Equity Compensation Plan InformationPerquisites
Our NEOs receive various perquisites provided by or paid for by us that we believe are reasonable, competitive and consistent with the Company’s overall compensation philosophy. In 2006, these perquisites included: car allowances or Company-owned automobiles, club dues, life insurance, supplemental long-term disability and memberships.
We provide these perquisites because many companies in the peer group provide such perquisites to their named executive officers and it is therefore necessary for retention and recruitment purposes that we do the same.
The following table summarizes information asCommittee reviews the perquisites provided to its NEOs on a regular basis, in an attempt to ensure that they continue to be appropriate in light of the Committee’s overall goal of designing a compensation program for NEOs that maximizes the interests of our shareholders. Attributed costs of the personal benefits described above for the NEOs for the fiscal year ended December 31, 2005, relating to equity compensation plans2006 are included in column (h) of the Company pursuant to which common stock is authorized for issuance:“Summary Compensation Table” below.
| | | | | | | | | | | | |
| | | | | | | | | | Number of securities |
| | Number of | | | | | | remaining available for |
| | securities to be | | | | | | future issuance under |
| | issued upon | | Weighted-average | | equity compensation |
| | exercise of | | exercise price of | | plans (excluding |
| | outstanding options, | | outstanding options, | | securities reflected in |
| | warrants and rights | | warrants and rights | | column (a)) |
Equity Compensation Plan category | | (a) | | (b) | | (c) |
|
Equity compensation plans approved by security holders: | | | | | | | | | | | | |
|
Ÿ WTFC 1997 Stock Incentive Plan, as amended | | | 3,063,654 | | | $ | 27.83 | | | | 379,286 | |
Ÿ WTFC Employee Stock Purchase Plan | | | N/A | | | | N/A | | | | 203,105 | |
Ÿ WTFC Directors Deferred Fee and Stock Plan | | | N/A | | | | N/A | | | | 203,544 | |
| | |
| | | 3,063,654 | | | $ | 27.83 | | | | 785,935 | |
|
Equity compensation plans not approved by security holders(1) | | | | | | | | | | | | |
|
Ÿ N/A | | | — | | | | — | | | | — | |
|
Total(1) | | | 3,063,654 | | | $ | 27.83 | | | | 785,935 | |
|
| | |
(1) | | Excludes 161,985 shares of the Company’s common stock issuable pursuant to the exercise of options previously granted under the plans of Advantage National Bancorp, Inc., Village Bancorp, Inc., Northview Financial Corporation, Town Bankshares, Ltd and First Northwest Bancorp, Inc. The weighted average exercise price of those options is $25.84. No additional awards will be made under these plans. |
SHAREHOLDER PROPOSALSPost-Termination Compensation
Shareholders’ proposals intended to be presented at
We have entered into employment agreements with certain members of our senior management team, including the Company’s 2007 Annual MeetingNEOs, which provide for post-termination compensation. These agreements provide for payments and other benefits if the officer’s employment terminates for a qualifying event or circumstance, such as being terminated without “Cause” or leaving employment for “Constructive Termination,” as these terms are defined in the employment agreements. Additionally, the employment agreements provide for the payment of Shareholders must be receivedseverance upon a“Change-in-Control” (as defined in writing by the Secretaryagreements) of the Company no later thanCompany. Additional information regarding the employment agreements, including a definition of key terms and a quantification of benefits that would have been received by our NEOs had termination occurred on December 26,31, 2006, is found under the heading “Potential Payments upon Termination orChange-in-Control” on page 25 of this Proxy Statement.
The Committee believes that these employment arrangements are an important part of overall compensation for our NEOs and will help to secure the continued employment and dedication of our NEOs, notwithstanding any concern that they might have at such time regarding their own continued employment, prior to or following a change in order to be considered for inclusion in the proxy material forcontrol. The Committee also believes that meeting. Any such proposals shall be subject to the requirementsthese agreements are important as a recruitment and retention device, as all or nearly all of the proxy rules adopted under the Securities Exchange Act of 1934 (the “Exchange Act”). Furthermore,companies with which we compete for executive talent have similar agreements in orderplace for any shareholder to properly propose any business for consideration at the 2007 Annual Meeting, including the nomination of any person for election as a director, or any other matter raised other than pursuant to Rule 14a-8 of the proxy rules adopted under the Exchange Act, written notice of the shareholder’s intention to make such proposal must be furnished to the Company in accordance with the By-laws. Under the existing provisions of the By-laws, if the 2007 Annual Meeting is held on May 24, 2007, the deadline for such notice is March 25, 2007.their senior employees.
14
OTHER BUSINESSOur Compensation Policies
The Company is unaware
Impact of any other matter to be acted upon at the Special Meeting for shareholder vote. In case of any matter properly coming before the Special Meeting for shareholder vote, unless discretionary authority has been denied the proxy holders named in the proxy accompanying this statement shall vote them in accordance with their best judgment.
| | | | |
| BY ORDER OF THE BOARD OF DIRECTORSSection 162(m)
| |
| /s/ David A. Dykstra | |
| David A. Dykstra | |
| Secretary | |
15
APPENDIX A
WINTRUST FINANCIAL CORPORATION
2007 STOCK INCENTIVE PLAN
1. Purpose; Effect on Predecessor Plan. The purpose
Section 162(m) of the Wintrust Financial Corporation 2007 Stock Incentive Plan is to benefit the Corporation and its Subsidiaries by enabling the Corporation to offer certain present and future officers, employees, directors and consultants stock-based incentives and other equity interests in the Corporation, thereby providing them a stake in the growth of the Corporation and encouraging them to continue in the service of the Corporation and its Subsidiaries.
This Plan is intended to replace the Predecessor Plan. As of the Effective Date, no further awards shall be granted under the Predecessor Plan; provided, however, that if the Plan is not approved by the shareholders of the Corporation, the Predecessor Plan shall remain in effect in accordance with its terms.
2. Definitions.
(a) “Award” includes, without limitation, stock options (including incentive stock options under Section 422 of the Code), stock appreciation rights, performance share or unit awards, stock awards, restricted share or unit awards, or other awards that are valued in whole or in part by reference to, or are otherwise based on, the Corporation’s Common Stock (“Other Incentive Awards”), all on a stand alone, combination or tandem basis, as described in or granted under this Plan.
(b) “Award Agreement” means a writing provided by the Corporation to each Participant setting forth the terms and conditions of each Award made under this Plan.
(c) “Board” means the Board of Directors of the Corporation.
(d) “Code” means the Internal Revenue Code of 1986, as amended, from timeimposes a $1 million limit on the amount that a public company may deduct for compensation paid to time.the certain “covered employees.” The “covered employees” generally consist of a company’s chief executive officer or other NEOs. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance-based” compensation. During the course of its evaluation of compensation paid to NEOs and certain other “covered employees,” the Company takes into account Section 162(m) considerations and the impact thereof.
19
Practices Regarding the Grant of Options
(e) “Committee” means
The Company has followed a practice of making a majority of all option grants to its NEOs on a single date each year and intends to have a practice of generally making all option grants to its NEOs on a single date each year, its regularly scheduled meeting in January. The January meeting date has historically occurred within two weeks following the Compensation Committeeissuance of the Boardrelease reporting our earnings for the previous fiscal year. The Committee believes that it is appropriate that annual awards be made at a time when material information regarding our performance for the preceding year has been disclosed. The Company does not otherwise have any program, plan or such other committee of the Board as may be designated by the Board from timepractice to time annual option grants to administer this Plan and which also shall be entirely comprisedits executives in coordination with the release of independent directors meetingmaterial non-public information.
While the disinterested administration requirementsbulk of Rule 16b-3our option awards to NEOs have historically been made pursuant to our annual grant program, the Committee retains the discretion to make additional awards to NEOs at other times, in connection with the initial hiring of a new officer, for retention purposes or otherwise. We refer to such grants as “ad hoc” awards. The Company does not have any program, plan or practice to time ad hoc awards in coordination with the release of material non-public information.
All equity awards made to our NEOs, or any of our other employees or Directors (except for payment of director fees under the Securities Exchange Act of 1934Company’s Directors Deferred Fee and Stock Plan), are made pursuant to our Incentive Plans. As noted above, all options under the “outside director” requirement of Section 162(m) ofIncentive Plans are granted with an exercise price equal to the Code.
(f) “Common Stock” means the Common Stock, no parfair market value of the Corporation.
(g) “Corporation” means Wintrust Financial Corporation, an Illinois corporation.
(h) “Director” means a director of the Corporation or a Subsidiary.
(i) “Effective Date” meansour common stock on the date of grant. Fair market value is defined under the approval of the Plan by the shareholders of the Corporation.
A-1
(j) “Employee” means an employee of the Corporation or a Subsidiary.
(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(l) “Fair Market Value” meansIncentive Plans to be the average of the highest and the lowest quoted selling prices on the Nasdaq National Market on the relevant valuation date or, if there were no sales on the valuation date, on the next preceding date on which such selling prices were recorded; provided, however, that,recorded on the date of grant. We do not have any program, plan or practice of awarding options and setting the exercise price based on the stock’s price on a date other than the grant date. We do not have a practice of determining the exercise price of option grants by using average prices (or lowest prices) of our common stock in a period preceding, surrounding or following the grant date. While the Incentive Plans permit delegation of the Committee’s authority to grant options in certain circumstances, all grants to NEOs are made by the Committee may modifyitself and not pursuant to delegated authority.
Prohibition on Hedging and Short Selling
The Company’s executive officers and directors are prohibited from engaging in selling short our common stock or engaging in hedging or offsetting transactions regarding our common stock.
Stock Ownership Policy
Part of our compensation philosophy involves common share ownership by our executive officers because we believe that it helps align their financial interests with those of our shareholders. While we do strongly encourage our executive officers to acquire and own our common shares, we have not adopted a formal written policy on share ownership requirements of our executive officers. We have, however, adopted share ownership guidelines for members of our Board to own, within three years of becoming a director, shares having a value of at least three times the definitionannual retainer fee paid to directors. Each of Fair Market Value to meanour Directors is currently in compliance with these share ownership guidelines.
20
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the closing selling price on the Nasdaq National Market on the relevant valuation date or, if there were no sales on the valuation date, on the next preceding date on which such closing selling prices were recorded.
(m) “Participant” means an Employee, Director or a consultant who has been granted an Award under the Plan.
(n) “Plan” means thisBoard of Directors of Wintrust Financial Corporation 2007 Stock Incentive Plan.
(o) “Plan Year” means a twelve-month period beginning with January 1 of each year.
(p) “Predecessor Plan” means theoversees Wintrust Financial Corporation 1997 Stock Incentive Plan, which incorporatedCorporation’s compensation program on behalf of the Crabtree Capital Corporation 1987 Stock Option Plan, The Credit Life Companies, Incorporated 1987 Stock Option Plan,Board. In fulfilling its oversight responsibilities, the Crabtree Capital Corporation 1990 Stock Purchase Plan,Compensation Committee reviewed and discussed with management the First Premium Services, Incorporated 1992 Stock Option Plan,Compensation Discussion and Analysis set forth in this Proxy Statement.
In reliance on the Lake Forest Bancorp, Inc. 1991 Stock Option Plan,review and discussions referred to above, the Lake Forest Bancorp, Inc. 1993 Stock Option Plan,Compensation Committee recommended to the Hinsdale Bancorp, Inc. 1993 Stock Option Plan,Board that the North Shore Community Bancorp, Inc. 1993 Stock Rights Plan,Compensation Discussion and Analysis be included in the North Shore Community Bancorp, Inc. 1994 Stock Option Plan,Company’s Annual Report onForm 10-K for the Libertyville Bancorp, Inc. 1995 Stock Option Planfiscal year ended December 31, 2006 and the Wolfhoya Investments, Inc. 1995 Stock Option Plan, the Advantage National Bancorp, Inc. 2002 Stock Incentive Plan, the Village Bancorp, Inc. 1998 Omnibus Stock Incentive Plan, the Town Bankshares, Ltd. 1997 Stock Incentive Plan, the Northview Financial Corporation 1993 Incentive Stock Program, the First Northwest Bancorp, Inc. 1998 Stock Option Plan, the First Northwest Bancorp, Inc. 2002 Stock Option Plan and the Hinsbrook Bancshares, Inc. 1992 Employee Stock Option Plan, as amended, each a stock option or stock purchase plan maintained by a predecessorCompany’s Proxy Statement to the Corporation.
(q) “Subsidiary” means any corporation or other entity, whether domestic or foreign,be filed in which the Corporation has or obtains, directly or indirectly, a proprietary interest of at least 50% (or 20%, if providing an Award to an Employee, Director or consultant of such Subsidiary is based upon legitimate business criteria, as defined in Section 409A of the Code and the regulations promulgated thereunder) by reason of stock ownership or otherwise.
3. Eligibility. Any Employee, Director or consultant selected by the Committee is eligible to receive an Award. In addition, the Committee may select former Employees and Directors who have a consulting arrangementconnection with the Corporation or a Subsidiary whomCompany’s 2007 Annual Meeting of Shareholders, each of which will be filed with the Committee determines have a significant responsibility for the successSecurities and future growth and profitability of the Corporation.Exchange Commission.
COMPENSATION COMMITTEE
| | |
PETER D. CRIST (Chairman) | | ALBIN F. MOSCHNER |
JOSEPH F. DAMICO | | HOLLIS W. RADEMACHER |
JOHN S. LILLARD | | J. CHRISTOPHER REYES |
A-2
21
4. Plan Administration.
2006 SUMMARY COMPENSATION TABLE
(a) Except as otherwise determined
The following table summarizes compensation awarded to, earned by or paid to our NEOs for 2006. The section of this Proxy Statement entitled “Compensation Discussion and Analysis” describes in greater detail the Board,information reported in this table and the Plan shall be administered by the Committee. objectives and factors considered in setting NEO compensation.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Non-
| | | | |
| | | | | | | | | | | | Equity
| | | | |
| | | | | | | | | | | | Incentive
| | All
| | |
| | | | | | | | | | Option
| | Plan
| | Other
| | |
| | | | Salary
| | Bonus
| | Stock Awards
| | Awards
| | Compensation
| | Compensation
| | Total
|
| | Year
| | ($)
| | ($)
| | ($)(1)
| | ($)(2)
| | ($)
| | ($)(3)
| | ($)
|
Name and Principal Position (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) |
|
Edward J. Wehmer | | | 2006 | | | | 672,917 | | | | — | | | | 1,319,110 | (4) | | | 412,502 | | | | — | | | | 26,495 | | | | 2,431,024 | |
President & Chief | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
David A. Dykstra | | | 2006 | | | | 486,667 | | | | — | | | | 1,009,569 | (4) | | | 307,661 | | | | — | | | | 16,080 | | | | 1,819,977 | |
Senior Executive Vice | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
President & Chief | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
David L. Stoehr | | | 2006 | | | | 208,333 | | | | 24,200 | | | | 99,906 | | | | 43,860 | | | | — | | | | 11,069 | | | | 363,168 | |
Executive Vice | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
President & Chief | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Richard B. Murphy | | | 2006 | | | | 267,750 | | | | 20,000 | | | | 144,941 | | | | 146,254 | | | | — | | | | 2,370 | | | | 561,315 | |
Executive Vice | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
President & Chief | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Credit Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Randolph M. Hibben | | | 2006 | | | | 273,750 | | | | — | | | | 168,009 | | | | 159,229 | | | | — | | | | 14,477 | | | | 615,465 | |
Executive Vice | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
President — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Market Head | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
(1) | | The amounts shown in this column constitute restricted stock units granted under the 1997 Plan and 2007 Plan. The amounts equal the financial statement compensation cost for Stock Awards as reported in our 2006 consolidated statement of income for fiscal year 2006 and are valued based on the aggregate grant date fair value of the award determined pursuant to Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (revised 2004),Share-Based Payment(which we refer to as FAS 123R). See Note 18 to the Consolidated Financial Statements included in our Annual Report onForm 10-K for the year ended December 31, 2006 for a discussion of the relevant assumptions used in calculating grant date fair value pursuant to FAS 123R. For further information on these awards, see the Grants of Plan-Based Awards table beginning on page 23 of this Proxy Statement. |
|
(2) | | The amounts shown in this column constitute options granted under the 1997 Plan and 2007 Plan. The amounts equal the financial statement compensation cost for Stock Awards as reported in our consolidated statement of income for fiscal year 2006 and are valued based on the aggregate grant date fair value of the award determined pursuant to FAS 123R. See Note 18 to the Consolidated Financial Statements included in our Annual Report onForm 10-K for the year ended December 31, 2006 for a discussion of the relevant assumptions used in calculating grant date fair value pursuant to FAS 123R. For further information on these awards, see the Grants of Plan-Based Awards table beginning on page 23 of this Proxy Statement. |
|
(3) | | Amounts in this column include the value of the following perquisites paid to the NEOs in 2006. Perquisites are valued at actual amounts paid to each provider of such perquisites. |
22
| | | | | | | | | | | | | | | | | | | | |
| | | | | Club
| | | | | | | | | | |
| | Corporate
| | | Memberships
| | | Life
| | | | | | | |
| | Automobile
| | | Not Exclusively
| | | Insurance
| | | Supplemental
| | | | |
| | Usage
| | | For Business Use
| | | Premiums
| | | Long-Term
| | | | |
Named Executive Officer | | ($) | | | ($) | | | ($) | | | Disability | | | Total | |
|
Edward J. Wehmer | | | 8,104 | | | | 14,551 | | | | 2,416 | | | | 1,424 | | | | 26,495 | |
David A. Dykstra | | | 14,921 | | | | — | | | | 1,159 | | | | — | | | | 16,080 | |
David L. Stoehr | | | 7,209 | | | | 3,240 | | | | 620 | | | | — | | | | 11,069 | |
Richard B. Murphy | | | 631 | | | | 923 | | | | 766 | | | | — | | | | 2,370 | |
Randolph M. Hibben | | | 12,000 | | | | 1,632 | | | | 845 | | | | — | | | | 14,477 | |
| | |
(4) | | Entire amount reflects the compensation cost for stock awards as reported in the Company’s 2006 consolidated financial statements in accordance with FAS 123R for shares granted relating to performance prior to 2006. Messrs. Wehmer and Dykstra did not receive stock awards relating to performance for the 2006 calendar year. |
GRANTS OF PLAN-BASED AWARDS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | All
| | | All
| | | | | | Grant
| |
| | | | | | | | | | | | | | | | | | | | | | | Other
| | | Other
| | | | | | Date
| |
| | | | | | | | | | | | | | | | | | | | | | | Stock
| | | Option
| | | Exercise
| | | Fair
| |
| | | | | | | | | | | | | | | | | | | | | | | Awards:
| | | Awards:
| | | or Base
| | | Value of
| |
| | | | | | | | | | | | | | | | | | | | | | | Number of
| | | Number of
| | | Price of
| | | Stock and
| |
| | | | | Estimated Future Payouts
| | | Estimated Future Payouts
| | | Shares
| | | Securities
| | | Option
| | | Option
| |
| | Grant
| | | Under Non-Equity Incentive Plan Awards | | | Under Equity Incentive Plan Awards | | | of Stock
| | | Underlying
| | | Awards
| | | Awards
| |
Name
| | Date
| | | Threshold
| | | Target
| | | Maximum
| | | Threshold
| | | Target
| | | Maximum
| | | or Units
| | | Options
| | | ($/Sh)
| | | ($/Sh)
| |
(a) | | (1)(b) | | | ($)(c) | | | ($)(d) | | | ($)(e) | | | (#)(f) | | | (#)(g) | | | (#)(h) | | | (2)(#)(i) | | | (#)(j) | | | (k) | | | (3)(l) | |
|
Edward J. Wehmer | | | 1/26/06 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,761 | | | | — | | | | — | | | | 250,000 | |
| | | 1/26/06 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,000 | | | | — | | | | — | | | | 262,550 | |
David A. Dykstra | | | 1/26/06 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,809 | | | | — | | | | — | | | | 200,011 | |
| | | 1/26/06 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 35,000 | | | | — | | | | — | | | | 1,837,850 | |
David L. Stoehr | | | 1/26/06 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,500 | | | | — | | | | — | | | | 78,765 | |
| | | 1/26/06 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,257 | | | | — | | | | — | | | | 66,005 | |
Richard B. Murphy | | | 1/26/06 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,739 | | | | — | | | | — | | | | 91,315 | |
Randolph M. Hibben | | | 1/26/06 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,634 | | | | — | | | | — | | | | 85,801 | |
| | | 12/27/06 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,351 | | | | — | | | | — | | | | 65,024 | |
| | |
(1) | | In each case, the “Grant Date” reflects the date on which the Compensation Committee acted to approve the grant of the award. All awards were made under the Company’s 1997 Incentive Plan. |
|
(2) | | This column shows the number of restricted stock units granted to the named executive officers in 2006. |
|
(3) | | The value of the awards (which in 2006 are all restricted stock units awards) represents the average of the high and low sale prices of the Company’s common stock on the date of grant, as reported by Nasdaq, multiplied by the number of restricted stock units granted to the named executive officers. |
23
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The Committee shall make determinationsfollowing table sets forth information for each named executive officer with respect to (1) each stock option to purchase common shares that has not been exercised and remained outstanding at December 31, 2006 and (2) each award of restricted stock units that has not vested and remained outstanding at December 31, 2006.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards (1) | | | Stock Awards(1) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | Equity
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | Incentive
| |
| | | | | | | | | | | | | | | | | | | | | | | Equity
| | | Plan
| |
| | | | | | | | | | | | | | | | | | | | | | | Incentive
| | | Awards:
| |
| | | | | | | | | | | | | | | | | | | | | | | Plan
| | | Market or
| |
| | | | | | | | Equity
| | | | | | | | | | | | | | | Awards:
| | | Payout
| |
| | | | | | | | Incentive
| | | | | | | | | | | | | | | Number of
| | | Value of
| |
| | | | | | | | Plan
| | | | | | | | | Number of
| | | Market
| | | Unearned
| | | Unearned
| |
| | Number of
| | | Number of
| | | Awards:
| | | | | | | | | Shares or
| | | Value of
| | | Shares,
| | | Shares,
| |
| | Securities
| | | Securities
| | | Number of
| | | | | | | | | Units of
| | | Shares or
| | | Units or
| | | Units or
| |
| | Underlying
| | | Underlying
| | | Securities
| | | | | | | | | Stock
| | | Units of
| | | Other
| | | Other
| |
| | Unexercised
| | | Unexercised
| | | Underlying
| | | | | | | | | That
| | | Stock
| | | Rights That
| | | Rights
| |
| | Options
| | | Options
| | | Unexercised
| | | Option
| | | Option
| | | Have Not
| | | That
| | | Have
| | | That
| |
| | (#)
| | | (#)
| | | Unearned
| | | Exercise
| | | Expiration
| | | Vested
| | | Have Not
| | | Not
| | | Have Not
| |
Name
| | Exercisable
| | | Unexercisable
| | | Options
| | | Price
| | | Date
| | | (#)(3)
| | | Vested
| | | Vested
| | | Vested
| |
(a) | | (2)(b) | | | (c) | | | (#)(d) | | | ($)(e) | | | (f) | | | (g) | | | ($)(h) | | | (#)(i) | | | ($)(j) | |
|
Edward J. Wehmer | | | 30,000 | | | | — | | | | — | | | | 12.00 | | | | 1/22/08 | | | | 40,000 | | | | 1,920,800 | | | | — | | | | — | |
| | | 22,000 | | | | — | | | | — | | | | 11.33 | | | | 10/28/09 | | | | 45,000 | | | | 2,160,900 | | | | — | | | | — | |
| | | 144,000 | | | | 36,000 | | | | — | | | | 18.81 | | | | 1/22/12 | | | | 4,761 | | | | 228,623 | | | | — | | | | — | |
| | | 30,000 | | | | 20,000 | | | | — | | | | 45.46 | | | | 1/22/13 | | | | 5,000 | | | | 240,100 | | | | — | | | | — | |
David A. Dykstra | | | 27,000 | | | | — | | | | — | | | | 12.00 | | | | 12/5/07 | | | | 28,000 | | | | 1,344,560 | | | | — | | | | — | |
| | | 16,000 | | | | — | | | | — | | | | 11.33 | | | | 10/28/09 | | | | 3,809 | | | | 182,908 | | | | — | | | | — | |
| | | 16,800 | | | | 4,200 | | | | — | | | | 18.81 | | | | 1/22/12 | | | | 35,000 | | | | 1,680,700 | | | | — | | | | — | |
| | | 9,000 | | | | 6,000 | | | | — | | | | 45.46 | | | | 12/22/13 | | | | | | | | | | | | | | | | | |
| | | 12,000 | | | | 48,000 | | | | — | | | | 54.92 | | | | 1/25/15 | | | | | | | | | | | | | | | | | |
David L. Stoehr | | | 10,200 | | | | 2,550 | | | | — | | | | 18.81 | | | | 1/22/12 | | | | 1,500 | | | | 72,030 | | | | — | | | | — | |
| | | 8,000 | | | | 2,000 | | | | — | | | | 30.57 | | | | 10/24/12 | | | | 1,257 | | | | 60,361 | | | | — | | | | — | |
| | | 600 | | | | 400 | | | | — | | | | 45.46 | | | | 12/22/13 | | | | | | | | | | | | | | | | | |
Richard B. Murphy | | | 13,500 | | | | — | | | | — | | | | 12.00 | | | | 12/5/07 | | | | 4,000 | | | | 192,080 | | | | — | | | | — | |
| | | 8,800 | | | | — | | | | — | | | | 11.33 | | | | 10/28/09 | | | | 1,739 | | | | 83,507 | | | | — | | | | — | |
| | | 3,999 | | | | 1,000 | | | | — | | | | 18.81 | | | | 1/22/12 | | | | | | | | | | | | | | | | | |
| | | 25,200 | | | | 16,800 | | | | — | | | | 43.20 | | | | 10/30/13 | | | | | | | | | | | | | | | | | |
| | | 600 | | | | 400 | | | | — | | | | 45.46 | | | | 12/22/13 | | | | | | | | | | | | | | | | | |
Randolph M. Hibben | | | 9,000 | | | | — | | | | — | | | | 12.00 | | | | 12/5/07 | | | | 6,000 | | | | 288,120 | | | | — | | | | — | |
| | | 22,500 | | | | — | | | | — | | | | 12.29 | | | | 4/29/09 | | | | 1,634 | | | | 78,465 | | | | — | | | | — | |
| | | 8,599 | | | | — | | | | — | | | | 11.33 | | | | 10/28/09 | | | | 1,351 | | | | 64,875 | | | | — | | | | — | |
| | | 38,799 | | | | 9,700 | | | | — | | | | 18.81 | | | | 1/22/12 | | | | | | | | | | | | | | | | | |
| | | 2,100 | | | | 1,400 | | | | — | | | | 45.46 | | | | 12/22/13 | | | | | | | | | | | | | | | | | |
| | |
(1) | | Multiple awards have been aggregated where the expiration date and the exerciseand/or base price of the instruments are identical. |
|
(2) | | The following table provides information with respect to the vesting of each NEO’s outstanding non-equity incentive plan options: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Award Type | | 1/22/07 | | | 1/25/07 | | | 10/24/07 | | | 10/30/07 | | | 12/22/07 | | | 1/25/08 | | | 10/30/08 | | | 12/22/08 | | | 1/25/09 | | | 1/25/10 | |
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Edward J. Wehmer | | Stock Options | | | 36,000 | | | | — | | | | — | | | | — | | | | 10,000 | | | | — | | | | — | | | | 10,000 | | | | — | | | | — | |
David A. Dykstra | | Stock Options | | | 4,200 | | | | 12,000 | | | | — | | | | — | | | | 3,000 | | | | 12,000 | | | | — | | | | 3,000 | | | | 12,000 | | | | 12,000 | |
David L. Stoehr | | Stock Options | | | 2,550 | | | | — | | | | 2,000 | | | | — | | | | 200 | | | | — | | | | — | | | | 200 | | | | — | | | | — | |
Richard B. Murphy | | Stock Options | | | 1,000 | | | | — | | | | — | | | | 8,400 | | | | 200 | | | | — | | | | 8,400 | | | | 200 | | | | — | | | | — | |
Randolph M. Hibben | | Stock Options | | | 9,700 | | | | — | | | | — | | | | — | | | | 700 | | | | — | | | | — | | | | 700 | | | | — | | | | — | |
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| | |
(3) | | The following table provides information with respect to the vesting of each NEO’s outstanding shares of restricted stock units: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Award Type | | 1/25/07 | | | 1/26/07 | | | 12/27/07 | | | 1/25/08 | | | 1/26/08 | | | 1/25/09 | | | 1/25/10 | | | 1/26/10 | | | 3/17/10 | |
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Edward J. Wehmer | | Restricted Stock Units | | | 10,000 | | | | 4,761 | | | | — | | | | 10,000 | | | | — | | | | 10,000 | | | | 10,000 | | | | 5,000 | | | | 45,000 | |
David A. Dykstra | | Restricted Stock Units | | | 7,000 | | | | 3,809 | | | | — | | | | 7,000 | | | | — | | | | 7,000 | | | | 7,000 | | | | 35,000 | | | | — | |
David L. Stoehr | | Restricted Stock Units | | | — | | | | 1,257 | | | | — | | | | — | | | | 1,500 | | | | — | | | | — | | | | — | | | | — | |
Richard B. Murphy | | Restricted Stock Units | | | 1,000 | | | | 1,739 | | | | — | | | | 1,000 | | | | — | | | | 1,000 | | | | 1,000 | | | | — | | | | — | |
Randolph M. Hibben | | Restricted Stock Units | | | 1,500 | | | | 1,634 | | | | 1,351 | | | | 1,500 | | | | — | | | | 1,500 | | | | 1,500 | | | | — | | | | — | |
OPTION EXERCISES AND STOCK VESTED
The following table sets forth information for each named executive officer with respect to exercises of stock options and the participationvesting of Employees, Directorsstock awards during 2006, and consultantsthe value realized upon such exercise or vesting.
| | | | | | | | | | | | | | | | |
| | Option Awards | | | Stock Awards | |
| | Number of Shares
| | | Value Realized on
| | | Number of Shares
| | | Value Realized on
| |
| | Acquired on
| | | Exercise
| | | Acquired on Vesting
| | | Vesting
| |
Name(a) | | Exercise (1)(#)(b) | | | (2)($)(c) | | | (3)(#)(d) | | | (4)($)(e) | |
|
Edward J. Wehmer | | | — | | | | — | | | | 14,097 | | | | 724,586 | |
David A. Dykstra | | | 6,039 | | | | 223,542 | | | | 10,186 | | | | 523,560 | |
David L. Stoehr | | | — | | | | — | | | | 517 | | | | 26,574 | |
Richard B. Murphy | | | — | | | | — | | | | 2,393 | | | | 123,000 | |
Randolph M. Hibben | | | — | | | | — | | | | 2,866 | | | | 147,312 | |
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(1) | | Represents the exercise of vested stock options under the Company’s 1997 Stock Incentive Plan. |
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(2) | | The value realized on the exercise of stock options represents the pre-tax difference between the option exercise price and the sale price of the common stock on the date of exercise, multiplied by the number of shares of common stock covered by the stock options held by the named executive officers. |
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(3) | | Represents the vesting of restricted stock units under the Company’s 1997 Stock Incentive Plan. |
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(4) | | The value realized on the vesting of restricted stock units represents the average of the high and low sale prices of the common stock on the date of vesting, as reported by Nasdaq, multiplied by the number of stock units held by the named executive officers. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
As noted under “Compensation Discussion and Analysis — Post-Termination Compensation” on page 19 of this Proxy Statement, we have entered into employment agreements with each of our NEOs that provide for payments in the Plan and, except as otherwise required by lawconnection with such NEO’s termination, whether upon a change of control or this Plan,otherwise. A description of the terms of Awards, including vesting schedules, price, lengththese employment agreements follows. The benefits to be provided to the NEO in each of relevant performance, restrictionthose situations are described below, which assume that termination had taken place on December 31, 2006, the last day of our most recent fiscal year, and thus includes amounts earned through such time and are estimates of the amounts which would be paid to our NEOs upon their termination. The actual amounts to be paid out can only be determined at the time of such NEO’s separation from the Company.
Payments Made upon Termination
The employment agreements provide for payments of certain benefits, as described below, upon the termination of the employment of a NEO. The NEO’s rights upon a termination of his or option periods, post-retirementher employment depend upon the circumstances of the termination. Central to an understanding of the rights of each NEO under the employment
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agreements is an understanding of the definitions of ‘Cause’ and termination rights, payment alternatives such as cash, stock, contingent awards or other means of payment consistent with the‘Constructive Termination’ that are used in those agreements. For purposes of this Plan,the employment agreements:
| | |
| • | We haveCauseto terminate the NEO if the NEO has engaged in any of a list of specified activities, including refusing to perform duties consistent with the scope and nature of his or her position, committing an act of gross negligence or willful misconduct resulting in or potentially resulting in economic loss or damage to the Company’s reputation, conviction of a felony or other actions specified in the definition. |
|
| • | The NEO is said to have beenConstructively Terminated(and thereby gain access to the benefits described below) if we (i) materially reduce the NEO duties and responsibilities or (ii) reduce the NEO’s total adjustment compensation to less than 75% of such amount for the prior 12 months. |
The employment agreements require, as a precondition to the receipt of these payments, that the NEO sign a standard form of release in which he or she waives all claims that he or she might have against us and certain associated individuals and entities. They also include noncompete and nonsolicit provisions and nondisparagement and confidentiality provisions that would apply for, in the case of Messrs. Wehmer, Dykstra and Murphy, three years and, in the case of Messrs. Stoehr and Hibben, two years following such other terms and conditions as the Committee deems appropriate.NEO’s termination of employment.
(b) No Award
Payment Obligations for Termination with Cause
If a NEO is terminated for Cause, he is entitled to receive amounts earned during the terms of employment. Such amounts include:
| | |
| • | unpaid base salary through the date of termination; |
|
| • | accrued but unused vacation or paid leave; |
|
| • | earned but unpaid annual incentive compensation; and |
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| • | reimbursements. |
Payment Obligations Upon Death or Permanent Disability
In the event of death or permanent disability of a NEO, in addition to the items above:
| | |
| • | he will be entitled to a payment equal to a multiple, which is 3x for Messrs. Wehmer, Dykstra and Murphy, and 2x in the case of Messrs. Stoehr and Hibben, of the base salary in effect at termination of employment plus the cash and stock bonus awards to such NEO in the prior 12 months, with such payments to be made, (i) in the case of death, in a lump sum within 30 days of the executive’s termination or (ii), in the case of permanent disability, ratably over 36 months in the case of Messrs. Wehmer, Dykstra and Murphy and over 24 months in the case of Messrs. Stoehr and Hibben, with any such payment benefit reduced by the proceeds from any life or disability insurance policies maintained by the Company and, in the case of disability, by other earned income; and |
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| • | he will immediately vest in all outstanding awards under the Incentive Plans. |
Additionally, in the event of termination due to permanent disability:
| | |
| • | Messrs. Wehmer, Dykstra and Murphy will continue to receive health insurance, including for qualified dependents, either under the then current Company plan or under an independent policy having similar coverage to that maintained by the Company, until the earlier of (a) the date he becomes eligible for any comparable medical, dental, or vision coverage provided by any other employer or (b) the date he becomes eligible for Medicare benefits; and |
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| • | Messrs. Stoehr and Hibben will continue to receive health insurance, including for qualified dependents, under the then current Company plan until the end of the24-month period over which the severance payments described in the first bullet point of this subsection are made. |
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Payment Obligations for Constructive Termination or Termination Without Cause
In the event of constructive termination or termination without cause of a NEO, such NEO is entitled to the items listed above under “Payment Obligations for Termination with Cause” and “Payment Obligations Upon Death or Permanent Disability,” except that contemplates exercise(1) the payment described in the first bullet point under Payment Obligations Upon Death or conversion mayPermanent Disability” will not be exercisedmade in a lump sum, but rather be made ratably over the applicable period, (2) outstanding awards under the Incentive Plans will not immediately vest but rather will remain exercisable until the earlier of three months or converted to any extent, and no other Award that defers vesting, shall remain outstanding and unexercised, unconverted or unvested more than seven (7) years after the date the Award was initially granted.
(c) The Committee, by majority action thereof (whether taken during a meeting or by written consent), shall have authority to interpret and construe the provisionslife of the Planaward and (3) in the Award Agreementscase of Messrs. Stoehr and make determinations pursuant to any Plan provision or Award Agreement which shall be final and binding on all persons. To the extent deemed necessary or advisable for purposes of Section 16 of the Exchange Act or Section 162(m) of the Code, a member or members of the Committee may recuse himself or themselves from any action, in which case action taken by the majority of the remaining members shall constitute action by the Committee. No member of the Committee shall be liable for any action or determination made in good faith, and the members of the CommitteeHibben, they shall be entitled to indemnification and reimbursement incontinued health benefits until the mannerearlier of (a) the date he becomes eligible for any comparable medical, dental, or vision coverage provided inby any other employer, (b) the Corporation’s Articles of Incorporation and By-Laws, as may be amended from time to time.
(d) The Committee may designate persons other than its members to carry out its responsibilities under such conditions or limitations as it may set, other than its authority with regard to Awards granted to Participants who are officers or directorsexpiration of the Corporation for purposes of Section 16 of the Exchange Actmaximum coverage period under COBRA or Section 162(m) of the Code. To the extent deemed necessary or advisable, including for purposes of Section 16 of the Exchange Act, the independent members of the Board may act as the Committee hereunder.
(e) It is the intent of the Company that no Award under the Plan be subject to taxation under Section 409A(a)(1) of the Code. Accordingly, if the Committee determines that an Award granted under the Plan is subject to Section 409A of the Code, such Award shall be interpreted and administered to meet the requirements of Sections 409A(a)(2), (3) and (4) of the Code and thus to be exempt from taxation under Section 409A(a)(1) of the Code.
5. Stock Subject to the Provisions of this Plan. The stock subject to the provisions of this Plan shall be made available from shares of authorized but unissued Common Stock, shares of authorized and issued Common Stock reacquired and held as treasury shares or otherwise, or a combination thereof. Subject to adjustment in accordance with the provisions of Section 10, the total number of shares of Common Stock which may be issued under the Plan or with respect to which all Awards may be granted shall not exceed 500,000 shares. Subject to adjustment in accordance with the provisions of Section 10, the total number of such shares with
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respect to which Awards other than stock options or stock appreciation rights may be granted shall not exceed 200,000 shares. Upon:
(a) a payout of an Award in the form of cash; or
(b) a cancellation, termination, forfeiture, or lapse for any reason (with the exception of the termination of a tandem Award upon exercise of the related Award, or the termination of a related Award upon exercise of the corresponding tandem Award) of any Award or any award granted under the Predecessor Plan,
then the number of shares of Common Stock underlying any such award which were not issued as a result of any of the foregoing actions shall again be available for the purposes of Awards under the Plan. Notwithstanding anything to the contrary contained herein: (A) shares tendered in payment of the exercise price of a stock or incentive option shall not be added to the aggregate plan limit described above; (B) shares withheld by the Company to satisfy the tax withholding obligation shall not be added to the aggregate plan limit described above; (C) shares that are repurchased by the Company with proceeds received from payment of the exercise price of a stock or incentive option shall not be added to the aggregate plan limit described above; and (D) all shares covered by an award made under Section 6(c) (stock appreciation rights), to the extent that it is exercised and settled in Common Stock, and whether or not shares are actually issued to the participant upon exercise of the right, shall be considered issued or transferred pursuant to the Plan.
6. Awards under this Plan. As the Board or Committee may determine, the following types of Awards may be granted under this Plan on a stand-alone, combination or tandem basis:
(a) Stock Option. A right to buy a specified number of shares of Common Stock at a fixed exercise price during a specified time, all as the Committee may determine; provided that the exercise price of any option shall not be less than 100% of the Fair Market Value of the Common Stock on(c) the date of grant of such Award.he becomes eligible for Medicare benefits.
(b) Incentive Stock Option. An Award in the form of a stock option which shall comply with the requirements of Section 422 of the Code or any successor Section of the Code as it may be amended from time to time.
(c) Stock Appreciation Right. A right to receive the excess of the Fair Market Value of a share of Common Stock on the date the stock appreciation right is exercised over the Fair Market Value of a share of Common Stock on the date the stock appreciation right was granted.
(d) Restricted and Performance Shares. A transfer of Common Stock to a Participant, subject to such restrictions on transfer or other incidents of ownership, or subject to specified performance standards, for such periods of time as the Committee may determine.
(e) Restricted and Performance Share Unit. A fixed or variable share or dollar denominated unit subject to such conditions of vesting, performance and time of payment as the Committee may determine, which are valued at the Committee’s discretion in whole or in part byA-4
reference to, or otherwise based on, the Fair Market Value of Common Stock and which may be paid in Common Stock, cash or a combination of both.
(f) Stock Award. An unrestricted transfer of ownership of Common Stock.
(g) Other Incentive Awards. Other Incentive Awards which are related to or serve a similar function to those Awards set forth in this Section 6, including, but not limited to, Other Incentive Awards related to the establishment or acquisition by the Corporation or any Subsidiary of a new or start-up business or facility.
Notwithstanding the foregoing, the maximum number of shares of Common Stock which may be made subject to Awards granted under the Plan in any Plan Year (taking into account any stock option granted in tandem with any stock appreciation right as an Award with respect to shares subject to the stock option and any restricted and performance shares or restricted and performance units as an Award basedPayment Obligations upon the maximum number of Shares to which the Award relates) to any single Participant may not exceed 100,000. The Committee may from time to time, establish performance criteria with respect to an Award. The performance criteria or standards shall be determined by the Committee in writing and may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated and may be based on or adjusted for any other objective goals, events, or occurrences established by the Committee, provided that such criteria or standards relate to one or more of the following: earnings, earnings growth, revenues, expenses, stock price, market share, charge-offs, loan loss reserves, reductions in non-performing assets, return on assets, return on equity, or assets, investment, regulatory compliance, satisfactory internal or external audits, improvement of financial ratings, achievement of balance sheet or income statement objectives, extraordinary charges, losses from discontinued operations, restatements and accounting changes and other unplanned special charges such as restructuring expenses, acquisition expenses including goodwill, unplanned stock offerings and strategic loan loss provisions. Such performance standards may be particular to a line of business, Subsidiary or other unit or may be based on the performance of the Corporation generally.
7. Award Agreements.
(a) Each Award under the Plan shall be evidenced by an Award Agreement. Delivery of an Award Agreement to each Participant shall constitute an agreement, subject to Section 9 hereof, between the Corporation and the Participant as to the terms and conditions of the Award.
(b) The Committee shall include a provision providing for a minimum vesting schedule for an Award pursuant to which:
(i) no stock option Award may become fully exercisable prior to the third anniversary of the date of grant, and to the extent such an Award provides for vesting in installments over a period of no less than three years, such vesting shall occur ratably on each of the first three anniversaries of the date of grant;
(ii) no Award other than stock options or stock appreciation rights may become fully exercisable or saleable prior to the third anniversary of the date of
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grant and to the extent such an Award provides for vesting or saleability in installments over a period of no less than three years, such vesting shall occur ratably on each of the first three anniversaries of the date of grant and requiring the forfeiture of unvested or nonsaleable shares subject to such Award at the time a participant is no longer an Employee;
provided, that, such restrictions shall not apply to (v) Awards to newly hired Employees, (w) performance based Awards, (x) Awards to Employees in connection with acquisitions (whether by asset purchase, merger or otherwise); (y) Awards to Employees who subsequently retire or have plans for retirement from the Company or one of its Subsidiaries or (z) Awards made in lieu of a cash bonus. Notwithstanding the foregoing, (i) any award agreement may provide for any additional vesting requirements, including but not limited to longer periods of required employment or the achievement of performance goals; (ii) any award agreement may provide that all or a portion of the shares subject to such Award vest immediately or, alternatively, vest in accordance with the vesting schedule but without regard to the requirement for continued employment in the event of a Change in Control or in the case of termination of employment due to death, disability, layoff, retirement or divestiture, or in the case of a vesting period longer than three years, vest and become exercisable or fail to be forfeited and continue to vest in accordance with the schedule in the award agreement prior to the expiration of any period longer than three years for any reason designated by the Committee.
8. Other Terms and Conditions.
(a) No Assignment; Limited Transferability of Options. Except as provided below, no Award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise then by will or by the laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its discretion, authorize all or a portion of the stock options (other than incentive stock options) granted to a Participant to be on terms which permit transfer by such Participant to:
(i) the spouse, children or grandchildren of the Participant (“Immediate Family Members”);
(ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, or;
(iii) a partnership in which such Immediate Family Members are the only partners, provided that:
(A) there may be no consideration for any such transfer;
(B) the Award Agreement pursuant to which such stock options are granted expressly provides for transferability in a manner consistent with this Section 8(a); and
(C) subsequent transfers of transferred options shall be prohibited except those in accordance with Section 8(b).
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Following transfer, any such options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that for purposes of Section 8(b) hereof the term “Participant” shall be deemed to refer to the transferee. The provisions of the stock option relating to the period of exercisability and expiration of the stock option shall continue to be applied with respect to the original Participant, and the stock options shall be exercisable by the transferee only to the extent, and for the periods, set forth in said stock option.
(b) Beneficiary Designation. Each Participant under the Plan may name, from time to time, any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his death before he receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during his lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to his estate.
(c) Termination of Employment. The termination of each Award in the event of the retirement, disability, deathconstructive termination (with the 75% payment threshold in such definition increased to 100%) or other termination without cause of a Participant’s employment shall be as determined by the Committee and set forth in the Award Agreement.
(d) Rights as a Shareholder. A Participant shall have no rights as a stockholder with respect to shares covered by an Award until the date the Participant or his nominee, guardian or legal representative is the holderNEO within eighteen months of record. No adjustment will be made for dividends or other rights for which the record date is prior to such date.
(e) Payments by Participants. The Committee may determine that Awards for which a payment is due from a Participant may be payable: (i) in cash by personal check, bank draft or money order payable to the order of the Corporation, by money transfers or direct account debits; (ii) through the delivery or deemed delivery based on attestation to the ownership of previously acquired shares of Common Stock with a Fair Market Value equal to the total payment due from the Participant; (iii) by a combination of the methods described in (i) and (ii) above; (iv) except as may be prohibited by applicable law, in cash by a broker-dealer acceptable to the Corporation to whom the Participant has submitted an irrevocable notice of exercise; or (v) by such other methods as the Committee may deem appropriate, including, but not limited to loans by the Corporation on such terms and conditions as the Committee shall determine to the extent permitted by applicable law.
(f) Withholding. Except as otherwise provided by the Committee in the Award Agreement or otherwise (i) the deduction of withholding and any other taxes required by law will be made from all amounts paid in cash, and (ii) in the case of the exercise of options or payments of Awards in shares of Common Stock, the Participant shall be required to pay or have paid by a broker-dealer acceptable to the Corporation to whom the Participant has submitted an irrevocable notice of exercise the amount of any taxes required to be withheld in cash prior to receipt of such stock, or alternatively, to elect to have a number of shares the Fair Market Value of which equals the amount required to be withheld deducted from the shares to be received upon such exercise or payment or deliver such number of previously-acquired shares of Common Stock.
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(g) Deferral. The receipt of payment of cash or delivery of shares of Common Stock that would otherwise be due to a Participant under any Award other than a stock option (including an incentive stock option) or stock appreciation right may be deferred to the extent permitted by an applicable deferral plan established by the Corporation or a Subsidiary. The Committee shall establish rules and procedures relating to any such deferrals and the payment of any tax withholding with respect thereto.
(h) No Repricing. Notwithstanding anything in this Plan to the contrary and subject to Section 10, without the approval of the shareholders of the Corporation, neither the Board nor the Committee will amend or replace any previously granted stock option, incentive stock option or stock appreciation right in a transaction that constitutes a “repricing,” as such term is used in the listing rules of the principal stock exchange on which the Common Stock is traded.
9. Amendments, Modification and Termination. The Board may at any time and from time to time, terminate, suspend or discontinue this Plan. The Board of Directors may at any time and from time to time, alter or amend this Plan, subject to any requirement of shareholder approval imposed by applicable law, rule or regulation, provided that any material amendment to the Plan will not be effective unless approved by the Company’s shareholders. For this purpose, a material amendment is any amendment that would (i) materially increase the number of shares available under the Plan or issuable to a participant (other than a change in control, which is defined below, such NEO shall be entitled to the numbersame payments and items described above under “Payment Obligations for Constructive Termination or Termination Without Cause,” however, such payments shall be made in a lump sum within 30 days of shares made pursuant to Section 10); (ii) change the typessuch termination. Additionally, a NEO will be entitled to:
| | |
| • | a payment equal to the excise tax charged to the NEO as a result of the receipt of any change of control payment within 30 days of the determination that such excise tax is due; and |
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| • | pursuant to our Incentive Plans, immediate vesting and lapsing of restrictions on all outstanding awards. |
“Change of awards that may be granted under the Plan; (iii) expand the class of persons eligible to receive awards or otherwise participatecontrol” is defined in the Plan; or (iv) reduce the price at which an option is exercisable eitherNEOs’ employment agreements by amendment of an Award Agreement or by substitution of a new option at a reduced price (other than as permitted in Section 10). No termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award.
10. Recapitalization. The aggregate number of shares of Common Stock as to which Awards may be granted to Participants, the limitations on the maximum number of shares of Common Stock which may be made subject to Awards granted to a Participant during a Plan Year, the number of shares of Common Stock covered by each outstanding Award, and the price per share of Common Stock in each such Award, shall all be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or consolidation of shares or other capital adjustment, or the payment of a stock dividend or other increase or decrease in such shares, effected without receipt of consideration by the Corporation, or other change in corporate or capital structure; provided, however, that any fractional shares resulting from any such adjustment shall be eliminated. The Committee may also make the foregoing changes and any other changes, including changes in the classes of securities available,reference to the extent it is deemed necessary or desirable to preserve the intended benefits1997 Plan, which defines change of the Plan for the Corporation and the Participants in the event of any other reorganization, recapitalization, merger, consolidation, spinoff, extraordinary dividend or other distribution or similar transaction.
11. Rightscontrol as Employees, Directors or Consultants. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a
A-8
Participant the right to be retained in the employ of or as a Director of or as a consultant to the Corporation or a Subsidiary. Further, the Corporation and each Subsidiary expressly reserve the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as provided herein or in any Award Agreement issued hereunder.
12. Change of Control.
(a) Notwithstanding anything contained in this Plan or any Award Agreement to the contrary, in the event of a Change of Control, as defined below, the following shall occur with respect to any and all Awards outstanding as of such Change of Control:
(i) any and all options and stock appreciation rights granted hereunder shall become immediately exercisable, and shall remain exercisable throughout their entire term, subject to any limitations on such term provided in the Award Agreement or pursuant to Section 8(c) hereof;
(ii) any restrictions imposed on restricted shares shall lapse and all restricted share units shall become fully vested;
(iii) unless otherwise specified in a Participant’s Award Agreement at time of grant, the maximum payout opportunities attainable under all outstanding Awards of performance units, performance shares and Other Incentive Awards shall be deemed to have been fully earned at the maximum level for the entire performance period(s) as of the effective date of the Change of Control, and the vesting of all such Awards shall be accelerated as of the effective date of the Change of Control; and
(iv) the Board (as constituted prior to such Change of Control) may, in its discretion:
(A) require that shares of stock of the corporation resulting from such Change of Control, or a parent corporation thereof, be substituted for some or all of the shares of Common Stock subject to an outstanding Award, with an appropriate and equitable adjustment to such Award as shall be determined by the Board or the Committee in accordance with Section 10; and/or
(B) require outstanding Awards, in whole or in part, to be surrendered to the Corporation by the holder, and to be immediately cancelled by the Corporation, and to provide for the holder to receive (1) a cash payment in an amount equal to (a) in the case of a stock option, incentive stock option or stock appreciation right, the number of shares of Common Stock then subject to the portion of such Award surrendered multiplied by the excess, if any, of the highest per share price offered to holders of Common Stock in any transaction whereby the Change of Control takes place, over the purchase price or base price per share of Common Stock subject to such Award and (b) in the case of restricted shares, restricted share units, performance shares, performance share units or Other Incentive Awards, the number of shares of Common Stock or units then subject to the portion of such Award surrendered multiplied by the highest per share price
A-9
offered to holders of Common Stock in any transaction whereby the Change of Control takes place; (2) shares of capital stock of the corporation resulting from such Change of Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (1) above; or (3) a combination of the payment of cash pursuant to clause (1) above and the issuance of shares pursuant to clause (2) above.
(b) A “Change of Control” of the Corporation shall be deemed to have occurred upon the happening of any of the following events:
(i)
| | |
| • | if any person acquires 20% or more of the Company’s outstanding shares of common stock (other than securities acquired directly from the Company); or |
|
| • | if a majority of the Directors cease to be directors, provided that any individual becoming a director whose election, or nomination for election, was approved by a vote of at least a majority of the then current directors shall be considered as though such individual were a member of the current board; or |
|
| • | the approval by our shareholders of a reorganization, merger or consolidation, in each case, in which our shareholders immediately prior to such transaction do not, following such transaction, beneficially own more than 50% of the combined voting power of the corporation resulting from such transaction; or |
|
| • | the approval of our shareholders of a complete liquidation or dissolution of the Company or of the sale or other disposition of all or substantially all of the assets of the Company. |
27
The acquisition,table below shows potential payments to the executive officers named in the Summary Compensation Table for cause, upon death or permanent disability, for Constructive Termination or without Cause and in connection with a Change in Control. The amounts shown assume that termination was effective as of December 31, 2006, and are estimates of the amounts that would be paid to the executives upon termination. The actual amounts to be paid can only be determined at the actual time of an executive’s termination.
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Constructive
| | | | |
| | | | | | | | | | Termination or
| | | | |
| | | | | | | | | | Termination
| | | | |
| | | | | | | Permanent
| | | Without
| | | Change in
| |
Name | | Type of Payment | | Death | | | Disability | | | Cause | | | Control | |
|
Edward J. Wehmer(3)(4) | | Payment equal to 3x (1) base salary in effect at termination plus (2) cash and stock bonus awards in prior 12 months(1) | | | 2,775,000 | | | | 2,775,000 | | | | 2,775,000 | | | | 2,775,000 | |
| | Vesting of Outstanding Awards | | | 5,653,183 | | | | 5,653,183 | | | | — | | | | 5,653,183 | |
| | Medical, dental and vision health benefits(2) | | | — | | | | 163,612 | | | | 163,612 | | | | 163,612 | |
| | Less life insurance proceeds paid to executive by third party(6) | | | (1,850,000 | ) | | | — | | | | — | | | | — | |
| | TOTAL | | | 6,578,183 | | | | 8,591,795 | | | | 2,938,612 | | | | 8,591,795 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
David A. Dykstra(3)(4) | | Payment equal to 3x (1) base salary in effect at termination plus (2) cash and stock bonus awards in prior 12 months(1) | | | 2,070,000 | | | | 2,070,000 | | | | 2,070,000 | | | | 3,254,855 | (7) |
| | Vesting of Outstanding Awards | | | 3,346,210 | | | | 3,346,210 | | | | — | | | | 3,346,210 | |
| | Medical, dental and vision health benefits(2) | | | — | | | | 90,972 | | | | 90,972 | | | | 90,972 | |
| | Less life insurance proceeds paid to executive by third party(6) | | | (1,380,000 | ) | | | — | | | | — | | | | — | |
| | TOTAL | | | 4,036,210 | | | | 5,507,182 | | | | 2,160,972 | | | | 6,692,037 | (7) |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Richard B. Murphy(3)(4) | | Payment equal to 3x (1) base salary in effect at termination plus (2) cash and stock bonus awards in prior 12 months(1) | | | 1,080,900 | | | | 1,080,900 | | | | 1,080,900 | | | | 1,080,900 | |
| | Vesting of Outstanding Awards | | | 386,797 | | | | 386,797 | | | | — | | | | 386,797 | |
| | Medical, dental and vision health benefits(2) | | | — | | | | 231,506 | | | | 231,506 | | | | 231,506 | |
| | Less life insurance proceeds paid to executive by third party(6) | | | (720,600 | ) | | | — | | | | — | | | | — | |
| | TOTAL | | | 747,097 | | | | 1,699,203 | | | | 1,312,406 | | | | 1,699,203 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Randolph M. Hibben(3)(5) | | Payment equal to 2x (1) base salary in effect at termination plus (2) cash and stock bonus awards in prior 12 months(1) | | | 721,600 | | | | 721,600 | | | | 721,600 | | | | 721,600 | |
| | Vesting of Outstanding Awards | | | 718,381 | | | | 718,381 | | | | — | | | | 718,381 | |
| | Medical, dental and vision health benefits(2) | | | — | | | | 26,712 | | | | 40,068 | | | | 40,068 | |
| | Less life insurance proceeds paid to executive by third party(6) | | | (721,600 | ) | | | — | | | | — | | | | — | |
| | TOTAL | | | 718,381 | | | | 1,466,693 | | | | 761,668 | | | | 1,480,049 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
David L. Stoehr(3)(5) | | Payment equal to 2x (1) base salary in effect at termination plus (2) cash and stock bonus awards in prior 12 months(1) | | | 552,000 | | | | 552,000 | | | | 552,000 | | | | 552,000 | |
| | Vesting of Outstanding Awards | | | 242,801 | | | | 242,801 | | | | — | | | | 242,801 | |
| | Medical, dental and vision health benefits(2) | | | — | | | | 26,712 | | | | 40,068 | | | | 40,068 | |
| | Less life insurance proceeds paid to executive by third party(6) | | | (552,000 | ) | | | — | | | | — | | | | — | |
| | TOTAL | | | 242,801 | | | | 821,513 | | | | 592,068 | | | | 834,869 | |
| | | | | | | | | | | | | | | | | | |
| | |
(1) | | Based on base salary at December 31, 2006 and cash and stock bonus paid or granted in 2006. |
|
(2) | | Based on premium costs as of December 31, 2006. |
28
| | |
(3) | | In the event of termination with cause, each NEO would only be entitled to earned but unpaid base salary through the termination date, accrued but unused vacation or paid leave, earned but unpaid annual incentive compensation and reimbursement of miscellaneous company incurred expenses. For each NEO, this amount was zero as of December 31, 2006. |
|
(4) | | The employment agreements for Messrs. Wehmer, Dykstra and Murphy provide that in the event the potential payments would constitute “excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code, or any interest or penalties with respect to such excise tax, then an additional cash payment would be made within 30 days of such determination that will place them in the same after-tax economic position that they would have enjoyed if the excise tax had not been applied to the payment. Assuming a payout occurred at December 31, 2006, no excise tax would have been incurred for “excess parachute payments” in respect of Messrs. Wehmer and Murphy, however, as more fully detailed in Note (7) below, Mr. Dykstra would have been entitled to an additional cash gross-up payment. |
|
(5) | | The employment agreements for Messrs. Hibben and Stoehr provide that in the event the potential payments would constitute “excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code, or any interest or penalties with respect to such excise tax, then the amount of the payout would be automatically reduced to an amount equal to $1 less than three times (3x) the “base amount” as defined in Section 280G(3) of the Internal Revenue Code (“Reduced Payment”). Provided, however, that the preceding sentence shall not apply if the sum of the potential payment less the amount of the excise tax payable would exceed the Reduced Payment. Assuming a payout occurred at December 31, 2006, no excise tax would have been incurred for “excess parachute payments.” |
|
(6) | | Based on payments to be received by NEO as defined in Bank Owned Life Insurance contracts. |
|
(7) | | Includes an excise tax gross-up payment of $717,430 and an income tax gross-up payment of $467,425, however, based on the terms of Mr. Dykstra’s employment agreement and the required calculation, these gross-up payments would not be required to be paid after January 2007. |
DIRECTOR COMPENSATION
The Company seeks to compensate its non-employee Directors in a manner that attracts and retains qualified candidates to serve on the Board of Directors. To strengthen the alignment of interests between Directors and shareholders, the Board has adopted a minimum stock ownership guideline. Within three years of joining the Board, each Director should own common stock (or common stock equivalents) having a value of at least three times the annual retainer fee.
Compensation for Non-employee Directors
For their service to the Company, non-employee Directors are entitled to an annual retainer, attendance fees for Board and committee meetings, and a payment for service as a chairman of the Board or of certain committees. Additionally, non-employee Directors who serve as a director of any of the Company’s subsidiaries are entitled to compensation for such service. Directors who are employees of the Company receive no additional compensation for their service on the Board of Directors.
Retainer Fees. The Company pays non-employee Directors an annual retainer of $30,000. As explained further below, this amount is paid in the Company’s common stock.
Attendance Fees. Non-employee Directors receive $3,250 for each Board of Directors meeting they attend. For service on a committee of the Board of Directors, non-employee Directors receive an attendance fee of $1,700 per committee meeting, except for Audit Committee members, who receive a $2,000 attendance fee.
Chairmanships. The Chairman of the Board, the Chairman of the Risk Management Committee, the Chairman of the Audit Committee, the Chairman of the Compensation Committee and the Chairman of the Nominating Committee are entitled to an additional fee of $55,000, $35,000, $20,000, $10,000 and $10,000, respectively.
Subsidiary Directorships. Non-employee Directors who serve on the Boards of Directors of our Subsidiaries are entitled to compensation for such service. No independent member of the Company’s Board of Directors serves on more than one subsidiary board other than fromMessrs. Getz and Rademacher. See the Corporation, by any individual, entitydescription above under “Election of Directors” for additional biographical information.
29
Directors Deferred Fee and Stock Plan
The Directors Deferred Fee and Stock Plan (the “Fee Plan”) is a program that allows non-employee Directors to receive their Director fees in either cash or group (withincommon stock. This option does not apply to the meaningretainer fee, which has been paid in common stock since January 2005. Under the Fee Plan, Directors may also choose to defer the receipt of Section 13(d)(3) or 14(d)(2)their Director fees. Each of these options is described in greater detail below.
Fees Paid in Stock. As noted above, the retainer fee will be paid in shares of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstandingCompany’s common stock. A Director may also elect to receive any other fees in shares of Common Stockthe Company’s common stock. The number of the Corporation or the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by the Corporation or any of its Subsidiaries, or any employee benefit plan (or related trust) of the Corporation or its Subsidiaries, or any corporation with respect to which, following such acquisition, more than 50% of, respectively, the then outstanding shares of common stock of such corporation andto be issued will be determined by dividing the combined voting powerfees earned during a calendar quarter by the fair market value (as defined in the Fee Plan) of the then outstanding voting securitiescommon stock on the last trading day of such corporationthe preceding quarter. The shares of common stock to be paid will be issued once a year on or about January 15th or more frequently if so determined by the administrator. Once issued, the shares will be entitled to vote generallyfull dividend and voting rights. In the event of an adjustment in the electionCompany’s capitalization or a merger or other transaction that results in a conversion of all or substantially all directors is then beneficially owned, directly or indirectly,the common stock, corresponding adjustments will be made to common stock received by a Director.
Deferral of Common Stock. If a Director elects to defer receipt of shares of common stock, the Company will maintain on its books deferred stock units (“Units”) representing an obligation to issue shares of common stock to the Director. The number of Units credited will be equal to the number of shares that would have been issued but for the deferral election. Additional Units will be credited at the time dividends are paid on the common stock. The number of additional Units to be credited each quarter will be computed by dividing the amount of the dividends that would have been received if the Units were outstanding shares by the individuals and entities who were the beneficial owners, respectively,fair market value of the Common Stock and voting securitiescommon stock on the last trading day of the Corporation immediately priorpreceding quarter. Because Units represent a right to such acquisitionreceive common stock in substantially the same proportion as their ownership, immediately prior to such acquisition,future, and not actual shares, there are no voting rights associated with them. In the event of an adjustment in the Company’s capitalization or a merger or other transaction that results in a conversion of the then outstandingcommon stock, corresponding adjustments will be made to the Units. The Director will be a general unsecured creditor of the Company for purposes of the common stock to be paid in the future. The shares of Common Stockcommon stock represented by the Units will be issued on or about January 15th in the year specified by the Director in his participation agreement or in annual installments over a specified period not to exceed ten years.
Deferral of Cash. If a Director elects to defer receipt of Directors’ fees in cash, the Company will maintain on its books a deferred compensation account representing an obligation to pay the Director cash in the future. The amount of the Corporation or the combined voting power of the then outstanding voting securities of the Corporation entitledDirector’s fees will be credited to vote generally in the election of directors, as the case may be; or
(ii) Individuals who,this account as of the date hereof, constitutesuch fees otherwise would be payable to the Board (asDirector. All amounts credited to a Director’s deferred compensation account will accrue interest based on the91-day Treasury Bill discount rate, adjusted quarterly, until paid. Accrued interest will be credited at the end of each calendar quarter. No funds will actually be set aside for payment to the Director and the Director will be a general unsecured creditor of the date hereofCompany for purposes of the “Incumbent Board”) ceaseamount in his deferred compensation account. The amount in the deferred compensation account will be paid to the Director on or about January 15th in the year specified by the Director in his participation agreement or in annual installments over a specified period not to exceed ten years.
30
Director Summary Compensation Table
The table below summarizes the compensation paid by the Company to non-employee Directors for any reasonthe fiscal year ended December 31, 2006.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | (e)
| | | | | | | |
| | | | | | | | | | | Change
| | | | | | | |
| | | | | | | | | | | in Pension
| | | | | | | |
| | | | | | | | | | | Value and
| | | | | | | |
| | (b)
| | | | | | | | | Nonqualified
| | | | | | | |
| | Fees
| | | (c)
| | | (d)
| | | Deferred
| | | (f)
| | | | |
| | Earned or
| | | Stock
| | | Option
| | | Compensation
| | | All Other
| | | (g)
| |
(a)
| | Paid in Cash
| | | Awards
| | | Awards
| | | Earnings
| | | Compensation
| | | Total
| |
Name | | ($)(1) | | | ($)(2) | | | ($) | | | ($) | | | ($)(3) | | | ($) | |
|
Allan E. Bulley, Jr. | | | — | | | | 39,050 | | | | — | | | | — | | | | 17,600 | | | | 56,650 | |
Peter D. Crist | | | — | | | | 74,000 | | | | — | | | | — | | | | 8,558 | | | | 82,558 | |
Bruce K. Crowther | | | — | | | | 59,500 | | | | — | | | | — | | | | 8,507 | | | | 68,007 | |
Joseph F. Damico | | | — | | | | 56,300 | | | | — | | | | — | | | | 700 | | | | 57,000 | |
Bert A. Getz, Jr. | | | — | | | | 75,550 | | | | — | | | | — | | | | 14,397 | | | | 89,947 | |
John S. Lillard | | | — | | | | 121,500 | | | | — | | | | — | | | | 16,493 | | | | 137,993 | |
James B. McCarthy | | | — | | | | 70,000 | | | | — | | | | — | | | | 3,847 | | | | 73,847 | |
Albin F. Moschner | | | — | | | | 69,050 | | | | — | | | | — | | | | 1,068 | | | | 70,118 | |
Thomas J. Neis | | | — | | | | 64,800 | | | | — | | | | — | | | | 8,692 | | | | 73,492 | |
Hollis W. Rademacher | | | 61,600 | | | | 30,000 | | | | — | | | | — | | | | 118,350 | | | | 209,950 | |
J. Christopher Reyes | | | — | | | | 76,500 | | | | — | | | | — | | | | 1,630 | | | | 78,130 | |
John J. Schornack | | | 64,000 | | | | 30,000 | | | | — | | | | — | | | | 24,086 | | | | 118,086 | |
Ingrid S. Stafford | | | — | | | | 72,300 | | | | — | | | | — | | | | 19,950 | | | | 92,250 | |
| | |
(1) | | Includes fees paid in cash, both paid out and deferred, for services as directors of the Company. |
|
(2) | | Includes fees paid in stock, both distributed and deferred, for services as directors of the Company. |
|
(3) | | Includes fees paid in cash and stock, both paid out and deferred, for services as directors of the Company’s subsidiaries. Also includes interest earned on fees deferred in accordance with “Deferral of Cash” option described above and dividends earned on fees deferred in accordance with “Deferral of Common Stock” option described above. |
31
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth the beneficial ownership of the common stock as of the Record Date, with respect to constitute(i) each Director and each Named Executive Officer (as defined herein) of the Company; (ii) all Directors and executive officers of the Company as a group and (iii) significant shareholders known to the Company that own in excess of 5% of the common stock.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Options &
| | | | | | | |
| | Amount of
| | | | | | Warrants
| | | Total
| | | | |
| | Common Shares
| | | Restricted
| | | Exercisable
| | | Amount of
| | | Total
| |
| | Beneficially
| | | Stock
| | | Within
| | | Beneficial
| | | Percentage
| |
| | Owned (1) | | | Units (1) | | | 60 Days (1) | | | Ownership (1) | | | Ownership (1) | |
|
Directors | | | | | | | | | | | | | | | | | | | | |
Allan E. Bulley, Jr. | | | 51,760 | | | | — | | | | — | | | | 51,760 | | | | * | |
Peter D. Crist | | | 52,415 | | | | — | | | | — | | | | 52,415 | | | | * | |
Bruce K. Crowther | | | 5,471 | | | | — | | | | 382 | | | | 5,853 | | | | * | |
Joseph F. Damico | | | 3,379 | | | | — | | | | — | | | | 3,379 | | | | * | |
Bert A. Getz, Jr. | | | 10,565 | | | | — | | | | — | | | | 10,565 | | | | * | |
John S. Lillard | | | 200,312 | | | | — | | | | — | | | | 200,312 | | | | * | |
James B. McCarthy | | | 5,429 | | | | — | | | | — | | | | 5,429 | | | | * | |
Albin F. Moschner (2) | | | 28,700 | | | | — | | | | — | | | | 28,700 | | | | * | |
Thomas J. Neis | | | 6,356 | | | | — | | | | — | | | | 6,356 | | | | * | |
Hollis W. Rademacher | | | 89,531 | | | | — | | | | — | | | | 89,531 | | | | * | |
J. Christopher Reyes | | | 245,030 | | | | — | | | | — | | | | 245,030 | | | | * | |
John J. Schornack | | | 17,063 | | | | — | | | | — | | | | 17,063 | | | | * | |
Ingrid S. Stafford | | | 8,232 | | | | — | | | | — | | | | 8,232 | | | | * | |
Edward J. Wehmer** | | | 168,023 | | | | 80,000 | (5) | | | 247,000 | | | | 495,023 | | | | 1.92 | % |
Other Named Executive Officers | | | | | | | | | | | | | | | | | | | | |
David A. Dykstra | | | 75,047 | | | | 56,000 | (5) | | | 97,000 | | | | 228,047 | | | | * | |
Richard B. Murphy | | | 18,144 | | | | 4,215 | (5) | | | 53,099 | | | | 75,458 | | | | * | |
David L. Stoehr | | | 3,452 | | | | 3,181 | (5) | | | 21,350 | | | | 27,983 | | | | * | |
Randolph M. Hibben | | | 26,966 | | | | 6,135 | (5) | | | 90,698 | | | | 123,799 | | | | * | |
Total Existing Directors & Executive | | | | | | | | | | | | | | | | | | | | |
Officers (25 persons) | | | 1,128,432 | | | | 162,042 | | | | 612,647 | | | | 1,903,121 | | | | 7.24 | % |
Other Significant Shareholders | | | | | | | | | | | | | | | | | | | | |
FMR Corp. (3) | | | 2,547,230 | | | | — | | | | — | | | | 2,547,230 | | | | 9.99 | % |
Transamerica Investment Management, LLC (4) | | | 1,937,028 | | | | — | | | | — | | | | 1,937,028 | | | | 7.60 | % |
| | |
* | | Less than 1% |
|
** | | Mr. Wehmer is also an executive officer. |
|
(1) | | Beneficial ownership and percentages are calculated in accordance with Securities and Exchange Commission (“SEC”)Rule 13d-3 promulgated under the Securities Exchange Act of 1934. |
|
(2) | | All of the shares beneficially owned by Mr. Moschner are pledged as security to a financial institution. |
|
(3) | | Based on information obtained from Schedule 13G/A filed by FMR Corp. with the SEC on February 14, 2007. According to this report, FMR Corp.’s business address is 82 Devonshire Street, Boston, MA 02109. |
32
| | |
(4) | | Based on information obtained from Schedule 13G/A filed by Transamerica Investment Management, LLC with the SEC on February 21, 2007. According to this report, Transamerica Investment Management, LLC’s business address is 11111 Santa Monica Boulevard Suite 820 Los Angeles, CA 90025. |
|
(5) | | Shares vest at various dates between 2007 and 2010, and are subject to forfeiture until such time as they vest. |
RELATED PARTY TRANSACTIONS
We or one or our subsidiaries may occasionally enter into transactions with certain “related persons.” Related persons include our executive officers, Directors, 5% or more beneficial owners of our common stock, immediate family members of these persons and entities in which one of these persons has a direct or indirect material interest. We refer to transactions with these related persons as “related party transactions.” The Audit Committee is responsible for the review and approval of each related party transaction exceeding $120,000. The Audit Committee considers all relevant factors when determining whether to approve a related party transaction including, without limitation, whether the terms of the proposed transaction are at least as favorable to us as those that might be achieved with an unaffiliated third party. Among other relevant factors, the Audit Committee considers the following:
| | |
| • | the size of the transaction and the amount of consideration payable to a related person; |
|
| • | the nature of the interest of the applicable executive officer, director or 5% shareholder in the transaction; |
|
| • | whether the transaction may involve a conflict of interest; |
|
| • | whether the transaction involves the provision of goods or services to us that are available from unaffiliated third parties; and |
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| • | whether the proposed transaction is on terms and made under circumstances that are at least as favorable to us as would be available in comparable transactions with or involving unaffiliated third parties. |
Some of the executive officers and Directors of the Company are, and have been during the preceding year, customers of the Company’s banking subsidiaries (the “Banks”), and some of the officers and Directors of the Company are direct or indirect owners of 10% or more of the stock of corporations which are, or have been in the past, customers of the Banks. As such customers, they have had transactions in the ordinary course of business of the Banks, including borrowings, all of which transactions are or were on substantially the same terms (including interest rates and collateral on loans) as those prevailing at the time for comparable transactions with nonaffiliated persons. In the opinion of management of the Company, none of the transactions involved more than the normal risk of collectibility or presented any other unfavorable features. At December 31, 2006, the Banks had $8.1 million in loans outstanding to certain Directors and executive officers of the Company and certain executive officers of the Banks, which amount represented 1.1% of total shareholders’ equity and 0.1% of the Company’s total loans outstanding as of that date.
The policies and procedures relating to the Audit Committee approval of related party transactions are available in the Audit Committee Charter, which is available on our website, www.wintrust.com. All related party transactions are approved by the Audit Committee pursuant to these policies and procedures.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the Company’s Directors and executive officers and any person who owns greater than 10% of the Company’s common stock to file reports of holdings and transactions in the Company’s common stock with the SEC. Currently, no person owns in excess of 10% of the Company’s common stock.
Based solely on a majorityreview of the Section 16(a) reports furnished to us with respect to 2006 and written representations from our executive officers and directors, we believe that all Section 16(a) filing requirements applicable to our executive officers and directors during 2006 were satisfied, except that (1) the Company inadvertently was late in the filing of a Form 4 (a) reporting shares acquired upon the exercise of a stock option by Hollis Rademacher, one of our Directors, and (b) reporting a grant of restricted stock units to Randolph Hibben, one of our executive officers, (2) Albin Moschner, one of our Directors, was late in filing a Form 4 reporting the sale of
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100 shares and (3) James McCarthy, one of our Directors, was late in filing a Form 4 reporting three separate sales of shares.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board provided that any individual becoming a director subsequentof Directors of the Company oversees the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility for the consolidated financial statements and the reporting process, including the systems of internal controls.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited consolidated financial statements of the Company set forth in the Company’s 2006 Annual Report to Shareholders and the Company’s Annual Report onForm 10-K for the year ended December 31, 2006 with management of the Company. The Audit Committee also discussed with Ernst & Young LLP, independent registered public accounting firm for the Company, who are responsible for expressing an opinion on the conformity of those audited consolidated financial statements with United States generally accepted accounting principles, the matters required to be discussed by Statement on Auditing Standards No. 61, “Communication with Audit Committees,” as amended.
The Audit Committee has received the written communication from Ernst & Young LLP required by Independence Standards Board Standard No. 1, has considered the compatibility of non-audit services with the auditors’ independence, and has discussed with Ernst & Young LLP their independence from the Company.
In reliance on the review and discussions referred to above, the Audit Committee recommended to the date hereof whose election, or nomination for election byBoard that the Corporation’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shallaudited consolidated financial statements be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or
(iii) The consummation of a reorganization, merger or consolidation of the Corporation, in each case, with respect to which all or substantially all of the individuals and entities who were the respective beneficial owners of the
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Common Stock and voting securities of the Corporation immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generallyincluded in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation, or a complete liquidation or dissolution of the Corporation or of the sale or other disposition of all or substantially all of the assets of the Corporation.
13. Governing Law. To the extent that federal laws do not otherwise control, the Plan and all Award Agreements hereunder shall be construed in accordanceCompany’s Annual Report onForm 10-K for 2006 for filing with and governed by the law of the State of Illinois, provided, however, that in the event the Corporation’s state of incorporation shall be changed, then the law of the new state of incorporation shall govern.
14. Savings Clause. This Plan is intended to comply in all aspects with applicable law and regulation, including, with respect to those Employees who are officers or directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 of the Securities and Exchange Commission. In case any one or more of the provisions of this Plan shall be held invalid, illegal or unenforceable in any respect under applicable law and regulation (including Rule 16b-3), the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provision shall be deemed null and void; however, to the extent permissible by law, any provision which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Plan to be construed in compliance with all applicable laws (including Rule 16b-3) so as to foster the intent of this Plan.
15. Effective Date and Term. The Plan shall be effective as of the Effective Date, provided it is approved by the shareholders of the Corporation at its 2007 special meeting. The Plan shall remain in effect until terminated by the Board, provided, however, that no incentive stock option shall be granted under this Plan on or after the ten year anniversary of the Effective Date.
AUDIT COMMITTEE
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JOHN J. SCHORNACK (Chairman) | | | JAMES B. McCARTHY | |
BRUCE K. CROWTHER | | | ALBIN F. MOSCHNER | |
BERT A. GETZ, JR. | | | INGRID S. STAFFORD | |
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PROPOSAL NO. 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP, independent registered public accounting firm, as auditors for the Company and its subsidiaries for fiscal year 2007. The Board of Directors and the Audit Committee recommend that shareholders ratify the appointment of Ernst & Young LLP as independent auditors for the Company and its subsidiaries. If shareholders do not ratify the appointment, the Audit Committee will reconsider its selection. Ernst & Young LLP has served as independent registered public accounting firm for the Company since 1999. One or more representatives of Ernst & Young LLP will be present at the Annual Meeting and afforded an opportunity to make a statement, if they desire to do so, and to respond to questions from shareholders.
THE BOARD OF DIRECTORS AND AUDIT COMMITTEE UNANIMOUSLY RECOMMEND THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR 2007.
AUDIT AND NON-AUDIT FEES PAID
The Company’s independent auditors for the fiscal year ended December 31, 2006, were Ernst & Young LLP. The Company’s Audit Committee has appointed Ernst & Young LLP as the Company’s independent auditors for 2007. Under its charter, the Audit Committee is solely responsible for reviewing the qualifications of the Company’s independent auditors and selecting the independent auditors for the current fiscal year.
The following is a description of the fees billed to the Company by Ernst��& Young LLP for the years ended December 31, 2006 and December 31, 2005:
Audit Fees: Audit fees include fees billed by Ernst & Young LLP for the review and audit of the Company’s annual financial statements and review of financial statements included in the Company’s quarterly reports filed with the SEC, as well as services normally provided by an independent auditor in connection with statutory and regulatory filings or engagements. Aggregate fees for audit services were $782,500 in 2006 and $735,000 in 2005.
Audit-Related Fees: Audit-related fees include fees for assurance and related services that are reasonably related to the performance of the audit or review of the financial statements. Aggregate fees for audit-related services were $20,000 in 2006 and $20,000 in 2005.
Tax Fees: Tax fees include fees for tax compliance, tax return preparation advice and tax planning services. Aggregate fees for tax services were $194,250 in 2006 and $148,225 in 2005.
All Other Fees: This category comprises all fees billed by Ernst & Young LLP to the Company not included in the previous three categories. Aggregate fees for other services were $2,500 in 2006 and $2,500 in 2005.
The Audit Committee pre-approves all services, including both audit and non-audit services, provided by the Company’s independent auditor. For audit services, the independent auditor provides the Audit Committee with an engagement letter outlining the scope of the audit services proposed to be performed during the year and the fees to be charged, which must be formally accepted by the Audit Committee before the audit commences.
Management also submits to the Audit Committee a list of non-audit services that it recommends the independent auditor be engaged to provide and an estimate of the fees to be paid for each. The Audit Committee considers whether the provision of non-audit services by the Company’s independent auditor is compatible with maintaining the auditor’s independence. The Audit Committee must approve the list of non-audit services and the estimated fees for each such service before the commencement of the work.
To ensure prompt handling of unexpected matters, the Audit Committee has delegated the authority to amend and modify the list of approved permissible non-audit services and fees to the Audit Committee Chairman. If the Chairman exercises this delegation of authority, he reports the action taken to the Audit Committee at its next regular meeting.
All audit and permissible non-audit services provided by Ernst & Young LLP to the Company for 2006 were pre-approved by the Audit Committee in accordance with these procedures.
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SHAREHOLDER PROPOSALS
Shareholders’ proposals intended to be presented at the Company’s 2008 Annual Meeting of Shareholders must be received in writing by the Secretary of the Company no later than December 27, 2007, in order to be considered for inclusion in the proxy material for that meeting. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act. Furthermore, in order for any shareholder to properly propose any business for consideration at the 2008 Annual Meeting, including the nomination of any person for election as a director, or any other matter raised other than pursuant toRule 14a-8 of the proxy rules adopted under the Exchange Act, written notice of the shareholder’s intention to make such proposal must be furnished to the Company in accordance with the By-laws. Under the existing provisions of the By-laws, if the 2008 Annual Meeting is held on May 22, 2008, the deadline for such notice is March 23, 2008.
OTHER BUSINESS
The Company is unaware of any other matter to be acted upon at the Annual Meeting for shareholder vote. In case of any matter properly coming before the Annual Meeting for shareholder vote, unless discretionary authority has been denied the proxy holders named in the proxy accompanying this statement shall vote them in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
David A. Dykstra
Secretary
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The Directors and Officers of
cordially invite you to attend our
Special2007 Annual Meeting of Shareholders
Tuesday, January 9,Thursday, May 24, 2007, 10:00 a.m.
Michigan Shores Club
911 Michigan Avenue
Wilmette, Illinois
Deerpath Inn
255 East Illinois Road,
Lake Forest, Illinois 60045
You can vote in one of three ways: 1) By Mail, 2) By Internet, 3) By Phone.
See the reverse side of this sheet for instructions.
IF YOU ARE NOT VOTING BY TELEPHONE OR BY INTERNET, COMPLETE BOTH SIDES OF PROXY CARD,
DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO:
Illinois Stock Transfer Co.
209 West Jackson Boulevard, Suite 903
Chicago, Illinois 60606
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| | You can vote in one of three ways: 1) By Mail, 2) By Internet, 3) By Phone. See the reverse side of this sheet for instructions. IF YOU ARENOT VOTING BY INTERNET OR BY TELEPHONE, COMPLETE BOTH SIDES OF PROXY CARD, DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO:
Illinois Stock Transfer Co. 209 West Jackson Boulevard, Suite 903 Chicago, Illinois 60606
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IMPORTANT
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DETACH PROXY CARD HERE | | Please complete both sides of the PROXY CARD, sign, date, detach and return in the enclosed envelope. | | | DETACH ATTENDANCE CARD HERE AND MAIL WITH PROXY CARD | | |
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This proxy is solicited on behalf of the Board of Directors. If not otherwise specified on the reverse side, this proxy will be voted FOR Proposal 1. | | | | | |
1 and 2. The undersigned revokes all proxies heretofore given to vote at such meeting and all adjournments or postponements. | | | | | |
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| | | | | | | Wintrust Financial Corporation | | |
| | | | | | If you personally plan to attend the SpecialAnnual Meeting of Shareholders, please check the box below and list names of attendees on reverse side. | | |
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| | | | Return this stub in the enclosed envelope with your completed proxy card. | | |
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Please sign your name exactly as it appears above. If executed by a corporation, a duly authorized officer should sign. Executors, administrators, attorneys, guardians and trustees should so indicate when signing. If shares are held jointly, all holders must sign. | | | I/We do plan to attend the Special2007 Annual Meeting. o | | |
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| | | TO VOTE BY MAIL | | | |
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To vote by mail, complete both sides, sign and date the proxy card below. Detach the card below and return it in the envelope provided.
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| | | TO VOTE BY INTERNET | | | |
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Your Internet vote is quick, confidential and your vote is immediately submitted. Just follow these easy steps: |
1. Read the accompanying Proxy Statement. |
2. Visit our Internet voting site athttp://www.illinoisstocktransfer.com, click on the heading “Internet Voting” and follow the instructions on the screen. |
3. When prompted for your Voter Control Number, enter the number printed just above your name on the front of the proxy card.
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Please note that all votes cast by Internet must becompletedandsubmittedprior to Sunday, January 7,Tuesday, May 22, 2007 at 11:59 p.m. Central Time. |
Your Internet vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned the proxy card. |
This is a “secured” web page site. Your software and/or Internet provider must be “enabled” to access this site. Please call your software or Internet provider for further information if needed. |
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If You Vote By INTERNET, Please Do Not Return Your Proxy Card By Mail
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| | | TO VOTE BY TELEPHONE | | | |
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Your telephone vote is quick, confidential and immediate. Just follow these easy steps: |
1. Read the accompanying Proxy Statement. |
2. Using a Touch-Tone telephone, call Toll Free 1-800-555-8140 and follow the instructions. |
3. When asked for your Voter Control Number, enter the number printed just above your name on the front of the proxy card below. |
Please note that all votes cast by telephone must becompletedandsubmittedprior to Sunday, January 7,Tuesday, May 22, 2007 at 11:59 p.m. Central Time. |
Your telephone vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned the proxy card. |
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If You Vote By TELEPHONE, Please Do Not Return Your Proxy Card By Mail
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| | PLEASE LIST NAMES OF PERSONS ATTENDING | | |
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| | Wintrust Financial Corporation | | REVOCABLE PROXY |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John S. Lillard and Edward J. Wehmer and either of them as Proxies, each with the power to appoint his substitute, and hereby authorizes each of them to represent and to vote, as designated below, all the shares of Common Stock of Wintrust Financial Corporation which the undersigned is entitled to vote at the SpecialAnnual Meeting of Shareholders to be held on January 9,May 24, 2007 or any adjournment thereof. If any other business is presented at the SpecialAnnual Meeting, including whether or not to adjourn the meeting, this proxy will be voted, to the extent legally permissible, by those named in this proxy in their best judgment.
Proposal 1 — To adopt the 2007 Stock Incentive Plan and the issuance of up to 500,000 shares of common stock thereunder.
oForoAgainstoAbstain
(to be signed on the other side)
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Proposal 1 — | | Election of the following Directors with a term ending 2008 |
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| | o | | For all NomineesListed Below (except as marked to the contrary below) | | o | | Withhold Authorityto vote for nominees below (Instructions: To withhold authority to vote for any individual nominee, strike a line through the nominee’s name) |
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| | 01 Allan E. Bulley, Jr. | | | 04 James B. McCarthy | | | | 07 Ingrid S. Stafford |
| | 02 Bruce K. Crowther | | | 05 Albin F. Moschner | | | | 08 Edward J. Wehmer |
| | 03 Bert A. Getz, Jr. | | | 06 Thomas J. Neis | | | | |
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Proposal 2 — | | Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for the year 2007 |
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