George T. Drost Director of the Company and of the 1987
(Age 52) Bank
David M. Miller Director of the Company and of the 1996
(Age 49) Bank
CONTINUING DIRECTORS
CLASS II
(Term Expires 2000)
John A. Flink Director of the Company and of the 1984
(Age 71) Bank
James L. Roberts President, Chief Executive Officer 1999
(Age 56) and Director of the Company and of
the Bank
Frank A. Svoboda, Jr. Director of the Company and Chairman 1973
(Age 65) of the Board of the Bank
4
<PAGE>
CLASS III
(Term Expires 2001)
Gerald T. Niedert Vice Chairman and Director of the 1987
(Age 53) Company and of the Bank
Thomas TenHoeve Director of the Company and of the 1987
(Age 63) Bank
David B. Speer Director of the Company and of the 1997
(Age 47) Bank
</TABLE>
All of the Company's directors will hold office for the terms indicated, or
until their respective successors are duly elected and qualified. There are no
arrangements or understandings between the Company and any other person pursuant
to which any of the Company's directors have been selected for their respective
positions.
BIOGRAPHICAL DATA
The principal occupation of each director is set forth below. Each
director has held his present position for at least five years unless otherwise
indicated.
GEORGE T. DROST is a partner in the law firm of Drost & Kivlahan, Ltd.,
Arlington Heights. Mr. Drost is also an Adjunct Professor at the John Marshall
Law School in Chicago, Illinois, and currently serves as a Commissioner on the
Village of Arlington Heights, Illinois, Plan Commission. He also serves as a
director of the Advocate Charitable Foundation, which is an affiliate of
Advocate Health Care, Oak Brook, Illinois, Uhlich Children's Home, Chicago,
Illinois, and the Lutheran Foundation, an affiliate of the Lutheran Home and
Services for the Aged, Arlington Heights, Illinois.
JOHN A. FLINK retired in 1990 as General Manager, Band Tools, of the DoALL
Company, an international machine tool distributor and industrial supplier
located in Des Plaines, Illinois, after serving in various marketing and
advertising capacities there since 1963.
DAVID M. MILLER currently serves as Senior Vice President/Professional
Services for Comdisco, Inc., a provider of technology solutions with offices in
Rosemont, Illinois. Mr. Miller joined that company in 1988 and has served as,
Vice President, Marketing Business System Manager and Capital Equipment Group
Director. Prior to joining Comdisco, Inc., he was Regional Financial Services
Manager for Storage Tek Corporation in the midwest region and a former Vice
President/Sales for Sanwa Business Credit.
GERALD T. NIEDERT is currently Vice President/Business Development of
Dedicated Transportation, Inc., a truck transportation company located in Elk
Grove Village, Illinois. From 1986 to 1991, Mr. Niedert was Vice
President/Sales with Leaseway Transportation Corp., a truck transportation
company headquartered in Cleveland, Ohio. Prior to 1986, Mr. Niedert was the
President of Niedert NationaLease, Inc. and Fleet Carriers, Inc.
JAMES L. ROBERTS was elected as the Company's President and Chief Executive
Officer on January 21, 1999. He served as President and CEO of Perpetual
Midwest Financial, Inc., of Cedar Rapids, Iowa, and its wholly owned subsidiary
Perpetual Savings Bank, FSB from 1993 to 1998. Prior to that he was Executive
Vice President and head of Corporate Finance for Kemper Securities, Inc. and its
predecessor firm, Blunt, Ellis & Loewi, Inc., from 1990 to 1993. From 1984 to
1990, Mr. Roberts served as President and CEO of First Bank Milwaukee. He was a
member of the Board of Directors of two United Way organizations, the
Metropolitan Milwaukee Chamber of Commerce, the Milwaukee Art Museum and St.
Luke's Hospital Foundation in Cedar Rapids, Iowa.
DAVID B. SPEER is a 20 year veteran of Illinois Tool Works, Inc., a
multinational manufacturer of industrial systems. In October, 1995, Mr. Speer
was elected Executive Vice President of its worldwide construction products and
finishing systems segments. He is a member of the American Marketing
Association and American Management Association.
FRANK A. SVOBODA, JR. is the Chairman of the Board of the Bank. Mr.
Svoboda was the owner of Svoboda's Mens Wear, Inc., a retail mens clothier
located in Des Plaines, Illinois until 1995.
THOMAS TENHOEVE, PH.D. retired in 1995 after having served for the previous
eleven years as President of Oakton Community College, a community college with
over 24,000 students on two campuses and 62 other locations located in the north
and northwest suburbs of Chicago.
5
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During 1998, the Board of Directors held 12 meetings. No director attended
fewer than 75% of the total number of meetings of the Board of Directors of the
Company held during 1998 and the total number of meetings held by all committees
of the Board on which any such director served during 1998. The Board of
Directors of the Company has standing audit/compliance, compensation and
nominating committees.
The Audit/Compliance Committee consists of Messrs. TenHoeve (Chair), Drost,
Miller, Neidert and Svoboda. The Audit/Compliance Committee reviews audit
reports and related matters to ensure effective compliance with regulations and
internal policies and procedures. This committee also approves the accounting
firm selected by management to perform the Company's and Bank's annual audit and
acts as the liaison between the auditors and the Board. Mr. Roberts serves EX
OFFICIO on this committee. During 1998, the Audit/Compliance Committee met four
times.
The Compensation Committee consists of Messrs. Drost (Chair), Flink,
Neidert and Svoboda. The Compensation Committee meets to review the
performance, salary and other compensation of the Chief Executive Officer and
recommends adjustments. During 1998, the Compensation Committee met two times.
The Nominating Committee is chaired by Mr. Svoboda and consists of all
members of the Board of Directors of the Company. This committee recommends to
the Board of Directors of the Company nominees for election as directors and for
nominees to fill any vacancies. Pursuant to the Company's Bylaws, this
committee will consider nominees recommended by stockholders provided any such
recommendation is made in writing and delivered to the Secretary of the Company
no later than 30 days prior to the date of the annual meeting at which directors
are to be elected and otherwise complies with the bylaws. During 1998, the
Nominating Committee met one time.
COMPENSATION OF DIRECTORS
Directors of the Company receive options to purchase 2,250 shares of Common
Stock on the first business day of each calendar year and are not paid a cash
fee for serving on the Company's Board or committees. The options have an
exercise price equal to the fair market value on the date of grant. During
1998, directors of the Bank received a fee of $3,600 per year, $1,100 for each
Bank Board meeting and $700 for each Executive Committee meeting attended
(except for the Chairman of the Board of the Bank, who receives an additional
$200 for each Board meeting attended). Directors may elect to defer all of
their fees. The Bank's non-employee directors also receive a $200 fee for each
committee meeting attended. The Company maintains a retirement plan for
directors which provides retirement benefits based upon the director's age at
retirement, the director's total number of years of service and average monthly
fees received during the last three years of service as a director. Retirement
benefits are payable upon retirement as defined under the plan.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock at March 5, 1999, by each
person known by the Company to be the beneficial owner of more than five percent
of the outstanding Common Stock, by each director or nominee, by each executive
officer named in the Summary Compensation Table, and by all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AND AMOUNT AND NATURE OF PERCENT
NUMBER OF PERSONS IN GROUP BENEFICIAL OWNERSHIP(1) OF CLASS
- -------------------------- ---------------------- --------
<S> <C> <C>
5% STOCKHOLDERS
CoVest Bancshares, Inc.
Employee Stock Ownership Plan ("ESOP")
749 Lee Street
Des Plaines, IL 60016 387,082(2) 9.2%
Brandes Investment Partners, Inc. ("Brandes")
12750 High Bluff Drive,
San Diego, CA 92130 331,045(3) 7.9%
Michael and Frances Halikias
15750 S. Harlem
Orland Park, IL 60462 317,250(5) 7.5%
Dimension Fund Advisors, Inc. ("Dimension")
1299 Ocean Avenue
Santa Monica, CA 90401 243,450(4) 5.8%
DIRECTORS
George T. Drost 79,818(6) 1.9%
John A. Flink 41,824(7) *
David M. Miller 11,271(8) *
Gerald T. Niedert 61,112(9) 1.4%
James L. Roberts 27,000(10) *
David B. Speer 4,912(11) *
Frank A. Svoboda, Jr. 99,878(12) 2.3%
Thomas TenHoeve 37,438(13) *
OTHER NAMED EXECUTIVE OFFICERS
Paul A. Larsen 44,936(16) 1.1%
Lawrence J. Schmidt 23,042(17) *
Joseph H. Tillotson 56,880(18) 1.3%
Larry G. Gillie 66,916(14) 1.6%
R. Kennedy Alger 28,658(15) *
All directors and executive officers
as a group (15 persons) 651,720(19) 14.4%
</TABLE>
- --------------------------------
* Less than one percent.
(1) The information contained in this column is based upon information
furnished to the Company by the persons named above and the members of the
designated group, except as set forth in the footnotes below. The nature of
beneficial ownership for shares shown in this column is sole voting and
investment power, except as set forth in the footnotes below. Inclusion of
shares shall not constitute an admission of beneficial ownership or voting and
investment power over included shares. Includes shares held directly, shares
allocated to the respective individual under the ESOP, shares obtainable within
the next 60 days pursuant to options granted under the Company's 1992 Stock
Option and Incentive Plan and the 1996 Stock Option Plan (collectively, the
"Stock Option Plans"), shares held in retirement accounts or in a fiduciary
capacity and shares held by certain family members, with respect to which shares
the listed individuals or group members may be deemed to have shared or sole
voting or investment power.
(2) James L. Roberts and Paul A. Larsen serve as co-trustees of the
ESOP, and are deemed to have shared voting and investment power over shares held
by the ESOP. Includes 288,363 shares held in the ESOP but allocated to
employees' accounts.
(3) As reported in a Schedule 13G filed under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), dated February 11, 1999, Brandes
reported sole voting and investment power over all such shares in the capacity
of investment adviser.
7
<PAGE>
(4) As reported in a Schedule 13G filed under the Exchange Act, dated
March 5, 1995. Mr. and Mrs. Halikias reported shared voting and investment
power over all such shares.
(5) As reported in a Schedule 13G filed under the Exchange Act, dated
February 11, 1999. Dimension reported sole voting and investment power over all
such shares.
(6) Includes 24,750 shares subject to options granted under the Stock
Option Plans, over which shares Mr. Drost has no voting and sole investment
power, 19,292 shares held by Mr. Drost's spouse, as trustee, over which Mr.
Drost has shared voting and no investment power, and 4,900 shares held by the
Drost & Kivlahan, Ltd. Profit Sharing Plan, over which Mr. Drost has shared
voting and investment power.
(7) Includes 6,750 shares subject to options granted under the Stock
Option Plans, over which shares Mr. Flink has no voting and sole investment
power, and 472 shares held by Mr. Flink's spouse, over which Mr. Flink has no
voting or investment power.
(8) Includes 4,500 shares subject to options granted under the Stock
Option Plans, over which Mr. Miller has no voting and sole investment power.
(9) Includes 26,485 shares subject to options granted under the Stock
Option Plans, over which shares Mr. Niedert has no voting and sole investment
power.
(10) Mr. Roberts became the Company's President and Chief Executive
Officer in January 1999. Excludes 387,082 shares over which Mr. Roberts is
deemed to have voting and/or investment power as co-trustee of the ESOP.
Includes 25,000 shares subject to options granted under the Stock Option
Plan, over which Mr. Roberts has no voting and sole investment power.
(11) Includes 2,250 shares subject to options granted under the Stock
Option Plans, over which Mr. Speer has no voting and sole investment power.
(12) Includes 39,975 shares subject to options granted under the Stock
Option Plans, over which shares Mr. Svoboda has no voting and sole investment
power, and 6,750 shares for which Mr. Svoboda serves as co-trustee and 3,375
shares held by Mr. Svoboda's spouse, over which shares Mr. Svoboda has shared
voting and investment power.
(13) Includes 18,710 shares subject to options granted under the Stock
Option Plans, over which shares Dr. TenHoeve has no voting and sole investment
power, and 13,353 shares held in a trust for benefit of Dr. TenHoeve, over which
shares Dr. TenHoeve has sole voting and investment power.
(14) Excludes 387,082 shares over which Mr. Larsen is deemed to have
voting and/or investment power as a co-trustee of the ESOP. Includes 31,500
shares subject to options granted under the Stock Option Plans, over which
shares Mr. Larsen has no voting and sole investment power.
(15) Includes 18,000 shares subject to options granted under the Stock
Option Plans, over which Mr. Schmidt has no voting and sole investment power.
(16) Includes 27,000 shares subject to options granted under the Stock
Option Plans, over which Mr. Tillotson has no voting and sole investment power,
200 shares held jointly with his spouse, over which Mr. Tillotson has shared
voting and investment power, and 5,450 shares owned by Mr. Tillotson's spouse,
over which Mr. Tillotson has no voting or investment power.
(17) Mr. Gillie's employment ended on August 25, 1998. Includes 2,100
shares held by Mr. Gillie's spouse and 2,386 shares for which Mr. Gillie
serves as trustee, over which shares Mr. Gillie has shared voting and
investment power.
(18) Mr. Alger's employment ended on February 8, 1999. Includes 27,000
shares subject to options granted under the Stock Option Plans, over which
Mr. Alger has no voting and sole investment power, and 1,500 shares held
jointly with his spouse, over which Mr. Alger has shared voting and
investment power.
(19) Excludes 387,082 shares over which Messrs. Roberts and Larsen are
deemed to have shared voting and/or investment power as co-trustees of the ESOP.
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors and persons who own more than 10% of the Common Stock to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and with the exchange on which the shares of Common Stock are traded.
Such persons are also required to furnish the Company with copies of all Section
16(a) forms they file. Based solely upon the Company's review of such forms
and, if appropriate, representations made to the Company by any such reporting
person concerning whether a Form 5 was required to be filed for the 1998 fiscal
year, the Company is not aware that any of its directors and executive officers
or 10% stockholders failed to comply with the filing requirements of Section
16(a) during the period commencing January 1, 1998 through December 31, 1998.
8
<PAGE>
VOTING AGREEMENTS
The trustees of the Company's ESOP are Messrs. James L. Roberts, the
Company's President and Chief Executive Officer, and Paul A. Larsen, its Senior
Vice President and Chief Financial Officer. As co-trustees, Messrs. Roberts and
Larsen are deemed to have shared voting power over shares held in the ESOP.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation paid
or granted to the Company's Chief Executive Officer and to each of the other
executive officers of the Company and the Bank whose aggregate salary and bonus
exceeded $100,000.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------------------
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
- ----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
RESTRICTED SECURITIES ALL OTHER
NAME AND OTHER ANNUAL STOCK UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) COMPENSATION($) AWARD($) OPTIONS/SARS(#) ($)(3)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Larry G. Gillie, President, 1998 $218,077 $ --- $ --- $ --- --- $ 5,505
Chief Executive Officer(4) 1997 208,846 300 --- --- --- 16,396
1996 180,492 15,300 --- --- --- 14,287
- ----------------------------------------------------------------------------------------------------------------------------------
R. Kennedy Alger(5) 1998 $160,385 $ 300 $ --- $ --- --- $ 4,839
Executive Vice President 1997 55,385 300 --- --- 81,000 144
1996 --- --- --- --- --- ---
- ----------------------------------------------------------------------------------------------------------------------------------
Paul A. Larsen, Senior Vice 1998 $123,942 $ 300 $ --- $ --- --- $ 3,795
President and Chief 1997 108,885 300 --- --- --- 11,206
Financial Officer 1996 88,269 11,300 --- --- --- 8,673
- ----------------------------------------------------------------------------------------------------------------------------------
Lawrence J. Schmidt, 1998 $123,269 $ 300 $ --- $ --- --- $ 3,968
Senior Vice President 1997 106,442 300 --- --- --- 9,808
1996 87,500 11,300 --- --- --- 170
- ----------------------------------------------------------------------------------------------------------------------------------
Joseph H. Tillotson, 1998 $125,192 $ 300 $ --- $ --- --- $ 4,291
Senior Vice President 1997 106,385 300 --- --- --- 10,083
1996 85,709 11,496 --- --- --- 8,739
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes amounts deferred under the Bank's Profit Sharing Plan.
(2) Amount shown as bonus for 1996 includes the market value of
non-restricted shares granted to Messrs. Gillie, Larsen, Schmidt
and Tillotson.
(3) Does not include amounts contributed to each officer under the
Company's ESOP for 1998, which amounts are undetermined at this time.
(4) Mr. Gillie's employment terminated on August 25, 1999. Information
regarding Mr. Gillie's severance payout is provided below under
"Employment Agreements."
(5) Mr. Alger's employment began on August 1, 1997 and ended on
February 8, 1999.
9
<PAGE>
The following table sets forth certain information concerning the number
and value of stock options at December 31, 1998, held by the named executive
officer.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARs AT OPTIONS/SARs AT
FY-END(#) FY-END($)
(d) (e)
----------------------------------------------------------------
SHARES ACQUIRED
NAME ON EXERCISE(#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE(1) EXERCISABLE UNEXERCISABLE
(a) (b) (c) (d) (e) (f) (g)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Larry G. Gillie 31,042 $374,230 --- --- $ --- $ ---
- ----------------------------------------------------------------------------------------------------------------------------------
R. Kennedy Alger --- --- --- 81,000 --- ---
- ----------------------------------------------------------------------------------------------------------------------------------
Paul A. Larsen --- --- 13,500 36,000 49,125 131,000
- ----------------------------------------------------------------------------------------------------------------------------------
Lawrence J. Schmidt 9,000 79,250 9,000 36,000 25,250 101,000
- ----------------------------------------------------------------------------------------------------------------------------------
Joseph H. Tillotson 9,000 78,270 9,000 36,000 33,270 133,080
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Remaining options become exercisable one-half each on January 1, 1999 and
2001, except for with respect to Messrs. Gillie and Alger.
EMPLOYMENT AGREEMENTS
The Company has entered into a two-year employment agreement, dated
January 20, 1999, with James L. Roberts, who replaced Larry G. Gillie as the
Company's and the Bank's President and Chief Executive Officer. The agreement
provides for an annual salary of $200,000, subject to annual increases as
determined by the Board of Directors. Additionally, the agreement provides
that Mr. Roberts receive options to purchase 100,000 shares of Common Stock
at the fair market value of the Common Stock on the date of the agreement,
and that 25% of such options shall be immediately vested and the remaining
portion shall vest in equal amounts on each of the first three anniversaries
of the agreement. The employment agreement provides for an automatic
extension of one year on each anniversary date of the agreement. Either the
Company or Mr. Roberts may elect not to renew the agreement upon written
notice provided on, or prior to, the respective anniversary date; provided,
however, that the agreement is not extendable beyond the date Mr. Roberts
attains the age of 65.
The agreement further provides for the continued payment of Mr. Roberts'
salary and health benefit coverage for the remainder of the then current term of
the agreement in the event employment is terminated for any reason other than
cause, disability or death. In addition, in the case of a change of control of
the Company (as defined in the agreement), the agreement provides for an
extension of the term of the employment agreement for the shorter of three years
from the date of the change in control or until the date on which Mr. Roberts
attains the age of 65. The agreement further provides that for a period of one
year after termination of his employment for any reason, Mr. Roberts will not
manage, operate or control any financial institution having an office within 25
miles of any office of the Bank as of the date Mr. Roberts' employment
terminates or the date on which there is a change in control of the Company.
The employment of Mr. Larry G. Gillie ended on August 25, 1998. Pursuant
to the provisions of his employment agreement pertaining to base salary, Mr.
Gillie will receive an aggregate amount of $140,000 in 1999. The additional
terms of Mr. Gillie's severance package have not yet been determined.
10
<PAGE>
CHANGE OF CONTROL AGREEMENTS
In addition to the change of control provisions set forth in Mr. Roberts'
employment agreement, the Company has entered into a one-year change of control
agreement with Messrs. Larsen, Schmidt and Tillotson. The agreements provide
for an automatic extension of one year on each anniversary date, provided there
is a satisfactory review of the respective officer's performance. The
agreements provide for a payment to the respective officer of one year's annual
salary in the event there is a change in control of the Company or the Bank and
his employment terminates voluntarily or involuntarily within one year after
such change in control. In such event, the officer would also be entitled to
receive health insurance for one year following his termination date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the members of the Compensation Committee were George T.
Drost, John A. Flink, Gerald T. Niedert and Frank A. Svoboda. None of these
individuals was an officer or employee of the Company or any of its subsidiaries
during 1998, and none of these individuals is a former officer or employee of
the Company or any of its subsidiaries.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE HAS FURNISHED THE FOLLOWING REPORT ON EXECUTIVE
COMPENSATION. THE INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY
DOCUMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE COMPANY SHALL
NOT BE DEEMED TO INCLUDE THE REPORT UNLESS SUCH REPORT IS SPECIFICALLY STATED TO
BE INCORPORATED BY REFERENCE INTO SUCH DOCUMENT.
COMPENSATION POLICIES. This report describes the Company's compensation
policies as endorsed by the Board of Directors and the Compensation Committee
and the resulting actions taken by the Company for 1998. Essentially, the
executive compensation program of the Company has been designed to:
* Support a pay-for-performance policy that differentiates compensation
amounts based on Company and individual performance;
* Provide compensation opportunities that are comparable to those offered by
other leading companies in the financial services industry, thus allowing
the Company to compete for and retain talented executives who are critical
to the Company's long-term success; and
* Align the interests of executives with the long-term interests of
stockholders through award opportunities that can result in ownership of
Common Stock.
At present, the executive compensation program is comprised of salary and
long-term incentive opportunities in the form of stock options, restricted stock
and benefits typically offered to executives by major corporations.
Additionally, the Company has adopted a Management Incentive Program, as
described below.
SALARY AND DEFERRED COMPENSATION. The Board of Directors, acting on the
recommendation of the Compensation Committee, determines the salary paid to the
Chief Executive Officer (the "CEO"). The CEO determines the salaries paid to
the other executive officers. In each case, salary increases reflect both
individual performance as well as the Bank's financial performance, as measured
by its return on assets and profitability. In the case of executive officers,
salary increases were granted in amounts ranging from 2.1% to 6.5% based on
individual performance, position, tenure, comparative data and the Bank's
operating results.
STOCK AWARDS. The Company's Stock Option Plans and Bank Incentive Plan ("BIP")
are designed to align a significant portion of the executive compensation
program with stockholder interests. The Stock Option Plans and BIP, each
approved by stockholders, permit the granting of stock-based awards. To date,
two types of awards have
11
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been granted to executive officers and other key employees:
Stock Options - Rights to purchase shares of Common Stock at the fair
market value per share as of the date the option is granted, either in the
form of incentive stock options under the Internal Revenue Code, on options
which are not so qualified; and
Restricted Stock - Shares of Common Stock that the recipient cannot sell or
otherwise dispose of until the applicable restriction period lapses and
that are forfeited if the recipient terminates employment for any reason
other than retirement, disability, or death prior to the lapsing of the
restriction period (or applicable portion of such period). Vesting periods
are established primarily by reference to a recipient's position, tenure
and age.
In granting stock options and restricted stock to executive officers, the
Committee takes into account the practices of other financial services companies
as verified by external surveys, as well as the executive's level of
responsibility and past contributions to the Company.
MANAGEMENT INCENTIVE PLAN.
On April 28, 1998, the Board approved the CoVest Banc Management Incentive
Program ("MIP"). The MIP is intended to provide incentives and reward for
increasing stockholder value by granting cash awards to certain executive
officers, Vice Presidents and other key employees based upon specific
performance objectives, including net income of the Company and individual
performance criteria for participating employees. Executive officer performance
is based solely upon net income, while awards for other employees are measured
on a formula weighted 25% on net income and 75% on individual performance. For
1998, the Company paid no amounts under the MIP.
George T. Drost
John A. Flink
Gerald T. Niedert
Frank A. Svoboda
PERFORMANCE GRAPH
THE INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY DOCUMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY THE COMPANY SHALL NOT BE
DEEMED TO INCLUDE THE FOLLOWING PERFORMANCE GRAPH AND RELATED INFORMATION UNLESS
THE GRAPH AND THE RELATED INFORMATION ARE SPECIFICALLY STATED TO BE INCORPORATED
BY REFERENCE INTO SUCH DOCUMENT.
The line graph below shows a five year comparison of cumulative total
stockholder return on a $100 investment in the Company's Common Stock to the
cumulative total return of a broad index of stocks traded on the Nasdaq Stock
Market, the Nasdaq Bank Stock Index. The graph has been prepared at the
Company's request by Research Holdings Limited, San Francisco, California.
12
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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG COVEST BANCSHARES, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND THE NASDAQ BANK INDEX
[GRAPH]
* $100 INVESTED ON 12/31/93 IN STOCK OR INDEX.
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Cumulative Total Return
- ---------------------------------------------------------------------------------------------
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CoVest Bancshares, Inc. $100 $92 $114 $143 $209 $158
Nasdaq Market $100 $98 $138 $170 $208 $294
Nasdaq Bank Stock $100 $100 $148 $196 $328 $325
- ----------------------------------------------------------------------------------------------
</TABLE>
*Total return assumes reinvestment of dividends
13
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TRANSACTIONS WITH MANAGEMENT
Directors and officers of the Company and the Bank, and their associates,
were customers of and had transactions with the Company and the Bank during
1998. Additional transactions may be expected to take place in the future. All
outstanding loans, commitments to loan, transactions in repurchase agreements
and certificates of deposit and depository relationships, in the opinion of
management, were made in the ordinary course of business, on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and did not involve more
than the normal risk of collectibility or present other unfavorable features.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed Crowe Chizek & Company
LLP, independent accountants, to be the Company's auditors for the fiscal year
ending December 31, 1999, and recommends that the stockholders ratify the
appointment. A representative of Crowe, Chizek & Company LLP is expected to
attend the Annual Meeting and will be available to respond to appropriate
questions and to make a statement if he or she so desires. If the appointment
of the auditors is not ratified, the matter of the appointment of auditors will
be considered by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK & COMPANY LLP.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Secretary of the Company at its
principal executive offices at 749 Lee Street, Des Plaines, Illinois 60016 on
or before November 18, 1999, to be considered for inclusion in the Company's
Proxy Statement and proxy relating to such meeting.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the meeting, holders of
the proxies will act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and/or the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James L. Roberts
James L. Roberts
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Des Plaines, Illinois
March 17, 1999
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<PAGE>
PROXY COVEST BANCSHARES, INC. PROXY
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS--APRIL 27, 1999
The undersigned hereby appoints James L. Roberts and John A. Flink or
either of them acting in the absence of the other, with power of
substitution, attorneys and proxies, for and in the name and place of the
undersigned, to vote the number of shares of Common Stock that the
undersigned would be entitled to vote if then personally present at the
Annual Meeting of the Stockholders of CoVest Bancshares, Inc., to be held at
the Casa Royale Banquets located at 783 Lee Street, Des Plaines, Illinois,
on Tuesday, April 27, 1999, at 10:00 a.m., local time, or any adjournments or
postponements thereof, upon the matters set forth in the Notice of Annual
Meeting and Proxy Statement (receipt of which is hereby acknowledged) as
designated on the reverse side, and in their discretion, the proxies are
authorized to vote upon such other business as may come before the meeting:
/ / Check here for address change. / / Check here if you plan to attend
New Address:_________________ the meeting.
______________________________
______________________________
(Continued and to be signed on reverse side.)
<PAGE>
COVEST BANCSHARES, INC.
PLEASE MARK VOTE IN OVAL USING DARK INK ONLY
<TABLE>
<CAPTION>
<S> <C>
1. Election of Directors FOR ALL EXCEPT
George T. Drost and David Michael Miller FOR ALL WITHHELD NOMINEE(S) WRITTEN BELOW
/ / / / / / ______________________________
2. To ratify the selection of FOR AGAINST ABSTAIN
Crowe, Chizek and Company / / / / / /
LLP as independent auditors
for the Company for 1999.
- ------------------------------------------------------------
The Board of Directors recommends a vote FOR all proposals.
- ------------------------------------------------------------
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
SPECIFICATION MADE. IF NO CHOICES ARE INDICATED,
THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
Dated: ________________________________, 1999
Signature(s)_________________________________
_________________________________
NOTE: Please sign exactly as your name(s) appears.
For joint accounts, each owner should sign. When
signing as executor, administrator, attorney,
trustee or guardian, etc., please give your
full title.
- ------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
