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, 2000
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 17, 2000, at 1:30 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
our 1999 Annual Report to Stockholders is enclosed. At the
meeting we shall report on operations and the outlook for the
year ahead.
Your board of directors has nominated two persons to serve
as Class I directors. Additionally, our management has selected
and recommends that you ratify the selection of KPMG LLP to
continue as our independent public accountants for the year
ending December 31, 2000.
We recommend that you vote your shares for each of the
director nominees and in favor of the proposal.
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. This will
ensure that your shares are represented at the meeting.
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
<PAGE>
[LOGO]
Heartland Financial USA, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 2000
TO THE STOCKHOLDERS:
The annual meeting of stockholders of HEARTLAND FINANCIAL
USA, INC. will be held at the corporate headquarters, 1398
Central Avenue, Dubuque, Iowa, on Wednesday, May 17, 2000, at
1:30 p.m., for the purpose of considering and voting upon the
following matters:
1. to elect two Class I directors.
2. to approve the appointment of KPMG LLP as
independent public accountants for the fiscal
year ending December 31, 2000.
3. to transact such other business as may properly be
brought before the meeting or any adjournments
or postponements of the meeting.
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, 2000, are the stockholders entitled to vote
at the meeting and any adjournments or postponements of the
meeting. 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 meeting may be adjourned or
postponed in order to permit further solicitation of proxies.
By order of the Board of Directors
/s/ Lois K. Pearce
----------------------------------
Lois K. Pearce
Secretary
Dubuque, Iowa
April 5, 2000
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE US 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>
[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. of proxies to be voted at the annual meeting of
stockholders. This meeting is to be held at the corporate
headquarters located at 1398 Central Avenue, Dubuque, Iowa, on
Wednesday, May 17, 2000, at 1:30 p.m. local time, or at any
adjournments or postponements of the meeting.
Heartland Financial USA, Inc., a Delaware corporation, is a
diversified financial services holding company headquartered in
Dubuque, Iowa. We offer full-service community banking through
six banking subsidiaries with a total of 29 banking locations in
Iowa, Illinois, Wisconsin and New Mexico. In addition, we have
separate subsidiaries in the consumer finance, vehicle leasing/
fleet management, insurance agency and investment management
businesses. Our primary strategy is to balance ourfocus on in-
creasing profitability with asset growth and diversification
through acquisitions, de novo bank formations, branch openings
and expansion into non-bank subsidiary activities.
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, on or about April 5, 2000.
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 proposal 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 our books at the close of business
on March 22, 2000, will be entitled to vote at the meeting or any
adjournments or postponements of the meeting. On March 22, 2000,
we had outstanding 9,627,465 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.
We 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 by:
- executing and delivering to our corporate secretary a
later dated proxy relating to the same shares prior to
the exercise of such proxy;
- filing with our corporate secretary, at or before the
meeting, a written notice of revocation bearing a
later date than the proxy; or
- 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 17, 2000, you will
be entitled to elect two Class I directors for terms expiring in
2003. The directors are divided into three classes having
staggered terms of three years. Each of the nominees for
election as a Class I director is an incumbent director. We have
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, 2000. 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 I directors for three-year terms expiring in 2003.
The board of directors recommends that you vote your shares FOR
each of the nominees for director.
NOMINEES
Served as
Company Position with the Company
Name Director and the Subsidiaries and
(Age) Since and Principal Occupation
- ------------------ --------- ------------------------
CLASS I
(Term Expires 2003)
Lynn B. Fuller 1987 President (1990-present) and
(Age 50) and Chief Executive Officer
(1999-present) of Heartland
Financial USA, Inc.; Director,
Vice Chairman of the Board
(2000-present), President
(1987-1999) and Chief
Executive Officer (1986-1999)
of Dubuque Bank and Trust;
Director of Galena State Bank,
First Community Bank,
Riverside Community Bank
(1995-present), Wisconsin
Community Bank (1997-present),
New Mexico Bank & Trust (1998-
present) and Keokuk
Bancshares, Inc.; Director and
President of Citizens Finance;
Director and Chairman of ULTEA
1996-present)
Gregory R. Miller 1994 Executive Vice President of
(Age 51) of Heartland Financial USA,
Inc. (1996-1998); Director
(1987-present), Vice Chairman
(1998-present), President and
Chief Executive Officer (1988-
1997) of First Community Bank;
President and Chief Executive
Officer of Keokuk Bancshares,
Inc. (1990-1997); Senior Vice
President and Portfolio
Manager of Chicago Capital
Fund Management (1998-present)
CONTINUING DIRECTORS
Served as
Company Position with the Company
Name Director and the Subsidiaries and
(Age) Since and Principal Occupation
- ------------------ --------- ------------------------
CLASS II
(Term Expires 2001)
Mark C. Falb 1995 Director of Dubuque Bank and
(Age 52) Trust; Director of Citizens
Finance (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 Board of
(Age 76) Heartland Financial USA, Inc.;
Chairman of the Board and
Director of Dubuque Bank and
Trust; Director of Citizens
Finance; Chairman of the Board
and Chief Executive Officer of
Crescent Electric Supply
Company
Robert Woodward 1987 Director of Dubuque Bank and
(Age 63) Trust and Citizens Finance;
Chairman of the Board and
Chief Executive Officer (1995-
present) and Executive Vice
President (1983-1994) of
Woodward Communications, Inc.
CLASS III
(Term Expires 2002)
Lynn S. Fuller 1981 Chairman of the Board (1988-
(Age 75) present) and Chief Executive
Officer (1988-1999) of
Heartland Financial USA, Inc.;
Director and Vice Chairman of
the Board of Dubuque Bank and
Trust; Director of Citizens
Finance
Evangeline K. Jansen 1981 Director of Dubuque Bank and
(Age 83) Trust and Citizens Finance
All of our 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 Heartland Financial USA, Inc. and any other person
pursuant to which any of our 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 are held
quarterly. During 1999, the board of directors held four regular
meetings and eight special meetings. All directors during their
terms of office in 1999 attended at least 75% of the total number
of meetings of the board of directors 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 four audit
committee meetings held, Mr. Falb was absent for two meetings due
to business travel. We do not currently have a standing
nominating committee. Rather, the entire board participates in
the process of selecting nominees to fill vacancies on the board.
The board of directors will consider nominees recommended by
stockholders provided any such recommendation is made in writing
and delivered to the corporate secretary as further provided in
our bylaws.
The compensation committee, consisting of directors Schmid
(Chairman), Falb, Jansen, Woodward and Miller, 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 1999, the compensation committee met three 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 are kept in accordance with applicable accounting
principles and standards. The members of the audit committee are
directors Schmid (Chairman), Falb, Jansen, Woodward and Miller.
During 1999, the audit committee met four times.
Compensation of Directors
Each of our 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information with
respect to the beneficial ownership of our common stock at March
22, 2000, by each person known by us 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 below and by all directors and executive
officers of Heartland Financial USA, Inc. as a group. Unless
otherwise noted, the address of each five percent stockholder is
1398 Central Avenue, Dubuque, Iowa 52001.
Amount and Nature
Name of Individual and of Beneficial Percent of
Number of Persons in Group Ownership (1) Class
- -------------------------- ------------------ ----------
5% Stockholders and Directors
Dubuque Bank and Trust Company 735,460 (2) 7.6%
Heartland Partnership, L.P. 556,000 (3) 5.8%
Mark C. Falb 182,574 (4) 1.9%
Lynn B. Fuller 329,690 (5) 3.4%
Lynn S. Fuller 884,570 (6) 9.2%
Evangeline K. Jansen 915,902 (7) 9.5%
Gregory R. Miller 204,764 (8) 2.1%
James A. Schmid 385,582 (9) 4.0%
Robert Woodward 439,834 (10 4.6%
Other Executive Officers
John K. Schmidt 77,174 (11) *
Kenneth J. Erickson 86,187 (12) *
Douglas J. Horstmann 83,684 (13) *
Paul J. Peckosh 72,774 (14) *
All directors and
executive officers
as a group (12 persons) 3,726,031 38.7%
* Less than one percent
(1) The information contained in this column is based upon
information furnished to Heartland Financial USA, Inc. 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 within 60 days of the date of the information
presented in this table in the following amounts: Mr. Lynn B.
Fuller - 72,000 shares; Messrs. Miller and Peckosh - 36,000
shares; Messrs. Schmidt, Erickson and Horstmann - 48,000 shares
and all directors and executive officers as a group - 336,000
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 337,164 shares over which Dubuque Bank and
Trust, Heartland Financial USA, Inc.'s leading bank subsidiary,
has sole voting and investment power and 398,296 shares over
which Dubuque Bank and Trust has shared voting or investment
power.
(3) Mr. Lynn S. Fuller, Chairman of the Board of Heartland
Financial USA, Inc., 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 4,305 shares held by Mr.
Fuller's spouse and minor children and 77,848 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 37,284 shares held by a trust for which Mr. Fuller's
spouse is a trustee and 77,848 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, 149,374
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 488 shares held by Mr. Schmidt jointly with
his spouse, over which Mr. Schmidt has shared voting and
investment power.
(12) Includes 5,333 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, over which Mr. Peckosh has shared voting and
investment power, and 1,600 shares held by Mr. Peckosh's spouse,
over which Mr. Peckosh has no voting and investment power.
Section 16(a) of the Securities Exchange Act of 1934 requires
that our 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 us with copies of all Section 16(a) forms they file.
Based solely upon our review of such forms, we are not aware that
any of our directors, executive officers or 10% stockholders
failed to comply with the filing requirements of Section 16(a)
during 1999.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the
compensation paid or granted to our Chief Executive Officer and
to each of the other four most highly compensated executive
officers of Heartland Financial USA, Inc. or our subsidiaries for
the fiscal year ended December 31, 1999:
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 1999 $180,000 $80,124
President and Chief 1998 170,000 58,155
Executive Officer of 1997 165,000 73,042
Heartland Financial USA, Inc.
John K. Schmidt 1999 $118,000 $32,315
Executive Vice President 1998 108,000 28,346
and Chief Financial Officer of 1997 105,000 29,182
Heartland Financial USA, Inc.
Kenneth J. Erickson 1999 $109,000 $35,290
Executive Vice President of 1998 104,000 17,538
Heartland Financial USA, Inc. 1997 100,000 20,808
Douglas J. Horstmann 1999 $105,000 $30,307
Senior Vice President of 1998 102,000 17,200
Heartland Financial USA, Inc. 1997 99,000 20,601
Paul J. Peckosh 1999 $ 94,250 $27,690
Senior Vice President of 1998 91,500 25,093
Heartland Financial USA, Inc. 1997 88,000 23,294
Long-term
Compensation
Awards
---------------------
(a) (b) (f) (g) (h)
Fiscal
Year Securities
Ended Restricted Underlying All Other
Name and Principal December Stock Options/ Compensa-
Position 31st Awards ($) SARs(#) tion($)(3)
- ------------------ -------- ---------- ---------- ----------
Lynn B. Fuller 1999 $ --- 24,000 $21,974
President and Chief 1998 --- 24,000 24,636
Executive Officer of 1997 --- 24,000 47,179
Heartland Financial
USA, Inc.
John K. Schmidt 1999 $ --- 16,000 $19,497
Executive Vice 1998 --- 16,000 18,382
President and 1997 --- 16,000 31,382
Chief Financial
Officer of Heartland
Financial USA, Inc.
Kenneth J. Erickson 1999 $ --- 12,000 $16,015
Executive Vice 1998 --- 16,000 18,024
President of Heartland 1997 --- 16,000 31,382
Financial USA, Inc.
Douglas J. Horstmann 1999 $ --- 6,000 $15,443
Senior Vice President 1998 --- 16,000 16,150
of Heartland Financial 1997 --- 16,000 28,818
USA, Inc.
Paul J. Peckosh 1999 $ --- 6,000 $15,191
Senior Vice President 1998 --- 12,000 15,951
of Heartland Financial 1997 --- 12,000 26,852
USA, Inc.
(1) Includes amounts deferred under our retirement plan.
(2) The amounts shown represent amounts received under our
management incentive compensation plan.
(3) The amounts shown represent amounts contributed on
behalf of the respective officer to the retirement plan, the
aggregate value of the discount to market price of shares
purchased under the employee stock purchase plan and/or the
executive restricted stock purchase plan, and the allocable
portion of the premium paid for life insurance under the
executive death benefit program. For Mr. Fuller, the amounts
shown include an automobile allowance of $1,463 for 1999, $1,698
for 1998 and $1,901 for 1997. For Mr. Schmidt, the amount shown
for 1999 includes an automobile allowance of $1,082. For 1999,
the amount contributed for each officer under the retirement plan
was $19,988 for Mr. Fuller, $18,283 for Mr. Schmidt, $15,808 for
Mr. Erickson, $15,266 for Mr. Horstmann and $14,909 for Mr.
Peckosh. There was no discount realized on shares purchased
under the stock plans during 1999. 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
$12,418 for Mr. Peckosh.
Stock Option Information
The following table sets forth certain information concerning
the number and value of stock options granted in the last fiscal
year to the individuals named in the summary compensation table:
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
(a) (b) (c) (d)
% of Total
Options Granted
Options to Employees Exercise or
Granted in Fiscal Base Price
Name (#) (1) Year ($/Share)
- ----------------------- ------------ ----------- -----------
Lynn B. Fuller 24,000 22.6% $18.00
John K. Schmidt 16,000 15.1% 18.00
Kenneth J. Erickson 12,000 11.3% 18.00
Douglas J. Horstmann 6,000 5.7% 18.00
Paul J. Peckosh 6,000 5.7% 18.00
(a) (e) (f)
Grant Date
Expiration Present Value
Name Date ($) (2)(3)
- ---------------------- ---------- -------------
Lynn B. Fuller 01/02/09 $121,200
John K. Schmidt 01/02/09 80,800
Kenneth J. Erickson 01/02/09 86,560
Douglas J. Horstmann 01/02/09 86,560
Paul J. Peckosh 01/02/09 64,920
(1) Options become exercisable in three equal portions on
the day after the third, fourth and fifth anniversaries of the
January 2, 1999 date of grant.
(2) The Black Scholes valuation model was used to deter-
mine the grant date present values. Significant assumptions
include: risk-free interest rate, 6.28%; expected option life, 10
years; expected volatility, 13.04%; expected dividends, 1.94%.
(3) The ultimate value of the options will depend on the
future market price of our common stock, which cannot be fore-
cast with reasonable accuracy. The actual value, if any, an
executive may realize upon the exercise of an option will depend
on the excess of the market value of our common stock, on the
date the option is exercised, over the exercise price of the
option.
The following table sets forth certain information concern-
ing the stock options at December 31, 1999, held by the named
executive officers. No stock options were exercised during 1999
by any of the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
(a) (b) (c) (d)
Number of Securities
Shares Underlying Unexercised
Acquired On Value Options/SARs at FY-End
Exercise Realized (#)
Name (#) ($) Exercisable Unexercisable
- ------------------ --------- -------- ----------- -------------
Lynn B. Fuller --- $--- 40,000 104,000
John K. Schmidt --- --- 26,667 69,333
Kenneth J. Erickson --- --- 26,667 65,333
Douglas J. Horstmann --- --- 26,667 59,333
Paul J. Peckosh --- --- 20,000 46,000
(a) (e)
Value of Unexercised
In-the-Money
Options/SARs at FY-End
($)
Name Exercisable Unexercisable
- -------------------- ----------- -------------
Lynn B. Fuller $374,960 $491,920
John K. Schmidt 249,977 327,943
Kenneth J. Erickson 249,977 327,943
Douglas J. Horstmann 249,977 327,943
Paul J. Peckosh 187,480 245,960
Change of Control Agreements
We have entered into a separate change of control agreement
with each of the named executive officers and certain other of
our officers. These agreements provide that if employment is
terminated six months prior to a change in control of Heartland
Financial USA, Inc. (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 us
or our subsidiaries within a designated geographic area for a
period of two years following the termination of employment.
Compensation Committee Report on Executive Compensation
The incorporation by reference of this proxy statement into
any document filed with the Securities and Exchange Commission by
Heartland Financial USA, Inc. shall not be deemed to include the
following report unless such report is specifically stated to be
incorporated by reference into such document.
Our compensation program is administered by the compensation
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 considera-
tion 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:
- encourage a consistent and competitive return to
stockholders;
- reward bank and individual performances;
- provide financial rewards for performance of those
having a significant impact on corporate profitability;
- provide competitive compensation in order to attract
and retain key personnel.
There are three major components of our executive officer
compensation: base salary, annual incentive awards and 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 our other key
executive officers. However, the committee makes the final
compensation decisions concerning such officers.
We have adopted the Heartland Financial USA, Inc. 1993 Stock
Option Plan. The stock option plan is intended to promote equity
ownership in Heartland Financial USA, Inc. by our directors and
selected officers and employees to increase their proprietary
interest in the success of Heartland Financial USA, Inc. and to
encourage them to remain in the employ of Heartland Financial
USA, Inc. or our subsidiaries. We have also purchased a split-
dollar life insurance policy on each of our executive officers.
The compensation of Mr. Fuller, the chief executive officer,
during 1999 was based upon these factors:
- our compensation program;
- the individual's performance, substantial experience,
expertise and length of service with our organization;
- progress toward our performance objectives;
- compensation of officers with similar duties and
responsibilities at comparable organizations.
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. However, no one
participated in any decisions regarding their own compensation.
Mr. Lynn S. Fuller serves as chairman of the board of Heartland
Financial USA, Inc. and vice chairman of the board of Dubuque
Bank and Trust. Mr. Lynn B. Fuller serves as president and chief
executive officer of Heartland Financial USA, Inc. and vice
chairman of the board of Dubuque Bank and Trust. Mr. Schmidt is
not a director of Heartland Financial USA, Inc., but is the
executive vice president and chief financial officer of Heartland
Financial USA, Inc. and president and chief executive officer of
Dubuque Bank and Trust. All of the regular members of the
committee also serve as directors of Dubuque Bank and Trust, the
leading bank subsidiary of Heartland Financial USA, Inc., except
for Mr. Miller.
Stockholder Return Performance Presentation
The incorporation by reference of this proxy statement into
any document filed with the Securities and Exchange Commission by
Heartland Financial USA, Inc. 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.
The following graph shows a five-year comparison of
cumulative total returns for Heartland Financial USA, Inc., the
NASDAQ Stock Market (U.S.) and an index of NASDAQ Bank stocks.
Our shares are traded in the over-the-counter market under the
symbol "HTLF" and are eligible for quotation on the OTC Bulletin
Board. Figures for our common stock represent inter-dealer
quotations, without retail markups, markdowns or commissions and
do not necessarily represent actual transactions. The graph was
prepared at our request by Research Data Group,Inc.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ASSUMES $100 INVESTED ON DECEMBER 31, 1994
[GRAPH DEPICTING VALUES ON THE FOLLOWING TABLE]
*Total return assumes reinvestment of dividends
Cumulative Total Return Performance
December 31,
----------------------------------
1994 1995 1996 1997 1998 1999
Heartland Financial USA, Inc. 100 120 172 182 264 284
NASDAQ Stock Market (U.S.) 100 141 174 213 300 542
NASDAQ Bank Index 100 149 197 329 327 314
TRANSACTIONS WITH MANAGEMENT
Directors and officers of Heartland Financial USA, Inc. and
our subsidiaries, and their associates, were customers of and had
transactions with us and one or more of our subsidiaries during
1999. 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
Our board of directors has appointed KPMG LLP, independent
auditors, to be the auditors for the fiscal year ending December
31, 2000, and recommends that the stockholders ratify the
appointment. KPMG LLP has been our auditors since June, 1994. A
representative of KPMG 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. If the appointment of
auditors is not ratified, the matter of the appointment of
auditors will be considered by the board of directors. The board
of directors recommends that you vote your shares FOR
ratification of this appointment.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any proposals of stockholders intended to be presented at the
2001 annual meeting of stockholders must be received by us on or
before December 3, 2000, and must otherwise comply with our
bylaws.
OTHER MATTERS
We are 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.
We will bear the cost of solicitation of proxies. We 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 our common stock. In
addition to solicitation by mail, directors, officers and regular
employees of Heartland Financial USA, Inc. or our 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 items (1)
and (2) on the proxy card, the shares of such stockholder shall
be voted FOR in each instance.
By order of the Board of Directors
/s/ Lynn B. Fuller
-----------------------------------
Lynn B. Fuller
President and
Chief Executive Officer
Dubuque, Iowa
April 5, 2000
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
<PAGE>
[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 17, 2000
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 17th day of May, 2000, at 1:30 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 I (Term Expires 2003): Lynn B. Fuller and Gregory R. Miller
2. APPROVE THE APPOINTMENT OF KPMG LLP as Heartland Financial
USA, Inc.'s independent public accountants for the year
ending December 31, 2000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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 AND FOR PROPOSAL 2.
Dated: , 2000
------------------
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.
