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
HEARTLAND FINANCIAL USA, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than
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)(4) 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:
[LOGO]
Heartland Financial USA, Inc.
April 5, 1999
Dear Fellow Stockholder:
You are cordially invited to attend the annual stockholders'
meeting of Heartland Financial USA, Inc. to be held at the
corporate headquarters, located at 1398 Central Avenue, Dubuque,
Iowa, on Wednesday, May 19, 1999, at 2:30 p.m. The accompanying
Notice of Annual Meeting of Stockholders and Proxy Statement
discuss the business to be conducted at the meeting. A copy of
the Company's 1998 Annual Report to Stockholders is enclosed. At
the meeting we shall report on Company operations and the outlook
for the year ahead.
Your Board of Directors has nominated two persons to serve
as Class III directors. We recommend that you vote your shares
for each of the director nominees.
We encourage you to attend the meeting in person. Whether
or not you plan to attend, however, please complete, sign and
date the enclosed proxy and return it in the accompanying
postpaid return envelope as promptly as possible.
We look forward with pleasure to seeing and visiting with
you at the meeting.
With best personal wishes,
/s/ Lynn S. Fuller
-----------------------------
Lynn S. Fuller
Chairman of the Board
1398 Central Avenue Dubuque, Iowa 52001 (319) 589-2100
[LOGO]
Heartland Financial USA, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1999
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of HEARTLAND FINANCIAL
USA, INC. (the "Company") will be held at the corporate
headquarters, 1398 Central Avenue, Dubuque, Iowa, on Wednesday,
May 19, 1999, at 2:30 p.m., for the purpose of considering and
voting upon the following matters:
1. to elect two (2) Class III directors.
2. to transact such other business as may properly be
brought 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 22, 1999, are the stockholders entitled to vote
at the meeting and any adjournments or postponements thereof.
By order of the Board of Directors
/s/ Lois K. Pearce
----------------------------------
Lois K. Pearce
Secretary
Dubuque, Iowa
April 5, 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.
[LOGO]
Heartland Financial USA, Inc.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Heartland Financial
USA, Inc. (the "Company") of proxies to be voted at the Annual
Meeting of Stockholders to be held at the corporate headquarters
located at 1398 Central Avenue, Dubuque, Iowa, on Wednesday,
May 19, 1999, at 2:30 p.m. local time, or at any adjournments or
postponements thereof.
The Company, a Delaware corporation, is a multi-bank and
thrift holding company with 19 locations in Iowa, Illinois,
Wisconsin and New Mexico. The Company is the parent of Dubuque
Bank and Trust Company, Dubuque, Iowa ("DB&T"); Galena State Bank
and Trust Company, Galena, Illinois ("GSB"); First Community
Bank, a Federal Savings Bank, Keokuk, Iowa ("FCB"); Riverside
Community Bank, Rockford, Illinois ("RCB"); Wisconsin Community
Bank, Cottage Grove, Wisconsin ("WCB") and New Mexico Bank &
Trust, Albuquerque, New Mexico ("NMB"). These banks are
collectively referred to as the "Banks". The Company also has
non-banking subsidiaries involved in providing insurance,
consumer credit loans, fleet vehicle leasing and related services
and products. The Banks and other subsidiaries of the Company
are collectively referred to as the "Subsidiaries".
The Proxy Statement and the accompanying Notice of Meeting
and proxy are first being mailed to holders of shares of common
stock, par value $1.00 per share, of the Company ("Common
Stock"), on or about April 5, 1999.
Voting Rights and Proxy Information
All shares of Common Stock represented at the annual meeting
by properly executed proxies received prior to or at the annual
meeting, and not revoked, will be voted at the annual 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 will constitute a
quorum for purposes of the meeting. Abstentions and broker non-
votes will be counted for purposes of determining a quorum.
Stockholders of record on the books of the Company at the
close of business on March 22, 1999, will be entitled to vote at
the meeting or any adjournments or postponements of the meeting.
On March 22, 1999, the Company had outstanding 9,518,805 shares
of Common Stock, with each share entitling its owner to one vote
on each matter submitted to a vote at the annual meeting.
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the meeting and entitled to
vote. In all other matters, the affirmative vote of the majority
of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be
required to constitute stockholder approval. Abstentions will be
treated as votes against any proposal and broker non-votes will
have no effect on the vote.
The Board of Directors would like to have all stockholders
represented at the annual 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 Ms. Lois K. Pearce, Secretary, Heartland
Financial USA, Inc., 1398 Central Avenue, Dubuque, Iowa 52001.
ELECTION OF DIRECTORS
At the annual meeting to be held on May 19, 1999, the
stockholders will be entitled to elect two Class III directors
for terms expiring in 2002. The directors of the Company are
divided into three classes having staggered terms of three years.
Each of the nominees for election as a Class III director is an
incumbent director. The Company has no knowledge that any of the
nominees will refuse or be unable to serve, but if any of the
nominees become unavailable for election, the holders of 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 as of March 22, 1999. Unless otherwise indicated,
each person has held the positions indicated for at least five
years. The nominees, if elected at the annual meeting, will
serve as Class III directors for three year terms expiring in
2002. The Board of Directors recommends that you vote your
shares FOR each of the nominees for director.
NOMINEES
Position with the Company
Name Served as Company and the Subsidiaries and
(Age) Director Since Principal Occupation
- ------------------ ----------------- -------------------------
CLASS III
(Term Expires 2002)
Lynn S. Fuller 1981 Chairman of the Board and
(Age 74) Chief Executive Officer
of the Company; Director
and Vice Chairman of the
Board of DB&T; Director
of DB&T Insurance Inc.,
Citizens Finance Co. and
DB&T Community
Development Corp. (1994 -
present).
Evangeline K. Jansen 1981 Director of DB&T;
(Age 82) Director of DB&T
Insurance Inc., Citizens
Finance Co. and DB&T
Community Development
Corp. (1994-present).
CONTINUING DIRECTORS
Position with the Company
Name Served as Company and the Subsidiaries and
(Age) Director Since Principal Occupation
- ------------------ ----------------- -------------------------
CLASS I
(Term Expires 2000)
Lynn B. Fuller 1987 President of the Company;
(Age 49) Director, President and
Chief Executive Officer
of DB&T; Director of GSB;
Director and President of
DB&T Insurance Inc.,
Citizens Finance Co. and
DB&T Community
Development Corp. (1994 -
present); Director of
Keokuk Bancshares, Inc.,
FCB and DBT Investment
Corporation (1994-
present); Director and
Chairman of RCB (1995 -
present); Director and
Chairman of ULTEA, Inc.
(1996-present); Director
of WCB (1997-present);
Director of NMB (1998-
present).
Gregory R. Miller 1994 Executive Vice President
(Age 50) of the Company (1996-
1998); Director (1987-
present), Vice Chairman
(1998-present), President
and Chief Executive
Officer (1988-1997) of
FCB; President and Chief
Executive Officer of
Keokuk Bancshares, Inc.
(1990-1997); Senior Vice
President and Portfolio
Manager of Chicago
Capital Fund Management
(1998-present).
CLASS II
(Term Expires 2001)
Mark C. Falb 1995 Director of DB&T;
(Age 51) Director of DB&T
Insurance Inc.; Citizens
Finance Co. and DB&T
Community Development
Corp. (1997-present);
Chairman of the Board
and Chief Executive
Officer of Westmark
Enterprises, Inc. and
Kendall/Hunt Publishing
Company.
James A. Schmid 1981 Vice Chairman of the
(Age 75) Board of the Company;
Chairman of the Board and
Director of DB&T;
Director of DB&T
Insurance Inc., Citizens
Finance Co. and DB&T
Community Development
Corp. (1994-present);
Chairman of the Board and
Chief Executive Officer
of Crescent Electric
Supply Company.
Robert Woodward 1987 Director of DB&T;
(Age 62) Director of DB&T
Insurance Inc., Citizens
Finance Co. and DB&T
Community Development
Corp. (1994-present);
Chairman of the Board and
Chief Executive Officer
(1995-present) and
Executive Vice President
(1993-1994) of Woodward
Communications, Inc.
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. No member of the Board of Directors
is related to any other member of the Board of Directors, except
that Lynn S. Fuller is the father of Lynn B. Fuller.
Meetings of the Board of Directors and Committees
Regular meetings of the Board of Directors of the Company
are held quarterly. During 1998, the Board of Directors held
five regular meetings including the annual meeting in May, five
special meetings and three meetings by Informal Directors' Action
pursuant to Section 14(F) of the General Corporation Law of
Delaware. All directors during their terms of office in 1998
attended at least 75% of the total number of meetings of the
Board of Directors of the Company and of meetings held by all
committees of the Board on which any such director served, with
the exception of the Audit Committee. Of the three Audit
Committee meetings held, Mr. Falb was absent for two meetings due
to business travel and Ms. Jansen was absent for one meeting due
to illness. The Company does not currently have a standing
nominating committee. Rather, the entire Board participates in
the process of selecting nominees to fill vacancies on the Board.
Pursuant to the Company's bylaws, the Board of Directors will
consider nominees recommended by stockholders provided any such
recommendation is made in writing and delivered to the Secretary
of the Company no less than 30, nor more than 75, days prior to
the date of the annual meeting at which directors are to be
elected and otherwise complies with the Company's bylaws.
The Compensation Committee, consisting of directors Schmid
(Chairman), Falb, Jansen and Woodward, meets to review the
salary, other compensation and performance of the Chief Executive
Officer and each of the other executive officers named in the
Summary Compensation Table and recommends adjustments. During
1998, the Compensation Committee met five times.
The Audit Committee recommends independent auditors to the
Board, reviews the results of the auditors' services, reviews
with management and the internal auditor the systems of internal
control and internal audit reports and assures that the books and
records of the Company are kept in accordance with applicable
accounting principles and standards. The members of the Audit
Committee are directors Schmid (Chairman), Falb, Jansen and
Woodward. During 1998, the Audit Committee met three times.
Compensation of Directors
Each of the Company's directors is paid a fee of $450 for
each board meeting attended and $250 for each committee meeting
attended, except that Mr. Lynn B. Fuller receives no fees for his
services as director of the Company.
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 22, 1999, by each person known by the Company to be the
beneficial owner of more than 5% 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.
Amount and Nature
Name of Individual and of Beneficial Percent of
Number of Persons in Group Ownership (1) Class
- -------------------------- ------------------ ----------
5% Stockholders
Dubuque Bank and Trust Company
1398 Central Avenue
Dubuque, Iowa 52001 733,908 (2) 7.7%
Heartland Partnership, L.P.
1145 S. Grandview
Dubuque, Iowa 52003 556,000 (3) 5.8%
Directors
Mark C. Falb 179,872 (4) 1.9%
Lynn B. Fuller 264,652 (5) 2.8%
Lynn S. Fuller 951,322 (6) 10.0%
Evangeline K. Jansen 921,312 (7) 9.7%
Gregory R. Miller 188,764 (8) 2.0%
James A. Schmid 382,880 (9) 4.0%
Robert Woodward 437,132 (10) 4.6%
Other Executive Officers
John K. Schmidt 55,613 (11) *
Kenneth J. Erickson 63,759 (12) *
Douglas J. Horstmann 62,235 (13) *
Paul J. Peckosh 58,193 (14) *
All directors and
executive officers
as a group (12 persons) 3,609,873 37.9%
* 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. Amounts reported
include shares held directly as well as shares which are held in
retirement accounts and shares held by certain members of the
named individuals' families or held by trusts of which the named
individual is a trustee or substantial beneficiary, with respect
to which shares the respective director may be deemed to have
sole or shared voting and/or investment power. Also included are
shares obtainable through the exercise of options in the
following amounts: Mr. Lynn B. Fuller - 40,000 shares; Messrs.
Miller and Peckosh - 20,000 shares; Messrs. Schmidt, Erickson and
Horstmann - 26,667 shares and all directors and executive
officers as a group - 186,668 shares. 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.
(2) Includes 338,314 shares over which DB&T has sole voting
and investment power and 395,594 shares over which DB&T has
shared voting or investment power.
(3) Mr. Lynn S. Fuller, Chairman of the Board and Chief
Executive Officer of the Company, is the General Partner of
Heartland Partnership, L.P., and in such capacity exercises sole
voting and investment power over such shares.
(4) Includes 109,376 shares over which Mr. Falb has shared
voting and investment power and 44,704 shares held by Mr. Falb's
spouse, as trustee, over which Mr. Falb has no voting or
investment power.
(5) Includes an aggregate of 4,205 shares held by Mr.
Fuller's spouse and minor children and 75,146 shares held in a
trust for which Mr. Fuller serves as co-trustee, over which Mr.
Fuller has shared voting and investment power. Includes 14,000
shares held by the Heartland Partnership, L.P. over which Mr.
Fuller has no voting or investment power but in which Mr. Fuller
does have a beneficial interest.
(6) Includes shares held by the Heartland Partnership,
L.P., over which Mr. Fuller has sole voting and investment power,
as well as 72,284 shares held by a trust for which Mr. Fuller's
spouse is a trustee and 75,146 shares held in a trust for which
Mr. Fuller serves as co-trustee, over which Mr. Fuller has shared
voting and investment power.
(7) Represents shares held in certain trusts for which Ms.
Jansen serves as trustee or co-trustee. Voting and investment
power is shared with respect to 288,512 of such shares.
(8) Includes an aggregate of 66,100 shares held by Mr.
Miller's spouse, over which Mr. Miller has shared voting and
investment power.
(9) Includes 10,784 shares held by Mr. Schmid's wife, over
which Mr. Schmid has shared voting and investment power, 146,672
shares held in trust over which Mr. Schmid has sole voting and
investment power, and 84,384 shares held by Crescent Realty
Corp., of which Mr. Schmid is a controlling person.
(10) Includes an aggregate of 261,200 shares held by various
trusts of which Mr. Woodward is a trustee and over which Mr.
Woodward has shared voting and investment power over 248,400
shares and sole voting and investment power over 12,800 shares.
Mr. Woodward also has full power of attorney for the 5,712 shares
held by his mother.
(11) Includes 260 shares held by Mr. Schmidt jointly with
his spouse, over which Mr. Schmidt has shared voting and
investment power.
(12) Includes 4,800 shares held by Mr. Erickson jointly with
his spouse, over which Mr. Erickson has shared voting and
investment power.
(13) Includes 18,000 shares held by Mr. Horstmann's spouse,
over which Mr. Horstmann has shared voting and investment power.
(14) Includes 3,017 shares held by Mr. Peckosh jointly with
his spouse and 1,600 shares held by Mr. Peckosh's spouse, over
which Mr. Peckosh has shared voting and investment power.
Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act") requires that the Company's directors, executive
officers and 10% stockholders file reports of ownership and
changes in ownership with the Securities and Exchange Commission.
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, the Company is not aware that any
of its directors, 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.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the
compensation paid or granted to the Company's President and to
each of the other four most highly compensated executive officers
of the Company or the Subsidiaries for the fiscal year ended
December 31, 1998:
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
(a) (b) (c) (d)
Fiscal
Year
Ended
Name and Principal December Salary Bonus
Position 31st ($)(1) ($)(2)
- ------------------------- ---------- --------- --------
Lynn B. Fuller 1998 $170,000 $58,155
President of the Company 1997 165,000 73,042
1996 157,000 72,523
John K. Schmidt
Executive Vice President 1998 $108,000 $28,346
and Chief Financial Officer 1997 105,000 29,182
of the Company 1996 99,000 26,257
Kenneth J. Erickson 1998 $104,000 $17,538
Senior Vice President 1997 100,000 20,808
of the Company 1996 96,000 22,946
Douglas J. Horstmann 1998 $102,000 $17,200
Senior Vice President 1997 99,000 20,601
of DB&T 1996 96,000 17,946
Paul J. Peckosh 1998 $ 91,500 $25,093
Senior Vice President 1997 88,000 23,294
of DB&T 1996 85,000 27,023
Long-term
Compensation
Awards
---------------------
(a) (b) (f) (g) (h)
Fiscal
Year Securities
Ended Restricted Underlying All Other
Name and Principal December Stock Options/ Compensa-
Position 31st Awards ($) SARs(#) tion($)(3)
- ------------------ ---------- ---------- ---------- ----------
Lynn B. Fuller 1998 $ --- $24,000 $24,636
President 1997 --- 24,000 47,179
of the Company 1996 --- 24,000 28,168
John K. Schmidt 1998 $ --- $16,000 $18,382
Executive Vice 1997 --- 16,000 30,071
President and 1996 --- 16,000 18,602
Chief Financial
Officer of the Company
Kenneth J. Erickson 1998 $ --- $16,000 $18,024
Senior Vice President 1997 --- 16,000 31,382
of the Company 1996 --- 16,000 19,117
Douglas J. Horstmann 1998 $ --- $16,000 $16,150
Senior Vice President 1997 --- 16,000 28,818
of DB&T 1996 --- 16,000 18,358
Paul J. Peckosh 1998 $ --- $12,000 $15,951
Senior Vice President 1997 --- 12,000 26,852
of DB&T 1996 --- 12,000 16,531
(1) Includes amounts deferred under the Company's
Retirement Plan.
(2) The amounts shown represent amounts received under the
Company's Management Incentive Compensation Plan.
(3) The amounts shown represent amounts contributed on
behalf of the respective officer to the Company's Retirement
Plan, the aggregate value of the discount to market price of
shares purchased under the Company's Employee Stock Purchase Plan
and/or the Company's Executive Restricted Stock Purchase Plan,
and the allocable portion of the premium paid for life insurance
under the Company's Executive Death Benefit Program. For Mr.
Fuller, the amounts shown include an automobile allowance of
$1,698 for 1998, $1,901 for 1997 and $1,901 for 1996. For 1998,
the amount contributed for each officer under the Retirement Plan
and the aggregate value of the discount realized by each named
individual was $20,000 and $2,490 for Mr. Fuller, $17,487 and
$780 for Mr. Schmidt, $15,825 and $2,028 for Mr. Erickson,
$15,590 and $414 for Mr. Horstmann and $14,555 and $1,167 for Mr.
Peckosh. For 1997, such amounts were $19,632 and $25,023 for Mr.
Fuller, $16,105 and $13,799 for Mr. Schmidt, $15,085 and $16,051
for Mr. Erickson, $14,349 and $14,252 for Mr. Horstmann and
$14,113 and $12,418 for Mr. Peckosh. For 1996, such amounts were
$18,622 and $7,171 for Mr. Fuller, $15,759 and $2,705 for Mr.
Schmidt, $14,349 and $4,587 for Mr. Erickson, $14,349 and $3,858
for Mr. Horstmann and $12,859 and $3,418 for Mr. Peckosh.
Stock Option Information
The following table sets forth certain information
concerning the number and value of stock options granted in the
last fiscal year to the individuals named in the Summary
Compensation Table:
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
(a) (b) (c) (d)
% of Total
Options Granted
Options to Employees Exercise or
Granted in Fiscal Base Price
Name (#) (1) Year ($/Share)
- ----------------------- ------------ ----------- -----------
Lynn B. Fuller 24,000 18.2% $14.75
John K. Schmidt 16,000 12.1% 14.75
Kenneth J. Erickson 16,000 12.1% 14.75
Douglas J. Horstmann 16,000 12.1% 14.75
Paul J. Peckosh 12,000 9.1% 14.75
(a) (e) (f)
Grant Date
Expiration Present Value
Name Date ($) (2)(3)
- ---------------------- ---------- -------------
Lynn B. Fuller 01/02/08 $129,840
John K. Schmidt 01/02/08 86,560
Kenneth J. Erickson 01/02/08 86,560
Douglas J. Horstmann 01/02/08 86,560
Paul J. Peckosh 01/02/08 64,920
(1) Options become exercisable in three equal portions on the
day after the third, fourth and fifth anniversaries of the
January 2, 1998 date of grant.
(2) The Black Scholes valuation model was used to determine the
grant date present values. Significant assumptions include: risk-
free interest rate, 5.75%; expected option life, 10 years;
expected volatility, 24.27%; expected dividends, 1.76%.
(3) The ultimate value of the options will depend on the future
market price of the Company's Common Stock, which cannot be
forecast with reasonable accuracy. The actual value, if any, an
executive may realize upon the exercise of an option will depend
on the excess of the market value of the Company's Common Stock,
on the date the option is exercised, over the exercise price of
the option.
The following table sets forth certain information
concerning the stock options at December 31, 1998 held by the
named executive officers. No stock options were exercised during
1998 by such persons.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
(a) (b) (c) (d)
Number of Securities
Shares Underlying Unexercised
Acquired On Value Options/SARs at FY-End
Exercise Realized (#)
Name (#) ($) Exercisable Unexercisable
- ------------------ --------- ------- ----------- -------------
Lynn B. Fuller --- $--- 16,000 104,000
John K. Schmidt --- --- 10,667 69,333
Kenneth J. Erickson --- --- 10,667 69,333
Douglas J. Horstmann --- --- 10,667 69,333
Paul J. Peckosh --- --- 8,000 52,000
(a) (e)
Value of Unexercised
In-the-Money
Options/SARs at FY-End
($)
Name Exercisable Unexercisable
- -------------------- ----------- -------------
Lynn B. Fuller $156,000 $740,880
John K. Schmidt 104,003 493,917
Kenneth J. Erickson 104,003 493,917
Douglas J. Horstmann 104,003 493,917
Paul J. Peckosh 78,000 370,440
Change of Control Agreements
The Company has entered into a separate Change of Control
Agreement with each of the named executive officers and certain
other officers of the Company's subsidiaries. These agreements
provide that if employment is terminated six months prior to a
change in control of the Company (as defined in the agreements)
or within one year thereafter, the terminated officer is to be
paid severance compensation equal to a multiple of such officer's
total compensation (as defined in the agreements) at the time of
termination. The multiple varies for each officer, up to a
maximum of four times total compensation. Additionally, the
agreements provide for the continuation of medical and dental
benefits for up to two years after such termination and the
payment of expenses for out-placement counseling for a period of
one year, up to a maximum amount equal to twenty-five percent of
total compensation. Messrs. Fuller, Schmidt and Erickson are
prohibited by their respective agreements from competing with the
Company or its subsidiaries within a designated geographic area
for a period of two years following the termination of
employment.
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 REPORT
UNLESS SUCH REPORT IS SPECIFICALLY STATED TO BE INCORPORATED BY
REFERENCE INTO SUCH DOCUMENT.
Compensation Committee Report On Executive Compensation
The Company's compensation program is administered by the
Compensation Committee (the "Committee"). In determining
appropriate levels of executive compensation, the Committee has
at its disposal independent reference information regarding
compensation ranges and levels for executive positions in
comparable companies. In determining compensation to be paid to
executive officers, primary consideration is given to quality
long-term earnings growth accomplished by achieving both
financial and non-financial goals such as return on equity,
earnings per share and asset and deposit growth. The objectives
of this philosophy are to: (i) encourage a consistent and
competitive return to stockholders; (ii) reward bank and
individual performances; (iii) provide financial rewards for
performance of those having a significant impact on corporate
profitability; and (iv) provide competitive compensation in order
to attract and retain key personnel.
There are three major components of the Company's executive
officer compensation (i) base salary, (ii) annual incentive
awards and (iii) long-term incentive awards. The process utilized
by the Committee in determining executive officer compensation
levels for all of these components is based upon the Committee's
subjective judgment and takes into account both qualitative and
quantitative factors. No specific weights are assigned to such
factors with respect to any compensation component. Among the
factors considered by the Committee are the recommendations of
the president with respect to the compensation of the Company's
other key executive officers. However, the Committee makes the
final compensation decisions concerning such officers. The
Company also has adopted the Heartland Financial, USA, Inc. 1993
Stock Option Plan ("Stock Option Plan"). The Stock Option Plan
is intended to promote equity ownership in the Company by
directors and selected officers and employees of the Company and
the Subsidiaries to increase their proprietary interest in the
success of the Company and to encourage them to remain in the
employ of the Company or the Subsidiaries. The Company has also
purchased a split-dollar life insurance policy on each of its
executive officers with the exception of the Chief Executive
Officer.
The Chief Executive Officer's salary for 1998 was based on a
variety of factors, the foremost of which was agreement that his
salary would remain at the current level until the transition of
the President to the Chief Executive Officer position occurs.
The Chief Executive Officer was not eligible for incentive based
compensation in 1998.
Respectfully,
James A. Schmid, Chairman
Mark C. Falb
Evangeline K. Jansen
Robert Woodward
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
During the last completed fiscal year, in addition to each
of the members of the Committee, Messrs. Lynn S. Fuller, Lynn B.
Fuller and John K. Schmidt also participated in Committee
deliberations concerning executive compensation. No such person
participated in any decisions regarding their own compensation.
Mr. Lynn S. Fuller serves as Chairman of the Board and Chief
Executive Officer of the Company and Vice Chairman of the Board
of DB&T. Mr. Lynn B. Fuller serves as President of the Company
and President and Chief Executive Officer of DB&T. Mr. Schmidt is
not a director of the Company or DB&T but is the Executive Vice
President and Chief Financial Officer of the Company and Senior
Vice President and Chief Financial Officer of DB&T. All of the
members of the Committee also serve as directors of DB&T.
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 SUCH GRAPH AND RELATED
INFORMATION IS SPECIFICALLY STATED TO BE INCORPORATED BY
REFERENCE INTO SUCH DOCUMENT.
Stockholder Return Performance Presentation
The following graph shows a five year comparison of
cumulative total returns for the Company, the NASDAQ Stock Market
(US Companies) and an index of NASDAQ Bank Stocks. The Company's
stock is traded in the over-the-counter market under the symbol
"HTLF" and is eligible for quotation on the OTC Bulletin Board.
Figures for the Company's Common Stock represent interdealer
quotations, without retail markups, markdowns or commissions and
do not necessarily represent actual transactions. The graph was
prepared at the Company's request by SNL Securities L.C.,
Charlottesville, Virginia.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ASSUMES $100 INVESTED ON DECEMBER 31, 1993
*Total return assumes reinvestment of dividends
Cumulative Total Return Performance
December 31,
----------------------------------
1993 1994 1995 1996 1997 1998
Heartland Financial USA, Inc. $100 $142 $172 $245 $299 $372
NASDAQ - Total US $100 $ 98 $138 $170 $209 $293
NASDAQ Bank Index $100 $100 $148 $196 $328 $325
TRANSACTIONS WITH MANAGEMENT
Directors and officers of the Company and the Subsidiaries,
and their associates, were customers of and had transactions with
the Company and one or more of the Subsidiaries 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.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors of the Company is in the process of
selecting the Company's auditors for the fiscal year ending
December 31, 1999. KPMG Peat Marwick LLP has been the Company's
auditors since June, 1994 and is one of the three firms
submitting a bid. A representative of KPMG Peat Marwick LLP is
expected to attend the meeting and will be available to respond
to appropriate questions and to make a statement if he or she so
desires.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any proposals of stockholders intended to be presented at
the 2000 Annual Meeting of Stockholders must be received by the
Company on or before December 4, 1999, and must otherwise comply
with the Company's bylaws.
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, it is intended that 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 or the
Subsidiaries may solicit proxies personally or by telegraph or
telephone without additional compensation.
FAILURE TO INDICATE CHOICE
If any stockholder fails to indicate a choice in item (1) on
the proxy card, the shares of such stockholder shall be voted FOR
the nominees listed.
By order of the Board of Directors
/s/ Lynn B. Fuller
-----------------------------------
Lynn B. Fuller
President
Dubuque, Iowa
April 5, 1999
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES
[LOGO]
Heartland Financial USA, Inc.
Proxy Card
PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
HEARTLAND FINANCIAL USA, INC. TO BE HELD ON MAY 19, 1999
The undersigned hereby appoints Lynn S. Fuller and James A.
Schmid, or either one of them acting in the absence of the other,
with power of substitution, attorneys and proxies, for and in the
name and place of the undersigned, to vote the number of common
shares that the undersigned would be entitled to vote if then
personally present at the Annual Meeting of Stockholders of
Heartland Financial USA, Inc., to be held at the corporate
headquarters located at 1398 Central Avenue, Dubuque, Iowa, on
the 19th day of May, 1999, at 2:30 p.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 follows:
1. ELECTION OF DIRECTORS:
[ ] FOR all [ ] WITHHOLD AUTHORITY
nominees listed to vote for all nominees
below (except as listed below
marked to the
contrary below)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW.)
Class III (Term Expires 2002): Lynn S. Fuller and Evangeline K.
Jansen
2. In accordance with their discretion, upon all other matters
that may properly come before said meeting and any
adjournments or postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED UNDER
PROPOSAL 1.
Dated: , 1999
------------------
Signature(s)
----------------------
----------------------
NOTE: PLEASE DATE PROXY AND SIGN IT EXACTLY AS NAME OR NAMES
APPEAR ABOVE. ALL JOINT OWNERS OF SHARES SHOULD SIGN. STATE
FULL TITLE WHEN SIGNING AS EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN, ETC. PLEASE RETURN SIGNED PROXY IN THE ENCLOSED
ENVELOPE.
