NORTHWEST EQUITY CORP.
234 Keller Avenue South
Amery, Wisconsin 54001
(715) 268-7105
June 26, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "Annual Meeting") of Northwest Equity Corp. (the "Company"), the holding
company for Northwest Savings Bank (the "Bank"). The meeting will be held on
Tuesday, August 13, 1996, at 2:00 p.m., Amery, Wisconsin time, at Centennial
Hall, 608 Harriman Avenue South, Amery, Wisconsin 54001.
The attached Notice of Annual of Shareholders and Proxy Statement
describes the formal business to be conducted at the Annual Meeting. A copy of
the Company's Annual Report for the fiscal year ended March 31, 1996, also is
enclosed. Directors and officers of the Company, as well as a representative of
Keller & Yoder, the Company's independent auditors, will be present at the
Annual Meeting to respond to any questions that shareholders may have.
The vote of every shareholder is important to ensure a quorum is
present and that the necessary business can be conducted at the meeting. Please
sign and return the enclosed appointment form of proxy promptly in the
postage-paid envelope provided, regardless of whether you are able to attend the
Annual Meeting in person. If you attend the Annual Meeting, you may vote in
person even if you have already mailed your Proxy.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I thank you for your investment and trust in Northwest
Equity Corp.
Sincerely yours,
Brian L. Beadle
Brian L. Beadle
President, Chief Executive Officer and
Chief Financial Officer
<PAGE>
NORTHWEST EQUITY CORP.
234 Keller Avenue South
Amery, Wisconsin 54001
(715) 268-7105
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on August 13, 1996
-------------
To Holders of Common Stock of Northwest Equity Corp.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Northwest Equity Corp. (the "Company") will be held on
Tuesday, August 13, 1996, at 2:00 p.m., Amery Wisconsin time, at Centennial
Hall, 608 Harriman Avenue South, Amery, Wisconsin 54001. The Annual Meeting is
for the purpose of considering and voting upon the following matters, all of
which are set forth more completely in the accompanying Proxy Statement:
1. The election of two directors each for a three year term, and in each
case until their successors are elected and qualified;
2. The ratification of the appointment of Keller & Yoder as independent
auditors of the Company for the fiscal year ending March 31, 1997; and
3. Such other matters as may properly come before the Annual Meeting or
any adjournments or postponements thereof. The Board of Directors is
not aware of any other such business.
The Board of Directors has established June 7, 1996, as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting and any adjournments thereof. Only shareholders of record as of
the close of business on that date will be entitled to vote at the Annual
Meeting or any adjournments or postponements thereof. In the event there are not
sufficient votes for a quorum or to approve or ratify any of the foregoing
proposals at the time of the Annual Meeting. The Annual Meeting may be adjourned
or postponed in order to permit further solicitation of proxies by the Company.
By Order of the Board of Directors
James L. Moore
Amery, Wisconsin James L. Moore
June 26, 1996 Secretary
================================================================================
TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED.
================================================================================
<PAGE>
NORTHWEST EQUITY CORP.
234 Keller Avenue South
Amery, Wisconsin 54001
(715) 833-7700
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On August 13, 1996
-----------------------------
This Proxy Statement is being furnished to holders of common stock,
$1.00 par value per share (the "Common Stock"), of Northwest Equity Corp. (the
"Company") in connection with the solicitation on behalf of the Board of
Directors of the Company of proxies to be used at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held on Tuesday, August 13, 1996, at
2:00 p.m., Amery, Wisconsin time, at Centennial Hall, 608 Harriman Avenue South,
Amery, Wisconsin 54001 and at any adjournments or postponements thereof.
The 1996 Annual Report to Shareholders, including the Company's
consolidated financial statements for the fiscal year ended March 31, 1996,
accompanies this Proxy Statement and appointment form of proxy (the "proxy"),
which are being mailed to shareholders on or about June 26, 1996.
Only shareholders of record at the close of business on June 7, 1996
(the "Voting Record Date") will be entitled to vote at the Annual Meeting or any
adjournments or postponements thereof. On the Voting Record Date, there were
945,392 shares of Common Stock outstanding and the Company had no other class of
securities outstanding.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. As to the election of
directors, the proxy being provided by the Board of Directors enables a
shareholder to vote for the election of the nominees proposed by the Board, or
to withhold authority to vote for one or more of the nominees being proposed.
Under the Wisconsin Business Corporation Law (the "WBCL"), directors are elected
by a plurality of the votes cast with a quorum present and shareholders do not
have a right to cumulate their votes for the election of directors unless the
articles of incorporation provide otherwise. The Company's Articles of
Incorporation do not provide cumulative voting rights for the election of
directors. The affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting is necessary to ratify
the appointment of Keller & Yoder as auditors of the Company for the fiscal year
ending March 31, 1997. Abstentions are included in the determination of shares
present and voting for purposes of whether a quorum exists, while broker
non-votes are not. Neither abstentions nor broker non-votes are counted in
determining whether a matter has been approved. In the event there are not
sufficient votes for a quorum or to approve or ratify any proposal at the time
of the Annual Meeting, the Annual Meeting may be adjourned or postponed in order
to permit the further solicitation of proxies.
<PAGE>
As provided in the Company's Articles of Incorporation, record holders of Common
Stock who beneficially own in excess of 10% of the outstanding shares of Common
Stock (the "10% Limit") are not entitled to any vote in respect of the shares
held in excess of the 10% Limit. A person or entity is deemed to beneficially
own shares owned by an affiliate of, as well as such persons acting in concert
with, such person or entity. The Company's Articles of Incorporation authorize
the Board (i) to make all determinations necessary to implement and apply the
10% Limit, including determining whatever persons or entities are acting in
concert, and (ii) to demand that any person who is reasonably believed to
beneficially own stock in excess of the 10% Limit supply information to the
Company to enable the Board to implement and apply the 10% Limit.
Shareholders are requested to vote by completing the enclosed proxy and
returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate their vote in the spaces provided on the
proxy. Proxies solicited by the Board of Directors of the Company will be voted
at the Annual Meeting or any adjournments or postponements thereof in accordance
with the directions given thereon. Where no instructions are indicated, signed
proxies will be voted FOR the election of each of the nominees for director
named in this Proxy Statement and FOR ratification of the appointment of Keller
& Yoder as independent auditors of the Company for the fiscal year ending March
31, 1997. Returning your completed proxy will not prevent you from voting in
person at the Annual Meeting should you be present and wish to do so.
Any shareholder giving a proxy has the power to revoke it any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (James L. Moore, Secretary, Northwest Equity Corp., 234 Keller
Avenue South, Amery Wisconsin 54001); (ii) submitting a duly executed proxy
bearing a later date; or (iii) appearing at the Annual Meeting and giving the
Secretary notice of his or her intention to vote in person. If you are a
shareholder whose shares are not registered in your own name, you will need
additional documentation from your record holder to vote personally at the
Annual Meeting. Proxies solicited hereby may be exercised only at the Annual
Meeting and any adjournments or postponements thereof and will not be used for
any other meeting.
The cost of solicitation of proxies by mail on behalf of the Board of
Directors will be borne by the Company. Proxies may be solicited by personal
interview or by telephone, in addition to the use of the mails by directors,
officers and regular employees of the Company and Northwest Savings Bank (the
"Bank"), without additional compensation therefor. The Company also has made
arrangements with brokerage firms, banks, nominees and other fiduciaries to
forward proxy solicitation materials for shares of Common Stock held of record
by the beneficial owners of such shares. The Company will reimburse such holders
for their reasonable out-of-pocket expenses.
Proxies solicited hereby will be returned to the Board of Directors,
and will be tabulated by inspectors of election designated by the Board of
Directors, who will not be employed by, or a director of, the Company or any of
its affiliates.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of shares of
Common Stock as of May 31, 1996 (except as noted otherwise below) by: (i) each
shareholder known to the Company to beneficially own more than 5% of the shares
of Common Stock outstanding, as disclosed in certain reports regarding such
ownership filed with the Company and with the Securities and Exchange Commission
("SEC"), in accordance with Sections 13(d) or 13(g) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), (ii) each director and director
nominee of the Company, (iii) the executive officer of the Company appearing in
the Summary Compensation Table below, and (iv) all directors and executive
officers as a group. Members of the Board of Directors of the Company also serve
as directors of the Bank.
Number of Shares
Beneficially
Name Owned(1) Percent of Class
---- -------- ----------------
Northwest Savings Bank
Employee Stock Ownership Trust(2). .................. 87,503 9.3%
Heartland Advisors, Inc.(3). ........................ 100,000 10.6%
John Hancock Advisers, Inc..(4) ..................... 71,000 7.5%
Donald J. Ripp(5). .................................. 52,000 5.5%
Brian L. Beadle(6)(7)(8)... ......................... 36,612 3.7%
Gerald J. Ahlin(7). ................................. 10,295 1.1%
Vern E. Albrecht(7).................................. 14,500 1.5%
James A. Counter(7). ................................ 1,525 *
Michael D. Jensen(7). ............................... 34,025 3.6%
Donald M. Michels(7). ............................... 5,120 *
Norman M. Osero(7). ................................. 12,875 1.4%
All directors, director nominees and
executive officers as a group(8 persons)(6)(7)(8).... 110,475 11.7%
- - ----------------------
* Amount represents less than 1% of the total shares of Common Stock
outstanding on the Voting Record Date.
(1) Unless otherwise indicated, includes shares of Common Stock held
directly by the individuals as well as by members of such individuals'
immediate family who share the same household, shares held in trust
and other indirect forms of ownership over which shares the
individuals effectively exercise sole or shared voting and/or
investment power.
(2) Emjay Corporation (the "Trustee") is the trustee for the Northwest
Savings Bank Employee Stock Ownership Trust. The Trustee's address
is 4600 North Port Washington Road, Milwaukee, Wisconsin 53217.
(3) Based upon a Schedule 13G, dated February 9, 1996, filed with the
Company under the Exchange Act, by Heartland Advisors, Inc., 790 North
Milwaukee Street, Milwaukee, Wisconsin 53202.
(4) Based upon a Schedule 13G, dated January 26, 1996, filed with the
Company under the Exchange Act, by John Hancock Advisers, Inc.,
John Hancock Place, P.O. Box 111, Boston, MA 02199.
(5) Based upon a Schedule 13D, dated December 14, 1994, filed with the
Company under the Exchange Act, by Donald J. Ripp, 10575 W. Forest
Home Avenue, P.O. Box 301, Hales Corners, Wisconsin 53130-0301.
(6) Includes shares of Common Stock awarded to certain executive officers
under the Company's stock incentive plan that are subject to vesting
requirements. Recipients of restricted stock awards may direct voting
prior to vesting.
(7) Does not include options for shares of Common Stock which do not vest
within 60 days of the Voting Record Date which have been awarded to
certain executive officers and directors under the Company's stock
option plan.
(8) Includes shares of Common Stock allocated to certain executive
officers under the Northwest Savings Bank Employee Stock Ownership
Plan, for which such individuals possess shared voting power.
Mr. Beadle was allocated 2,262 shares and Mr. Moore was allocated
1,425 shares.
3
<PAGE>
MATTERS TO BE VOTED ON AT THE ANNUAL
MEETING MATTER 1
ELECTION OF DIRECTORS
Pursuant to the Articles of Incorporation of the Company, at the first
annual meeting of shareholders of the Company held on August 8, 1995, directors
of the Company were divided into three classes as equal in number as possible.
Directors of the first class were elected to hold office for a term expiring at
the first succeeding annual meeting, directors of the second class were elected
to hold office for a term expiring at the second succeeding annual meeting and
directors of the third class were elected to hold office for a term expiring at
the third succeeding annual meeting, and in each case until their successors are
elected and qualified. At each subsequent annual meeting of shareholders, one
class of directors, or approximately one-third of the total number of directors,
are to be elected for a term of three years. There are no family relationships
among any of the directors and/or executive officers of the Company. No person
being nominated as a director is being proposed for election pursuant to any
agreement or understanding between any person and the Company.
Unless otherwise directed, each proxy executed and returned by a
shareholder will be voted FOR the election of the nominees for director listed
below. If any person named as nominee should be unable or unwilling to stand for
election at the time of the Annual Meeting, the proxies will nominate and vote
for any replacement nominee or nominees recommended by the Board of Directors.
All of the proposed nominees currently serve as directors of the Bank. At this
time, the Board of Directors knows of no reason why any of the nominees listed
below may not be able to serve as director if elected.
The following table presents information concerning the nominees for
director and continuing directors. All of the following nominees have served as
a director of the Company since the Company's formation in November 1993.
Nominees for Director for Three-Year Term Expiring in 1999
Director
Position with the Company of the Bank
Name Age and Principal Occupation Since
- - ---- --- ------------------------ -----
Michael D. Jensen 46 Director of the Company and the 1986
Bank; President and director of
Amery Telcom, Inc., a communications
company, since 1983; Director of
Apple River Hospital, Amery, Wisconsin
since 1984.
Donald M. Michels 69 Director of the Company and the 1987
Bank; Prior to his retirement, he
served from 1977-1991 as President
of Holy Family Hospital, New
Richmond, Wisconsin.
The affirmative vote of a plurality of the votes cast is required for
the election of directors. Unless otherwise specified, the shares of Common
Stock represented by the proxies solicited hereby will be voted in favor of the
election of the above-described nominees. The Board of Directors recommends that
you vote FOR the election of each of the nominees for director.
4
<PAGE>
INFORMATION WITH RESPECT TO CONTINUING DIRECTORS
Director
Position with the Company of the Bank
Name Age and Principal Occupation Since
- - ---- --- ------------------------- -----
Directors Whose Terms Expire in 1997
Gerald J. Ahlin 63 Director of the Company and the 1985
Bank; Prior to his retirement,
from 1959 to 1992, he was a
business and economics teacher
for the Amery Public Schools,
Amery, Wisconsin.
Brian L. Beadle 53 President, Chief Executive Officer, 1976
Chief Financial Officer, and
Director of the Company and
the Bank; from 1974 to 1984, he
served as Vice President of the
Bank; joined the Bank in 1970.
Directors Whose Terms Expire in 1998
Vern E. Albrecht 67 Director of the Company and the 1989
Bank; Prior to his retirement,
from 1971 to 1989, he was a
President, Chief Executive Officer
and principal owner of Nova Tran
Corporation, an electronics and
and medical manufacturing
company, Clear Lake, Wisconsin.
James A. Counter 55 Director of the Company and the 1995
Bank; Owner of J.A. Counter
& Associates, Inc., an insurance,
financial planning and investment
brokerage located in New Richmond,
Wisconsin.
Norman M. Osero 57 Director of the Company and the 1992
Bank; President of Dynatronix, Inc.,
Amery, Wisconsin, an electronic
manufacturing company since 1979:
Vice President of Amery Technical
Products, Inc., Amery, Wisconsin,
a subcontractor manufacturing
company, since 1984.
5
<PAGE>
MATTER 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Company's independent auditors for the fiscal year ended March 31,
1996, were Keller & Yoder. The Board of Directors of the Company has reappointed
Keller & Yoder to perform the audit of the Company's financial statements for
the fiscal year ending March 31, 1997. A representative of Keller & Yoder will
be present at the Annual Meeting and will be given the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate question from the Company's shareholders.
The affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy and voted at the Annual Meeting is required
for ratification of the selection of auditors. The Board of Directors recommends
a vote FOR ratification of the appointment of Keller & Yoder as the independent
auditors of the Company.
MEETINGS OF THE BOARD AND ITS COMMITTEES
The Company was incorporated on November 3, 1993. Regular meetings of
the Board of Directors are held on a monthly basis. During the fiscal year ended
March 31, 1996, the Board of Directors of the Company held twelve regular
meetings and one special meeting. No incumbent director attended fewer than 75%
of the aggregate total number of meetings of the Board of Directors held and the
total number of committee meetings on which such director served during the
fiscal year ended March 31, 1996.
The Board of Directors of the Company has a standing joint Audit
Committee with the Bank. For the fiscal year ended March 31, 1996, the Audit
Committee of the Company and the Bank consisted of Directors Vern E. Albrecht,
Donald M. Michels and James A. Counter, who were neither officers nor employees
of the Company nor the Bank ("Outside Directors"). The Audit Committee reviews
the scope and timing of the audit of the Company's financial statements by the
Company's independent auditors and reviews with the independent auditors the
Company's management policies and procedures with respect to auditing and
accounting controls. The Audit Committee also reviews and evaluates the
independence of the Company's auditors, approves services rendered by such
auditors and recommends to the Board the engagement, continuation or discharge
of the Company auditors. The Company's Audit Committee met once during the
fiscal year ended March 31, 1996.
For the fiscal year ended March 31, 1996, the Compensation Committee of
the Board of Directors of the Company consisted of Directors Michael D. Jensen,
Norman M. Osero and Gerald J. Ahlin. The Company did not pay separate
compensation to its officers during the fiscal year ended March 31, 1996. All
compensation was paid by the Bank and the compensation policies were determined
by the Compensation Committee of the Bank. The Compensation Committee of the
Company met twice during the fiscal year ended March 31, 1996. In June 1996, the
Compensation Committee of the Company met to ratify compensation decisions made
by the Bank during the fiscal year ended March 31, 1996. In August 1996, the
Compensation Committee of the Company met to grant stock options and shares of
common stock under the Company's stock related benefit plans.
For the fiscal year ended March 31, 1996, the Nominating Committee of
the Board of Directors of the Company consisted of Directors Brian L. Beadle,
James A. Counter and Vern E. Albrecht. In May 1996, the Nominating Committee
recommended nominees for directors to stand for election at the Annual Meeting
to the Board of Directors. In April 1995, the entire Board of Directors acted as
a Nominating Committee for the selection of nominees for directors for the
Annual Meeting held in 1995, so the Nominating Committee did not meet during the
fiscal year ended March 31, 1996. The Company's By-Laws allow for shareholder
nominations of directors and require such nominations be made pursuant to timely
notice in writing to the Secretary of the Company. See "Shareholder Proposals
for the 1997 Annual Meeting."
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
During the fiscal year ended March 31, 1996, the Company did not pay
separate compensation to its executive officers. Separate compensation will not
be paid to officers of the Company until such time as the officers of the
Company devote significant time to separate management of Company affairs. This
is not expected to occur until the Company becomes actively involved in
additional significant business beyond that of the Bank. The following table
summarizes the total compensation earned by the Bank's Chief Executive Officer.
The Bank's next highest paid executive officer's compensation (salary and bonus)
did not exceed $100,000 for the Bank's fiscal years ended March 31, 1996, 1995
or 1994.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
----------------------
Awards
------
Annual Compensation(1) Value of Number All
Restricted of Shares Other
----------------------- Stock Subject to Compen-
Name and Principal Position Year Salary Bonus(2) Awards(3) Options(4) sation(5)
- - --------------------------- ---- ------ -------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Brian L. Beadle................ 1996 $77,684 $3,750 $215,586 41,300 $23,059
President, Chief Executive 1995 74,058 -- 7,406
Officer and Chief Financial 1994 71,265 3,500 7,476
Officer of the Company
and the Bank
- - -------------------------------
<FN>
(1) Perquisites and other personal benefits provided to the named executive officer by the Bank
did not exceed the lesser of $50,000 or 10% of named executive officer's total annual salary
and bonus during the fiscal years indicated, and accordingly, are not included.
(2) Bonuses paid during the fiscal years ended March 31, 1994 and 1996 were discretionary.
(3) The amount shown in this column represents the value of shares of Common Stock awarded under
the Northwest Equity Corp. Incentive Plan (the "Incentive Plan") during the fiscal year
ended March 31, 1996, calculated by multiplying the value of the Common Stock on the date
of grant by the number of shares awarded. The number and vesting schedule for the shares
awarded to Mr. Beadle are as follows: (i)6,883 - (10-10-96); (ii) 6,883 - (10-10-97); and
(iii)6,884-(10-10-98). At March 31, 1996, the aggregate value of restricted(unvested) shares
awarded to Mr. Beadle under the Incentive Plan was $215,586 based on 20,650 restricted shares
and the value of the shares of Common Stock on that date ($10.44). Mr. Beadle received
cash dividends in the amount of $3,717 on the restricted shares during the fiscal year ended
March 31, 1996. Recipients of awards under the Incentive Plan are entitled to payment of any
dividends on unvested shares of Common Stock.
(4) The amount shown in this column represents the total number of shares of Common Stock subject
to options granted (both vested and unvested) under the Northwest Equity Corp. Stock Option
Plan (the "Stock Option Plan") during the year ended March 31, 1996.
(5) The amounts shown in this column for the fiscal years ended March 31, 1994 and 1995 represent
the Bank's contribution on behalf of the named executive officer under the Northwest Savings
Bank Money Purchase Pension Plan (the "Pension Plan"). The amount shown for the fiscal year
ended March 31, 1996, is derived from the following figures: (i) $18,987 - ESOP
contribution (based upon the value of the shares of Common Stock at March 31, 1996);
(ii)$4,072-Pension Plan contribution.
</FN>
</TABLE>
7
<PAGE>
Employment Agreements
In connection with the Bank's conversion from mutual to stock form in
October 1994 (the "Conversion"), the Bank entered into a three-year employment
agreement with Mr. Brian L. Beadle and a one-year employment agreement with Mr.
James L. Moore. The term of these agreements may be restored to the full three
and one year terms, as applicable, by action of the Board of Directors in
connection with the Board's annual performance evaluation. These employment
agreements were restored on February 13, 1996 by action of the Board of
Directors to full terms and the base salaries were changed to reflect current
salaries. These employment agreements are intended to ensure that the Bank
maintains stable and competent management. Under these agreements, the base
salary for Brian L. Beadle is $78,500 and $51,860 for James L. Moore. Base
salaries may be increased by the Board of Directors of the Bank, but may not be
reduced except as part of a general pro rata reduction in compensation for all
executive officers. In addition to base salary, the agreements provide for
payments from other Bank incentive compensation plans, and provide for other
benefits, including participation in any group health, life, disability or
similar insurance program and in any pension, profit-sharing, employee stock
ownership plan, deferred compensation, 401(k) or other retirement plans
maintained by the Bank. The agreements also provide for participation in any
stock-based incentive programs made available to executive officers of the Bank.
The agreements may be terminated by ;the Bank upon death, disability, or
retirement; for cause at any time; or in certain events specified by regulations
issued by the Office of the Wisconsin Commissioner of Savings and Loan (the
"Commissioner"). If the Bank terminates the agreements other than for death,
disability, retirement or cause (or a change of control as defined below), the
executive is entitled to continuation of his compensation and benefits (based on
the highest compensation within three years preceding termination) for the
remainder of the employment term together with other compensation and benefits
in which he was vested at the termination date.
The agreements provide for severance payments if the executive's
employment terminates following a change in control. Under the agreements, a
"Change of Control" is generally defined to include any change in control
required to be reported under the federal securities laws as well as (i) the
acquisition by any person of 25% or more of the Company's outstanding voting
securities, or (ii) a change in a majority of the directors of the Company
during any two-year period without the approval of at least two-thirds of the
persons who were directors at the beginning of such period. In the event of a
Change of Control, the executive shall receive severance pay in the form of one
year's base salary (based upon the executive's highest base salary within three
years preceding termination). In the event of a Change in Control, the executive
shall receive severance pay in the form of one year's base salary (based upon
the executive's highest base salary within three years preceding the date of
termination). Assuming a Change in Control occurred as of March 31, 1996,
Messrs. Beadle and Moore would be entitled to severance pay in the amounts of
$78,500 and $51,860, respectively, or $130,360 in the aggregate. In addition,
the executive is entitled to all qualified retirement and other benefits in
which the executive was vested and additional retirement benefits under all
qualified plans that the executive would have been entitled had such executive
continued employment through the then-remaining employment term. If the
severance payments following a Change in Control would constitute "parachute
payments" within the meaning of Section 280G(b)(2) of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"), and the present value of such
"parachute payments" equals or exceeds three times the executive's average
annualized includable income for the five calendar years preceding the year in
which a Change in Control occurred, the severance payments shall be reduced to
an amount equal to the present value of 2.99 times the average annual
compensation paid to the executive during the five calendar years immediately
preceding such Change in Control. If total payments following a Change in
Control constitute excess parachute payments under Section 280G of the Internal
Revenue Code, it could result in the imposition of an excise tax on the
recipient and denial of an income tax deduction for such excess amounts to the
Bank and the Company. The employment agreements provide that benefits payable to
the executive under a Change in Control may, at the election of the executive,
be reduced to an amount necessary to prevent imposition of an excise tax.
8
<PAGE>
Benefits
Insurance Plans
All full-time employees of the Bank are eligible for comprehensive
health insurance commencing upon the completion of three full months of
employment with the Bank. After three full months of employment, full-time
employees are covered as a group for life insurance and long-term disability
insurance. The Bank pays 85% of the cost of health insurance for single coverage
and 70% of the cost of health insurance for family coverage. The Bank pays the
entire cost of life insurance and long-term disability coverage for all
employees.
Money Purchase Pension Plan
The Bank maintains the Northwest Savings Bank Money Purchase Pension
Plan (the "Pension Plan"), a tax qualified defined contribution plan covering
all eligible employees. Employees are eligible to participate after completing a
twelve-month period of 1,000 or more hours of employment and attaining age 21.
Each plan year, the Bank contributes 5% of each participant's salary to the
Pension Plan on behalf of those participants who have completed 1,000 hours of
service during the plan year and are employed at the end of the plan year.
Benefits generally become 5% vested after one year of service, 10% vested after
two years of service, 15% vested after three years of service, 20% vested after
four years of service and 100% vested after five years of service. Distributions
from the Pension Plan are made upon termination of service in an annuity, a lump
sum or in installments over a period not exceed the greater of the life
expectancy of the participant or the life expectancy of the joint survivor of
the participant and his designated beneficiary. Under the Pension Plan, a
separate account is established for each participating employee. The Pension
Plan's trustee is the Emjay Corporation.
Employee Stock Ownership Plan and Trust
The Bank has established for eligible employees the ESOP. As part of
the Conversion, the ESOP borrowed funds from the Company to purchase 10% of the
Common Stock issued in the Conversion, or 103,250 shares of Common Stock.
Collateral for the loan is the Common Stock purchased by ;the ESOP. The Bank
will make scheduled discretionary cash contributions to the ESOP sufficient to
amortize the principal and pay the interest on the loan. The loan will be repaid
principally from the Bank's contributions to the ESOP over a period of seven
years. The interest rate payable on the ESOP loan is 8% simple interest
compounded annually. Shares purchased by the ESOP are held in a suspense account
for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account
in an amount proportional to the repayment of the ESOP loan will be allocated
among participants on the basis of compensation. Benefits generally become 5%
vested after one year of service, 10% vested after two years of service, 15%
vested after three years of service, 20% vested after four years of service and
100% vested after five years of service. Participants also become 100% vested
upon death, retirement, early retirement, disability or separation from service.
Benefits may be paid either in shares of Common Stock or in cash. As the Bank's
contributions to the ESOP are not fixed, benefits payable under the ESOP cannot
be estimated.
In November 1993, the American Institute of Certified Public
Accountants issued Statement of Position 93-6 - "Employers' Accounting for
Employee Stock Ownership Plans" ("SOP"). The SOP is effective for the Company's
fiscal year that began April 1995. The SOP requires that shares committed to be
released in an accounting period should be reflected in the consolidated
financial statements as compensation expense equal to the fair value of the
shares committed to be released. The shares generally will be deemed to be
committed to be released ratably during an accounting period as the employee
performs service. Accordingly, average fair values will be used to determine the
amount of compensation expense to be recognized in that period. Thus, as shares
increase or decrease in value, earnings will be affected relative to the shares
committed to be released in that period. Additionally, the SOP requires that
outstanding shares for purposes of computing both primary and fully diluted
earnings per share include only those shares scheduled to be released in that or
prior periods. Thus, as additional shares are released by the ESOP in future
periods, earnings per share may be diluted. Shares of the Company acquired by
the ESOP are scheduled to be released over a seven year period commencing in
1996. 15,747 shares of Common Stock held by the ESOP were released on March 31,
1996.
9
<PAGE>
Emjay Corporation (the "Trustee") is the ESOP trustee. The Compensation
Committee may instruct the Trustee regarding investment of funds contributed to
the ESOP. The Trustee will vote all allocated shares held in the ESOP in
accordance with instructions from participating employees. The Trustee will vote
unallocated shares held in the suspense account.
Northwest Equity Corp. Incentive Plan
In October 1995, the Company's shareholders approved the Northwest
Equity Corp. Incentive Plan (the "Incentive Plan"). The Incentive Plan provides
officers and employees of the Company and the Bank with a proprietary interest
in the Company and is intended to encourage them to remain with the Company and
the Bank. As of March 31, 1996, the Bank had 15 officers and employees
participating in the Plan. The Plan acquired 41,300 shares of Common Stock, or
4.0% of the number of shares of Common Stock issued by the Company in connection
with the Bank's Conversion.
The Incentive Plan is administered by the Compensation Committee of the
Company, consisting of Directors Gerald J. Ahlin, Michael D. Jensen and Norman
M. Osero. In October 1995, officers and employees of the Bank were granted in
the aggregate 41,300 nontransferable and nonassignable shares of Common Stock.
The Incentive Plan may be amended to increase the number of shares available for
grant; however, if the increase in the number of shares would be deemed to be
material under regulations issued by the SEC, such amendment would require
shareholder approval. Officers and employees become vested in shares of Common
Stock awarded under the Incentive Plan at the rate of approximately 33 1/3% per
year on the first, second and third anniversaries of the date of the grant. The
vesting schedule for any future awards under the Incentive Plan will be
determined by the Compensation Committee of the Company at the time of the
award. Awards will be 100% vested upon termination of employment due to death,
disability or following a change in control of the Bank or the Company. If an
employee terminates employment with the Bank or Company for reasons other than
due to death, disability or a change in control of the Bank or the Company,
unvested Plan awards will be forfeited.
In the event of a stock split, reverse stock split or stock dividend,
the number of shares of Common Stock awarded (and not sold by the recipient of
the award as of the date of the stock split, reverse stock split or stock
dividend) and the number of shares of Common Stock available for future awards
under the Incentive Plan will be adjusted to reflect such increase or decrease
in the total number of shares of Common Stock outstanding.
Northwest Equity Corp. 1995 Stock Option Plan
In October 1995, the Company's shareholders approved the Northwest
Equity Corp. 1995 Stock Option Plan (the "Stock Option Plan"). The purpose of
the Stock Option Plan is to provide officers, employees and directors of the
Company and the Bank with a proprietary interest in the Company; to recognize
management, employees and the Board of Directors for their contributions to the
success of the Bank; and to incite their future performance and encourage them
to remain with the Company and the Bank. Under the Stock Option Plan, all
directors, officers and employees of the Company and its subsidiaries are
eligible to participate. As of March 31, 1996, the Company had 16 directors,
officers and employees participating in the Stock Option Plan. The Stock Option
Plan authorizes the grant of (i) options to purchase shares of Common Stock
intended to qualify as incentive stock options under Section 422 of the Internal
Revenue Code ("Incentive Stock Options"); (ii) options that do not so qualify
("Non-Statutory Options"); and (iii) options that are exercisable only upon a
change in control of the Bank or the Company ("Limited Rights"). Under the Stock
Option Plan, options for a total of 103,251 shares of Common Stock, or 10.0% of
the number of shares of Common Stock issued in connection with the Conversion,
were made available for granting to eligible participants. As of March 31, 1996,
options to purchase 103,251 shares had been granted under the Stock Option Plan
and no options to purchase Common Stock were available for future grants. The
Stock Option Plan may be amended to increase the number of options available for
granting in the future; however, if the increase in the number of shares
available for grant is deemed material under regulations issued by the SEC, such
amendment would require shareholder approval.
10
<PAGE>
The following table sets forth certain information concerning the grant
of stock options to Mr. Beadle under the Stock Option Plan during the fiscal
year ended March 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
-----------------
% of Total
Options
Granted to
Options Employees in Exercise Expiration
Name Granted(1) Fiscal Year(2) Price/share Date
- - ---- ----------- -------------- ----------- -----
Brian L. Beadle.......41,300 80.0% $10.44 10-10-05
- - ------------------
(1) The options granted are subject to a vesting schedule under the Stock
Option Plan and are exercisable as follows: (i)9,578 - (10-10-96);
(ii)9,578 - (10-10-97); (iii)9,578 - (10-10-98); (iv)9,578 - (10-10-99),
(v)2,988 - (10-10-00).
(2) Options to purchase 103,251 shares of Common Stock were granted to
eligible participants under the Stock Option Plan during the year ended
March 31, 1996, of which options to purchase 51,627 shares were granted
to officers and employees.
The following table sets forth certain information concerning the
exercise of stock options granted under the Stock Option Plan by Mr. Beadle
during the year ended March 31, 1996, and the number and value of his
unexercised stock options at March 31, 1996.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Value of
Number of Unexercised
Number of Unexercised In-the-Money
Shares Options Options
Acquired on Value At Fiscal Year-End At Fiscal Year-End(1)
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- - ---- -------- ----------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Brian L. Beadle 0 0 0 41,300 0 n/a
- - --------------- ------------------
<FN>
(1) None of the unexercised options granted to Mr.Beadle were "in-the-money" at March 31, 1996, as the
exercise price of the options ($10.44) exceeded the fair market value of the options ($10.38) at
March 31, 1996.
</FN>
</TABLE>
11
<PAGE>
Of the options to purchase 51,624 shares of Common Stock granted to the
directors of the Company, options grants to individual directors were determined
based upon years of service with the Bank. Each non-executive director who had
served as a director for a period of one or more years as of the date of
shareholder approval in October 1995 were granted options to purchase 10,000
shares of Common Stock. Each non-executive director who served as a director for
a period of less than one year as of the date of shareholder approval was
granted options to purchase 1,624 shares of Common Stock.
Under the Stock Option Plan, the Compensation Committee will determine
the expiration date (but not later than ten years from the date the option is
granted) and the exercise price of the options with respect to employees. With
respect to all options granted to directors and the initial grant of options to
officers and employees, the expiration date is ten years from the date of grant
(October 10, 1995) and the exercise price of the options is the fair market
value of the Common Stock on the date of the grant ($10.44). All options granted
to employees are intended to be Incentive Stock Options to the extent permitted
under Section 422 of the Internal Revenue Code. The exercise price may be paid
in cash or shares of Common Stock. No options will be awarded under the Stock
Option Plan following the tenth anniversary of approval of the Stock Option Plan
by shareholders of the Company. Options will be transferable only by will or the
laws of descent and distribution, except that Non-Statutory Options may be
transferred to the spouse, children or grandchildren of a participating employee
(or a trust for the benefit of such family members).
Options granted under the Stock Option Plan in October 1995 to
employees are intended to vest at the rate necessary to qualify such options as
Incentive Stock Options under the Internal Revenue Code. Options granted to
non-executive directors vest at the rate of 33 1/3% per year commencing on the
first, second and third anniversaries of the date the Stock Option Plan was
approved by shareholders. The vesting schedule of options to be granted to
non-executive employees in the future, if any, will be determined by the
Compensation Committee of the Company.
In the event of a stock split, reverse stock split or stock dividend,
the number of shares of Common Stock subject to options awarded under the Stock
Option Plan and the exercise price per share under the option will be adjusted
to reflect such increase or decrease in the total number of shares of Common
Stock outstanding.
No option granted in connection the Stock Option Plan will be
exercisable after three months after the date on which the optionee ceases to
perform services for the Bank or the Company, except that in the event of death
or disability, options may be exercisable for up to one year thereafter or such
longer period as determined by the Compensation Committee of the Company.
Options held by employees terminated for cause will terminate on the date of
termination. Termination "for cause" includes termination due to personal
dishonesty, incompetence, willful misconduct, the intentional failure to perform
stated duties, breach of fiduciary duty involving personal dishonesty, willful
violations of law, the entry of a final cease and desist order or the material
breach of any provisions of an employee's employment contract. Options will be
immediately exercisable in the event of a change of control. "Change of control"
is defined to include the acquisition of beneficial ownership of 25% or more of
any class of equity security by a person or group of persons acting in concert,
an exchange offer, merger or other form of business combination, a sale of
assets or a contested election of directors that results in a change in control
of a majority of the Board of Directors of the Company.
In the event of death, disability or retirement, the Company, if
requested by the employee, may elect to pay the employee in exchange for
cancellation of the option, or beneficiary in the event of death, the amount by
which the fair market value of the Common Stock exceeds the exercise price of
the option on the date of the employee's termination of employment.
12
<PAGE>
Directors' Compensation
For the fiscal year ended March 31, 1996, each non-employee member of
the Board of Directors of the Bank received a $400 monthly directors' fee. The
directors of the Company, including Mr. Beadle, also received a $200 monthly
directors' fee for Company board meetings attended during the fiscal year ended
March 31, 1996.
In October 1995, Outside Directors Ahlin, Albrecht, Jensen, Michels and
Osero each were granted options to purchase 10,000 shares of Common Stock under
the Stock Option Plan which are subject to the following vesting schedule: (i)
3,333 -- 10/10/96; (ii) 3,333 -- 10/10/97; and (iii) 3,334 -- 10/10/98. In
addition, Outside Director Counter was granted options to purchase 1,624 shares
of Common Stock that are subject to the following vesting schedule: (i) 541 --
10/10/96; (ii) 541 -- 10/10/97; and (iii) 542 -- 10/10/98.
INDEBTEDNESS OF MANAGEMENT AND CERTAIN TRANSACTIONS
Current federal law requires that all loans or extensions of credit to
officers and directors must be made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. In addition, loans made
to a director or executive officer in excess of the greater of $25,000 or 5% of
the Bank's capital and surplus (up to a maximum of $500,000) must be approved in
advance by a majority of the disinterested members of the Board of Directors of
the Bank.
The Bank's policy provides that all loans or extensions of credit to
executive officers and directors are to be 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 may not involve more than the normal risk of collectibility
or present other unfavorable features. All loans since the enactment of current
laws were made by the Bank in the ordinary course of business and were not made
with favorable terms nor involved more than the normal risk of collectibility or
presented unfavorable features.
The Company and the Bank intend that all transactions in the future
between the Company and the Bank and executive officers, directors, holders of
10% or more of the shares of any class of common stock of the Company and
affiliates thereof, will contain terms no less favorable to the Company than
would have been obtained by them in arms' length negotiations with unaffiliated
persons and will be approved by a majority of outside directors of the Company
or the Bank, as applicable, not having any interest in the transaction.
SECTION 16 COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of the shares
of Common Stock outstanding, to file reports of ownership and changes in
ownership with the SEC and the National Association of Securities Dealers, Inc.
Executive officers, directors and greater than ten percent shareholders are
required by regulation to furnish the Company with copies of all Section 16(a)
forms they file. Based upon the review of the information provided to the
Company, the Company believes that during the fiscal year ended March 31, 1996,
executive officers, directors and greater than ten percent shareholders complied
with all Section 16(a) filing requirements.
13
<PAGE>
SHAREHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
To be considered for inclusion in the proxy statement relating to the
Annual Meeting to be held in August 1997, shareholder proposals must be received
at the principal executive offices of the Company at 234 Keller Avenue South,
Amery, Wisconsin 54001 no later than March 2, 1997. If such proposal is in
compliance with all of the requirements of 17 C.F.R. paragraph 240.14a-8 ("Rule
14a-8) of the Rules and Regulations under the Exchange Act, it will be included
in the proxy statement and set forth on the appointment form of proxy issued for
such annual meeting of shareholders. It is urged that any such proposals be sent
certified mail, return receipt requested.
Shareholder proposals that are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Article VII of the Company's
Articles of Incorporation. For business to be properly brought before an annual
meeting, a shareholder must have given timely notice thereof in writing to the
Secretary of the Company. To be timely, a shareholder's notice must be delivered
to or mailed by first class United States mail, postage prepaid, to the
principal executive offices of the Company not later than the close of business
on the tenth day following the day on which notice of the annual meeting was
mailed to the shareholders. A shareholder's notice must set forth certain
information in accordance with Article VII of the Company's Articles of
Incorporation. The notice must include the shareholder's name and address, as
they appear on the Company's record of shareholders, the class and number of
shares of the Company's Common Stock beneficially owned by such shareholder, a
brief description of the proposed business, the reason for considering such
business at the annual meeting and any material interest of the shareholder in
the proposed business.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business that will be presented for
consideration at the Annual Meeting other than as stated in the Notice Annual
Meeting of Shareholders. If, however, other matters are properly brought before
the Annual Meeting or any adjournments or postponements thereof, it is the
intention of the persons named in the accompanying proxy to vote the shares
represented thereby on such matters in accordance with their best judgment.
A copy of the Company's Annual Report or Form 10-KSB (without exhibits)
for the fiscal year ended March 31, 1996, as filed with the SEC will be
furnished without charge to shareholders of record upon written request to
Northwest Equity Corp., Brian L. Beadle, 234 Keller Avenue South, Amery,
Wisconsin 54001.
By Order of the Board of Directors
James L. Moore
James L. Moore
Secretary
Amery, Wisconsin
June 26, 1996
================================================================================
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
================================================================================
14
