SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FIRST MANISTIQUENORTH COUNTRY FINANCIAL CORPORATION
(Name of registrant as specified in its charter)
(Name of person(s) filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
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______________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-110- 11 (set forth the
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PRELIMINARY COPY
First ManistiqueDATE: 6/1/98
North Country Financial Corporation This Proxy is solicited
130 South Cedar Street on behalf of the
Manistique, Michigan 49854 Board of Directors
PROXY
The undersigned hereby appoints Michael C. Henricksen and Ronald G. Ford as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of First ManistiqueNorth Country Financial Corporation held of record by the undersigned
on February 19,July 1, 1998, at the annualspecial meeting of shareholders to be held April 14,August 11,
1998, and at any adjournment thereof.
1. In the election of three directors to be elected for terms expiring in 2001
[ ]FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below.)
Stanley J. Gerou II, Thomas G. King, John Lindroth
2. Proposal to changeincrease the Corporation's nameauthorized common stock, no par
value, to North Country Financial
Corporation.18,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3.2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this Proxy will be
voted FOR all nominees listed in Proposal 1 and FOR the Other Proposal.1.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
_______________________________________ ________________________________________________________________________ _____________________________________
Signature Signature if held jointly
Dated: ____________________,___________________, 1998
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
PRELIMINARY COPY
FIRST MANISTIQUEDATE: 6/1//98
NORTH COUNTRY FINANCIAL CORPORATION
P.O. Box 369, 130 South Cedar Street
Manistique, Michigan 49854
NOTICE OF ANNUALSPECIAL MEETING OF SHAREHOLDERS
To Be Held April 14,August 11, 1998
NOTICE IS HEREBY GIVEN that the Annuala Special Meeting of Shareholders (the "Annual"Special
Meeting") of First ManistiqueNorth Country Financial Corporation (the "Corporation"), a Michigan
corporation, will be held on April 14,August 11, 1998, at 5 p.m.12:00 noon at Howard Johnsons,130 South Cedar
Street, Manistique, Michigan, for the following purposes:
1. To elect three (3) directors, each to hold office for a three-year
term.
2. To consider and act upon a proposal to changeapprove an amendment to the
Corporation's nameArticles of Incorporation to North Country Financial Corporation.
3.increase the Corporation's
authorized shares of common stock, no par value per share, from
6,000,000 shares to 18,000,000 shares.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed February 19,July 1, 1998, as the record date for the
determination of shareholders entitled to notice of and to vote at the meeting
or any adjournment thereof.
By order of the Board of Directors
RICHARD B. DEMERS,Paulette Demers, Secretary
Your vote is important. Even if you plan to attend the meeting, please
date and sign the enclosed proxy form, indicate your choice with respect
to the matters to be voted upon, and return it promptly in the enclosed
envelope. Note that if the stock is held in more than one name, all
parties must sign the proxy form.
Dated: March 14,July 10, 1998
FIRST MANISTIQUENORTH COUNTRY FINANCIAL CORPORATION
P.O. Box 369, 130 South Cedar Street
Manistique, Michigan 49854
PROXY STATEMENT
This Proxy Statement and the enclosed proxy are furnished in connection
with the solicitation of proxies by the Board of Directors of First ManistiqueNorth Country
Financial Corporation (the "Corporation"), a Michigan bank holding company, to
be voted at the Annuala Special Meeting of Shareholders of the Corporation to be held on
Tuesday, April 14,August 11, 1998, at 5 p.m.,12 :00 noon, at Howard Johnsons,130 South Cedar Street, Manistique,
Michigan, or at any adjournment or adjournments thereof, for the purposes set
forth in the accompanying Notice of AnnualSpecial Meeting of Shareholders and in this
Proxy Statement.
VOTING AT THE MEETING
This Proxy Statement has been mailed on or about March 14,July 10, 1998, to all
holders of record of common stock of the Corporation as of the record date. The
Board of Directors of the Corporation has fixed the close of business on February 19,July 1,
1998, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting of Shareholders and any adjournment
thereof.
The Corporation has only one class of common stock and one class of
preferred stock. As of January 15,July 1, 1998, there were 2,380,194 shares of common stock of the
Corporation outstanding and no shares of preferred stock outstanding. Each
outstanding share will entitle the holder thereof to one vote on each separate
matter presented for vote at the meeting. Votes cast at the meeting and
submitted by proxy are counted by the inspectors of the meeting, who are
appointed by the Corporation.
If a Proxy in the enclosed form is properly executed and returned to the
Corporation, the shares represented by the Proxy will be voted at the AnnualSpecial
Meeting and any adjournment thereof. If a shareholder specifies a choice, the
Proxy will be voted as specified. If no choice is specified, the shares
represented by the Proxy will be voted for the election of all of the nominees
named in the Proxy Statement and for the proposalsproposal set forth in this Proxy
Statement, and in accordance with the judgment of the persons named as proxies
with respect to any other matter which may come before the meeting. A proxy may
be revoked before exercise by notifying the Chairman of the Board in writing or
in open meeting, by submitting a proxy of a later date or attending the meeting
and voting in person. All shareholders are encouraged to date and sign the
enclosed proxy form, indicate your choice with respect to the matters to be
voted upon, and return it to the Corporation.
ELECTION OF DIRECTORS[THIS SPACE INTENTIONALLY LEFT BLANK]
PROPOSAL TO INCREASE AUTHORIZED COMMON STOCK
The Bylaws of the Corporation provide for aCorporation's Board of Directors consistinghas proposed that the first paragraph
of a minimumArticle III of five (5) and a maximum of fifteen (15) members. The Restatedthe Corporation's Articles of Incorporation ("Articles") be
amended to read as follows:
"The total number of shares of all classes of stock which the Corporationcorporation
shall have authority to issue is 18,500,000 shares, of which 18,000,000
shares shall be a single class of common stock and 500,000 shares shall be
series preferred stock."
This amendment would increase the Bylaws alsoCorporation's authorized common stock
from 6,000,000 shares to 18,000,000 shares of common stock, without par value.
The purpose of this amendment is to provide additional shares of common stock
for the
divisionfuture issuance. As of July 1, 1998, issued shares of common stock totaled ,
leaving shares of common stock for future issuance as authorized by the Board of
Directors into three (3) classes of nearly equal sizethe Corporation. The amendment would not change the number of
shares of series preferred stock which the Corporation has authority to issue.
The Corporation does not have any present plan, understanding or agreement
to issue additional shares of common stock except for a possible 3-for-1 stock
split. A 3-for-1 stock split would not be possible without an increase in the
authorized common stock. The Board of Directors believes that it is advisable to
have additional shares of common stock available for possible future
acquisitions, public offerings and stock dividends or stock splits. The Board of
Directors of the Corporation will determine whether and on what terms the
issuance of shares of common stock may be warranted and appropriate.
All of the additional shares resulting from the increase in the
Corporation's authorized common stock would be of the same class with staggered three-year termsthe same
dividend, voting and liquidation rights as the shares of office. Three persons have been nominatedcommon stock presently
outstanding. The shares would be unreserved and available for electionissuance. No
further authorization for the issuance of common shares by shareholder vote is
required under the Corporation's existing Articles, and none would be required
prior to the Board, each to serve a three-year term expiring atissuance of the 2001
Annual Meeting of Shareholders. The Board has nominated Stanley J. Gerou II,
Thomas G. King and John Lindroth, all of whom are incumbent directors previously
electedadditional common shares by the Corporation.
Shareholders have no preemptive rights to acquire any shares issued by the
Corporation under its existing Articles, and shareholders would not acquire any
such rights with respect to any additional shares under the proposed amendment
to its Articles.
While the Corporation is not aware of any pending or threatened effort to
gain control of the Corporation, shareholders should be aware that the authority
of the Board to issue common stock might be considered as having the effect of
discouraging an attempt by another person or entity to effect a takeover or
otherwise gain control of the Corporation, because the issuance of additional
common stock, would dilute the voting power of the stock then outstanding. The
Corporation's shareholders.authorized series preferred stock could also be used for these
purposes.
Other provisions of the Corporation's Articles could also be viewed as
potential impediments to efforts to acquire control of the Corporation.
Specifically, those provisions of the Articles requiring the election of only
one-third of the directors of the Corporation every year, and the requirement
that the Board of Directors, in evaluating a takeover proposal, consider
interests of constituencies of the Corporation in addition to its shareholders,
or amendment to or deletion of any of the foregoing provisions, could be used in
a manner calculated to prevent the removal of management and make more difficult
or discourage a change in control of the Corporation. The Corporation has no
present intention of soliciting the vote of shareholders on any other proposal,
or series of proposals, to deter changes in control of the Corporation.
If the proposed amendment to increase the authorized shares of common stock
is approved, common stock may, as noted, be issued without further action by the
shareholders and without first offering such shares to the Corporation's
shareholders for subscription. Issuance of common stock otherwise than on a pro
rata basis to all current shareholders would reduce current shareholders'
proportionate interests.
The affirmative vote of the holders of a majority of the outstanding shares
of common stock of the Corporation is required for approval of the proposed
amendment to the Corporation's Articles. Unless otherwise directed by a
shareholder's proxy, the persons named as proxy holdersvoters in the accompanying proxy
will vote forFOR the nominees named above.
In the event any of such nominees shall become unavailable, which is not
anticipated, theamendment.
The Board of Directors in its discretion may designate substitute
nominees, in which eventhas determined that the enclosed proxy will be voted for such substitute
nominees. Proxies cannot be voted for a greater number of persons than the
number of nominees named.
A plurality of the votes cast at the meetingproposed amendment is
required to elect the
nominees as directors of the Corporation. As such, the three individuals who
receive the largest number of votes cast at the meeting will be elected as
directors. Shares not voted at the meeting, whether by abstention, broker
nonvote, or otherwise, will not be treated as votes cast at the meeting.
The Board of Directorsdesirable and recommends a vote FOR the election of all the
persons nominated by the Board.amendment.
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PROPOSAL TO APPROVE
CORPORATE NAME CHANGE
The Board of Directors has approved a proposed amendment to the
Corporation's Articles of Incorporation that would change the name of the
Corporation to "North Country Financial Corporation." This change would identify
the Corporation with its bank subsidiary, North Country Bank and Trust, and
would eliminate the parochial focus of the Corporation's present name.
Required Vote for Approval. The affirmative vote of a majority of the
Corporation's outstanding Common Stock is required to approve the name change.
Unless otherwise directed by marking the accompanying proxy, the proxy holders
named therein will vote for the approval of the name change.
The Board of Directors recommends a vote FOR THE APPROVAL OF THE PROPOSED
NAME CHANGE.
INFORMATION ABOUT DIRECTORS AND DIRECTOR NOMINEES
The following information relating to the principal occupation or
employment has been furnished to the Corporation by the respective directors and
director nominees.directors.
Each of those persons has been engaged in the occupations stated below for more
than five years.
Nominees for Election as Directors forWhose Terms ExpiringExpire in 2001
Director of
Age Corporation Since
Stanley J. Gerou II............................................................. 49 1989
Owner, Gerou Excavating, Inc.
Thomas G. King.................................................................. 45 1987
President, Top of Lake Investment Company Owner, King's
Motel
John Lindroth................................................................... 42 1987
President, Superior State Agency, Inc. (Insurance Agency)
Directors Whose Terms Expire in 2000
Charles B. Beaulieu............................................................. 60 1984
Owner, Beaulieu Funeral Home, Inc.
Bernard A. Bouschor............................................................. 49 1996
Tribal Chairman, Sault Tribe of Chippewa Indians
C. Ronald Dufina................................................................ 53 1992
Owner, Balsam Shop, Inc., HRD, Inc., Island Leasing, Inc., and
Mackinaw Island Hospitality, Inc. (companies involved in tourism)
Directors Whose Terms Expire in 1999
Michael C. Henricksen........................................................... 55 1988
Co-Owner, Satellite Services, Inc., a service company
John P. Miller.................................................................. 5960 1976
Owner, Peoples Store Co., Inc. (Retail Clothing)
Ronald G. Ford.................................................................. 50 1987
President, North Country Bank & Trust, First ManistiqueNorth Country Financial
Corporation, First Manistique Agency, First Northern Services and First
Rural Relending Co.
-2-
BOARD COMMITTEES
The Board of Directors of the Corporation has an Audit Committee comprised
of John Miller, Chairman, John Lindroth, C. Ronald Dufina and Loren Hulsizer
(who will be retiring at this year's Annual Meeting). Four meetings of the
Committee were held during 1997. This Committee is responsible for the
recommendation of the independent accounting firm to be engaged for the external
audit, directing and supervising investigations into matters relating to audit
functions, reviewing with independent auditors the plan and results of the
external audit, the establishment and continued supervision of internal auditing
procedures, reviewing the degree of independence of the auditors and reviewing
the adequacy of internal accounting controls.
The Compensation Committee is comprised of Chairman C. Ronald Dufina,
Charles Beaulieu, Bernard Bouschor, and John Miller. Four meetings of this
Committee were held in 1997. This Committee is responsible for recommending
annually to the Board the salary of the President and CEO. This Committee
additionally reviews with management the annual projected salary ranges and
recommends those for Board approval. This Committee also annually reviews the
written Personnel Policy and audits the employee benefit package annually.
The Nominating Committee of the Board, comprised of Stanley Gerou,
Chairman, Bernard Bouschor, John Lindroth, and Loren Hulsizer, held three
meetings during the year. The Board also has an Executive Committee comprised of
Michael C. Henricksen, Chairman, Thomas G. King, Ronald G. Ford and Richard B.
Demers. This Committee handles strategic planning for the Corporation and its
subsidiaries.
The Board of Directors of the Corporation held a total of six meetings and
one special meeting during 1997. No director attended less than 75 percent of
the aggregate number of meetings of the Board of Directors and the Committees on
which he served. There are no family relationships between or among any of the
directors, nominees, or executive officers of the Corporation.
REMUNERATION OF DIRECTORS
The directors of the Corporation each receive a fee of $500 for attendance
at meetings of the Board, except for the Chairman who receives $1,000 per
meeting. Some of the directors also serve on the Board of Directors of North
Country Bank and Trust ("Bank"), for which they are paid an annual fee of $1,200
and a fee of $1,000 per meeting (except for Mr. Ronald G. Ford, the Bank Board
Chairman, who receives $700 per meeting) for attendance at Bank Board meetings
and $250 per meeting for committee meetings that are held on days when the
entire Bank Board is not meeting. In November 1984, the Corporation adopted a
deferred compensation plan for certain senior management employees and directors
that provides for benefit payments to the participant and his or her family upon
retirement or death. Messrs. Ernest King, John Clark, Charles Beaulieu, John
Miller, and Ronald Ford are participants in this plan. This plan was closed to
additional participants in 1986. The plan allows the deferral of director fees
and compensation in return for the payment of certain defined monthly benefits
payable upon termination of one's service as a director or officer of the
Corporation. Benefits under this plan may be funded by life insurance policies,
with the premiums paid for by the Corporation. Any benefits payable under this
plan are unsecured and payable out of the general assets of the Corporation.
At the 1996 shareholder meeting, the Corporation's shareholders approved of
the Corporation's Deferred Compensation, Deferred Stock and Current Stock
Purchase Plan for Non-Employee Directors ("the Plan") to provide an opportunity
for directors of the Corporation and its subsidiaries to defer payment of all or
a part of their director fees ("Plan Fees") or to receive shares of the
Corporation's stock in lieu of cash payment of Plan Fees. Each director who
participates in the Plan must elect to have his or her Plan Fees credited
quarterly to either (a) a Current Stock Purchase Account, (b) a Deferred Cash
Investment Account, or (c) a Deferred Stock Account. Plan Fees credited to a
Current Stock Purchase Account are converted to shares of the Corporation's
Common Stock at market value on the credit date and distributed to the director
in lieu of cash payment of Plan Fees. Plan Fees credited to a Deferred Cash
Investment Account are deferred for tax purposes and are credited quarterly with
an appreciation factor that may not exceed the prime rate of interest charged by
the Bank. Plan Fees credited to a Deferred Stock Account are also deferred for
tax purposes. At the credit date, the Plan Fees are converted into "Corporation
stock units" determined by dividing the amount of the Plan Fees credited for the
quarter by the fair market value of a share of the Corporation's Common Stock on
the credit date. From the credit date forward, the value of the Corporation
stock units in the director's account is tied
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directly to the fair market value of the Corporation's Common Stock, including
the impact of paid dividends. Upon termination of a director's service with the
Corporation, the amount credited to his or her Deferred Cash Investment Account
or Deferred Stock Account is paid out in a lump sum, or if termination occurs
because of retirement, the distribution may be spread over 5 to 10 years.
At the 1997 shareholder meeting, the Corporation's shareholders approved
the Corporation's 1997 Directors' Stock Option Plan (the "Director Option Plan")
to encourage stock ownership by non-employee directors ("Eligible Directors") of
the Corporation's bank subsidiaries ("Banks") and to provide additional
incentives for them to manage the Banks effectively. The Director Option Plan
provides for the grant of options to Eligible Directors each year following each
annual meeting beginning in 1998 based on the Banks' return on equity ("ROE")
for the prior year ranging from 0 if the ROE was less than 13% to 400 shares if
the Banks' ROE was greater than 15%. The term of each option is ten (10) years,
subject to earlier termination in certain events, and the option price is 100%
of fair market value on the date of grant. Based on the earnings of the North
County Bank and Trust for 1997, Messrs. Beaulieu, Bouschor, Dufina, Gerou,
Henricksen, King, Lindroth, Miller will, on April 15, 1998, each be granted an
option to purchase 400 shares of the Corporation's Common Stock.
COMPENSATION OF EXECUTIVE OFFICERS
Committee Report on Executive Compensation
Decisions on the compensation of the Corporation's executive officers are
made by the Board's Compensation Committee comprised of nonemployee directors
consisting of Chairman C. Ronald Dufina, Charles Beaulieu, Barnard Bouschor and
John Miller. To ensure this Committee's independence, the Board of Directors has
used outside consultants to assist the Committee in its deliberations. This
Committee report addresses the Corporation's compensation policies and programs
for the year ended December 31, 1997.
Base Salary - Excluding consideration of other relevant factors, which may
include individual performance, experience, expertise and tenure, the Board
intends to maintain the base salaries of the Corporation's executive officers
and senior managers within peer group levels.
Annually, the Committee recommends a base wage for the President and Chief
Executive Officer for consideration by the entire Board of Directors. The
Committee's recommendation is based upon compensation levels established by the
Corporation's peers and evaluations by consultants.
The base salaries of the Presidents of the Corporation's subsidiary banks
(the "Banks") are determined in a similar manner by the Corporation's President
and Chief Executive Officer and each Bank's Board of Directors. The base
salaries of all other executive officers are established by the Corporation's
President and Chief Executive Officer.
Annual Cash Incentive - To provide performance incentives and to compensate
for the reduction in base salary, the strategy provides for annual cash awards
that are payable if the Corporation and the Banks meet or exceed annual
performance objectives established by the Board of Directors.
Long-Term Incentives - To align the interests of its executive officers and
senior managers with the Corporation's shareholders, the Board's compensation
strategy provides for a 401(k) matching contribution and equity-based
compensation under the Corporation's Stock Compensation Plan. Each of the
Corporation's compensation plans has been adopted by the Board of Directors, and
the equity-based compensation plans have been approved by the Corporation's
shareholders.
C. Donald Dufina, Charles Beaulieu, Bernard Bouschor
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SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by the
Corporation's Chief Executive Officer and the Corporation's other executive
officers whose annual compensation exceeded $100,000, for any of the three years
ended December 31, 1997
Long-Term
Compensation
Name and Annual Compensation Options Granted All Other
Principal Position Year Salary(2) Bonus(2) (#) Compensation(3)
Ronald G. Ford 1997 $180,000 $45,000 24,000 $23,900
President and CEO 1996 $150,050 $61,520 0 $29,550
1995 $145,000 $30,450 0 $29,300
Richard B. Demers(1) 1997 $100,000 $30,000 8,888 $ 6,007
Executive Vice 1996 $ 84,000 $20,140 0 $ 4,200
President and Chief 1995 $ 84,000 $16,800 0 $ 7,800
Operating Officer
Sherry L. Littlejohn 1997 $116,000 $44,000 11,555 $ 6,940
President and Chief 1996 $ 84,000 $22,640 0 $ 4,200
Operating Officer, 1995 $ 78,824 $13,103 0 - 0 -
North Country Bank
and Trust
(1) Mr. Demers served as the President and Chief Executive Officer of the Bank
of Stephenson from February 1994 to October 1995.
(2) Includes amounts deferred by employees under the Corporation's retirement
plan account pursuant to Section 401(k) of the Internal Revenue Code.
(3) The amounts disclosed in this column include: (a) the amounts contributed
by the Corporation to the Corporation's retirement plan, in which
substantially all employees of the Corporation participate (the
Corporation made matching contributions equal to 5 percent of each
Employee's salary reduction contribution for calendar 1997, (b) director
fees, and (c) the dollar value of premiums paid by the Corporation for
certain deferred compensation benefits, as follows:
1997 1996 1995
---- ---- ----
Mr. Ford (a) $ 8,000 $ 7,500 $ 7,250
(b) $15,950 12,050 12,050
(c) $10,000 10,000 10,000
Mr. Demers (a) $ 6,007 $ 4,200 $ 4,200
(b) - 0 - -0- 3,600
Ms. Littlejohn (a) $ 6,940 $ 4,200 $ 4,200
-5-
EMPLOYMENT CONTRACT
Ronald G. Ford entered into an Employment Contract with North County Bank
and Trust, as President and CEO, effective July 1, 1994. This contract is for a
term of three years with an automatic annual one year extension unless notice of
termination is given six months before the end of the current year. This
contract provides that Mr. Ford's duties, responsibilities and administrative
authority, absent written agreement to the contrary, shall be as President and
CEO, respectively, of the Corporation and the Bank. If Mr. Ford's employment is
terminated following a change in control of the Corporation for reasons other
than his death, disability, normal retirement, for cause or by Ford without good
reason, the contract provides that he will be paid 20 quarter annual payments
each equal to 25% of the average of his aggregate annual base salary for the
three immediately preceding years. If any payment to Mr. Ford under the
Employment Contract is subject to an excise tax under Section 4999 of the
Internal Revenue Code, Mr. Ford will receive additional payments so that the
amount he receives equals the amount he would receive under the contract if an
excise tax was not imposed.
The Corporation has entered into individual Management Continuity
Agreements with Ms. Littlejohn and Mr. Demers. These agreements provide
severance benefits if the executive's employment is terminated within thirty-six
(36) months after a change in control or within six (6) months before a change
in control if the Corporation terminates her or his employment in contemplation
of a change in control and to avoid the agreement. For the purposes of these
agreements, a "change in control" is any occurrence reportable as such in a
proxy statement under applicable rules of the Securities and Exchange
Commission, and would include, without limitation, the acquisition of beneficial
ownership of 25% of the Company's voting securities by any person or an
extraordinary change in the composition of the Board of Directors. Severance
benefits will not be payable if the Corporation terminates the employment for
cause, if employment terminates due to the executive's death or disability, or
if the executive resigns without good reason. An executive may resign with "good
reason" after a change in control and retain benefits if the Corporation reduces
the executive's salary or bonus, assigns duties inconsistent with the
executive's prior position, or shifts the executive's job location more than 40
miles. The agreements are for self-renewing terms of three (3) years unless the
Corporation takes action to terminate further extensions. Each agreement is
automatically extended for a three (3) year term from the date of a change in
control. These agreement provide a severance benefit of a lump-sum payment equal
to three (3) years' salary and bonus and continuation of benefits coverage for
three (3) years and provide for additional payment to make an executive whole,
on an after-tax basis, for any excise taxes imposed by Section 4999 of the IRC.
STOCK OPTION AND RESTRICTED STOCK PLAN
In 1992, the Corporation adopted a Stock Option Plan. Participants in the
Plan generally include senior officers and certain directors of the
Corporation's subsidiary banks. The Plan authorizes the issuance of 37,350
shares of Common Stock pursuant to the exercise of options under the Plan, all
of which have been granted. Except as to then-outstanding options, this Plan was
terminated at the same time that the Board of Directors approved the Stock
Compensation Plan described below.
In 1997, the Corporation adopted a Stock Compensation Plan. Senior officers
and other key employees of the Corporation and its subsidiaries are eligible to
participate in the Plan. The Plan permits the grant of stock awards covering up
to 200,000 shares of the Corporation's common Stock, less shares covered by
options granted under the 1997 Directors' Stock Option Plan. Under the Plan, a
Committee consisting of non-employee directors may award stock options,
restricted stock, performance shares or other stock based awards.
-6-
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
% of Total
Options Exercise Annual Rates of Stock
Options Granted Price Expiration Price Appreciation
Granted to Employees in (Per Share) Date for Option Term (2)
(1) Fiscal Year 5% 10%
Ronald G. Ford 24,000 46.90% $45 2007 $679,206 $1,721,242
Richard B. Demers 8,888 17.39% $45 2007 $251,537 $ 635,877
Sherry L. Littlejohn 11,555 22.61% $45 2007 $327,009 $ 828,706
(1) These options vest ratably over five years commencing one year from the
date of grant.
(2) Amounts reflect certain assumed rates of appreciation set forth in the
SEC's executive compensation disclosure rules. Actual gains, if any, on
stock option exercise depend on future performance of the Corporation's
Common Stock and overall stock market conditions. No assurances can be
made that the amounts reflected in these columns will be achieved.
AGGREGATE STOCK OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
The following table provides information on the exercise of stock options
during 1997 by the executives listed in the Summary Compensation Table and the
value of unexercised options at December 31, 1997.
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
12/31/97 12/31/97(2)
Shares Acquired
Name on Exercise Value Realized Exercisable/Unexercisable Exercisable/Unexercisable
Ronald G. Ford 0 $ 0 0/24,000 0/$96,000
Richard B. Demers 1,200 $39,000 (1) 1,050/8,888 $38,325/$35,552
Sherry L. Littlejohn 2,250 $51,755 (1) 0/11,555 0/$46,220
(1) Value realized is the difference between the last reported sale price of
the Corporation's Common Stock immediately prior to the date of exercise
and the exercise prices of the options.
(2) Values are based on the difference between the last reported sale price of
the Corporation's Common Stock prior to December 31, 1997 ($49.00), and
the exercise prices of the options.
INDEBTEDNESS OF AND TRANSACTIONS WITH MANAGEMENT
Certain of the directors and officers of the Corporation have had and are
expected to have in the future, transactions with the subsidiary banks of the
Corporation, or have been directors or officers of corporations, or members of
partnerships, which have had and are expected to have in the future,
transactions with the subsidiary banks. In the opinion of management, all such
transactions with officers and directors and with such corporations and
partnerships are made in the ordinary course of business and substantially on
the same terms, including interest rates and collateral, as those prevailing at
the same time for comparable transactions with other customers, and these
transactions do not involve more than normal risk of collectibility or present
other unfavorable features.
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OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of February 15,
19987,July 1, 1998, as
to the common stock of the Corporation owned beneficially by each director, each
executive named in the Summary Compensation Table above,officer, and by all directors and executive officers of the
Corporation as a group. Mr. Ernest D. King, also listed in the table below, is
the only shareholder known to the Corporation to have been the beneficial owner
of more than five percent (5%) of the Corporation's outstanding common stock as
of February 15, 19987.July 1, 1998. His mailing address is P.O. Box 216, Naubinway, Michigan 49762.
Shared
Sole Voting Voting and
and Investment Investment Percent
Power (1) Power (1) of Class (2)
----------- ----------- ------------
Charles B. Beaulieu 1,727 12,867 .61%
Bernard A. Bouschor 100
C. Ronald Dufina 2,194 6,314 .35%
Ronald G. Ford 7,706 23,846 (3) 1.32%
Stanley Gerou 6,300 30,806 (4) 1.55%
Michael Henricksen 1,800 44,493 (4) 1.95%
Loren Hulsizer 18,000 .75%
Thomas G. King 22,902 .95%
John Lindroth 4,050 15,950 (5) .84%
John P. Miller 39,122 1.64%
Richard B. Demers 4,033 3,336 (3) .31%
Sherry L. Littlejohn 3,144 (3) .06%
All Directors and Executive 31,054 217,636 10.33%
Officers as a group (12 persons)
Ernest D. King 181,584 (6) 7.63%
(1) Includes shares with respect to which executive officers and directors
have the right to acquire beneficial ownership under stock options
exercisable in 60 days. At February 15,July 1, 1998, there were a total of 15,150 such
shares.
(2) Calculated on the basis of the amount of shares outstanding, plus 15,150
shares acquirable upon exercise of options described in the preceding
footnote.
(3) Messrs. Ford and Demers, and Ms. Littlejohn, together with one other
officer of the Corporation, share voting and investment power with respect
to 23,739 shares. These shares are included in the shares shown as owned
by Mr. Ford.
(4) Michael Henricksen and Stanley Gerou own 425 shares in a company called
SDM. These shares are not reported in their totals.
(5) John Lindroth owns 3,000 shares that are in the name Superior State
Agency. John is a major shareholder in Superior State and these shares are
reported in his totals.
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SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Corporation's common stock(6) Ernest D. King holds 170,700 shares jointly with that of the cumulative total return on the NASDAQ Bank Stocks Indexhis wife and the
NASDAQ Stock Market Index for the five year period ended December 31, 1997. The
following information is based on an
investment of $100, on January 1, 1992 in
the Corporation's common stock, the NASDAQ Bank Stocks Index,additional 10,884 shares with various children and the NASDAQ
Stock Market Index, with dividends reinvested. There has been only limited
trading in the Corporation's Common Stock, there are no market makers for such
shares, and the Corporation's common stock does not trade on any stock exchange
or on the NASDAQ market. Accordingly, the returns reflected in the following
graph and table are based on sale prices of the Corporation's stock of which
management is aware. There may have been sales at higher or lower prices of
which management is not aware.
[GRAPHIC OMITTED]
1992 1993 1994 1995 1996 1997
First Manistique Corporation 100 102.24 114.96 165.28 213.36 392.00
Industry Index (1) 100 104.36 97.33 141.95 188.44 297.47
NASDAQ Stock Market Index 100 119.95 125.94 163.35 202.99 248.30
(1) MG Industry Group 044 - East North Central Banks - Source: Media General
Financial Services, Richmond, Virginia.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements of the Corporation for the year ended December 31,
1997, have been examined by Wipfli Ullrich and Bertelson, LLP, independent
public accountants. A representative of Wipfli Ullrich and Bertelson, LLP, will
be at the Annual Meeting of Shareholders and will have an opportunity to make a
statement and will be available to answer appropriate questions. Wipfli Ullrich
and Bertelson, LLP has been appointed by the Board of Directors as the
independent public accountants of the Corporation and its subsidiaries for the
year ending December 31, 1998.
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grandchildren.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered by the Corporation for inclusion
in the 1999 Annual Meeting of Shareholders proxy materials must be received by
the Corporation no later than November 15, 1998.
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OTHER BUSINESS
The Board of Directors is not aware of any matter to be presented for
action at the meeting, other than the matters set forth herein. If any other
business should come before the meeting, the Proxy will be voted in respect
thereof in accordance with the best judgment of the persons authorized therein,
and discretionary authority to do so is included in the proxy. The cost of
soliciting proxies will be borne by the Corporation. In addition to solicitation
by mail, officers and other employees of the Corporation and its subsidiaries
may solicit proxies by telephone or in person, without compensation other than
their regular compensation.
The Annual Report of the Corporation for 1997 is included with this Proxy
Statement. Copies of the report will also be available for all shareholders
attending the Annual Meeting.
Shareholders are urged to sign and return the enclosed proxy in the
enclosed envelope. A prompt response will be helpful and appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
Richard B.Paulette Demers
Secretary
March 14,July 10, 1998
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