You are entitled to cast one vote for each share of Common Stock you owned on the Record Date. These include shares held directly in your name as a shareholder of record and shares held for you as a beneficial owner through a stockbroker, bank or other nominee or in your account in the Company 401(k) Profit Sharing Plan.
What is the difference between holding shares as a shareholder of record and as a beneficial owner?
Many shareholders of the Company hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As described below, there are some differences between shares held of record and shares beneficially owned when determining how to vote your shares at the Meeting.
Shareholder of Record
If your shares are registered directly in your name with the Company’s transfer agent, you are considered to be the “shareholder of record” with respect to those shares, and these proxy materials are being sent to you directly by the Company. As the shareholder of record, you have the right to vote in person at the Meeting or to grant your voting proxy directly to the persons named in the proxy card (who will vote your shares on your behalf at the Meeting). You can vote your shares by proxy by completing and returning the proxy card included with these materials or by submitting your proxy via the Internet as described below under “How can I vote my shares without attending the Meeting?”.
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered to be the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by your stockbroker, bank or other nominee who is considered to be the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your stockbroker, bank or other nominee on how to vote your shares at the Meeting. As beneficial owner, you are also invited to attend the Meeting. However, since you are not the shareholder of record, you may not vote your shares in person at the Meeting. Your stockbroker, bank or other nominee has enclosed a voting instruction card for you to use in directing them how to vote your shares and you should complete and return that card as directed by your stockbroker, bank or other nominee.
How can I vote my shares in person at the Meeting?
Shares held directly in your name as the shareholder of record may be voted by you in person at the Meeting. Even if you plan to attend the Meeting, the Company recommends you vote your shares in advance, as described below so that your vote will be counted if you later decide not to attend the Meeting. Shares held in “street name,” of which you are the beneficial owner, may be voted by you in person only if you obtain a signed proxy from the stockbroker, bank or other nominee that is the shareholder of record giving you the right to vote the shares at the Meeting.
How can I vote my shares without attending the Meeting?
Shareholder of Record
If you are the shareholder of record with respect to your shares, you can vote your shares without attending the Meeting by submitting your proxy through either of the following methods:
| · | By Mail – Complete, sign and date the proxy card and return it to the Company in the enclosed postage prepaid envelope. |
| · | By Internet – Follow the instructions on the proxy card to submit your proxy via the Internet. The instructions require that you enter a unique voter control number (found on the proxy card) designed to verify that you have authorized the submission of your proxy via the Internet. Submission of a proxy via the Internet authorizes the named proxies to vote your shares to the same extent as if you marked, signed and submitted a proxy card by mail. |
If your proxy is submitted by mail or via the Internet (and your proxy is not later revoked), your shares will be voted in accordance with your instructions as indicated in the proxy. If, however, you do not indicate the manner in which your shares should be voted in your proxy, your shares will be voted in accordance with the recommendations of the Board as set forth above under “Does the Board have a recommendation for voting?”.
Beneficial Owner
If you are the beneficial owner of your shares, you can vote your shares without attending the Meeting by following the directions contained in the voting instruction card sent to you by your stockbroker, bank or other nominee. Typically, voting instruction cards allow you to direct the voting of your shares by returning the votervoting instruction card by mail or by submitting your directions via the Internet or by telephone. Your stockbroker, bank or other nominee is required to vote your shares according to the directions you have given.
Can I revoke my proxy or change my vote?
Shareholder of Record
If you are the shareholder of record of your shares, you may revoke your proxy at any time prior to the vote at the Meeting. Your proxy may be revoked through any of the following methods:
| · | By sending a written revocation of your proxy to the attention of the Secretary of the Company at the Company’s principal executive office located at P.O. Box 846, 405 Fifth5th Street, Ames, IA 50010, Attn: Secretary. |
| · | By submitting to the Company by mail a signed proxy card bearing a later date. |
| · | By submitting a new proxy via the Internet. |
| · | By attending the Meeting in person, requesting your proxy be withdrawn and voting your shares in person. Attendance at the Meeting without voting in person, however, will not serve as a revocation of a proxy. |
Beneficial Owner
If you are the beneficial owner of your shares, you may revoke or change your voting instructions prior to the Meeting. To do so, you should contact your stockbroker, bank or other nominee who is the shareholder of record of your shares and obtain directions as to how you can revoke or change the voting instructions you have previously given.
What are the voting requirements for the proposals at the Meeting?
The vote required to approve each of the proposals to be acted on at the Meeting is set forth below for each proposal under the heading “PROPOSALS TO BE VOTED ON AT MEETING.”
What is the effect of “broker non-votes”?
If your broker holds your shares in its name and you have not provided voting instructions for your shares, your broker, in its discretion, may either leave your shares unvoted or vote your shares on certain “routine” matters. Of the matters to be voted on at the Meeting, only Proposal 2 (ratifying the appointment of the Company’s independent registered public accounting firm) is considered a routine matter. The other proposals to be votedmatter on the Meeting arewhich your broker would have discretionary voting authority. Proposal 1 (the election of directors) is considered a “non-routine” matters,matter, for which your broker does not have discretionary voting authority. If your broker returns a proxy card but does not have discretionary authority to vote your shares, this results in a “broker non-vote.” Broker non-votes will be counted as present for the purpose of determining a quorum. Proposalsquorum at the Meeting.
Proposal 1 (election of directors), 3 (approval of the compensation of the Company’s named executive officers), 4 (frequency of future shareholder votes to approve executive compensation) and 5 (shareholder proposal) are is considered a “non-routine” mattersmatter and, without your instruction, your broker cannot vote your shares on these proposals.this proposal. Because brokers do not have discretionary authority to vote on these proposals,this proposal, broker non-votes will not be counted for purposes of determining the number of votes cast on these proposalsthis proposal and will not affect the outcome of these matters.this matter. Proposal 2 (ratification of the independent registered public accounting firm) is considered a "routine" matter and your broker can vote your shares on this proposal even though you have not provided voting instructions for your shares. Because brokers have discretionary authority to vote on this proposal, broker non-votes will be counted for purposes of determining the number of votes cast on this proposal and will affect the outcome of this matter.
Who will count the votes?
The Board has appointed an inspector of election who will be responsible for tabulating the votes by proxy, counting the votes cast in person at the Meeting and announcing the results of voting at the Meeting.
Who will pay the expenses of soliciting proxies for the Meeting and how will proxies be solicited?
The Company will pay all expenses associated with soliciting proxies for the Meeting. In addition to sending these proxy materials by mail, proxies may be solicited by officers, directors and regular employees of the Company, without extra compensation, by telephone, facsimile, personal contact or electronic means. To assist the Company in limiting its expenses in connection with the Meeting, you are requested to promptly return a signed proxy card by mail or submit your proxy via the Internet, even if you plan to attend the Meeting.
How can I obtain directions to attend the Meeting?
The meeting will be held at Reiman Gardens in Ames, Iowa. To obtain directions to this location, please contact Lori Hill at (515) 663-3059.
The Board consists of eleven directors elected on a staggered basis, with each director elected to a three-year term of service.service (except where a shorter term may be necessary to preserve the classification of the directors). Each director (with the exception of Dr. Douglas C. Gustafson, Chairman of the Company, and Thomas H. Pohlman, the President and Chief Executive Officer of the Company) also serves on one or more of the three standing committees (Audit, Compensation and Nominating) established by the Board. The following table lists each director currently serving on the Board, the director’s term of service and the committee(s) to which the director is currently appointed.
Name of Director | Term(1) | Audit Committee | Compensation Committee | Nominating Committee |
Betty A. Baudler Horras | 20112014
| X | | X |
David W. Benson(2) | 2012 | | | X |
Robert L. Cramer | 2012 | X | | |
Steven D. Forth | 2012 | | | X |
Douglas C. Gustafson, DVM | 20112014
| | X
| X
|
Charles D. Jons, MD | 20112014
| | X | X |
James R. Larson II | 2012 | X | X | |
Warren R. Madden | 2012 | X | | |
Thomas H. Pohlman | 20112014
| | | |
Larry A. Raymon | 2013 | | X | |
Frederick C. Samuelson | 2013 | | | X |
Marvin J. Walter
| 2013
| | | X |
Notes:
| (1) | A director’s term of service expires at the annual meeting of shareholders to be held in the year indicated for each director. |
| (2) | Mr. Benson was appointed to the Board in June of 2011 to fill the vacancy created by the death of former director Marvin J. Walter. Although Mr. Walter's term of service was not scheduled to expire until the annual meeting of shareholders to be held in 2013, Mr. Benson's appointment, consistent with Iowa law, expires in 2012. |
The Common Stock is listed and traded on the NASDAQ Capital Market. The corporate governance rules of the NASDAQ Capital Market require that a majority of the Board consist of directors who are "independent" of the Company. The Board has determined each of the directors and nominees for director qualify as "independent" under the NASDAQ standards for determining independence, with the exception of Mr. Pohlman who does not qualify as an independent director givenas a result of his employment relationship with the Company.
The Board holds regular quarterly meetings and held four such meetings during 2010.2011. The Board also held onetwo special meetingmeetings during 2010 and, in addition, held a meeting to focus on strategic planning issues.2011. During 2010,2011, each director of the Company attended at least 75% of all meetings of the Board and meetings of committees to which such director was appointed.
The Board has established an Audit Committee, a Compensation Committee and a Nominating Committee as standing committees of the Board. Additional information is set forth below concerning each of the committees and the directors serving thereon.
Audit Committee
The Audit Committee is responsible for oversight of the Company’s auditing, accounting, financial reporting and internal control functions and for the appointment, compensation and oversight of the Company’s independent accountants. Additionally, the Audit Committee is responsible for monitoring the quality of the Company’s accounting principles and financial reporting as well as the independence of the Company’s independent accountants. The Audit Committee is also required to preapprove any audit or permissible non-audit services to be provided by the independent accountants and to review and approve any transaction constituting a “related party transaction” under rules adopted by the Securities and Exchange Commission. The Board has adopted a written charter for the Audit Committee, a copy of which may be accessed on the Company’s website at www.amesnational.com. A report of the Audit Committee appears in this Proxy Statement. The Audit Committee currently consists of Mr. Madden, who acts as chair, Ms. Baudler Horras, Mr. Cramer and Mr. Larson, each of whom qualify as an independent director. Mr. Madden has been designated by the Board to serve in the capacity as the “financial expert” for the Audit Committee. The Audit Committee met on four occasions during 2010.2011.
Compensation Committee
The Compensation Committee determines and makes recommendations to the Board on all elements of compensation for the executive officers of the Company and certain executive officers of the Company’s subsidiary banks (the “Banks”). The Compensation Committee also assists the Board in establishing fees to be paid to the directors of the Company and in determining appropriate employee benefit programs to be provided to eligible employees of the Company and the Banks. The Board has adopted a written charter for the Compensation Committee, a copy of which can be accessed on the Company’s website at www.amesnational.com. A report of the Compensation Committee appears in this Proxy Statement. The Compensation Committee currently consists of Mr. Larson, who acts as chair, Dr. Gustafson, Dr. Jons, Mr. Raymon and Mr. Raymon,Samuelson, each of whom qualify as an independent director. The Compensation Committee met on two occasions during 2010.2011.
Nominating Committee
The Nominating Committee is responsible for evaluating and recommending to the Board the names of nominees for election as directors. The Nominating Committee also reviews and recommends to the Board the desired characteristics of the composition of the Board, including the number of directors, age, experience and other appropriate attributes. The Board has adopted a written charter for the Nominating Committee, a copy of which may be accessed on the Company’s website at www.amesnational.com. The Nominating Committee currently consists of Dr. Gustafson,Jons, who acts as chair, Dr. Jons,Ms. Baudler Horras, Mr. Samuelson,Benson, Mr. Forth and Mr. Walter,Samuelson, each of whom qualify as an independent director. The Nominating Committee met onceon two occasions during 2010.2011.
The Nominating Committee evaluates and recommends to the Board the names of nominees for election as directors. The Nominating Committee will consider, as part of its nomination process, any nominee submitted by a shareholder of the Company, provided the shareholder has complied with the procedure set forth in the Company’s bylaws (the “Bylaws”) for the submission of nominees. In order to submit the name of a nominee, a shareholder must provide written notice of such nominee, accompanied by other information concerning the nominee as specified in Section 3.1(c) of the Bylaws, to the Secretary of the Company no less than 120 days prior to the first anniversary of the date of the proxy statement distributed by the Company in connection with the prior year’s annual meeting of shareholders. A nomination with respect to the election of directors at the annual meeting of shareholders to be held in 20122013 would need to be submitted no later than November 18, 2011.19, 2012. A copy of the relevant provisions of the Bylaws pertaining to nominations may be obtained by contacting the Secretary of the Company or by accessing the Bylaws on the Company’s website at www.amesnational.com. A shareholder who has complied with the procedure set forth in the Bylaws for submitting the name of a nominee may nominate such individual at an annual meeting notwithstanding that such individual has not been nominated for election by the Board.
On an annual basis the Board compiles a list of candidates for submission to the Nominating Committee for its evaluation. As noted above, the list of candidates will include any person nominated by a shareholder in compliance with the nomination procedures set forth in the Bylaws. The Nominating Committee may also identify and evaluate any other person that may come to the attention of the Nominating Committee as a candidate for nomination. The Nominating Committee evaluates each candidate utilizing the minimum qualifications specified in the Nominating Committee Charter and taking into account any other information deemed by the Nominating Committee to be relevant to the evaluation process. The evaluation process for director and shareholder-nominated candidates is applied on a uniform basis. The Nominating Committee may, to the extent it deems appropriate, contact other directors not serving on the Nominating Committee, directors and officers of the Banks and any shareholder nominating an individual, to ensure the necessary information is obtained to properly evaluate the desirability of each candidate. Upon completion of the evaluation process, the Nominating Committee will make its recommendations to the Board based upon the desired composition of the Board, review of minimum qualifications, readily ascertainable strengths and weaknesses of each candidate and other information deemed by the Nominating Committee to be relevant.
The Nominating Committee Charter identifies the following minimum qualifications under which a candidate will be evaluated: (i) the ability to understand financial affairs and complexities of business organizations; (ii) business experience and community involvement in the market areas in which the Banks conduct their business; (iii) although not required, the prior experience of a candidate as a director of one of the Banks; (iv) reputation for high moral and ethical business standards that will add to the stature of the Board; and (v) compliance with the requirements of the Company’s age limitation policies. The age limitation policy provides that a newly-nominated director must be under age 60 (unless the nominee also serves as an executive officer of the Company or a Bank or as a director of a Bank) and that a current director will be eligible for re-election only if such director will not be more than 75 years of age at the end of the term for which the director would be re-elected.
The Board has not adopted a formal policy with respect to the consideration of diversity in identifying or selecting nominees for election as directors. The Nominating Committee Charter does, however, include the concept of diversity as being a factor the Nominating Committee may wish to consider in making recommendations to the Board with respect to the composition of the Board, although no specific recommendation regarding diversity has been made.
With respect to the nominees for election as directors at the Meeting, Ms. Baudler Horras, Dr. Gustafson, Dr. JonsMr. Benson, Mr. Cramer, Mr. Forth, Mr. Larson and Mr. PohlmanMadden currently serve as directors of the Company and are standing for re-election.
During 2010,2011, the leadership structure of the Company was divided between Thomas H. Pohlman, who served as President and Chief Executive Officer of the Company, and Daniel L. Krieger and Marvin J. Walter and Dr. Douglas C. Gustafson, both of whom served as Chairman of the Board of the Company during portions of 2010. With the retirement of2011. Mr. KriegerWalter served as a directorChairman of the CompanyBoard until his death in April of 2010, Mr. Walter, an independent director,June, and Dr. Gustafson, was named thesubsequently elected Chairman of the Board. The Board believes the appointment of an independent director to serve in the capacity as Chairman of the Board is a sound corporate governance practice.
The Board has established, and actively monitors, various policies and practices designed to manage the risks inherent in the assets and liabilities of the Banks. These policies and practices are administered under the Asset/Liability Management Policy adopted by the Board and applicable to each Bank. The Asset/Liability Management Policy, together with the Loan Policy and the Investment Policy adopted by the Board, form the foundation of the asset/liability management function for each of the Banks. These policies provide guidelines and boundaries for decision-making to manage risks associated with asset quality, liquidity, interest rate risk and capital adequacy. The Board supervises compliance with these policies by reviewing a summary of the asset/liability reports of the Company on a periodic basis. Additionally, quarterly reports prepared by each of the Banks are reviewed by the President of the Company and any significant concerns raised in those reports are promptly communicated to the Board for appropriate action. The reporting process established under the Asset/Liability Management Policy is designed to keep the Board current and provide advance notice of any impending issues at the Bank level with respect to issues of asset quality, liquidity, interest rate risk or capital adequacy. While the Board believes that the implementation and administration of the asset/liability management function is principally the responsibility of senior management of the Company and the Banks, the reporting process described above enables the Board to actively monitor the Company’s risk management.
The Board has adopted a process whereby a shareholder may direct written communications to the Board. A shareholder desiring to communicate with the Board may send a written communication addressed to the Board and directed, if by e-mail, to info@amesnational.com with Attention: “Board of Directors” in the subject line or, if sent by regular mail, addressed to Ames National Corporation, P.O. Box 846, 405 Fifth5th Street, Ames, Iowa 50010, Attention: Board of Directors. Upon receipt of a written communication from a shareholder addressed to the Board in a manner described above, the communication will be reviewed by the Chairman and President of the Company and the Chairman of the Audit Committee for purposes of determining whether the communication raises an issue of appropriate concern to the Board. Communications raising issues of appropriate concern will be forwarded to each member of the Board for consideration by the Board as a whole. All written communications directed to the Board and submitted in the manner prescribed by the process will, regardless of whether such communication is ultimately submitted to the Board, receive a written response from the Chairman of the Company.
The Board has adopted a policy providing that each member of the Board shall use his or her reasonable efforts to attend each annual meeting of shareholders of the Company, giving appropriate consideration to the business and travel schedule of the director. Each person who was serving as a director of the Company at the time of the annual meeting of shareholders in 20102011 attended such meeting.meeting, with one exception.
Compensation paid to the directors of the Company is determined on an annual basis by the Board upon recommendation of the Compensation Committee. Each year, the President of the Company develops a recommendation to the Compensation Committee with respect to fees to be paid to directors of the Company for attendance at meetings of the Board and of committees of the Board and fees to be paid to members of the boards of directors of the Banks for board and committee meetings. The recommendation is provided to the Compensation Committee which, in turn, reviews and makes its recommendation to the Board with respect to director fees to be paid for the year.
The following table provides information concerning all compensation paid to each director during 20102011 for services as a member of the Board and, to the extent applicable, for services as a member of the board of directors of one of the Banks.
Name | | Fees Earned or Paid in Cash(1)($) | | | Fees Earned or Paid in Cash(1) ($) | |
| | | | |
Betty A. Baudler Horras | | $ | 17,125 | | | $ | 17,310 | |
David W. Benson | | | $ | 11,955 | |
Robert L. Cramer | | $ | 13,155 | | | $ | 13,335 | |
Steven D. Forth | | $ | 11,430 | | | $ | 10,895 | |
Douglas C. Gustafson, DVM | | $ | 13,365 | | | $ | 14,845 | |
Charles D. Jons, MD | | $ | 16,775 | | | $ | 15,945 | |
Daniel L. Krieger(2) | | $ | 9,805 | | |
James R. Larson II | | $ | 16,545 | | | $ | 14,680 | |
Warren R. Madden | | $ | 15,490 | | | $ | 15,135 | |
Thomas H. Pohlman | | None | | | None | |
Larry A. Raymon | | $ | 12,040 | | | $ | 11,410 | |
Frederick C. Samuelson | | $ | 12,745 | | | $ | 13,525 | |
Marvin J. Walter | | $ | 19,620 | | |
Marvin J. Walter(2) | | | $ | 8,725 | |
The Board of the Company consists of eleven directors, divided into two classes of four directors each and one class of three directors for the purpose of electing and defining the terms of service of such directors. The terms of fourfive directors will expire at the Meeting. TheFour of those directors have been nominated by the Board has nominated the four directors whose terms are expiring at the Meeting to stand for re-election for a three-year term expiring at the annual meeting of shareholders to be held in 2014.2015. The remaining director, David W. Benson, has been nominated by the Board to stand for re-election for a one-year term expiring at the annual meeting of shareholders to be held in 2013. Mr. Benson was appointed to fill the vacancy created by the death of former director Marvin J. Walter and, in accordance with Iowa law, Mr. Benson's appointment expires at the Meeting (notwithstanding that Mr. Walter's term was not scheduled to expire until the annual meeting of shareholders to be held in 2013). As a member of the class of directors whose terms are scheduled to expire at the annual meeting of shareholders to be held in 2013, Mr. Benson is accordingly being nominated for a one-year term, such that his term of service will expire at the same time as the two other directors who are members of the same class of directors.
Each director elected at the Meeting will serve until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. The Board has no reason to believe that any nominee named in this Proxy Statement will be unable to serve as a director, if elected. However, in case any nominee should become unavailable for election, the proxy will be voted for such substitute, if any, as the Board may designate.
Board Recommendation
The Board unanimously recommends a vote “FOR” the election of each of the foregoing nominees to the Board.
Required Vote
The four nominees receivingfor a three-year term, and the one nominee for a one-year term, who receive the greatest number of votes “FOR” their election will be elected to the Board, regardless of whether any individual nominee receives votes from a majority of the votes cast at the Meeting.
Directors Continuing in Office
Set forth below is certain information with respect to directors of the Company who will continue to serve subsequent to the Meeting and who are not nominees for election at the Meeting.Meeting
Terms Expiring in 2012
Robert L. Cramer
Age 70
| Mr. Cramer has served as a director of the Company since 2003. He retired in 2006 after being employed as President of Fareway Stores, Inc., a privately owned company operating grocery stores in Iowa, Illinois, Minnesota and Nebraska. He has served on the board of directors of Boone Bank & Trust Co. since 1999. |
| |
Steven D. Forth
Age 60
| Mr. Forth has served as a director of the Company since 2007. He owns and operates a large row crop farm in western Story County, Iowa. He has served on the board of directors of Randall-Story State Bank since 1999. |
| |
James R. Larson II
Age 59
| Mr. Larson has served as a director of the Company since 2000. He is President of Larson Development Corporation, a real estate development and property management company located in Ames, Iowa. Mr. Larson was elected to the Ames City Council in the fall of 2006. He retired in 2004 from ACI Mechanical, Inc., a commercial and industrial mechanical contracting and engineering company of which he served as President. He has served on the board of directors of First National Bank since 1994. |
| |
Warren R. Madden
Age 71
| Mr. Madden has served as a director of the Company since 2003. He is employed as Vice President of Business and Finance at Iowa State University, a major land grant university located in Ames, Iowa, with an enrollment of over 28,000 students. He has served on the board of directors of First National Bank since 2008. |
Terms Expiring in 2013
Larry A. Raymon Age 6768 | Mr. Raymon has served as a director of the Company since 2007. He is the owner and Chief Executive Officer of Raymon Enterprises, Inc., an air distribution equipment manufacturing business located in Albion, Iowa. He has served on the board of directors of United Bank & Trust, N.A. since 2002. |
| |
Frederick C. Samuelson Age 6768 | Mr. Samuelson has served as a director of the Company since 2004. He has been employed since 1971 as the President and owner of James Michael & Associates, Inc., a general retail business located in Nevada, Iowa. He also holds management and ownership positions in several other retail businesses with operations located in Iowa, Missouri and Wisconsin. He has served on the board of directors of State Bank & Trust Co. since 1993. |
| |
Terms Expiring in 2014
Marvin J. WalterBetty A. Baudler Horras
Age 7058 | Mr. WalterMs. Baudler Horras has served as a director of the Company since 1978 and was elected Chairman of the Board in 2010. He2000. She is the President of Dayton Road Development Corporation,Baudler Enterprises, Inc., dba Sign Pro, a real estate developmentsign and graphics business located in Ames, Iowa, and the former owner and General Manager of radio stations KASI and KCCQ located in Ames, Iowa, and KIKD located in Carroll, Iowa. She has served on the board of directors of First National Bank since 1991. |
Douglas C. Gustafson, DVM Age 69 | Dr. Gustafson has served as a director of the Company since 1999. He is a retired veterinarian and was formerly a partner in Boone Veterinary Hospital located in Boone, Iowa. He has served on the board of directors of Boone Bank & Trust Co. since 1993. |
Charles D. Jons, MD Age 71 | Dr. Jons has served as a director of the Company since 1996. He retired in 1999 after a 20 year medical practice with McFarland Clinic in Ames, Iowa. He has served on the board of directors of First National Bank since 1978.1991. |
Thomas H. Pohlman Age 61 | Mr. Pohlman has served as a director of the Company since 2007. He has served as President and Chief Executive Officer of the Company since 2007. From 2000 to 2008 he served as President of First National Bank. He also currently serves as Chairman of the Board of First National Bank, State Bank and Trust Co., Boone Bank & Trust Co. and United Bank & Trust, N.A. |
None of the nominees or directors currently serves, or has served in the past five years, as a director of another company whose securities are registered under the Securities Exchange Act of 1934 or a company registered under the Investment Company Act of 1940. There are no family relationships among the Company’s directors, nominees for director and executive officers.
Director Qualifications
Under rules adopted by the Securities and Exchange Commission, the Company is required to describe the experience and qualifications of those persons serving as directors or nominated for election as directors. The Nominating Committee, which is charged with the responsibility of evaluating nominees for director, has historically sought individuals with prior experience in business, professional practice or government, a commitment to community involvement and, perhaps most importantly, prior service as a member of the board of directors of one of the Banks. Experience gained through these pursuits is viewed by the Nominating Committee as a strong indication that individuals nominated for election as directors will possess the attributes for successful service as a member of the Board.
| · | Ms. Baudler Horras and Messrs. Raymon, Samuelson, Gustafson, Walter, Cramer, Forth, Gustafson, Larson, Raymon and Larson and Ms. Baudler HorrasSamuelson all have substantial business experience as the owner and/or principal executive officer of a small or medium-sized business enterprise through which they have obtained, to varying degrees, knowledge with respect to financial and accounting matters, operational matters, risk management issues, marketing issues and human resources issues. Dr. Jons also has significant business experience, as he served in several management positions with his medical practice group, as well as serving on the boards of several national and state medical associations. Mr. Madden possesses a high level of qualification with respect to financial and accounting matters based on his experience as the senior financial officer of Iowa State University. Mr. Benson has practiced business, real estate and trust and estate law for over 34 years and will contribute his legal and business knowledge to the Board. Mr. Pohlman, whose career in the financial services industry has spanned 3435 years, brings his knowledge and experience as a senior bank executive to the Board. |
| · | Each of the directors has demonstrated active involvement in the community in which he or she resides, all of which are included in the trade areas in which the Banks conduct their business operations. This demonstrated commitment to community involvement is important to the Company as these directors are viewed as key links to clients and prospective clients, as well as furthering the reputation of the Banks in those communities. |
| · | With the exception of Mr. Madden, each of the directors served on the board of directors of one of the Banks prior to his or her election to the Board of the Company. This prior experience is highly desired for members of the Board, as it enables the individual to become familiar with the Company’s practices and business philosophy, as well as the financial and operational aspects of a financial institution, before accepting a position on the Board of the Company. Prior service on the board of a Bank has also enabled the Nominating Committee to assess the performance of the individual as a director of a Bank and to determine that such performance merits elevation to the Board of the Company. |
The Audit Committee of the Board has appointed Clifton GundersonCliftonLarsonAllen LLP to serve as the Company’s independent registered public accounting firm to audit its consolidated financial statements for 2011.2012. During 2010, Clifton Gunderson2011, CliftonLarsonAllen LLP served as the Company’s independent registered public accounting firm and also provided certain tax and other non-audit services. Although the Company is not required to seek shareholder approval of this appointment, the Board believes it to be sound corporate governance to do so. If the appointment is not ratified, the Audit Committee will investigate the reasons for shareholder rejection and will reconsider the appointment. Representatives of Clifton GundersonCliftonLarsonAllen LLP are expected to attend the Meeting, where they will be able to respond to questions and, if they desire, make a statement.
Board Recommendation
The Board unanimously recommends a vote “FOR” ratification of the appointment of Clifton GundersonCliftonLarsonAllen LLP as the Company’s independent registered public accounting firm for 2011.2012.
Required Vote
The proposal to ratify the appointment of the Company’s independent registered public accounting firm will be approved if the number of votes cast “FOR” the proposal exceed the number of votes cast “AGAINST” the proposal. Shares which abstain from voting on this proposal will not be counted as votes cast and will not affect the outcome.
The Company is requesting shareholder approval, on an advisory basis, of the compensation of the Company’s named executive officers for 2010 as listed in the Summary Compensation Table (appearing on page 38 of this Proxy Statement). The Board and the Compensation Committee have developed and administer an executive compensation program that is described more fully under the Compensation Discussion and Analysis section of this Proxy Statement, including the related compensation tables and narrative. This proposal, commonly known as a “say on pay” proposal, gives shareholders the opportunity to approve, reject or abstain from voting with respect to the Company’s executive compensation program and the compensation paid to the named executive officers during 2010.
As discussed in the “Compensation Discussion and Analysis” section of this Proxy Statement, the primary objective of the Company’s executive compensation program is to provide a fair and competitive compensation package that will enable the Company to compete for and retain talented executives who will enhance the Company’s ability to continue its history of steady growth and financial stability, thereby increasing shareholder value over the long-term. The Board and the Compensation Committee believe that the executive compensation program promotes a performance-based culture and aligns the interests of the named executive officers with those of the shareholders by linking a substantial portion of their compensation to the Company’s performance. The advisory vote will serve as an additional tool to guide the Board and the Compensation Committee in aligning the executive compensation program with the interests of the Company and its shareholders and is consistent with the Board’s commitment to the observance of high standards of corporate governance. The Company is accordingly requesting the vote of the shareholders on the following resolution:
RESOLVED, that the shareholders of Ames National Corporation approve, on an advisory basis, the compensation of its named executive officers for 2010 as disclosed in this Proxy Statement (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and the related narrative discussion contained in this Proxy Statement).
Because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to any named executive officer and will not be binding on or overrule any decision by the Board; nor will it create or imply any additional fiduciary duty on the part of the Board. The Board and the Compensation Committee value the opinions of the shareholders and will take into account the outcome of the advisory vote when considering future compensation arrangements for the named executive officers.
Board Recommendation
The Board unanimously recommends a vote “FOR” approval, on an advisory basis, of the compensation of the named executive officers for 2010 as disclosed in this Proxy Statement.
Required Vote
The “say on pay” proposal will be approved if the number of votes cast “FOR” the proposal exceeds the number of votes “AGAINST” the proposal. Shares which abstain from voting on this proposal, as well as broker non-votes, will not be counted as votes cast and will not affect the outcome.
The Company is requesting shareholder approval, on an advisory basis, as to whether the Company should conduct a shareholder advisory vote on executive compensation at the annual meeting of shareholders to be held every year, every second year or every third year. Shareholders may vote on the frequency with which the Company should conduct an advisory vote on executive compensation by selecting the vote to be held every year, every second year, every third year or by abstaining from voting on this proposal.
After careful consideration of the alternatives, the Board has determined that an advisory vote on executive compensation every three years, or a triennial vote, is the best approach for the Company based upon a number of considerations, including the following:
| · | The Company’s executive compensation program is based on a “pay for performance” philosophy, with a significant portion of each named executive officer’s total compensation dependent on the Company’s results of operations for the year. The Board believes that the compensation results for the named executive officers should be judged based on longer-term operating results of the Company, and not simply on an annual basis, and a triennial advisory vote is consistent with this view. |
| · | The executive compensation program has resulted in levels of compensation that are relatively modest in comparison to compensation paid by other public companies in the financial services industry and the Board believes that a triennial vote will provide the shareholders with a sufficient voice in the Company’s executive compensation practices. |
| · | A triennial vote gives the Board and the Compensation Committee sufficient time to thoughtfully respond to shareholder views as expressed through previous advisory votes and to implement any necessary changes to its executive compensation program. |
| · | The Board is available to engage with shareholders on matters of executive compensation in between the recommended triennial advisory votes. As noted elsewhere in this Proxy Statement, shareholders may communicate directly with the Board, including on issues of executive compensation. |
As an advisory vote, this proposal will not be binding on the Company and will not create or imply any additional fiduciary duty on the part of the Board. The Board, however, values the opinions expressed by the shareholders through their vote on this proposal and will consider the outcome of the vote when making a determination as the frequency of future shareholder advisory votes for approval of executive compensation.
Board Recommendation
The Board unanimously recommends a vote of “THREE YEARS” with respect to the frequency of future shareholder advisory votes for approval of executive compensation.
Required Vote
The advisory vote regarding the frequency of future shareholder votes for approval of executive compensation will be determined by a plurality of the votes cast. Shares which abstain from voting on this proposal, as well as broker non-votes, will not be counted as votes cast and will not affect the outcome.
Gerald R. Armstrong, who owns 2,000 shares of Common Stock, has given the Company notice that he intends to present the proposal set forth below at the Meeting. The proposal will be voted on only if properly presented at the Meeting by Mr. Armstrong or his qualified representative. In accordance with the rules of the Securities and Exchange Commission, the text of Mr. Armstrong’s resolution and supporting statement is printed verbatim from his submission and neither the Company nor the Board is responsible for the contents of those materials. A box has been placed around the proposal and supporting statement provided by Mr. Armstrong so that those materials may be distinguished from the information provided below by the Board regarding the proposal. Mr. Armstrong’s mailing address is 910 Sixteenth Street, No. 412, Denver, Colorado 80202-2917 and his telephone number is (303) 355-1199.
Text of Shareholder Proposal
RESOLUTION
That the shareholders of AMES NATIONAL CORPORATION request its Board of Directors to take the steps necessary to eliminate classification of terms of the Board of Directors to require that all Directors stand for election annually. The Board declassification shall be completed in a manner that does not affect the unexpired terms of the previously-elected Directors.
STATEMENT
The current practice of electing only one-third of the directors for three-year terms is not in the best interest of the corporation or its shareholders. Eliminating this staggered system increases accountability and gives shareholders the opportunity to express their views on the performance of each director annually. The proponent believes the election of directors is the strongest way that shareholders influence the direction of any corporation and our corporation should be no exception.
As a professional investor, the proponent has introduced the proposal at several corporations which have adopted it. In others, opposed by the board or management, it has received votes in excess of 70% and is likely to be reconsidered favorably.
The proponent believes that increased accountability must be given our shareholders whose capital has been entrusted in the form of share investments especially during these times of great economic challenge.
Arthur Levitt, former Chairman of The Securities and Exchange Commission said, “In my view, it’s best for the investor if the entire board is elected once a year. Without annual election of each director, shareholders have far less control over who represents them.”
While management may argue that directors need and deserve continuity, management should become aware that continuity and tenure may be best assured when their performance as directors is exemplary and is deemed beneficial to the best interests of the corporation and its shareholders.
The proponent regards as unfounded the concern expressed by some that annual election of all directors could leave companies without experienced directors in the event that all incumbents are voted out by shareholders.
In the unlikely event that shareholders do vote to replace all directors, such a decision would express dissatisfaction with the incumbent directors and reflect the need for change.
If you agree that shareholders may benefit from greater accountability afforded by annual election of all directors, please vote “FOR” this proposal.
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Company Statement in Opposition to Shareholder Proposal
After careful consideration of the foregoing shareholder proposal, the Board has concluded that the best interest of the Company and its shareholders will be served by maintaining the current classified structure of the Board. Under this structure, the Board is divided into three classes, with directors elected on a staggered basis to a three-year term of service. Approximately one-third of the directors stand for election each year and the entire Board can be replaced in the course of three annual meetings. The classified structure of the Board was adopted when the Company was originally organized in 1975. In connection with its review of the shareholder proposal, the Board considered the history and purposes of the classified board structure and the arguments for and against this structure. Following this analysis, the Board concluded that the continuity and quality of leadership that results from a classified board structure creates long-term shareholder value and is in the best interest of the Company and its shareholders.
The Board unanimously recommends a vote AGAINST this proposal and offers the following reasons in support of its opposition to the proposal.
Independence. The Board believes that the three-year terms of office provided by the classified structure, rather than one-year terms, increases the independence of the outside directors by assuring them of a longer term of service. With one-year terms, directors are less insulated from management or other groups who may have an agenda that is not aligned with the long-term interests of all shareholders. Independence may also be enhanced when directors are not concerned about being re-nominated by the Company’s other directors each year. The current classified board structure increases the ability of the directors to act independently and to focus on the long-term interests of the Company and its shareholders.
Accountability to Shareholders. The proponent’s ascertation that the classified board structure diminishes a director’s accountability to the shareholders is unfounded. Each director is required by law to uphold his or her fiduciary duties to the Company and its shareholders, regardless of the length of his or her term of service or the frequency of his or her standing for re-election. Shareholders already have a meaningful opportunity at each annual meeting to communicate their views of the Board’s performance through the director election process. It is the manner in which the directors fulfill their duties and responsibilities, not the frequency of their election, which results in effective corporate governance and the protection of shareholder interests.
Director Quality. The classified board structure strengthens the ability of the Company to recruit high quality directors who are willing to make a significant commitment to the Company and its shareholders for the long term. It is particularly important that directors make the commitment to serve for a three-year term given the time required to properly understand the Company’s operations, complex regulatory environment and competitive market. Experienced directors who are knowledgeable about the Company’s business are better-positioned to make decisions that are in the best interests of the Company and its shareholders. Given the current climate in which many qualified individuals are increasingly reluctant to serve on boards of public companies, the Company could be placed at a competitive disadvantage in recruiting qualified director candidates if their service on the Board could potentially be limited to a one-year period.
Continuity and Stability. The classified board structure is designed to provide stability, enhance long-term planning and ensure that, at any given time, there are directors serving on the Board who are familiar with the Company, its operations and its strategic goals. The classified board structure also provides flexibility by requiring the election of approximately one-third of the directors on an annual basis and a majority of the directors over a two-year period. Experienced directors who are knowledgeable about the Company’s operations and highly-regulated industry are a valuable resource and are better positioned to make decisions that are in the best interests of the Company and its shareholders. Staggered terms give the Company’s new directors an opportunity to gain knowledge about the Company’s business and affairs from its continuing directors. If all directors were elected annually, the Board could be composed entirely of directors who are unfamiliar with the Company and its business. This could jeopardize the Company’s long-term strategies and growth plans. The Board believes the Company’s current classified board is prudent and necessary for the protection of all shareholders and leads to creation of long-term shareholder value.
Protection Against Unfair Takeover Practices. The classified structure of the Board reduces the Company’s vulnerability to unfriendly or unsolicited takeover attempts that may not be in the best interests of the shareholders. The classified structure encourages potential acquirers to initiate arms-length negotiations with the Board. As only one-third of the directors are elected at any annual meeting of shareholders, at least two annual meetings would be required to replace a majority of the Board and to dismantle any shareholder protection measures that may be in place. This gives the directors the time and leverage necessary to evaluate the adequacy and fairness of any takeover proposal, consider alternative proposals and to ultimately negotiate the best result for all shareholders. Absent a classified board structure, a potential acquirer could unilaterally gain control of the Company by acquiring or obtaining voting control over a sufficient number of shares to replace the entire Board with its own nominees at a single annual meeting without paying fair value to the Company’s other shareholders. The classified board structure does not prevent or preclude unsolicited takeover attempts, but it empowers the incumbent Board to negotiate terms to maximize the value of the transaction for all shareholders. In considering any takeover effort or other significant development concerning the Company, the Board understands its duty to protect the interests of all shareholders. The Board intends to discharge this duty to its utmost ability and would not utilize the various defensive tactics available to it to resist any action that the Board believes to be in the best interests of the Company and its shareholders. The majority of the Board are independent, non-management directors who will always put the interests of the shareholders first.
Community Interest. The Company is a holding company for five community banks. Each of the directors resides in or near one of the communities served by one of the banks and all of the directors have deep roots as leaders in the communities in which they reside. As such, the directors provide business development opportunities for the banks, as well assuring the observance of sound corporate governance principles. Community involvement is generally considered to be an important factor in evaluating a candidate for director, based on the premise that individuals actively engaged in supporting their communities provide increased stature for the Company and the potential to expand customer relationships for the banks. By maintaining a classified board, the Company balances from year to year the backgrounds and experience of its directors and the anticipated business contributions that the directors will make to the growth of the Company.
Corporate Governance. The Board believes that certain statements in the proponent’s materials may give shareholders the erroneous impression that the Company trails behind other companies in matters of corporate governance. This is simply not the case. Rather, the Board is dedicated to operating in accordance with principles of sound corporate governance as illustrated by the following:
| · | All of the directors qualify as “independent” directors under the NASDAQ corporate governance standards, with the exception of Mr. Pohlman, who is employed by the Company. This exceeds the requirements of the NASDAQ corporate governance standards which mandate only that a majority of the directors be independent. |
| · | The positions of Chief Executive Officer and Chairman of the Board have been separated, with Mr. Walter, an independent director, serving as Chairman of the Board and Mr. Pohlman serving as Chief Executive Officer. This is considered a best corporate practice and is beyond the requirements of the NASDAQ corporate governance standards. |
| · | The Company has adopted an “open” nomination process, whereby any shareholder may propose a candidate for director to the Nominating Committee by complying with the procedure set forth in the Bylaws. Any candidate so proposed is evaluated by the Nominating Committee under the same standards as applicable to a candidate proposed by the Board or the current directors. |
| · | None of the Company’s executive officers is covered by an employment agreement providing for a guaranteed period of employment or any type of “golden parachute” payment in the event of a change of control of the Company. |
| · | The compensation of the executive officers is determined in accordance with a “pay for performance” philosophy, as a significant portion of each executive officer’s total compensation is dependent on the Company’s results of operations for the year. |
Company Performance. The proponent’s statement indicates that other companies have de-classified their boards of directors as a result of his efforts. The Board has not verified the statement to be true. In any event, the Board feels strongly that what may be appropriate for one company may not be appropriate for another. This “one-size-fits-all” view does not take into account the differences among companies and their management or the differences among shareholder groups. The Company, like many other publicly-traded corporations, has a diverse shareholder base with different shareholders focused on different performance metrics and goals. All shareholders, however, must view the history and performance of a company and its record of providing shareholder value. The Company has an excellent record of providing shareholder value, including during the recent turbulent economic conditions, and the Board and management have demonstrated accountability to the shareholders through the Company’s financial performance, including the following:
| · | Despite the challenging economic conditions, the Company achieved record earnings in 2010, generating net income of $1.37 diluted earnings per share for the year (and eclipsing the previous record of $1.32 diluted earnings per share set in 2004 before the onset of the financial crisis). |
| · | The Company has continued its practice of paying quarterly dividends notwithstanding the difficult economic climate experienced by the financial services industry from 2008 through 2010. |
| · | The Company’s stock price has out-performed indexes of bank peer group stock performance for each of the last three years (as reflected in the stock performance graph appearing on page 35 of the Annual Report to Shareholders). |
| · | The Company’s performance as measured by its “return on assets” has exceeded peer group averages during each of the last three years for which peer group information is currently available (2008 through 2010). |
| · | The Company’s performance as measured by its “return on equity” has exceeded peer group averages during each of the last three years for which peer group information is currently available (2008 through 2010). |
Board Recommendation
For all the foregoing reasons, the Board believes that the shareholder proposal is not in the best interests of the Company or its shareholders. Therefore, the Board unanimously recommends a vote “AGAINST” the shareholder proposal.
Non-Binding Request
The shareholder proposal is only a request that the Board take the steps necessary to eliminate the classified board structure. Approval of this proposal by the shareholders would not in itself effectuate the changes contemplated by the proposal and lead to the election of all directors on an annual basis. Further action by the Board and the shareholders would be required to amend the Articles of Incorporation to implement this change.
Required Vote
To approve the shareholder proposal, the number of votes cast “FOR” the proposal must exceed the number of votes cast “AGAINST” the proposal. Shares which abstain from voting on this proposal, as well as broker non-votes, will not be counted as votes cast and will not affect the outcome.
SECURITYSECURITY OWNERSHIP OF MANAGEMENT ANDCERTAIN BENEFICIAL OWNERS
The following table sets forth the shares of Common Stock beneficially owned as of February 28, 2011,29, 2012, by each director of the Company, by each executive officer of the Company or the Banks named in the Summary Compensation Table included herein (the “named executive officers”) and by all directors and executive officers (including the named executive officers) as a group.
Name | | Shares Beneficially Owned (1)(2) | | | Percent of Total Shares Outstanding | | | Shares Beneficially Owned (1)(2) | | | Percent of Total Shares Outstanding | |
| | | | | | | |
Betty A. Baudler Horras | | | 20,000 | | | | * | | | | 26,950 | | | | * | |
Scott T. Bauer(3) | | | 712,276 | | | | 7.55 | % | | | 649,792 | | | | 6.98 | % |
David W. Benson(4)(11) | | | | 6,300 | | | | * | |
Robert L. Cramer(4)(5) | | | 16,155 | | | | * | | | | 16,155 | | | | * | |
Steven D. Forth(11) | | | 2,520 | | | | * | | | | 2,520 | | | | * | |
Douglas C. Gustafson, DVM (5) | | | 48,545 | | | | * | | |
Douglas C. Gustafson, DVM (6)(11) | | | | 51,045 | | | | * | |
Charles D. Jons, MD (6)(7) | | | 27,225 | | | | * | | | | 28,310 | | | | * | |
James R. Larson II (7)(8) | | | 22,965 | | | | * | | | | 25,465 | | | | * | |
Warren R. Madden (8)(9) | | | 3,140 | | | | * | | | | 3,140 | | | | * | |
John P. Nelson (9) | | | 2,439 | | | | * | | |
Thomas H. Pohlman (10) (11) | | | 720,355 | | | | 7.64 | % | |
Jeffrey K. Putzier(10))(12) | | | 4,016 | | | | * | | |
Larry A. Raymon(13) | | | 5,335 | | | | * | | |
Frederick C. Samuelson(14) | | | 14,486 | | | | * | | |
Marvin J. Walter (15) | | | 34,578 | | | | * | | |
John P. Nelson (10) | | | | 4,843 | | | | * | |
Thomas H. Pohlman (11) (12) | | | | 659,928 | | | | 7.09 | % |
Jeffrey K. Putzier(11))(13) | | | | 3,966 | | | | * | |
Larry A. Raymon(14) | | | | 5,585 | | | | * | |
Frederick C. Samuelson(15) | | | | 14,486 | | | | * | |
Terrill L. Wycoff (16) | | | 86,978 | | | | * | | | | 91,213 | | | | * | |
| | | | | | | | | | | | | | | | |
Directors and Executive | | | | | | | | | |
Officers as a Group (17) | | | 1,144,835 | | | | 12.14 | % | |
Directors and Executive Officers as a Group (17) | | | | 1,096,913 | | | | 11.78 | % |
Notes:
* | Indicates ownership of less than 1% of outstanding shares. |
(1) | Shares "beneficially owned" includes, in addition to shares directly owned by the named individual, shares owned by or for the benefit of, among others, the spouse and/or minor children of the named individual and any other relative who has the same home as such individual, as well as other shares with respect to which the named individual has sole investment or voting power or shares investment or voting power. Beneficial ownership may be disclaimed as to certain of the shares. |
(2) | Except as otherwise indicated in the following notes, each named individual owns his or her shares directly and has sole investment and voting power with respect to such shares. |
(3) | Includes 100 shares held in an individual retirement account for the benefit of his spouse over which he has shared investment and voting power and 2,8123,044 shares held by the Ames National Corporation 401(k) Plan (the “Company 401(k) Plan”) for the benefit of Mr. Bauer over which he has sole investment power in his personal capacity and shares over which Mr. Bauer has shared investment and/or voting power in his capacity as trust officer of First National Bank, which acts as trustee of the Company 401(k) Plan and for various trust clients, as follows: |
Shares Held By: | Investment Power | Voting Power | Investment Power | Voting Power |
Company 401(k) Plan | 2,812 (sole) | 137,424 (shared) | 3,044 (sole) | 111,212 (shared) |
Various First National Bank Trust Clients | 570,831 (shared) | 570,831 (shared) | 536,721 (shared) | 536,721 (shared) |
Total Shares | 573,643 | 708,255 | 539,765 | 647,933 |
Mr. Bauer disclaims any pecuniary interest in shares reported in the preceding table, with the exception of 2,8123,044 shares held by the Company 401(k) Plan for his benefit over which he has sole investment power in his personal capacity and shared voting power in his capacity as trust officer. Beneficial ownership of shares over which Mr. Bauer has shared investment and/or voting power in his capacity as a trust officer have also been reported below under the holdings of Mr. Pohlman who also acts as a trust officer for First National Bank.