What vote is required to amend the Company’s 2007 Stock Incentive Plan to (i) add an additional 325,000 shares of common stock to the number of shares that may be offered under the plan, (ii) modify the limitation on full value awards that may be offered under the plan, and (iii) require the Company to obtain shareholder approval prior to cancelling any outstanding options or stock appreciation rights in exchange for cash, except in certain events?
The approval of the amendment to the 2007 Plan requires the affirmative vote of a majority of the shares of common stock represented at the Annual Meeting, in person or by proxy, and entitled to vote thereon. Abstentions will have the same effect as a vote against the proposal.
What vote is required forto approve the ratificationadvisory (non-binding) proposal approving the Company’s 2008 executive compensation as described in this proxy statement?
The approval of the advisory (non-binding) proposal on the Company’s 2008 executive compensation described in this proxy statement requires the affirmative vote of a majority of the shares of common stock represented at the Annual Meeting, in person or by proxy, and entitled to vote thereon. Abstentions will have the same effect as a vote against the proposal.
What vote is required to ratify the Audit Committee’s selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2009?
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firm. BecauseRatification of the vote to ratifyappointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009 requires the affirmative vote of a majority of the shares of common stock represented at the Annual Meeting, in person or by proxy, and entitled to vote abstentionsthereon. Abstentions will have the same effect as votesa vote against ratification.
What if other matters come up during the meeting?Annual Meeting?
If any matters other than those referred to in the Notice of Annual Meeting properly come before the meeting,Annual Meeting, the individuals named in the accompanying form of proxy will vote the proxies held by them in accordance with their best judgment. The Company is not aware of any business other than the items referred to in the Notice of Annual Meeting that may be considered at the meeting.Annual Meeting.
Your vote is important.Because many shareholders cannot personally attend the Annual Meeting, it is necessary that a large number be represented by proxy. Whether or not you plan to attend the meeting in person, prompt voting will be appreciated. Registered shareholders can vote their shares via the Internet or by using a toll-free telephone number. Instructions for using these convenient services are provided on the proxy card. Of course, you may still vote your shares on the proxy card. To do so, we ask that you complete, sign, date and return the enclosed proxy card promptly in the postage-paid envelope.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Shareholders to be Held on May 22, 2008:28, 2009:
This Proxy Statement and the 20072008 Annual Report onForm 10-K are Available at:
http://ww3.ics.adp.com/streetlink/WTFCmaterials.proxyvote.com/97650W
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PROPOSAL NO. 1 — ELECTION OF DIRECTORS
The Company’s Board of Directors is comprised of 13 Directors, each serving a term that will expire at this year’s Annual Meeting. At the Annual Meeting, you will elect 13 individuals to serve on the Board of Directors until the next Annual Meeting. The Board of Directors, acting pursuant to the recommendation of the Nominating and Corporate Governance Committee, has nominated each Director standing for election. All of the nominees currently serve as Directors, except for Messrs. Hackett and Heitmann.Mr. Perry. Each nominee has indicated a willingness to serve, and the Board of Directors has no reason to believe that any of the nominees will not be available for election. However, if any of the nominees is not available for election, proxies may be voted for the election of other persons selected by the Board of Directors. Proxies cannot, however, be voted for a greater number of persons than the number of nominees named. Shareholders of the Company have no cumulative voting rights with respect to the election of Directors.
The following sections set forth the names of the Director nominees, their ages, a brief description of their recent business experience, including present occupation and employment, certain directorships held by each, and the year in which they became Directors of the Company. Director positions in the Company’s subsidiaries are included in the biographical information set forth below.
The Company’s main operating subsidiaries include Advantage Bank, Barrington Bank, Beverly Bank, Broadway, Crystal Lake Bank, First Insurance Funding, Guardian Real Estate Services, Hinsdale Bank, Lake Forest Bank, Libertyville Bank, North Shore Bank, Northbrook Bank, Old Plank Trail Community Bank, State Bank of The Lakes, St. Charles Bank, Tricom, Town Bank, Village Bank, Wayne Hummer Asset Management Company, Wayne Hummer Investments, Wayne Hummer Trust Company, WestAmerica Mortgage Company, Wheaton Bank, and Wintrust Information Technology Services.Services and Wintrust Mortgage Company.
Nominees to Serve as Directors until the 20092010 Annual Meeting of Shareholders
Allan E. Bulley, Jr. (75), Director since 2006 Mr. Bulley is the Chairman and Chief Executive Officer of Bulley & Andrews, whose subsidiary, Bulley & Andrews, LLC, is one of Chicago’s oldest and largest general contracting firms. Mr. Bulley is the Vice Chairman and a Trustee of the Museum of Science and Industry where he chairs the Buildings and Grounds Committee. He also serves as a Director of the Coldwater Conservation Fund, Trout Unlimited. He has been a director of the L.E. Myers Company (formerly NYSE listed). Since 1968, Mr. Bulley has been involved as an organizer, director and investor in numerous community banks. Mr. Bulley is currently a director of North Shore Bank.
Peter D. Crist (56)(57), Director since 1996 Mr. Crist has served as the Company’s Chairman since 2008. He is Chairman and Chief Executive Officer of CristCrist|Kolder Associates, an executive recruitment firm which focuses on CEO and director searches. From December 1999 to January 2003, Mr. Crist served as Vice Chairman of Korn/Ferry International (NYSE), the largest executive search firm in the world. Previously, he was President of Crist Partners, Ltd., an executive search firm he founded in 1995 and sold to Korn/Ferry International in 1999. Immediately prior thereto he was Co-Head of North America and the Managing Director of the Chicago office of Russell Reynolds Associates, Inc., the largest executive search firm in the Midwest, where he was employed for more than 18 years. Mr. CristHe also serves as a director and chairman of the compensation committee of Northwestern Memorial Hospital. HeMr. Crist is a Director of Hinsdale Bank.
Bruce K. Crowther (56)(57), Director since 1998Mr. Crowther has served as President and Chief Executive Officer of Northwest Community Healthcare, Northwest Community Hospital and certain of its affiliates since January 1992. Prior to that time he served as Executive Vice President and Chief Operating Officer from 1989 to 1991. He is a Fellow of the American College of Healthcare Executives. Mr. Crowther is the past Chairman of the board of directors of the Illinois Hospital Association as well as a member of the board of directors of the Max McGraw Wildlife Foundation. Mr. Crowther is a Director of Barrington Bank.
Joseph F. Damico (54)(55), Director since 2005Mr. Damico is founding partner and serves as an operating principal of RoundTable Healthcare Partners, an operating-oriented private equity firm focused on the healthcare industry. Mr. Damico has more than 30 years of healthcare industry operating experience, previously as Executive Vice President of Cardinal Health, Inc. and President & COO of Allegiance Corporation. Mr. Damico also held senior management positions at Baxter International Inc. and American Hospital Supply. Mr. Damico is the Chairman of the Board of Ascent Healthcare Solutions, ACI Medical Devices.Devices, Inc., American Medical Instruments
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Holdings, Inc. and Instrumed. He is also a member of the board of directors of Bioniche Pharma, CorePharma Holdings, Inc., Excelsior Medical Inc., the College of Lake County Foundation, James Madison University, and Lake Forest Hospital and Manor Care, Inc. Mr. Damico is an advisory Director of Libertyville Bank.
Bert A. Getz, Jr. (40)(41), Director since 2001Mr. Getz isjoined Globe Corporation in 1991 and serves as Director and Co-Chief Executive Officer. He is also President of Globe Development Corporation (wholly-owned real estate development subsidiary), an Officer and Director of Globe Corporation where he has worked since 1991.Management Company, and Chairman of the Investment Committee for Globe Corporation is a diversified investment company focused on real estate investment and development, asset management and private equity investments. Founded in 1901, Globe Corporation is currently managed by the fourth generation of Getz family members.Investment Company, LP. Mr. Getz is also a director of HDO Productions Inc., a national tent
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rental and special events firm based in Northbrook, Illinois, IMS Companies, LLC, a diversified manufacturing company headquartered in Des Plaines, Illinois and Juniper Content Corporation,Top Driver LLC, a media corporation based in New York with operations in Texas.driver education company. Additionally, Mr. Getz serves onis a Director of the Zoning Board of Appeals forGlobe Foundation, the Village of Northfield,National Historical Fire Foundation and Children’s Memorial Hospital, and is a Trustee of the Chicago Zoological Society at Brookfield Zoo, a director of Children’s Memorial Hospital, and a Trustee of The Lawrenceville School and North Shore Country Day School. He is also a member in Young President’s Organization. Mr. Getz serves as a Director of Libertyville Bank, Wayne Hummer Asset Management Company, Wayne Hummer Investments and Wayne Hummer Trust Company.
H. Patrick Hackett, Jr. (56)(57), Director nomineesince 2008 Mr. Hackett is the founder and Chief Executive Officer of HHS Co., a real estate development and management company located in the Chicago area, which positionarea. Previously, he has held since 2002. He served as the President and Chief Executive Officer of RREEF Capital, Inc. and as Principal of The RREEF Funds, an international commercial real estate investment management firm, from 1992 to 2002.firm. Mr. Hackett taught real estate finance at the Kellogg Graduate School of Management for 15 years and haswhen he also served on the real estate advisory boards of Kellogg and the Massachusetts Institute of Technology. He serves on the boards of Textura Corporation and Evanston Capital Management. Mr. Hackett is a directorDirector of North Shore Bank.
Scott K. Heitmann (59)(60), Director nomineesince 2008 Mr. Heitmann, retired for the past threefour years, has over 30 years of experience in the banking industry, including his service as Vice Chairman of LaSalle Bank Corporation and President, Chairman and Chief Executive Officer of Standard Federal Bank from 1997 to 2005. He served as the President and Chief Executive Officer of LaSalle Community Bank Group and LaSalle Bank FSB from 1988 to 1996. Mr. Heitmann currently serves as a director of The Nature Conservancy, Vice-Chairman of The Illinois Chapter of The Nature Conservancy, and as a member of the Northwestern University Kellogg Alumni Advisory Board. Mr. Heitmann has previously served as a director of LaSalle Bank Corporation, Standard Federal Bank and the Federal Home Loan Bank of Chicago. Mr. Heitmann is a directorDirector of North Shore Bank.Bank, Wayne Hummer Asset Management Company, Wayne Hummer Investments and Wayne Hummer Trust Company.
Charles H. James III (49)(50), Director since 2008Mr. James is the Chairman and Chief Executive Officer of C.H. James & Co., an investment holding company with interests in wholesale food distribution businesses, and is Managing Owner of C.H. James Restaurant Holdings LLC, which owns quick service restaurants. Mr. James graduated from Morehouse College and obtained an MBA from the Wharton School at the University of Pennsylvania. Mr. James serves on the board of directors of Morehouse College, the Wharton School at the University of Pennsylvania, the Children’s Memorial Hospital, and the Chicago Urban League.League and the Steppenwolf Theater Company.
Albin F. Moschner (55)(56), Director since 1996Mr. Moschner is currently Executive Vice President and Chief MarketingOperating Officer of Leap Wireless. Prior to joining Leap Wireless, Mr. Moschner was consulting in the telecommunications industry. Mr. Moschner was President of Verizon Card Services from December 2001 to November 2003. Mr. Moschner had been President and Chief Executive Officer, from December 1999 to December 2001, of One Point Services, LLC, a telecommunications company. From September 1997 to November 1999, he served as President and Chief Executive Officer of Millecom, LLC, a development stage internet communications company. From August 1996 to August 1997, he served as Vice Chairman and director and an officer of Diba, Inc., a development stage internet technology company. Mr. Moschner served as President and CEO and a director of Zenith Electronics, Glenview, Illinois, from 1991 to July 1996. Mr. Moschner is also a director of Pella Windows Corporation. Mr. Moschner serves asis a Director of Lake Forest Bank.
Thomas J. Neis (59)(60), Director since 1999Mr. Neis is the owner of Neis Insurance Agency, Inc., Longaker Insurance Agency, Pachini Insurance Agency and Parr Insurance Agency and is an independent insurance agent with these companies. Mr. Neis also owns Parr Insurance Brokerage Inc., which markets insurance products to insurance agencies. Mr. Neis serves on the board of directors of Illinois Wesleyan University. He also serves as a chairman of the Crystal Lake Sister City organization and several other charitable and fraternal organizations. Mr. Neis is a Director of Crystal Lake Bank.
Christopher J. Perry (53), Director nominee Mr. Perry is currently partner of CIVC Partners LLC, which he joined in 1994 after leading Continental Bank’s Mezzanine Investments and Structured Finance groups. Prior to joining Continental in 1985, he served as a Vice President in the Corporate Finance Department of the Northern Trust Company. He has also served as a CFO in both public and private companies. Mr. Perry is currently a director
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of The Brickman Group Ltd., LA Fitness International LLC, Thermo Fluids, Inc. and Icon Identity Solutions Inc, and has previously served as a director of Transwestern Publishing, LP, First Franklin Financial, Wastequip Inc. and Kellermeyer Building Services. He also serves as chairman of the Board of Trustees for Cristo Rey Jesuit High School and serves on the Executive Committee of Loyola Academy. Mr. Perry previously served as a director of Wintrust from 2001 to 2002. An affiliate of CIVC Partners LLC own all of Wintrust’s 8.00% Non-Cumulative Perpetual Convertible Preferred Stock, Series A, as described under “Related Party Transactions.”
Hollis W. Rademacher (72)(73), Director since 1996Mr. Rademacher is self-employed as a business consultant and private investor. From 1957 to 1993, Mr. Rademacher held various positions, including Officer in Charge, U.S. Banking Department and Chief Credit Officer of Continental Bank, N.A., Chicago, Illinois, and from 1988 to 1993 held the position of Chief Financial Officer. Mr. Rademacher is a director of Schawk, Inc. (NYSE), provider of prepress graphics for the packaging industry, First Mercury Financial Corp. (NYSE), a holding company for insurance agents, underwriters, advisors and carriers specializing in Excess and Surplus lines, as well as several other private business enterprises. Mr. Rademacher currently serves as a Director of each of the Company’s main operating subsidiaries except for Beverly Bank, Guardian Real Estate Services, Old Plank Trail Community Bank, Town Bank, St. Charles Bank, WestAmerica Mortgage Company,Town Bank, Wheaton Bank, and Wintrust Information Technology Services.Services, , Wayne Hummer Asset Management Company, Wayne Hummer Investments, Wayne Hummer Trust Company and Wintrust Mortgage Corporation.
Ingrid S. Stafford (54)(55), Director since 1998Ms. Stafford has held various positions since 1977 with Northwestern University, where she is currently Associate Vice President for Financial Operations and Treasurer. Ms. Stafford is a trustee of the Board of Pensions of the Evangelical Lutheran Church in America.America, where she serves on its Audit, Finance and Nominating Committees. She is a member of the Investment Advisory Committee of College Illinois,also serves on the investment committee of Wittenberg University and the investment and audit committees of the Evanston Community Foundation. She is the President of the Church Council of Trinity Lutheran Church in Evanston, Illinois. She is an emeritus director of Wittenberg University where she served from 1993 to 2006, including serving as Board Chair from2001-2005. She has also served as Board Chair of the following community organizations: Childcare Network of Evanston, Leadership Evanston, and the Evanston McGaw YMCA. Ms. Stafford is a Director of North Shore Bank.
Edward J. Wehmer (54)(55), Director since 1996Since May 1998, Mr. Wehmer has served as President and Chief Executive Officer of the Company. Prior to May 1998, he served as President and Chief Operating Officer of the Company since its formation in 1996. He served as the President of Lake Forest Bank from 1991 to 1998. He serves as a Director or Advisory Director of each of the Company’s main operating subsidiaries. Mr. Wehmer is a certified public accountant and earlier in his career spent seven years with the accounting firm of Ernst & Young LLP specializing in the banking field and particularly in the area of bank mergers and acquisitions. Mr. Wehmer serves on the board of directors of Stepan Company (NYSE), a chemical manufacturing and distribution company, as a trustee for Children’s Memorial Hospital and Foundation and on the Finance CouncilBoard and the School Board of the Archdiocese of Chicago. He is also a former Chairman of the Board of Trustees for Loyola Academy in Wilmette, Illinois.
Required Vote
Election as a Director of the Company requires that a nominee receive the affirmative vote of a majority of the shares of common stock represented at the Annual Meeting, in person or by proxy, and entitled to vote thereon. Accordingly, instructions to withhold authority will have the same effect as a vote against such nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR NAMED ABOVE.
Directors Not Standing for Election
John S. Lillard (77)Allan E. Bulley, Jr. (76), Director since 19962006 Mr. Lillard, retired forBulley is the past five years, has served asChairman and Chief Executive Officer of Bulley & Andrews, whose subsidiary, Bulley & Andrews, LLC, is one of Chicago’s oldest and largest general contracting firms. Mr. Bulley is the Company’sVice Chairman since May 1998. He spent more than 15 years as an executive with JMB Institutional Realty Corporation, a real estate investment firm, where he served as President from 1979 to 1991 and asChairman-Founder from 1992 to 1994. Mr. Lillard was a general partner of Scudder Stevens & Clark until joining JMB in 1979. At Scudder Stevens & Clark he was national marketing director and a member of the board of directors. He is a Life Trustee of the Chicago Symphony Orchestra and a Trustee of Lake Forest College. Mr. Lillard servedthe Museum of Science and Industry where he chairs the Buildings and Grounds Committee. He also serves as a Director of the Coldwater Conservation Fund, Trout Unlimited. He has been a director of Stryker Corporation (NYSE) from1978-2005the L.E. Myers Company (formerly NYSE listed). Since 1968, Mr. Bulley has been involved as an organizer, director and Cintas Corporation (NASDAQ) from1978-2000.investor in numerous community banks. Mr. LillardBulley is currently a Director of Lake Forest Bank, Wayne Hummer Asset Management Company, Wayne Hummer Investments and Wayne Hummer Trust Company.
John J. Schornack (77), Director since 1996 Mr. Schornack served as Chairman of Strong Arm Products, LLC from 1999 to 2003. Mr. Schornack is also the former Chairman and CEO of KraftSeal Corporation, Lake Forest, Illinois, a position he held from 1991 to 1997, and retired Chairman of Binks Sames Corporation (Nasdaq), Chicago, Illinois, where he served from 1996 to 1998. From 1955 to 1991, Mr. Schornack was with Ernst & Young LLP, serving most recently as Vice Chairman and Managing Partner of the Midwest Region. He is a Life Trustee of the Chicago Symphony Orchestra and a Life Trustee of the Kohl Children’s Museum. He also is the retired Chairman of the Board of Trustees of Barat College, Lake Forest, Illinois. Mr. Schornack is a Directordirector of North Shore Bank.
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PROPOSAL NO. 2 — APPROVAL OF AN AMENDMENT TO THE WINTRUST FINANCIAL CORPORATION DIRECTORS DEFERRED FEE AND
EMPLOYEE STOCK PURCHASE PLAN
General
The Board of Directors is proposing for shareholder approval an amendment (the “Amendment”“ESPP Amendment”) to the Wintrust Financial Corporation Directors Deferred Fee andEmployee Stock Purchase Plan (the “Director Plan”“ESPP”). If approved by shareholders, the ESPP Amendment would add an additional 200,000250,000 shares of Common Stockcommon stock to the number of shares authorized for issuancethat may be offered under the Director Plan.ESPP. The Board of Directors approved the ESPP Amendment on April 17, 2008,6, 2009, subject to shareholder approval.
History and Reason for Proposing the ESPP Amendment
The Director PlanESPP was adopted by the Board of Directors on April 26, 200130, 1997 and became effective when it was approved by shareholders and became effective on May 24, 2001. The Board of Directors amended the Director Plan on April 17, 2008 for the purpose of complying with Section 409A of the Internal Revenue Code and to make certain other administrative amendments.22, 1997. When first adopted in 2001, 225,0001997, the Company was permitted to offer up to 375,000 shares of Common Stockcommon stock (adjusted to reflect the March 15, 2002 split of our Common Stock) were authorized for issuancecommon stock) under the Director Plan.ESPP. As of March 31, 2008,2009, only 26,93881,680 shares of Common Stockcommon stock remain available under the Director Plan.ESPP. At current participation levels, we estimate that, in the absence of an amendment to increase the number of shares of Common Stock authorizedcommon stock that may be offered under the Director Plan,ESPP, all such authorized shares would be exhausted by late 2008.2009. If the ESPP Amendment is approved, the number of shares available under the Director PlanESPP in the future will be increased from 26,938 to 226,938 shares.331,680. We believe that this increase in the number of shares available under the Director PlanESPP will enable eligible persons to participate under the Director PlanESPP until approximately 2012.2013 based on current participation levels and the current price of our common stock.
In addition, the ESPP Amendment makes certain changes to the terms of the ESPP. The terms of the ESPP, as proposed to be amended and restated, are described below.
Purpose of the Director PlanESPP
The purpose of the Director PlanESPP is to align the interests of directors and our shareholders by providing a mechanism for directorsencourage employee stock ownership, thereby enhancing employee commitment to acquire and add to their ownership in the Company as requiredand providing employees an opportunity to share in the Company’s Corporate Governance Guidelines, and encouraging directors to own additional shares of our Common Stock and remain as directors. The Director Plan also provides a means for directors of the Company and its subsidiaries to defer, to some future date, fees payable for services as a director. The Director Plan also allows directors to choose payment of directors meeting and Board or committee chair fees in our Common Stock in lieu of cash and to facilitate deferral of receipt of fees for income tax purposes, both in cash or Common Stock.success.
Description of the Director PlanESPP
The following is a description of the terms of the Director Plan.ESPP, as proposed to be amended and restated, and the changes to the shares available under the plan that will be made if shareholders approve the ESPP Amendment. This description is qualified in its entirety by reference to the plan document, as proposed to be amended and restated, a copy of which is attached to this Proxy Statement as ExhibitAnnex A and incorporated herein by reference.
Shares Available. As originally approved by shareholders in 2001, 225,0001997, the ESPP permitted the Company to offer up to 375,000 shares of Common Stockour authorized but unissued common stock (adjusted to reflect the March 15, 2002 split of our Common Stock) were authorized for issuance under the Director Plan,common stock), subject to adjustment in the event of certain changes to our capital structure as described inaffecting the Director Plan.common stock. As noted above, 198,062293,320 shares have already been allocatedsold to directorsemployees under the Director PlanESPP and only 26,93881,680 shares remain available for future awards as of March 31, 2008,2009, and it is anticipated that all available shares under the Director PlanESPP will be awarded by late 2008.2009. If shareholders approve the ESPP Amendment, a total of 226,938331,680 shares would be available for future awards under the Director PlanESPP, subject to adjustment in the event of certain changes to our capital structure.structure affecting the common stock. This represents an increase of 200,000250,000 shares over the number of shares that would have been available for awards in the absence of the ESPP Amendment. The ESPP Amendment also clarifies that shares of Common Stock allocatedoffered under the Director Plan may beinclude treasury shares authorized and unissued shares or any combination ofpurchased on the foregoing.open market.
Eligibility. The Director Plan is open to all non-employee members of the Board of DirectorsAll employees (including officers and directors who are employees) of the Company and its subsidiaries. Currently, there are approximately 170 persons whocertain participating subsidiaries are eligible to participate in the Director Plan.
Participation andESPP except that the Compensation Elections. Eligible directorsCommittee may, with respect to any offering, exclude from eligibility any employee who do not elect to participate in the Director Plan will continue to receive cash compensation for attendance at Board of Directors or committee meetings and for serving as chairperson of the Board or a committee, and to receive their annual retainer in the form of shares of
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Common Stock. Eligible directors who elect to participate in the Director Plan must choose from the following three compensation options:
1. Fees Paid in Stock. If so elected by a director, the meeting attendance, chairperson and annual retainer fees payable to such director will be paid in shares of our Common Stock. Any such election will become effective on January 1 of the year following the date of the election or, in the case of a new director, upon his or her election within 30 days of becoming anon-employee director. The number of shares of Common Stock to be issued will be determined by dividing the fees earned during a calendar quarter(i) has been employed by the fair market value (as defined in the Director Plan) of the Common Stock on the last trading day of the preceding quarter. The shares of Common Stock to be paid will be issued once a year before January 15th,Company or more frequently if sosuch subsidiaries for less than 24 months (or such lesser number determined by the administrator. Once issued, the shares will be entitled to full dividend and voting rights.
2. Deferral of Common Stock. If a director elects to defer receipt of the 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. Any such election will become effective on January 1 of the year following the date of the election or, in the case of a new director, upon his or her election within 30 days of becoming anon-employee 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 fair market value of the Common Stock on the last trading day of the preceding quarter.
Because Units represent a right to receive Common Stock in the 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 Common 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 Stock represented by the Units will be issued before January 15th of the year following the date specified by the director in his or her deferral election, which may be either the date on which he or she ceases to be a director of the Company, or the 1st, 2nd, 3rd, 4th or 5th anniversary of such date. A director may elect to change the date on which the Common Stock represented by the Units will be issued, but such election will not be effective for 12 months and must specify a date that is at least five years after the date on which the original issuance would have been made.
3. Deferral of Cash. If a director elects to defer receipt of meeting attendance and chairperson fees in cash, the Company will maintain on its books a deferred compensation account representing an obligation to pay such director cash in the future. Any such election will become effective on January 1 of the year following the date of the election or, in the case of a new director, upon his or her election within 30 days of becoming anon-employee director. The amount of the director’s fees will be credited to this accountCompensation Committee) as of the datefirst day of an offering period; (ii) normally works less than 20 hours per week (or such fees otherwise would be payable to the director.
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 Company for purposes of the amount in his deferred compensation account.
The amount in the deferred compensation account will be paid to the director before January 15th of the year following the date specifiedlesser number determined by the director in his or her deferral election, which may be either the date on which he or she ceases to be a director of the Company, or the 1st, 2nd, 3rd, 4th or 5th anniversary ofCompensation Committee); (iii) normally works less than five months per year (or such date. A director may elect to change the date on which the amount in the deferred compensation account will be paid, but such election will not be effective for 12 months and must specify a date that is at least five years after the date on which the original payment would have been made.lesser number
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Amendment and Terminationdetermined by the Compensation Committee); or (iv) is a highly compensated employee (as defined in Section 414(q) of the Director Plan.Internal Revenue Code of 1986, or the Code).
Administration. The ESPP provides that the Compensation Committee will administer the ESPP. The Compensation Committee, in its sole discretion, determines from time to time when the Company will make an offering under the ESPP, but is under no obligation to do so. Any such offering period must be at least three months in duration, but no more than 26 months in duration. The Compensation Committee also acts as the administrator of the ESPP and makes administrative and procedural decisions regarding the ESPP, adopts rules and regulations concerning the operation of the ESPP and decides questions of construction and interpretation regarding the ESPP and an employee’s participation therein. The Compensation Committee may employ such other persons and delegate to them such powers, rights and duties as it may consider necessary to properly carry out the administration of the ESPP.
Operation of the ESPP. Employees may enroll in the ESPP during the first enrollment period for each offering after they become eligible. Each participating employee may authorize payroll deductions and will become entitled to purchase shares of common stock on such dates duringand/or at the end of the offering period as determined by the Compensation Committee. A participating employee may purchase up to such number of shares as the employee’s accumulated payroll deductions may permit, provided that the aggregate purchase price may not exceed the lesser of (i) $50,000, (ii) 20% of such employee’s compensation (as defined by the Compensation Committee and consistent with the Code), or (iii) such lesser amount as the Compensation Committee may determine. Shares of the Company offered under the ESPP may be newly issued shares, treasury shares, shares purchased on the open market, or any combination of such shares. The purchase price of the shares of common stock will be determined by the Compensation Committee prior to the commencement of such offering, provided that the price may not be lower than the lesser of 85% of the fair market value per share of the common stock on the first day of the offering period or 85% of the fair market value per share of the common stock on the purchase date for the offering. The Compensation Committee may also limit for any offering period the number of shares which may be purchased by an employee. No employee may participate in an offering to the extent (i) such participation would permit the employee to purchase shares of common stock under all of the employee stock purchase plans (as defined in Section 423 of the Code) of the Company and its subsidiaries at a rate that exceeds $25,000 in fair market value of such shares (determined on the first date of the offering period) for each calendar year in which the employee participates in the ESPP or (ii) if such employee, immediately after commencing participation, would own 5% or more of the total combined voting power or value of all classes of stock of the Company or any subsidiary.
Payroll deductions are credited to a participant’s purchase savings account, which is part of an aggregate account at a banking subsidiary of the Company designated by the Compensation Committee. Unless otherwise directed by an employee, the funds credited to an employee’s account on a purchase date (which may occur periodically during the offering period or only at the end of the offering period) are applied to the purchase of shares of common stock, and any excess over the purchase price is paid to the employee or carried forward to the following offering period, as determined by the Compensation Committee. However, if the fair market value of a share of common stock on the last day of the offering period is less than the purchase price of one share of common stock, all funds on deposit in the employee’s account will be paid to the employee and the employee’s account will be closed.
An employee participating in the ESPP may not increase or decrease the amount of the employee’s payroll deduction during the offering period unless such change is permitted by the Compensation Committee in its discretion. However, an employee may withdraw the funds credited to the employee’s savings account at any time, unless the Compensation Committee provides otherwise, or may voluntarily terminate participation in the ESPP at any time. Should an employee terminate participation in the ESPP entirely, the accumulated payroll deductions will be returned to such employee. If an employee terminates employment, other than by death, retirement or total and permanent disability, the employee’s right to purchase the stock immediately terminates. Following a termination of employment due to death, retirement or total and permanent disability, the employee (or his estate, personal representative or beneficiary) has the right to purchase stock as of the earlier of the end of the offering period and the end of the three month period following such termination. An employee’s participation rights in the ESPP and the related purchase savings account are not assignable or transferable except by will or the laws of descent and distribution. An employee has no rights as a shareholder with respect to the shares the employee is eligible to purchase until the shares are so purchased and issued by the Company.
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Merger, Consolidation and Change of Control. In the event of a merger or consolidation in which the Company is the surviving company, the right to purchase shares through an offering shall continue. In the event of a dissolution or liquidation of the Company, or a merger or consolidation in which the Company is not the surviving company, participation in the offering shall terminate unless the surviving company decides in its discretion to allow purchase of its shares on substantially similar terms. However, in the event of a change of control (defined below), the change of control shall be a purchase date under all offering periods, and each participant in the ESPP will have the right to elect to purchase up to such number of shares as the employee’s accumulated payroll deductions may permit or to be paid in cash all of the employee’s accumulated payroll deductions. A change of control is defined in the ESPP as certain acquisitions of 50% or more of the Company’s common stock, a change in the majority of the Board of Directors, or the consummation of a reorganization, merger or consolidation (unless, among other conditions, the Company’s shareholders receive more than 50% of the stock of the surviving company), a sale or disposition of all or substantially all of the assets of the Company, or a complete liquidation or dissolution of the Company.
Amendments and Termination. The Board of Directors may at any time amend, suspend or terminatediscontinue the Director PlanESPP, or at any time prior to a change of control alter or amend any and all terms of participation in any offering made under the ESPP. However, if applicable laws require shareholder approval, then such amendment will be subject to the extent permitted by law; provided, however, that no such action may adversely affect a director’s rights with respect to fees already earned but not yet paid in cash, common stock or units without the director’s written consent. A participant’s rights under the Director Plan are not transferable.
Administration. The Board of Directors of the Company has delegated the administration of the Director Plan to the Company’s Chief Operating Officer. As administrator, the Chief Operating Officer is authorized to interpret the Director Plan, to prescribe and modify its rules and procedures, and to make all other determinations necessary for its administration, including employing agents to assist in plan administration.
Adjustment to Available shares of Common Stock. In the event there is any change in the outstanding shares of our Common Stock as a result of any stock dividend or split, recapitalization, merger, consolidation combination, share exchange or similar corporate change, the number of shares of Common Stock available for issuance under the Director Plan will be adjusted accordingly.requisite shareholder approval.
Federal Income Tax Consequences
The following is a brief summary of the United Statesdiscussion briefly summarizes certain U.S. federal income tax consequences to participants who may receive grants of awards under the Director Plan.ESPP. The discussion is based upon current interpretations of the Code, and the regulations promulgated thereunder as of such date.
Taxes RelatedThe ESPP is not qualified under Section 401 of the Code, but is intended to be a qualified employee stock purchase plan under Section 423 of the Code. An employee pays no tax when the employee enrolls in the ESPP, when the employee purchases shares of common stock pursuant to the ReceiptESPP or when the employee receives shares of Stock. Thecommon stock.
An employee will have a taxable gain or loss when any shares of common stock purchased through the ESPP are sold. If an employee sells the stock within two years of the commencement of the employee’s participation in the offering or within one year of the actual purchase of the shares (each, a “disqualifying disposition”), then the excess of the fair market value of the shares of Common Stock received underon the Director Plan ispurchase date over the purchase price will be taxed as ordinary income in the year received. If a director elects to receive compensation in the formincome. The amount of Common Stock on a current basis, he or shesuch difference will be taxed currently onadded to the valuebasis of the shares onfor purposes of determining the date issued to the director, as ifamount of gain or loss upon such value had been paid in cash. If a director elects to defer receipt of the Common Stock, hesale, and such gain or she will not be taxed currently, but insteadloss will be taxed at the time in the future when thelong or short-term capital gain or loss for income tax purposes depending upon how long such shares of Common Stock are actually issued. At that time, the director will recognize ordinary income equal to the value of the shares determined as of the future date of issuance.were held. The Company will be entitled to a tax deduction from income in an amount equal to the amount of ordinary income recognizedreported by the director at that time.employee arising from a disqualifying disposition.
Taxes Related toIf an employee sells the Deferralstock after the holding period described above, then the lesser of Cash. Cash received under(i) the Director Plan will be taxed as ordinary income inexcess of the year received. Accordingly, if a director elects to defer receiptfair market value of fees to be paid in cash, he or she will not be taxed currently, but will be taxed in the futureshares on the director fees deferredfirst day of the offering period over the purchase price and (ii) the accrued interest whenexcess of the cash is actually received. The cashamount realized over the purchase price will be taxed as ordinary income and the balance of the employee’s gain, if any, will be long-term capital gain. The Company will not be entitled to a tax deduction from income in an amount equal to the amount of ordinary income recognized.reported by the employee.
The approval of the amendment to the Director PlanESPP requires the affirmative vote of a majority of the shares of Common Stockcommon stock represented at the Annual Meeting, in person or by proxy, and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE FOR “FOR”
APPROVAL
OF THE AMENDMENT TO THE WINTRUST FINANCIAL
CORPORATION DIRECTORS
DEFERRED FEE ANDEMPLOYEE STOCK PURCHASE PLAN.
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PROPOSAL NO. 3 — APPROVAL OF AN AMENDMENT TO THE 2007 STOCK INCENTIVE PLAN
General
The Board of Directors is proposing for shareholder approval an amendment (the “2007 Plan Amendment”) to the Wintrust Financial 2007 Stock Incentive Plan (the “2007 Plan”). If approved by shareholders, the 2007 Plan Amendment would (i) add an additional 325,000 shares of common stock to the number of shares that may be offered under the 2007 Plan, (ii) change the manner in which the number of shares subject to full value awards (i.e., awards other than stock options and stock appreciation rights) are limited and (iii) require the Company to obtain shareholder approval prior to cancelling any outstanding options or stock appreciation rights in exchange for cash, except in certain events. The Board of Directors approved the 2007 Plan Amendment on April 6, 2009, subject to shareholder approval.
History and Reason for Proposing the 2007 Plan Amendment
The 2007 Plan was adopted by the Board of Directors on November 9, 2006 and became effective when it was approved by shareholders on January 9, 2007. The 2007 Plan was also amended and restated by the Board of Directors as of October 22, 2007 (the “October Amendment”). When first adopted, the 2007 Plan authorized the Company to issue, or to grant awards with respect to, up to 500,000 shares of common stock, of which no more than 200,000 may be full value awards (i.e., awards other than stock options and stock appreciation rights). The October Amendment further limited the number of unrestricted stock awards to 25,000. As of March 31, 2009, only 133,031 shares of common stock remain available to be granted under the 2007 Plan. As of such date, 203,064 full value awards were outstanding and 2,352,836 options were outstanding. The outstanding options had a weighted average exercise price of $35.97 and a weighted average remaining term of 4.3 years. At current participation levels, we estimate that, in the absence of an amendment to increase the number of shares of common stock that may be offered under the 2007 Plan, all such shares would be exhausted by late 2009 or early 2010. If the 2007 Plan Amendment is approved, the number of shares available to be granted in the future under the 2007 Plan will be increased from 133,031 to 458,031 shares. We believe that this increase in the number of shares available under the 2007 Plan will enable the Company to grant awards to eligible persons until approximately 2011. In addition, if the 2007 Plan Amendment is approved, the number of shares available for full value awards will not be limited to 200,000. Instead, each share awarded pursuant to a full value award (including an award of unrestricted stock) granted on or after the effective date of the 2007 Plan Amendment will be counted as 1.73 shares against the 2007 Plan’s share reserve. This effectively limits the number of full value awards that may be granted under the 2007 Plan because these awards would be counted against the 2007 Plan’s share reserve as 1.73 shares for every one share issued in connection with such awards. The number of shares available for unrestricted stock awards will remain limited to 25,000, with each share subject to such an award counting as 1.73 shares for purposes of this limit.
The 2007 Plan Amendment would also clarify that the Company must obtain shareholder approval prior to cancelling any outstanding options or stock appreciation rights in exchange for cash, except in connection with an event described below in “Adjustments” or “Change of Control.”
Purpose of the 2007 Plan
The 2007 Plan is intended to provide the Company with the ability to provide market-responsive, stock-based incentives and other rewards for employees and directors of the Company and its subsidiaries and consultants to the Company and its subsidiaries that (i) provide such employees, directors and consultants a stake in the growth of the Company and (ii) encourage them to continue in the service of the Company and its subsidiaries.
The 2007 Plan enhances our ability to link pay to performance and our ability to attract key employees to manage our banks and other businesses. The 2007 Plan also helps promote the retention of key employees while aligning their interests closely with those of our shareholders. Accordingly, management believes the ability to award equity incentives is an important component in continuing the Company’s growth.
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Key Features of the 2007 Plan
We believe that the following features of the 2007 Plan, as proposed to be amended and restated if shareholders approve the 2007 Plan Amendment, help assure that the 2007 Plan both provides incentives to our employees and protects shareholder value:
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| • | an independent body, the Compensation Committee, administers the 2007 Plan; |
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| • | the 2007 Plan counts each full-value award as 1.73 shares against the number of shares available for grant; |
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| • | the 2007 Plan limits unrestricted stock awards to an aggregate maximum of 25,000; |
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| • | the 2007 Plan prohibits repricing or repurchasing of stock option awards (or other material amendments) without prior shareholder approval; |
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| • | the 2007 Plan does not provide for the payment of dividends on unvested performance awards and does not allow discounted awards; and |
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| • | the 2007 Plan does not provide for liberal share counting or recycling of shares. |
Description of the 2007 Plan
The following is a description of the terms of the 2007 Plan, as proposed to be amended and restated, and the changes that will be made if shareholders approve the 2007 Plan Amendment. This description is qualified in its entirety by reference to the plan document, as proposed to be amended and restated, a copy of which is attached to this Proxy Statement as Annex B and incorporated herein by reference.
Shares Available. The 2007 Plan provides that the total number of shares of common stock as to which awards may be granted may not exceed 500,000 shares. Of this amount, the number of shares that are available for full value awards (i.e., awards other than stock options and stock appreciation rights) is limited to 200,000 shares, and the number of shares available for unrestricted stock awards is further limited to 25,000. As noted above, awards with respect to 373,956 shares have already been granted under the 2007 Plan and only 133,031 shares remain available as of March 31, 2009, and it is anticipated that all available shares under the 2007 Plan will be awarded by late 2009 or early 2010. If shareholders approve the 2007 Plan Amendment, a total of 458,031 shares would be available under the 2007 Plan, subject to adjustment in the event of certain changes to our capital structure. This represents an increase of 325,000 shares over the number of shares that would have been available in the absence of the 2007 Plan Amendment. In addition, if the 2007 Plan Amendment is approved, the number of shares available for full value awards will not be limited to 200,000. Instead, each share awarded pursuant to a full value award (including an award of unrestricted stock) granted on or after the effective date of the 2007 Plan Amendment will be counted as 1.73 shares against the 2007 Plan’s share reserve. This effectively limits the number of full value awards that may be granted under the 2007 Plan because these awards would be counted against the 2007 Plan’s share reserve as 1.73 shares for every one share issued in connection with such awards. The number of shares available for unrestricted stock awards will remain limited to 25,000, with each share subject to such an award counting as 1.73 shares for purposes of this limit.
Shares covered by an award granted under the 2007 Plan are not counted as used under the 2007 Plan unless and until they are actually issued and delivered to a participant. Consequently, in the event that an award granted under the 2007 Plan is ultimately paid in cash rather than shares, any shares that were covered by that award will remain available for issue or transfer under the 2007 Plan (in the same number as such shares were counted against the 2007 Plan’s share reserve). Notwithstanding anything to the contrary: (a) shares tendered in payment of the exercise price of an option will not be added to the aggregate plan limit described above; (b) shares withheld by the Company to satisfy the tax withholding obligation will not be added to the aggregate plan limit described above; (c) shares that are repurchased by the Company with proceeds from option exercises will not be added to the aggregate plan limit described above; and (d) all shares covered by a stock appreciation right, to the extent that it is exercised and settled in shares and whether or not shares are actually issued to the participant upon exercise of the right, will be considered issued or transferred pursuant to the 2007 Plan.
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The shares of common stock subject to awards under the 2007 Plan and available for future awards may be reserved for issuance out of the Company’s total authorized but unissued shares or they may be shares held in treasury or acquired by the Company on the open market. A participant in the 2007 Plan is permitted to receive multiple grants of stock-based awards. The terms and provisions of a type of award with respect to any recipient need not be the same with respect to any other recipient of such award. The 2007 Plan provides that during any calendar year the maximum number of shares of common stock which may be made subject to awards to any single participant may not exceed 100,000.
Administration. The 2007 Plan provides that it shall be administered by a committee of the Board of Directors, constituted so as to permit the 2007 Plan to comply with the “non-employee director” provisions ofRule 16b-3 under the Exchange Act and the “outside director” requirements of Section 162(m) of the Internal Revenue Code of 1986, or the Code (see “Performance Goals and Maximum Awards” under “Federal Income Tax Consequences” below). The Board of Directors of the Company has delegated the administration of the 2007 Plan to its Compensation Committee. The Compensation Committee makes determinations with respect to the participation of employees, directors and consultants in the 2007 Plan and, except as otherwise required by law or the 2007 Plan, the grant terms of awards including vesting schedules, price, length of relevant performance, restriction or option periods, dividend rights, post-retirement and termination rights, payment alternatives, and such other terms and conditions as the Compensation Committee deems appropriate. Such grant terms are set forth in a written award agreement. The Compensation Committee also has final, binding authority to interpret and construe the provisions of the 2007 Plan and the award agreements. The Compensation Committee may designate other persons (so long as such persons are independent) to carry out its responsibilities under such conditions and limitations as it may set, other than its authority with regard to awards granted to employees who are executive officers or directors of the Company (including those individuals whose compensation is subject to the limit under Section 162(m) of the Code, as further described below in “Performance Goals and Maximum Awards” under “Federal Income Tax Consequences”).
Awards. The following types of awards may be granted under the 2007 Plan:
Stock Options. Stock options may be granted in the form of incentive stock options within the meaning of Section 422 of the Code or stock options not meeting such Code definition (“nonqualified stock options”). The 2007 Plan permits all of the shares available under the 2007 Plan to be awarded in the form of incentive stock options if the Compensation Committee so determines. The exercise period for any stock option will be determined by the Compensation Committee at the time of grant which may provide that options may be exercisable in installments. The exercise price per share of common stock of any option may not be less than the fair market value of a share of common stock on the date of grant. Each stock option may be exercised in whole, at any time, or in part, from time to time, after the grant becomes exercisable. The Compensation Committee may provide for the exercise price to be payable in cash, in shares of already owned common stock, in any combination of cash and shares, pursuant to a broker-assisted cashless exercise program, or by such methods as the Compensation Committee may deem appropriate, including but not limited to loans by the Company on such terms and conditions as the Compensation Committee may determine.
Stock Appreciation Rights. Stock appreciation rights (“SARs”) may be granted independently of any stock option or in tandem with all or any part of a stock option granted under the 2007 Plan, upon such terms and conditions as the Compensation Committee may determine. Upon exercise, an SAR entitles a participant to receive the excess of the fair market value of a share of common stock on the date the SAR is exercised over the fair market value of a share of common stock on the date the SAR is granted. The Compensation Committee will determine whether an SAR will be settled in cash, common stock or a combination of cash and common stock. Upon exercise of an SAR granted in conjunction with a stock option, the option or the portion thereof to which the SAR relates will be surrendered. The 2007 Plan Amendment would clarify that the exercise price of any SAR may not be less than the fair market value of a share of common stock on the date of grant.
Restricted Shares. Restricted shares are shares of common stock that may not be sold or otherwise disposed of during a restricted period after grant, the duration of which will be determined by the Compensation Committee. The Compensation Committee may provide for the lapse of such restrictions in
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installments. Restricted shares may be voted by the recipient. Dividends on the restricted shares may be payable to the recipient in cash or in additional restricted shares. A recipient of a grant of restricted shares will generally earn unrestricted ownership thereof only if the individual is continuously employed by the Company or a subsidiary during the entire restricted period.
Performance Shares. Performance shares are grants of shares of common stock which are earned by achievement of performance goals established for the award by the Compensation Committee. During the applicable performance period determined by the Compensation Committee for an award, the shares may be voted by the recipient and the recipient is also entitled to receive dividends thereon unless the Compensation Committee determines otherwise. If the applicable performance criteria are met, at the end of the applicable performance period, the shares are earned and become unrestricted. The Compensation Committee may provide that a certain percentage of the number of shares originally awarded may be earned based upon the attainment of the performance goals.
Restricted and Performance Share Units. Share units are fixed or variable share or dollar denominated units valued, at the Compensation Committee’s discretion, in whole or in part by reference to, or otherwise based on, the fair market value of the Company’s common stock. The Compensation Committee will determine the terms and conditions applicable to share units, including any applicable restrictions, conditions or contingencies, which may be related to individual, corporate or other categories of performance. A share unit may be payable in common stock, cash or a combination of both.
Other Incentive Awards. The Compensation Committee may grant other types of awards of common stock or awards based in whole or in part by reference to common stock (“Other Incentive Awards”). Such Other Incentive Awards include, without limitation, unrestricted stock grants or awards related to the establishment or acquisition by the Company or any subsidiary of a new orstart-up business or facility. The Compensation Committee will determine the time at which grants of such Other Incentive Awards are to be made, the size of such awards and all other conditions of such awards, including any restrictions, deferral periods or performance requirements.
The disposition of an award in the event of the retirement, disability, death or other termination of a participant’s employment or service shall be as determined by the Compensation Committee as set forth in the award agreement.
Except to the extent permitted by the specific terms of any nonqualified stock options, no award will be assignable or transferable except by will, the laws of descent and distribution or the beneficiary designation procedures under the 2007 Plan.
Minimum Vesting and Restricted Period. Each award agreement will contain a requirement that (i) no stock option award or grant of restricted shares that is not performance-based 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 and (ii) pursuant to the October Amendment, no performance-based award may become fully exercisable or saleable prior to the first anniversary of the date of grant; except that, in each case, such minimum vesting restrictions (i) may not apply when employment terminates as a result of death, disability, retirement, layoff or divestiture and (ii) will not apply to awards for newly hired employees or employees who subsequently retire or have plans for retirement, or awards in connection with acquisitions or in lieu of cash bonuses.
Term of Awards. The maximum term of unvested or unexercised awards is seven years after the initial date of grant.
Adjustments. If the number of issued shares of common stock increases or decreases as a result of certain stock splits, capital adjustments, stock dividends or otherwise, without the receipt of consideration by the Company, then the aggregate number of shares as to which awards may be granted, the limit on the number of shares that may be awarded to a single participant each year, the number of shares covered by each outstanding award and the price per share of common stock in each such award will be adjusted proportionately. The Compensation Committee may also adjust such amounts and make certain other changes in the event of any other reorganization, recapitalization, merger, consolidation, spinoff, extraordinary dividend or other distribution or similar transaction.
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Change of Control. The Company will undergo a change of control in the event of certain acquisitions of 50% or more of the Company’s common stock, a change in the majority of the Board of Directors, or the consummation of a reorganization, merger or consolidation (unless, among other conditions, the Company’s shareholders receive more than 50% of the stock of the surviving company), a sale or disposition of all or substantially all of the assets of the Company, or a complete liquidation or dissolution of the Company. In such event, all options and SARs outstanding shall become immediately exercisable and remain exercisable for their entire term, all restrictions on restricted shares will lapse, all restricted share units will become fully vested and, unless otherwise specified in a participant’s award agreement, all performance goals applicable to any awards shall be deemed attained at the maximum payment level. In addition, the Board of Directors (as constituted before the change of control) may, in its sole discretion:
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| • | 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 subject to an outstanding award, with an appropriate and equitable adjustment to the award, and/or |
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| • | require outstanding awards, in whole or in part, to be cancelled, and to provide for the holder to receive a cash payment (or shares in the resulting corporation or its parent corporation) in an amount (or having a value) equal to (a) in the case of a stock option or stock appreciation right, the number of shares then subject to the portion of such award cancelled multiplied by the excess, if any, of the highest per share price offered to holders of common stock in the change of control transaction, over the purchase price or base price per share subject to the 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 cancelled multiplied by the highest per share price offered to holders of common stock in the change of control transaction. |
Amendments and Termination. The Board of Directors may at any time suspend or terminate the 2007 Plan. The Board of Directors may amend the 2007 Plan at any time, subject to any requirement of shareholder approval imposed by applicable law, rule or regulation; provided, however, that any material amendment to the 2007 Plan will not be effective unless approved by the Company’s shareholders. For this purpose, a material amendment is any amendment that would:
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| • | materially increase the number of shares available under the 2007 Plan or issuable to a participant, except in connection with an event described above in “Adjustments;” |
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| • | change the types of awards that may be granted under the 2007 Plan; |
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| • | expand the class of persons eligible to receive awards or otherwise participate in the 2007 Plan; or |
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| • | reduce the price at which an option is exercisable either by amendment of an award agreement or by substitution of a new option at a reduced price, except in connection with an event described above in “Adjustments.” |
No amendment, suspension or termination may adversely affect in any material way any awards previously granted thereunder without such award holder’s written consent. There is no set termination date for the 2007 Plan, although no incentive stock options may be granted more than 10 years after the effective date of the 2007 Plan. Neither the Board of Directors nor the Compensation Committee may reprice any previously granted stock option or stock appreciation right without shareholder approval, except in connection with an event described above in “Adjustments.” The 2007 Plan Amendment would clarify the repricing prohibition to provide that neither the Board of Directors nor the Compensation Committee may (i) reduce the exercise price of any previously granted stock option or stock appreciation right or (ii) cancel any previously granted stock option or stock appreciation right in exchange for cash or other awards with a lower exercise price, in either case without shareholder approval, except in connection with an event described above in “Adjustments” or “Change of Control.”
Federal Income Tax Consequences
The following discussion briefly summarizes certain U.S. federal income tax consequences generally arising with respect to awards under the 2007 Plan. The discussion is based upon current interpretations of the Code, and
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the regulations promulgated thereunder as of such date. To the extent a participant recognizes ordinary income in any event described below, such amount is subject to income tax withholding if the participant is an employee.
Nonqualified Stock Options. For U.S. federal income tax purposes, no income is recognized by a participant upon the grant of a nonqualified stock option under the 2007 Plan. Upon the exercise of a nonqualified option, compensation taxable as ordinary income will be realized by the participant in an amount equal to the excess of the fair market value of a share of common stock on the date of such exercise over the exercise price. A subsequent sale or exchange of such shares will result in gain or loss measured by the difference between (a) the exercise price, increased by any compensation reported upon the participant’s exercise of the option and (b) the amount realized on such sale or exchange. Such gain or loss will be capital in nature if the shares were held as a capital asset and will be long-term if such shares were held for more than one year.
Except as limited by Section 162(m) of the Code, as described below, the Company is entitled to a deduction for compensation paid to a participant at the same time and in the same amount as the participant is considered to have realized compensation by reason of the exercise of an option.
Incentive Stock Options. No taxable income is realized by the participant pursuant to the exercise of an incentive stock option granted under the 2007 Plan, and if no disqualifying disposition of such shares is made by such participant within two years after the date of grant or within one year after the transfer of such shares to such participant, then (a) upon the sale of such shares, any amount realized in excess of the option price will be taxed to such participant as a long-term capital gain and any loss sustained will be a long-term capital loss, and (b) no deduction will be allowed to the Company for U.S. federal income tax purposes. Upon exercise of an incentive stock option, the participant may be subject to alternative minimum tax on certain items of tax preference.
If the shares of common stock acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of the holding period described above, generally (a) the participant will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares at the time of exercise (or, if less, the amount realized on the disposition of the shares) over the option price thereof, and (b) the Company will be entitled to deduct such amount. Any further gain or loss realized will be taxed as short-term or long-term capital gain or loss, as the case may be, and will not result in any deduction by the Company.
If an incentive stock option is exercised at a time when it no longer qualifies as an incentive stock option, the option is treated as a nonqualified stock option.
Stock Appreciation Rights. No taxable income is recognized by a participant upon the grant of an SAR under the 2007 Plan. Upon the exercise of an SAR, however, compensation taxable as ordinary income will be realized by the participant in an amount equal to the cash received upon exercise, plus the fair market value on the date of exercise of any shares of common stock received upon exercise. Shares of common stock received on the exercise of an SAR will be eligible for capital gain treatment, with the capital gain holding period commencing on the day after the date of exercise of the SAR.
Except as limited by Section 162(m) of the Code, as described below, the Company is entitled to a deduction for compensation paid to a participant at the same time and in the same amount as the participant is considered to have realized compensation by reason of the exercise of the SAR.
Restricted and Performance Shares. A recipient of restricted shares or performance shares generally will be subject to tax at ordinary income rates on the fair market value of the common stock at the time the restricted shares or performance shares vest or are no longer subject to forfeiture. However, a recipient who so elects under Section 83(b) of the Code within 30 days of the date of the grant will recognize ordinary taxable income on the date of the grant equal to the fair market value of the restricted shares or performance shares as if the restricted shares were unrestricted or the performance shares were earned and could be sold immediately. If the shares subject to such election are forfeited, the recipient will not be entitled to any deduction, refund or loss for tax purposes with respect to the forfeited shares. Upon sale of the restricted shares or performance shares after vesting or after the forfeiture period has expired, the holding period to determine whether the recipient has long-term or short-term capital gain or loss begins when the restriction period expires. However, if the recipient timely elects to be taxed as of the date of the grant, the holding period commences on the day after the date of the grant and the tax basis will be equal to the fair market value of the shares on the date of the grant as if the shares were then unrestricted and could be sold
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immediately. A participant receiving dividends with respect to restricted shares or performance shares for which the above-described election has not been made and prior to the time the restrictions lapse will recognize compensation taxable as ordinary income, rather than dividend income, in an amount equal to the dividends paid.
The amount of ordinary income recognized upon the lapse of restrictions or by making the above-described election is deductible by the Company as compensation expense, except to the extent the deduction limits of Section 162(m) of the Code apply.
Restricted and Performance Share Units. A recipient of restricted or performance share units will generally be subject to tax at ordinary income rates on the fair market value of any common stock issued pursuant to such an award. The fair market value of any common stock received will generally be included in income at the time of receipt. The capital gain or loss holding period for any common stock distributed under an award will begin when the recipient recognizes ordinary income in respect of that distribution. The amount of ordinary income recognized is deductible by the Company as compensation expense, except to the extent the deduction limits of Section 162(m) of the Code apply.
Other Incentive Awards. The federal income tax consequences of Other Incentive Awards will depend on how such awards are structured. Generally, the Company will be entitled to a deduction with respect to such awards only to the extent that the recipient realizes compensation income in connection with such awards and only to the extent not subject to the deduction limits of Section 162(m) of the Code. It is anticipated that Other Incentive Awards will usually result in compensation income to the recipient in some amount. However, some forms of Other Incentive Awards may not result in any compensation income to the recipient or any income tax deduction for the Company.
Performance Goals and Maximum Awards. The Compensation Committee may, from time to time, establish performance criteria with respect to an award. These performance criteria may be measured in absolute terms or measured against, or in relationship to, other companies comparably, similarly or otherwise situated and may be based on, or adjusted for, other objective goals, events, or occurrences established by the Compensation Committee for a performance period, but must 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, return on investment, regulatory compliance, satisfactory internal or external audits, improvements in 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, and unplanned stock offerings and strategic loan loss provisions.
In general, Section 162(m) of the Code disallows federal income tax deductions for certain compensation in excess of $1,000,000 per year paid to each of the Company’s Chief Executive Officer and its other three most highly compensated executive officers other than the Chief Financial Officer. Normally, under Section 162(m), compensation that qualifies as “performance-based compensation” is not subject to the $1,000,000 limit. To qualify certain incentive awards as “performance-based compensation,” the following requirements must be satisfied: (i) the performance goals are determined by a committee consisting solely of two or more “outside directors”, (ii) the material terms under which the compensation is to be paid, including the performance goals, are approved by a majority of the shareholders of the Company and (iii) if applicable, the committee certifies that the applicable performance goals were satisfied before any payment of performance-based compensation is made. Our shareholders are being asked to approve the amendment to the 2007 Plan for purposes of Section 162(m), so that we may have the ability to make awards under the 2007 Plan subject to the attainment of performance goals, which awards will then be eligible to qualify as performance-based compensation not subject to the $1 million limit on deductible compensation that might otherwise be imposed pursuant to Section 162(m) , subject to the further restrictions described below.
However, an entity that receives financial assistance from the U.S. Treasury Department under the Troubled Asset Relief Program (“TARP”) is subject to greater restrictions on federal income tax deductions for compensation under Section 162(m) of the Code. For so long as any obligation arising from the financial assistance provided under TARP remains outstanding, federal income tax deductions are not permitted for any compensation in excess of
18
$500,000 per year paid to each of the Company’s Chief Executive Officer, Chief Financial Officer and other three most highly compensated executive officers.
Currently, the Company has outstanding obligations with respect to financial assistance that it has received under TARP and therefore all compensation under the plan, including performance-based compensation, is subject to the $500,000 deduction limit under Section 162(m) of the Code. Once the TARP obligations cease, however, certain compensation under the plan, such as that payable with respect to options and SARs, would be expected to qualify under the “performance-based compensation” exception to the $1,000,000 deduction limit under Section 162(m), but other compensation payable under the plan, such as any restricted stock award which is not subject to a performance condition to vesting, would be subject to this limit.
The approval of the amendment to the 2007 Plan requires the affirmative vote of a majority of the shares of common stock represented at the Annual Meeting, in person or by proxy, and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE “FOR”
APPROVAL OF THE AMENDMENT TO THE WINTRUST FINANCIAL
CORPORATION 2007 STOCK INCENTIVE PLAN.
19
PROPOSAL NO. 4 — ADVISORY VOTE ON 2008 EXECUTIVE COMPENSATION
Background of the Proposal
The American Recovery and Reinvestment Act of 2009, or the ARRA, requires that we, as a participant in the United States Department of the Treasury’s Capital Purchase Program, permit a separate and non-binding shareholder vote to approve the compensation of our executive officers as described in this proxy statement. The SEC has recently issued guidance requiring participants in the Capital Purchase Program to submit to shareholders annually for their approval the executive compensation arrangements as described in the Compensation Discussion and Analysis and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in their proxy statements.
Executive Compensation
The Company believes that its compensation policies and procedures, which are reviewed and approved by the Compensation Committee, encourage a culture of pay for performance and are strongly aligned with the long-term interests of shareholders. Like most companies in the financial services sector, the recent and ongoing financial downturn had a significant negative impact on the Company’s 2008 results of operations and on the price of the Company’s common stock. Consistent with the objective of aligning the compensation of the Company’s executive officers with the annual and long-term performance of the Company and the interests of the Company’s shareholders, these factors were also reflected in the compensation of the Company’s named executive officers for 2008, and in a number of executive compensation-related actions that have been taken by the Company and the Compensation Committee with respect to 2009. The Compensation Committee has also taken a number of actions in recent years to further encourage a culture of pay for performance and more strongly align the Company’s executive compensation with the long-term interests of shareholders. For example:
| | |
| • | Although our Company was profitable for 2008, our results fell short of our goals, and the Compensation Committee, at the request of our chief executive officer and chief operating officer, determined that our chief executive officer and chief operating officer would not receive any year-end cash or equity incentive compensation for 2008; |
|
| • | Our Compensation Committee, at the request of our chief executive officer and chief operating officer, exercised its discretion with respect to the awarding of bonuses in respect of our 2007 and 2006 performance, which also fell short of our goals, and did not award bonuses to either our chief executive officer or chief operating officer for those years; |
|
| • | We have adopted a clawback policy to recoup any compensation based upon statements of earnings, gains or other criteria that are later proven to be materially inaccurate; and |
|
| • | Equity incentive awards provided to the Company’s 2007 Stock Incentive Plan are generally subject to3-year vesting periods. |
The Company and the Compensation Committee remain committed to the compensation philosophy and objectives outlined under “Executive Compensation — Compensation Discussion and Analysis.” Named executive officer compensation for 2008 reflects the effectiveness of the Company’s executive compensation program in fulfilling its objectives during times of economic difficulty and weak financial performance. As always, the Compensation Committee will continue to review all elements of the executive compensation program and take any steps it deems necessary to continue to fulfill the objectives of the program.
Shareholders are encouraged to carefully review the “Executive Compensation” section of this Proxy Statement for a detailed discussion of the Company’s executive compensation program.
As required by the ARRA and the guidance provided by the SEC, the Board of Directors has authorized a shareholder vote on the Company’s 2008 executive compensation as reflected in the Compensation Discussion and Analysis, the disclosures regarding named executive officer compensation provided in the various tables included in this Proxy Statement, the accompanying narrative disclosures and the other compensation information provided in this Proxy Statement. This proposal, commonly known as a “Say on Pay” proposal, gives the Company’s
20
shareholders the opportunity to endorse or not endorse the Company’s executive pay program and policies through the following resolution:
“Resolved, that the shareholders of Wintrust Financial Corporation approve the 2008 executive compensation, as described in the Company’s Proxy Statement for the 2009 Annual Meeting of Shareholders.”
Required Vote
The approval of the advisory (non-binding) proposal on our 2008 executive compensation described in this proxy statement requires the affirmative vote of a majority of the shares of common stock represented at the Annual Meeting, in person or by proxy, and entitled to vote thereon. Abstentions will have the same effect as a vote against the proposal. Because this shareholder vote is advisory, it will not be binding on the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE “FOR”
APPROVAL OF THE ADVISORY PROPOSAL ON 2008 EXECUTIVE COMPENSATION
AS DESCRIBED IN THIS PROXY STATEMENT
BOARD OF DIRECTORS, COMMITTEES AND GOVERNANCE
Board of Directors
The Board provides oversight with respect to our overall performance, strategic direction and key corporate policies. It approves major initiatives, advises on key financial and business objectives, and monitors progress with respect to these matters. Members of the Board are kept informed of our business by various reports and documents provided to them on a regular basis, including operating and financial reports made at Board and Committee meetings by the Chief Executive Officer and other officers. The Board has five standing committees, the principal responsibilities of which are described below. Additionally, the independent Directors meet in regularly scheduled executive sessions, without management present, at each meeting of the Board.
The Board met sixseven times in 2007.2008. Each member of the Board attended more than 75% of the total number of meetings of the Board and the committees on which he or she served, except for Bruce K. Crowther and Joseph F.
10
Damico.served. We encourage, but do not require, our Board members to attend annual meetings of shareholders. All but twoone of our Board members then in office attended our 20072008 Annual Meeting of Shareholders.
Director Independence
A Director is independent if the Board affirmatively determines that he or she has no material relationship with the Company and otherwise satisfies the independence requirements of the Nasdaq listing standard. A Director is “independent” under the Nasdaq listing standards if the Board affirmatively determines that the Director has no material relationship with us directly or as a partner, shareholder or officer of an organization that has a relationship with us. Direct or indirect ownership of even a significant amount of our stock by a Director who is otherwise independent will not, by itself, bar an independence finding as to such Director.
The Board has reviewed the independence of our current non-employee Directors and nominees and found that each of them are independent under the Nasdaq listing standards. Accordingly, more than 90% of the members of the Board are independent, including the Chairman of the Board.
Code of Ethics
The Board of Directors has adopted a Code of Ethics applicable to all officers, Directors and employees, which is available on the Company’s website at www.wintrust.com by choosing “About Wintrust” and then choosing “Corporate Governance.” To assist in enforcement of the Code of Ethics, we maintain Wintrust’s Ethicspoint, a toll-freetoll-
21
free hotline and Internet-based service through which confidential complaints may be made by employees regarding illegal or fraudulent activity; questionable accounting, internal controls or auditing matters; conflicts of interest, dishonest or unethical conduct; disclosures in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), bank regulatory filings and other public disclosures that are not full, fair, accurate, timely or understandable; violations of Wintrust’s Code of Ethics;and/or any other violations of laws, rules or regulations. Any complaints submitted through this process are presented to the Audit Committee on a regular, periodic basis.
Committee Membership
The following table summarizes the current membership of the Board and each of its committees:
| | | | | | | | | | |
| | | | Nominating and
| | | | | | |
| | | | Corporate
| | | | Risk
| | |
| | Compensation
| | Governance
| | Audit
| | Management
| | Executive
|
Board of Directors | | Committee | | Committee | | Committee | | Committee | | Committee |
|
Allan E. Bulley, Jr. | | | | Member | | | | Member | | |
Peter D. Crist | | Chair | | Member | | | | | | Member |
Bruce K. Crowther | | | | | | Member | | | | Member |
Joseph F. Damico | | Member | | Chair | | | | | | |
Bert A. Getz, Jr. | | | | Member | | Member | | Member | | |
Charles H. James III | | | | | | | | | | |
John S. Lillard (Chair)* | | Member | | | | | | | | Chair |
Albin F. Moschner | | Member | | | | Member | | | | |
Thomas J. Neis | | | | Member | | | | Member | | |
Hollis W. Rademacher | | Member | | | | | | Chair | | Member |
John J. Schornack* | | | | Member | | Chair | | | | Member |
Ingrid S. Stafford | | | | | | Member | | Member | | |
Edward J. Wehmer | | | | | | | | | | Member |
| | |
* | | Messrs. Lillard and Schornack will not be standing for re-election at the Annual Meeting, as each of them has attained the mandatory retirement age under our corporate governance guidelines. |
The Nominating and Corporate Governance Committee has proposed, and the Board has agreed, that pending his re-election, Peter D. Crist will serve as Chairman of the Board of Directors following the Annual Meeting. In addition, the Nominating and Corporate Governance Committee has proposed, and the board has agreed, that the
11
membership of each of the committees of the Board, assuming that each of the current Directors is re-elected and the new Director nominees are elected, will be as follows:
| | | | | | | | | | |
| | | | Nominating and
| | | | | | |
| | | | Corporate
| | | | Risk
| | |
| | Compensation
| | Governance
| | Audit
| | Management
| | Executive
|
Board of Directors
| | Committee | | Committee | | Committee | | Committee | | Committee |
|
Allan E. Bulley, Jr. | | | | | | Member | | Member | | |
Peter D. Crist (Chair) | | Member | | Member | | | | | | Chair |
Bruce K. Crowther | | Member | | | | | | | | |
Joseph F. Damico | | Member | | Chair | | | | | | Member |
Bert A. Getz, Jr. | | | | Member | | Member | | Member | | |
H. Patrick Hackett, Jr. | | Member | | Member | | | | | | |
Scott K. Heitmann | | | | | | Member | | Member | | |
Charles H. James III | | Member | | Member | | Member | | | | |
Albin F. Moschner | | Chair | | | | Member | | | | Member |
Thomas J. Neis | | | | Member | | | | Member | | |
Hollis W. Rademacher | | Member | | Member | | | | Chair | | Member |
Ingrid S. Stafford | | | | | | Chair | | Member | | Member |
Edward J. Wehmer | | | | | | | | | | Member |
| | |
* | | Mr. Bulley will not be standing for re-election at the Annual Meeting, as he has attained the mandatory retirement age under our corporate governance guidelines. |
The Nominating and Corporate Governance Committee has proposed, and the Board has agreed, that pending his re-election, Peter D. Crist will continue to serve as Chairman of the Board of Directors following the Annual Meeting. In addition, the Nominating and Corporate Governance Committee has proposed, and the Board has agreed, that the membership of each of the committees of the Board, assuming that each Director nominee is elected, will be as follows following the Annual Meeting:
| | | | | | | | | | |
| | | | Nominating and
| | | | | | |
| | | | Corporate
| | | | Risk
| | |
| | Compensation
| | Governance
| | Audit
| | Management
| | Executive
|
Board of Directors | | Committee | | Committee | | Committee | | Committee | | Committee |
|
Peter D. Crist (Chair) | | Member | | Member | | | | | | Chair |
Bruce K. Crowther | | Member | | | | | | | | |
Joseph F. Damico | | Member | | Chair | | | | | | Member |
Bert A. Getz, Jr. | | | | Member | | Member | | Member | | |
H. Patrick Hackett, Jr. | | Member | | Member | | | | | | |
Scott K. Heitmann | | | | | | Member | | Member | | |
Charles H. James III | | Member | | | | Member | | | | |
Albin F. Moschner | | Chair | | | | Member | | | | Member |
Thomas J. Neis | | | | | | Member | | Member | | |
Christopher J. Perry | | | | Member | | | | Member | | |
Hollis W. Rademacher | | | | Member | | | | Chair | | Member |
Ingrid S. Stafford | | | | | | Chair | | Member | | Member |
Edward J. Wehmer | | | | | | | | | | Member |
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Nominating and Corporate Governance Committee
The Board has established the Nominating and Corporate Governance Committee (the “Nominating Committee”) which is responsible for:
| | |
| • | establishing criteria for selecting new Directors; |
|
| • | assessing, considering and recruiting candidates to fill positions on the Board; |
|
| • | recommending the Director nominees for approval by the Board and the shareholders; |
|
| • | establishing procedures for the regular ongoing reporting by Directors of any developments that may be deemed to affect their independence status; |
|
| • | reviewing the corporate governance principles at least annually and recommending modifications thereto to the Board; |
|
| • | advising the Board with respect to the charters, structure, operations and membership qualifications for the various committees of the Board; |
|
| • | establishing and implementing self-evaluation procedures (including annual director and officer questionnaires) for the Board and its committees; and |
|
| • | reviewing shareholder proposals submitted for inclusion in our Proxy Statement. |
The Board has adopted a Nominating Committee Charter, a copy of which is available at www.wintrust.com by choosing “About Wintrust” and then choosing “Corporate Governance.”
The Nominating Committee consists of six Directors, and the Board has determined that each of them is independent under the Nasdaq listing standards. During 2007,2008, the Nominating Committee met fivefour times.
Nomination of Directors
The Nominating Committee seeks nominees from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity and, in doing so, considers a wide range of factors in evaluating the suitability of director candidates, including general understanding of finance and other disciplines relevant to the success of a publicly-traded company in today’s business environment, understanding of our business and education and professional background. The following personal characteristics are considered minimum qualifications for Board membership under the corporate governance guidelines approved by the Board:
12
integrity and accountability, the ability to provide informed judgments on a wide range of issues, financial literacy, a history of achievements that reflects high standards for themselves and others, and willingness to raise tough questions in a manner that encourages open discussion. In addition, no person is to be nominated for election to the Board if he or she will attain the age of 76 before such election. Under the corporate governance guidelines adopted by the Board, Directors are expected to maintain a minimum ownership stake in the Company and to limit board service at other companies to no more than four other public company boards.
The Nominating Committee does not have any single method for identifying director candidates but will consider candidates suggested by a wide range of sources.
The Nominating Committee will consider director candidates recommended by our shareholders if such recommendations are timely received. Any such recommendation must comply with the procedures set forth in the Company’s By-Laws (see “Notification of Shareholder Proposed Business”“Shareholder Proposals”). To be timely under the Company’s By-Laws, recommendations must be received in writing at the principal executive offices of the Company, addressed to the Wintrust Financial Corporation Nominating and Corporate Governance Committee,c/o Corporate Secretary, 727 North Bank Lane, Lake Forest, IL 60045, by February 27, 2009.March 28, 2010. Any such recommendation should include:
| | |
| • | the name, address and number of shares of the Company held by the shareholder; |
|
| • | the name and address of the candidate; |
|
| • | the qualifications of such nominee and the reason for such recommendation; |
23
| | |
| • | a description of any financialall arrangements or other relationshipunderstandings between the shareholder and such nominee or between the nominee and the Company or any of its subsidiaries; and |
|
| • | the candidate’s signed consent to serve as a director if elected and to be named in the Proxy Statement. |
Once the Nominating Committee receives the recommendation, it may request additional information from the candidate about the candidate’s independence, qualifications and other information that would assist the Nominating Committee in evaluating the candidate, as well as certain information that must be disclosed about the candidate in our Proxy Statement, if nominated. The Nominating Committee will apply the same standards in considering director candidates recommended by shareholders as it applies to other candidates.
The Nominating Committee also evaluates the performance of individual Directors and assesses the effectiveness of committees and the Board as a whole.
In 2008, 112009, 12 of the 13 director nominees are Directors standing for re-election. Messrs. Lillard and SchornackMr. Bulley will not be standing for re-election, as each of themhe has attained the mandatory retirement age under our corporate governance guidelines. The Nominating Committee considered many qualified candidates to replace Messrs. Lillard and SchornackMr. Bulley and is delighted that Messrs. Hackett and Heitmann haveMr. Perry has agreed to serve as Directorsa Director of the Company if elected at the Annual Meeting.
Audit Committee
The Board has established an Audit Committee for the purpose of overseeing our accounting and financial reporting processes and the audits of our financial statements. In addition, the Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to:
| | |
| • | our compliance with legal and regulatory requirements, including our disclosure controls and procedures; |
|
| • | the independent registered public accounting firm’s qualifications and independence; and |
|
| • | the performance of our internal audit function and independent registered public accounting firm. |
The Board has adopted an Audit Committee Charter, a copy of which is available at www.wintrust.com by choosing “About Wintrust” and then choosing “Corporate Governance.”
The Audit Committee has established a policy to pre-approve all audit and non-audit services provided by the independent registered public accounting firm and all accounting firms. These services may include audit services,
13
audit-related services, tax services and other services. Pre-approval is generally provided for up to one year. Once pre-approved, the services and pre-approved amounts are monitored against actual charges incurred and modified if appropriate.
To serve on the Audit Committee, Directors must meet financial competency standards and heightened independence standards set forth by the SEC and Nasdaq. In particular, each Audit Committee member:
| | |
| • | must be financially literate; |
|
| • | must not have received any consulting, advisory, or other compensatory fees from us (other than in his or her capacity as a Director); |
|
| • | must not be our affiliate or the affiliate of any of our subsidiaries; and |
|
| • | must not serve on the audit committee of more than two other public companies, unless the Board determines that such simultaneous service would not impair the ability of such Director to effectively serve on the Audit Committee. |
Furthermore, at least one member of the Audit Committee must be a financial expert.
The Audit Committee consists of fivesix Directors, and the Board has determined that each of them is independent under the Nasdaq listing standards and meets the financial competency and heightened independence standards set forth above. The Board has determined that Ms. Stafford, Mr. Getz, Mr. Moschner,Heitmann and Mr. Schornack and Ms. StaffordMoschner qualify as financial experts. During 2007,2008, the Audit Committee met eightsix times.
24
Compensation Committee
The Board has established a Compensation Committee which is responsible for:
| | |
| • | establishing the Company’s general compensation philosophy and overseeing the development and implementation of compensation programs; |
|
| • | with input from the Board, reviewing and approving corporate goals and objectives relevant to the compensation of the chief executive officer and other management, evaluating the performance of the chief executive officer and other management in light of those goals and objectives, and setting the chief executive officer’s and other management’s compensation levels based on this evaluation; |
|
| • | administering and interpreting all salary and incentive compensation plans for officers, management and other key employees; |
|
| • | reviewing senior management compensation; |
|
| • | reviewing management organization, development and succession planning; |
|
| • | taking any actions relating to employee benefit, compensation and fringe benefit plans, programs or policies of the Company; |
|
| • | reviewing and approving severance or similar termination payments to any executive officer of the Company; |
|
| • | preparing reports on executive compensation; and |
|
| • | reporting activities of the Compensation Committee to the Board on a regular basis and reviewing issues with the Board as the Compensation Committee deems appropriate. |
The Compensation Committee’s authority is set forth in a charter adopted by our Board, a copy of which is available at www.wintrust.com by choosing “About Wintrust” and then choosing “Corporate Governance.”
The Compensation Committee consists of fivesix Directors, and the Board has determined that each of them is independent under the Nasdaq listing standards. During 2007,2008, the Compensation Committee met fivenine times.
14
Risk Management Committee
The Board has established a Risk Management Committee which is responsible for:
| | |
| • | monitoring and overseeing the Company’s insurance program, interest rate risk and credit risk exposure on a consolidated basis and at the subsidiaries; |
|
| • | developing and implementing the Company’s overall asset/liability management and credit policies; |
|
| • | implementing risk management strategies and considering hedging techniques; |
|
| • | reviewing the Company’s capital position, liquidity position, sensitivity of earnings under various interest rate scenarios, the status of its securities portfolio and trends in the economy; and |
|
| • | reporting activities of the Risk Management Committee to the Board on a regular basis and reviewing issues with the Board as the Risk Management Committee deems appropriate. |
The Risk Management Committee’s authority is set forth in a charter adopted by our Board, a copy of which is available at www.wintrust.com by choosing “About Wintrust” and then choosing “Corporate Governance.”
The Risk Management Committee consists of fivesix Directors, and the Board has determined that each of these Directors has no material relationship with us and is otherwise independent under the Nasdaq listing standards. During 2007,2008, the Risk Management Committee met fivefour times.
25
Executive Committee
The Board has established an Executive Committee which is authorized to exercise certain powers of the Board, and meets as needed, usually in situations where it is not feasible to take action by the full Board. The Executive Committee’s authority is set forth in a charter adopted by our Board.
The Executive Committee consists of six Directors, and the Board has determined that each of these Directors, except for Mr. Wehmer, is independent under the Nasdaq listing standards. During 2007,2008, the Executive Committee met one time.twice.
Shareholder Communications
Any shareholder who desires to contact the non-employee Directors or the other members of our Board may do so by writing to: Wintrust Financial Corporation, Board of Directors,c/o the Secretary of the Company, Wintrust Financial Corporation, 727 North Bank Lane, Lake Forest, Illinois 60045. Copies of written communications received at this address will be provided to the Board, the applicable committee chair or the non-employee Directors as a group unless such communications are considered, in consultation with the non-employee Directors, to be improper for submission to the intended recipient(s). Communications that are intended specifically for non-employee Directors should be addressed to the attention of the Chair of the Nominating Committee. All communications will be forwarded to the Chair of the Nominating Committee unless the communication is specifically addressed to another member of the Board, in which case, the communication will be forwarded to that Director. Other interested parties may also use this procedure for communicating with the Board, individual Directors or any group of Directors. Shareholders also may obtain a copy of any of the documents posted to the website free of charge by calling(847) 615-4096 and requesting a copy. Information contained on Wintrust’s website is not deemed to be a part of this Proxy Statement.
EXECUTIVE OFFICERS OF THE COMPANY
The Company’s executive officers are elected annually by the Company’s Board of Directors at the first meeting of the Board following the Annual Meeting. Certain information regarding those persons serving as the Company’s executive officers is set forth below.
Edward J. Wehmer(54)(55) — President and Chief Executive Officer — Mr. Wehmer serves as the Company’s President and performs the functions of the Chief Executive Officer. Accordingly, he is responsible for overseeing
15
perquisites (both with respect to the value of the benefit to the NEO and the cost to the Company) and post-employment obligations in establishing each element of compensation. However, as noted above, the overall focus was on the total annual compensation and not on the individual components. The Committee acted pursuant to a written charter that had been approved by our Board.
Elements of Our Compensation Program
This section describes the various elements of our compensation program for NEOs, together with a discussion of various matters relating to those items, including why the Committee chooseschoose to include the items in the compensation program. The principal components of compensation for our NEOs were:
| | |
| • | cash compensation consisting of base salary and cash bonus; |
|
| • | equity compensation; and |
|
| • | perquisites and other personal benefits. |
Cash Compensation
Cash compensation is paid in the form of salary or bonuses.
Salary.Salary. The Company provides NEOs with base salary to compensate them for services rendered during the fiscal year. Base salary for NEOs for any given year is generally fixed by the Committee at its meeting in January. Increases or decreases in base salary on a year-over-year basis are dependent on the Committee’s assessment of the Company and individual performance. The Committee is free to set NEO salary at any level it deems appropriate. In addition, the Committee considers market data, internal pay equity and merit history in evaluating merit recommendations. As part of this process, the Committee solicits the recommendations of the CEO with respect to NEOs (other than the CEO).
The Committee approved base salary merit increases for all NEOs in 2008 based on this review. However, after thorough consideration of aggregate compensation of the CEO and COO, the Committee determined that the aggregate compensation levels of these officers were substantially below the peer group median. While recognizing that this resulted in part from the decision in both 2007 and 2008 to make no bonus award to these officers for fiscal years 2006 and 2007, the Committee determined that the aggregate compensation levels were significantly impacted by lower than median base salaries for these two officers. In light of this determination, the Committee approved higher than usual base salary merit increases for these two officers. The Committee intends to continue to work to gradually bring the base compensation of these officers closer to market norms.
In 2007 and 2008, after taking into account the market data and other factors described above, the Committee approved the following merit-based and cost of living adjustment salary increases for our NEOs set forth under the heading “2007 Base Salary Merit Increase Percentage” and “2008 Base Salary Merit Increase Percentage,” respectively:NEOs:
| | | | | | | | |
| | 2007 Base Salary Merit
| | | 2008 Base Salary Merit
| |
Named Executive Officer | | Increase Percentage | | | Increase Percentage | |
|
Edward Wehmer, Chairman & CEO | | | 3.70 | % | | | 14.29 | % |
David Dykstra, Chief Operating Officer | | | 4.08 | % | | | 17.65 | % |
David Stoehr, Chief Financial Officer | | | 9.52 | % | | | 8.70 | % |
Richard Murphy, Chief Credit Officer | | | 30.11 | % | | | 4.29 | % |
Randolph Hibben, Executive Vice President — Market Head | | | 5.45 | % | | | 3.45 | % |
| | | | |
| | 2008 Base Salary Merit
|
Named Executive Officer | | Increase Percentage |
|
Edward J. Wehmer | | | 14.29 | % |
Chairman & CEO | | | | |
David A. Dykstra | | | 17.65 | % |
Chief Operating Officer | | | | |
David L. Stoehr | | | 8.70 | % |
Chief Financial Officer | | | | |
Richard B. Murphy | | | 4.29 | % |
Chief Credit Officer | | | | |
John S. Fleshood | | | 3.45 | % |
Executive Vice President — Risk Management | | | | |
Bonus.Bonus. The Company may award discretionary cash bonuses to executives, although the Company does not maintain a defined cash bonus plan. Cash bonuses are intended to provide officers with an opportunity to receive additional cash compensation through the achievement of specified Company, subsidiary and individual performance goals. Performance-based cash bonuses are included in the package because they permit the Committee to incentivize our NEOs, in any particular year, to pursue particular objectives that the Committee believes are consistent with the overall goals and strategic direction that the Board has set for the Company.
20
The total targeted bonus that is provided to each NEO in a given year is generally determined by reference to the NEO’s base salary for that year. That is, each year the Committee approves a targeted bonus award for each NEO
31
with a cash value that is determined by multiplying the NEO’s base salary by a percentage that is chosen by the Committee. For 2007,2008, that percentage was 42.5%45%. In determining the amount of target bonuses, the Committee considers several factors, including:
(i) the target bonuses set, and actual bonuses paid, in recent years;
(ii) the desire to ensure, as described above, that a substantial portion of total compensation is performance-based; and
(iii) the relative importance, in any given year, of the long and short-term performance goals of the Company.
After determining the total targeted bonus percentage for a year, the Committee allocates the potential bonus award between Company-level, subsidiary-level and personal objectives, as well as retaining a discretionary factor. Company and subsidiary-level objectives including targeted net income, deposit growth, loan growth, net interest margin, credit quality, net overhead ratios and personally tailored objectives for each NEO. These performance objectives for bonuses (both cash and equity), are developed through an iterative process. Based on a review of business plans, management, including the NEOs, develops preliminary recommendations for Committee review. The Committee reviews management’s preliminary recommendations and establishes final goals. The Committee strives to ensure that the objectives are consistent with the strategic goals set by the Board, that the goals set are sufficiently ambitious, within defined risk parameters, so as to provide a meaningful incentive and that bonus payments, assuming target levels of performance are attained, will be consistent with the overall NEO compensation program established by the Committee.
For fiscal 2007, other than in2008, target bonuses were allocated across the case of Mr. Hibben, 57.6% of the NEO bonus award was based upon the achievement of Company-level financial objectives, 32.9% of the NEO bonus award was based upon the achievement ofobjective, subsidiary-level objective, personal objectives and 9.4%the discretionary component as follows, expressed as a percentage of such awardeach NEO’s base salary:
| | | | | | | | | | | | | | | | | | | | |
| | Company-Level
| | | Subsidiary-Level
| | | Personal
| | | Discretionary
| | | | |
| | Objective | | | Objective | | | Objectives | | | Component | | | Total | |
|
Edward J. Wehmer | | | 25 | % | | | — | | | | 15 | % | | | 5 | % | | | 45 | % |
David A. Dykstra | | | 25 | % | | | — | | | | 15 | % | | | 5 | % | | | 45 | % |
David L. Stoehr | | | 25 | % | | | — | | | | 15 | % | | | 5 | % | | | 45 | % |
Richard B. Murphy | | | 25 | % | | | — | | | | 15 | % | | | 5 | % | | | 45 | % |
John S. Fleshood | | | 15 | % | | | 15 | % | | | 10 | % | | | 5 | % | | | 45 | % |
The company-level objective was discretionary. Into achieve consolidated net income of $67.8 million for 2008. Accordingly, based on goals approved by the caseCommittee, our NEOs were eligible to receive the following percentage of the target bonus allocated to the company-level objective:
| | | | |
| | Performance-Weighting of
| |
Wintrust 2008 Consolidated
| | Company-Level
| |
Net Income | | Bonus Component | |
|
Greater than $85.3 million | | | 150 | % |
$76.8 million to $85.2 million | | | 125 | % |
$67.8 million to $76.7 million | | | 100 | % |
$63.0 million to $67.7 million | | | 75 | % |
$60.5 million to $62.9 million | | | 50 | % |
$57.4 million to $60.4 million | | | 25 | % |
Less than $57.4 million | | | 0 | % |
Wintrust’s consolidated net income for the year ended December 31, 2008 was $20.5 million. Accordingly, none of our NEOs met the company-level objective.
The subsidiary-level objective for Mr. Hibben, 32.9%Fleshood was based on attaining net income objectives at subsidiaries for which he serves as Market Head. Mr. Fleshood did not meet his subsidiary-level objective.
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Each of our NEOs was eligible to earn a portion of his target bonus award based on satisfaction of certain personal objectives. For the 5% target bonus award allocated to the discretionary factor, the Committee determined that each of our NEOs was based upon the achievement of financial objectives at Lake Forest Bank, 32.9% of such award was based upon the achievement of Company-level financial objectives, 24.7%eligible to receive 100% of his bonus award was based upon the achievement of personal objectives and 9.4% of his award was discretionary.discretionary bonus.
The Committee usesdetermined that neither of the measurablecompany-level or subsidiary level objectives described above as a guideline to establish actual bonuses relative towere met in 2008 and therefore, paid no bonus in respect thereof. The Committee determined that our NEOs met some personal and discretionary bonus components. Once the targeted percentagetotal target bonus but the end determination is ultimately a discretionary decision and, ifwas determined, the Committee deems it appropriate, higher or lower bonuses may be paidmade a final discretionary adjustment in determining the actual bonus payments to anour NEOs based on the recommendation of our chief executive officer (other than targeted. The Committee reservesfor the discretion to reduce or not pay cash bonuses even ifchief executive officer). For 2008, as was also the relevant performance targets are met. The Committee exercised this discretioncase in 2007 and did not pay cash2006, Mr. Wehmer and Mr. Dykstra volunteered to take no bonus, and the Committee accepted their recommendation. The following table sets forth the total eligible bonus amounts and bonuses paid to eithereach of Messrs. Wehmer or Dykstra.our NEOs.
| | | | | | | | |
| | Total Eligible
| | | Total
| |
Named Executive Officer | | Bonus | | | Bonus Paid | |
|
Edward J. Wehmer | | $ | 100,000 | | | $ | 0 | |
David A. Dykstra | | | 75,000 | | | $ | 0 | |
David L. Stoehr | | | 46,875 | | | $ | 47,000 | |
Richard B. Murphy | | | 56,575 | | | $ | 50,000 | |
John S. Fleshood | | | 23,375 | | | $ | 30,000 | |
| | | | | | | | |
Total | | $ | 301,825 | | | $ | 127,000 | |
| | | | | | | | |
Equity Compensation. As described above, the Committee believes that a substantial portion of each NEO’s compensation should be in the form of equity awards in order to further align the interests of our NEOs and shareholders. The Committee evaluates cash bonus amountsdetermines equity-based awards in conjunction with stock incentiveits determination of cash bonus awards, described above, to ensure a balance of cash and equity compensation. In making that assessment, the Committee considers factors such as the relative merits of cash and equity as a device for retaining and incentivizing NEOs and the practices of the other companies in the group selected by Deloitte.our compensation consultant. The Committee strives to equally balance cash and equity bonuses. However, in 2007,2008 the Company weighted bonus compensation more heavily on cash compensation (60% to 40%) largely related to the limited availability of equity awards under the Company plans. The Committee also has the discretion to individually vary the mix of cash and equity awards and used such discretion in 2007 by granting Mr. Hibben a bonus comprised entirely of restricted stock units.
On April 9, 2008, the Committee established a new Cash Incentive and Retention Plan (the “CIRP”) that will allow it to provide equity-like cash compensation to its NEOs and other senior executives, and more closely align compensation with its philosophy of compensating NEOs with equity. The Committee engaged The Delves Group, a human resources consulting firm, to assist in the creationdid not allocate any of the CIRP. The Committee will establish the applicable performance criteria for an award under the CIRP. Nobonus payments to equity-based awards, have been made under the CIRP.
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Equity Compensation
As described above, the Committee believes that a substantial portion of each NEO’s compensation should be in the form of equity awards. Also as described above, we pay a substantial portion of NEO compensation in the form of equity awards because the Committee believes that such awards serve to align the interests of NEOs and our shareholders. Equity awards to our NEOs in regard to their 2007 performance were made pursuant to our 2007 Stock Incentive Plan (the “2007 Plan”), which was approved by our shareholders on January 9, 2007. Although no awards were granted under our 1997 Stock Incentive Plan (the “1997 Plan” and together with the 2007 Plan, the “Incentive Plans”), awards previously granted under the 1997 Plan will continue to be governed by the 1997 Plan. The Incentive Plans provide for awards in the form of, among others, stock options, restricted stock and restricted stock units. The mix between these forms of awards changes from year to year as determined by the Committee. In 2007, NEOs generally received less equity than the Committee would prefer due to the limited availability of equity awardsshares under the Company’s 2007 Stock Incentive Plans.Plan.
As discussed above under “Cash Compensation — Bonus,”If the Committee establishes a target percentageproposal to increase the number of base salaryshares that may be offered pursuant to be paid in a given year as a mixed cash and equity bonus. For 2007 this targeted percentage was 42.5% of salary. The Committee also targeted to make equity awards to the NEOs that had a value equal to approximately 17% of base compensation (assuming performance at ’target’ levels). After assessing actual Company-level, subsidiary-level and individual performance and results against the pre-established targets and objectives, the Committee determined the actual total bonus to be received and the cash and equity components of such total bonus. See “Cash Compensation — Bonus” above for further information on the establishment of targets and objectives and the bonus determination process.
The Committee believes that its current compensation program for NEOs strikes the correct balance between cash and equity compensation. The mix of equity and cash compensation gives our NEOs a substantial alignment with shareholders, while also permitting the Committee to incentivize the NEOs to pursue specific short and long-term performance goals.
A description of the form of equity awards that were made in 2007 under the 2007 Plan follows:is approved by shareholders at the Annual Meeting, the Committee intends to resume the use of such equity-based awards, including stock options and restricted stock units. See “Proposal No. 3 — Approval of Amendment to the 2007 Stock Incentive Plan.”
Stock Options.Stock options granted under the 2007 Plan may vest on the basis of the satisfaction of performance conditions established by the Committee or on the basis of the passage of time and continued employment, however, in recent years, the Committee has issued awards vesting based on passage of time and continued employment. Under the 2007 Plan, except in limited circumstances, no stock option may become fully exercisable until the third anniversary of the award and, to the extent that such an award provides for vesting in installments, such vesting shall occur ratably on the anniversaries of the grant date. The Committee has also granted options that vest based on the passage of time over a five-year period, with 20% becoming exercisable on each anniversary of the grant date. Options granted under the 2007 Plan have a seven-year term and options granted under the 1997 Plan have a ten-year term. All options are granted with an exercise price equal to the fair market value of our common stock on the date of grant, and option re-pricing is expressly prohibited by the 2007 Plan terms.
Restricted Stock Units.In determining the portion of long-term incentive pay that should be composed of stock options, the Committee considers the fact that stock options are the most effective at aligning NEO and shareholder interests, may result in greater dilution to shareholders for a given award value.
Restricted stock units (“RSUs”) convert into shares of our common stock if the recipient is still employed by us on the date that specified restrictions lapse. Restricted stock units granted under the Incentive Plans may vest on the basis of the satisfaction of performance conditions established by the Committee or on the basis of the passage of time and continued employment. The Committee has granted RSUs that vest on the basis of the passage of time and
33
continued employment with vesting periods ranging up to five years. Recipients of RSUs may not vote the units in shareholder votes, but once their RSUs vest, they do receive payments equal to the amount of dividends that would be paid on an equivalent number of shares of common stock.
PerquisitesIn determining the portion of long-term incentive pay that should be composed of RSUs, the Committee considers the fact that RSUs help facilitate executive stock ownership, and, compared to other forms of long-term incentives, provide a higher level of retention value.
Cash Incentive and Retirement Plan. The Cash Incentive and Retention Plan, or the CIRP, allows us to provide equity-like cash compensation to our NEOs and other senior executives. Awards under the CIRP may be earned pursuant to the achievement of performance criteria established by the Committeeand/or continued employment. The performance criteria established by the Committee must relate to one or more of the criteria specified in the Plan, which include: earnings, earnings growth, revenues, stock price, return on assets, return on equity, improvement of financial ratings, achievement of balance sheet or income statement objectives and expenses. These criteria may relate to the Company, a particular line of business or a specific subsidiary of the Company.
Awards under the CIRP are an important component of our long-term incentive payments, as they result in less dilution to shareholders than stock options and RSUs, and may be used when the availability of stock options and RSUs is limited.
In 2008, the Company made awards under the CIRP to Mr. Wehmer and Mr. Dykstra. Under the terms of their awards, Mr. Wehmer and Mr. Dykstra are eligible to receive target awards of $215,000 and $195,000, respectively. Mr. Wehmer’s award, unless he leaves the employment of the Company prior to December 31, 2012, will not be less than his target award. The actual amount of the award to Mr. Dykstra may be greater than or less than his target amount, and will depend upon the Company’s cumulative earnings per share over the course of a five-year performance cycle, commencing on January 1, 2008 and continuing through December 31, 2012.
Perquisites and Other Benefits.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 2007,2008, these perquisites included: car allowances or Company-owned automobiles, club dues, life insurance and supplemental long-term disability and memberships.disability.
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.
22
The Committee 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 maximizesmaximize the interests of our shareholders. Attributed costs of the personal benefits described above for the NEOs for the fiscal year ended December 31, 20072008 are included in column (h) of the “Summary Compensation Table” below.
Post-Termination Compensation
We have entered into employment agreements with certain memberseach of our senior management team, including the NEOs whichthat 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 severance uponif the officer’s employment is terminated within eighteen months of a“Change-in-Control” (as defined in the agreements) of the Company. As discussed below, however, such severance payments are prohibited under the ARRA and therefore will not be made during any period in which any obligation arising from financial assistance under TARP remains outstanding. 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 31, 2007,2008, is found under the heading “Potential Payments upon Termination or Change in Control” on page 2845 of this Proxy Statement.
34
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 control. The Committee also believes that these agreements are important as a recruitment and retention device, as all or nearly all of the companies with which we compete for executive talent have similar agreements in place for their senior employees.
OurAdditional Compensation Policies
Impact of Section 162(m)
Clawback Policy. The compensation restrictions that are applicable to us as a result of our participation in TARP provide that bonus and incentive compensation paid to the NEOs during the period the U.S. Treasury maintains an equity interest in the Company are subject to recovery by Wintrust if the payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria. We have adopted a clawback policy as required under our agreements with the U.S. Treasury. The ARRA expanded this clawback provision to cover the next 20 most highly compensated employees, and provides for recovery of any bonus, retention award, or incentive compensation based on statements of earnings, revenues, gains, or other criteria that are later found to be materially inaccurate.
Impact of Section 162(m).Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes a $1 million limit on the amount that a public company may deduct for compensation paid to 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”performance-based” compensation. During the courseAs a result of its evaluation of compensation paidour participation in TARP, we agreed to NEOs and certain other “covered employees,” the Company takes into accountbe subject to amendments to Section 162(m) considerations andwhich limit the impact thereof.deductibility of all compensation, including performance based compensation, to $500,000 per executive with respect to any taxable year during which the U.S. Treasury retains its investment in the Company. This limitation is applied on a pro rata basis with respect to calendar years during which the Treasury Department held its investment for less than the full year, as was the case in 2008 when the Treasury Department held the investment for less than one month.
When our Board of Directors determined to participate in the TARP Program, it was aware of, factored into its analysis and agreed to the potential increased after-tax cost of our executive compensation program that would arise because of the TARP Program’s $500,000 deduction limitation. As a result, while the Committee will remain mindful of the deduction limitation, it has concluded that the $500,000 deduction limitation will not be a significant factor in its decision-making with respect to the compensation of our executive officers.
Practices Regarding the Grant of OptionsOptions.
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 issuance of the news release 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 practice to time annual option grants to its executives in coordination with the release of material non-public information.
While the bulk of our option awards to NEOs have historically been made pursuant to our annual grant program, the Committee retainsretained 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 Company’s Directors Deferred Fee and Stock Plan), arewere made pursuant to our 2007 Plan. As noted above, all options under the 2007 Plan arewere granted with an exercise price equal to the fair market value of our common stock on the date of grant. Fair market value is defined under the 2007 Plan to be the average of the highest
23
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 on the
35
date of grant. We dodid 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 dodid 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 arewere made by the Committee itself or the full Board and not pursuant to delegated authority.
Prohibition on Hedging and Short SellingSelling.
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 PolicyPolicy.
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 We strongly encourage our executive officers to acquire and own our common shares, webut have not adopted a formal written policy on share ownership requirements of our executive officers. We have,did, however, adopted share ownershipseek to deliver a significant portion of each executive’s compensation in the form of long-term incentives. Such awards, including stock options and restricted stock units that are subject to multi-year vesting requirements, ensure that our executive officers hold a significant portion of their compensation in Wintrust securities. For our directors, our corporate governance guidelines for members of our Board toprovide that Directors should own, within three years of becoming a Director, shares having a value of at least three times the annual retainer fee paid to Directors. Each of our Directors is currently in compliance with these share ownership guidelines.
Our 2009 Compensation Program
The Committee recently undertook a thorough review of the Company’s compensation program with respect to its NEOs and certain other members of senior management. As part of this review, the Committee retained Towers Perrin, an independent compensation consultant. Towers Perrin provides expert knowledge of marketplace trends and best practices relating to competitive pay levels.
Representatives of Towers Perrin delivered multiple presentations to the Committee regarding their review of the Company’s compensation program. The representatives compared the compensation program to best practices and to the compensation programs used by comparable financial companies, as described below. Based on survey data and on proxy disclosures by the comparable financial companies, Towers Perrin reported that the Company’s target base salaries and target total cash compensation were near the competitive median. Annual cash incentive payments were described as being below the median level for senior executive positions, but above the median for more junior executives. Towers Perrin suggested this was caused by Wintrust’s use of uniform target bonus amounts, as a percentage of base salary, for its executive officers, and noted that many companies offer their most senior executives higher target bonus percentages than they offer to junior executives. Such a compensation structure recognizes that senior executives can have a greater effect on a company’s performance, and should therefore have a greater percentage of their total compensation be incentive-based pay. Finally, Towers Perrin reported that Wintrust’s long-term incentive payments were well below the median level, resulting in total direct compensation that was also below the median level.
Representatives of Towers Perrin met subsequently with the Committee to present their final recommendations regarding the Company’s compensation program. Towers Perrin recommended that Wintrust set target compensation levels within a competitive range of the median for comparable companies, and at levels approaching the 75th percentile and above for executives that demonstrate superior performance. Additionally, they recommended that the Company increase the relative size of target annual bonuses for our senior executive officers and consider reference group performance, historical performance and investor and analyst expectations when setting performance goals.
36
Compensation Philosophy and Objectives
In connection with the review of the Company’s compensation program, the Committee adopted the following additional compensation philosophies and procedures, which will form the basis of the Company’s compensation program for 2009:
Compensation should be performance based. Our compensation program should encourage and reward excellent performance from the Company’s management team. Accordingly, compensation should depend on the Company’s overall performance, its financial performance, the performance of its subsidiaries and a manager’s attainment of his or her individual management objectives.
A significant portion of total compensation should be in the form of long-term incentives. Long-term incentives, such as stock options, restricted stock units and awards under the Company’s Cash Incentive and Retention Plan, are an important way of aligning management and shareholder interests because they link a manager’s compensation levels to the performance of the Company over a multi-year time horizon. Additionally, they can help promote continuity of management by tying compensation to continued service, and can help reduce incentives to take excessive risks by ensuring that managers are incentivized to create lasting value for shareholders.
Compensation levels should be competitive to ensure that we attract and retain a highly qualified management team to lead and grow our Company. The successful operation of our Company requires an experienced and talented management team. To hire and retain such managers, our compensation program must be competitive with those of our peer firms in terms of total compensation and for each element of compensation.
Compensation opportunities should be commensurate with an executive’s roles and responsibilities. Greater levels of compensation should be offered to our executives who are most responsible for the performance of the Company. This helps ensure that compensation levels are perceived as fair, both internally and externally, and reduces the risk that we lose managerial talent to our competitors.
Total compensation expense should be predictable. While variable compensation is an important component of our pay-for-performance philosophy, overall compensation levels should be consistent and predictable so that management and shareholders will have greater certainty regarding their effects on the Company’s financial performance.
Compensation Procedures
In 2009, the Company will employ similar procedures to those described under “2008 Compensation Program — Compensation Procedures.” In addition, the Committee intends to focus on the total direct compensation received by each executive officer, as well as the amount of each element of compensation in relation to those provided by the peer companies identified below.
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Following consultation with Towers Perrin, the Committee identified two reference groups of peer financial companies that it will use for purposes of benchmarking its compensation practices. These include a group of 15 similarly-sized national banks and a group of eleven Midwestern banks. The reference group of similarly-sized national banks included banks with total assets between $7.4 billion and $11.9 billion as of December 31, 2007, compared to $9.4 billion of assets for Wintrust as of such date. The reference group of Midwestern banks included banks with total assets between $3.7 billion and $21.6 billion as of their respective fiscal year ends.
| | |
Similarly-Sized
| | |
National Banks
| | Midwestern Banks
|
Reference Group | | Reference Group |
|
East West Bancorp Inc. | | First Midwest Bancorp Inc. |
UCBH Holdings Inc. | | MB Financial Inc. |
International Bancshares Corp. | | Midwest Bank Holdings Inc. |
Whitney Holding Corp. | | Private Bancorp Inc. |
Cathay General Bancorp. | | Taylor Capital Group Inc. |
FirstMerit Corp. | | CORUS Bankshares Inc. |
UMB Financial Corp. | | Amcore Financial Inc. |
Trustmark Corp. | | Associated Banc-Corp. |
Umpqua Holdings Corp. | | Citizens Republic Bancorp Inc. |
United Community Banks Inc. | | Old National Bancorp |
First Midwest Bancorp Inc. | | TCF Financial Corp. |
United Bankshares Inc. | | |
Old National Bancorp | | |
MB Financial Inc. | | |
Pacific Capital Bancorp. | | |
Since information regarding compensation for our NEOs other than our chief executive officer and chief financial officer is not generally publicly available for these reference groups, the Committee supplemented its review of these reference groups with additional survey data provided by Towers Perrin. The survey data was compiled by Towers Perrin from four surveys of compensation in the financial services industry, published by executive compensation firms during the spring of 2008. The survey data was adjusted to reflect the Company’s asset size, in order to provide an estimated distribution of compensation levels for a financial company with $10 billion in assets.
The Committee uses these sources of market data to ensure that the compensation being paid by the Company is competitive with those of its peer companies. Beginning in 2009, the Committee will seek to set each element of compensation to an amount within a competitive range of the median for similarly situated officers at comparable companies, with compensation at levels approaching the 75th percentile and above for executives that have demonstrated superior performance. However, these benchmarks are not applied rigidly due to the Company’s unique structure and the hybrid nature of certain managerial positions at Wintrust.
38
Elements of Compensation
Following its discussions with Towers Perrin, the Committee determined to establish the following framework for NEO compensation in 2009:
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Long-Term
| | | Perks &
| | | | |
| | Base
| | | | | | Incentive
| | | Other
| | | Total
| |
Named Executive Officer | | Salary | | | Bonus | | | Compensation | | | Benefits | | | Compensation | |
|
Edward J. Wehmer | | | 35 | % | | | 30 | % | | | 30 | % | | | 5 | % | | | 100 | % |
Chairman & CEO | | | | | | | | | | | | | | | | | | | | |
David A. Dykstra | | | 40 | % | | | 30 | % | | | 25 | % | | | 5 | % | | | 100 | % |
Chief Operating Officer | | | | | | | | | | | | | | | | | | | | |
David L. Stoehr | | | 45 | % | | | 30 | % | | | 20 | % | | | 5 | % | | | 100 | % |
Chief Financial Officer | | | | | | | | | | | | | | | | | | | | |
Richard B. Murphy | | | 40 | % | | | 30 | % | | | 25 | % | | | 5 | % | | | 100 | % |
Chief Credit Officer | | | | | | | | | | | | | | | | | | | | |
John S. Fleshood | | | 45 | % | | | 30 | % | | | 20 | % | | | 5 | % | | | 100 | % |
Executive Vice President — Risk Management | | | | | | | | | | | | | | | | | | | | |
Salary. In 2009, the Committee determined not to increase the salaries of Mr. Wehmer and Mr. Dykstra in order to increase the relative portion of their compensation that is provided under incentive-based pay, including bonus and long-term incentive payments. The Committee approved a substantial raise for Mr. Stoehr to bring him closer to median compensation level at the peer financial companies identified above.
| | | | |
| | 2009 Base Salary Merit Increase
| |
Named Executive Officer | | Percentage | |
|
Edward Wehmer | | | — | |
Chairman & CEO | | | | |
David Dykstra | | | — | |
Chief Operating Officer | | | | |
David Stoehr | | | 12.0 | % |
Chief Financial Officer | | | | |
Richard Murphy | | | 4.1 | % |
Chief Credit Officer | | | | |
John S. Fleshood | | | 1.1 | % |
Executive Vice President — Risk Management | | | | |
Bonus. As part of the review of our compensation program, the Committee determined to restructure the target bonus levels for the NEOs beginning in 2009 so that target bonus levels for the Company’s senior executive officers represent a larger percentage of such executives’ total compensation. The Committee believes that this change will increase the pay-for-performance nature of our compensation program. Below are the threshold, target and maximum bonus awards for our NEOs, expressed as a percentage of base salary:
| | | | | | | | | | | | |
Named Executive Officer | | Threshold | | | Target | | | Maximum | |
|
Edward J. Wehmer | | | 60 | % | | | 70 | % | | | 90 | % |
Chairman & CEO | | | | | | | | | | | | |
David A. Dykstra | | | 55 | % | | | 65 | % | | | 75 | % |
Chief Operating Officer | | | | | | | | | | | | |
David L. Stoehr | | | 55 | % | | | 60 | % | | | 65 | % |
Chief Financial Officer | | | | | | | | | | | | |
Richard B. Murphy | | | 55 | % | | | 65 | % | | | 75 | % |
Chief Credit Officer | | | | | | | | | | | | |
John S. Fleshood | | | 55 | % | | | 60 | % | | | 65 | % |
Executive Vice President — Risk Management | | | | | | | | | | | | |
The final determination of an executive’s actual bonus payment will be based on company and individual performance metrics, including consolidated net income, personal objectives, discretionary factors and, in the case
39
of Mr. Fleshood, the net income of certain subsidiaries. As in years past, the final determination of the Committee could result in no bonus being paid or a bonus in an amount less than the low target bonus.
Long-Term Incentive Compensation. The Committee expects that long-term incentive compensation will consist of stock options, RSUs and awards under the CIRP in such proportions as it determines, which determinations will be based on achievement of certain levels of return on tangible equity.
The remaining elements of compensation that we provide under our compensation program are not expected to change in 2009.
Additional Factors Affecting Compensation
Participation in the U.S. Department of the Treasury’s Capital Purchase Program
In December 2008, we became a participant in the Capital Purchase Program portion of the United States Department of the Treasury’s Troubled Assets Relief Program, or TARP. As a result, we are subject to certain compensation requirements under the Emergency Economic Stabilization Act of 2008, or the EESA. These restrictions affect our five most highly-compensated senior executive officers, which are the same as our NEOs, and the next ten most highly compensated employees. The restrictions include the following:
| | |
| • | we must structure executive compensation to exclude incentives for our NEOs to take unnecessary and excessive risks that threaten the value of the Company; |
|
| • | we are required to maintain a policy requiring us to recover any bonus or incentive compensation paid to our NEOs based on statements of earnings, gains or other criteria that are later proven to be materially inaccurate, which we refer to as a clawback policy; |
|
| • | we may not make any “golden parachute” payment to our NEOs, generally meaning any severance payment or benefit given to an NEO if the value of such payments and benefits equals or exceeds an amount equal to three times the NEO’s “base amount” (generally defined as the average of the NEO’s compensation over the five preceding years); and |
|
| • | we must limit the size of any deduction for compensation expenses that we claim under Section 162(m) of the Internal Revenue Code to $500,000 annually per executive. |
In order to comply with these requirements, the Company entered into letter agreements with each of our NEOs. The letter agreements have the effect of amending each NEO’s compensation, bonus, incentive and other benefit plans, arrangements and agreements to the extent necessary to comply with the clawback and golden parachute requirements of the Capital Purchase Program requirements described above for any year in which the U.S. Treasury holds an equity or debt position in the Company. In addition, the letter agreements provide that if the Committee determines that such forms of compensation include incentives to take unnecessary and excessive risks, the NEOs and the Company will negotiate the required changes promptly and in good faith.
The Committee has also reviewed the Company’s overall risk structure with the Company’s chief risk officer and discussed the risk profile of the Company as well as the structure of the Company’s executive compensation program. Based on its review, the Compensation Committee determined that the Company’s executive compensation program does not encourage our NEOs to take unnecessary and excessive risks that threaten the value of the Company, and that no changes to the program were required for this purpose. The required certification of the Compensation Committee is provided in the Compensation Committee Report set forth following this Compensation Discussion and Analysis section.
On February 17, 2009 the American Recovery and Reinvestment Act of 2009, or the ARRA, was enacted, which directs the U.S. Secretary of the Treasury and the SEC to establish additional restrictions on our compensation practices, which will apply to us during any period in which any obligations arising from financial assistance under TARP remain outstanding. Pursuant to these restrictions:
| | |
| • | we may not pay any bonus, retention award or incentive compensation, other than restricted stock awards that do not account for more than one-third of an executive’s total annual compensation, to any of our NEOs or the ten next most highly-compensated employees; |
40
| | |
| • | our clawback policy must cover any bonus, retention award or incentive compensation paid to our NEOs or any of our next 20 most highly-compensated employees; |
|
| • | we may not make any severance payments to any of our NEOs or any of the five next most highly-compensated employees, except for services performed and benefits accrued; |
|
| • | we must adopt a company-wide policy regarding excessive or luxury expenditures; and |
|
| • | we are required to provide our shareholders an annual non-binding vote on our executive compensation program. |
The ARRA also prohibits the use of any compensation plan that would encourage the manipulation of our reported earnings to enhance employee compensation, and requires that our chief executive officer and chief financial officer provide annual certifications of our compliance with these provisions.
Because the regulations required under the ARRA have not yet been issued, it is uncertain to what extent they will affect our compensation program. As described above, our compensation philosophy is to provide executives with a significant component of performance-based pay and long-term incentive compensation. However, our ability to do so in the future may be limited under the ARRA regulations. Accordingly, the Committee will require the flexibility to make additional changes to our compensation program to account for such changes, to ensure that we continue to meet our compensation philosophies objectives.
Economic Uncertainty
The recent economic downturn and its effects on the Company and the financial system will make it difficult for the Committee to set appropriate company and individual performance criteria for compensation purposes. Additionally, continued economic volatility, and its effects on our Company’s stock price, may cause the value of stock options and restricted stock units that we have awarded to our NEOs to fall below levels that the Committee deems necessary to provide appropriate performance and retention incentives for such officers. Accordingly, our Compensation Committee will continue to exercise discretion in determining compensation for our NEOs to ensure that we continue to meet our compensation philosophies and objectives.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of Wintrust Financial Corporation oversees Wintrust Financial Corporation’s compensation program on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Proxy Statement.
In reliance on the review and discussions referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 20072008 and the Company’s Proxy Statement to be filed in connection with the Company’s 20082009 Annual Meeting of Shareholders, each of which will be filed with the Securities and Exchange Commission.
The Compensation Committee certifies that it has reviewed with senior risk officers the senior executive officer incentive compensation arrangements and has made reasonable efforts to ensure that such arrangements do not encourage senior executive officers to take unnecessary and excessive risks that threaten the value of the financial institution.
COMPENSATION COMMITTEE
| | |
ALBIN F. MOSCHNER (Chair) | | JOSEPH F. DAMICO |
PETER D. CRIST (Chairman)
JOSEPH F. DAMICO
JOHN S. LILLARD | | ALBIN F. MOSCHNER
HOLLIS W. RADEMACHERH. PATRICK HACKETT, JR. |
BRUCE K. CROWTHER | | CHARLES H. JAMES III |
2441
SUMMARY COMPENSATION TABLE
The following table summarizes compensation awarded to, earned by or paid to our NEOs for 2008, 2007 and 2006. The section of this Proxy Statement entitled “Compensation Discussion and Analysis” describes in greater detail the information reported in this table and the objectives and factors considered in setting NEO compensation.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Non-
| | | | | | | | | | | | | | | | Non-
| | | | |
| | | | | | | | | | | | Equity
| | | | | | | | | | | | | | | | Equity
| | | | |
| | | | | | | | | | | | Incentive
| | All
| | | | | | | | | | | | | | Incentive
| | All
| | |
| | | | | | | | | | Option
| | Plan
| | Other
| | | | | | | | | | | | Option
| | Plan
| | Other
| | |
| | | | Salary
| | Bonus
| | Stock Awards
| | Awards
| | Compensation
| | Compensation
| | Total
| | | | Salary
| | Bonus
| | Stock Awards
| | Awards
| | Compensation
| | Compensation
| | Total
|
| | Year
| | ($)
| | ($)
| | ($)(1)
| | ($)(2)
| | ($)
| | ($)(3)
| | ($)
| | Year
| | ($)
| | ($)
| | ($)(1)
| | ($)(2)
| | ($)
| | ($)(3)
| | ($)
|
Name and Principal Position (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) |
|
Edward J. Wehmer | | | 2007 | | | | 697,917 | | | | — | | | | 1,093,197 | (4) | | | 186,155 | | | | — | | | | 29,144 | | | | 2,006,413 | | | | 2008 | | | | 791,667 | | | | — | | | | 1,079,022 | (4) | | | 184,759 | | | | — | | | | 17,350 | | | | 2,072,798 | |
President & Chief | | | 2006 | | | | 672,917 | | | | — | | | | 1,319,110 | (4) | | | 412,502 | | | | — | | | | 26,495 | | | | 2,431,024 | | | | 2007 | | | | 697,917 | | | | — | | | | 1,093,197 | (4) | | | 186,155 | | | | — | | | | 29,144 | | | | 2,006,413 | |
Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | 2006 | | | | 672,917 | | | | — | | | | 1,319,110 | (4) | | | 440,182 | | | | — | | | | 26,495 | | | | 2,458,704 | |
David A. Dykstra | | | 2007 | | | | 508,333 | | | | — | | | | 857,077 | (4) | | | 298,542 | | | | — | | | | 19,140 | | | | 1,683,092 | | | | 2008 | | | | 592,500 | | | | — | | | | 845,688 | (4) | | | 312,411 | | | | — | | | | 20,217 | | | | 1,770,816 | |
Senior Executive Vice | | | 2006 | | | | 486,667 | | | | — | | | | 1,009,569 | (4) | | | 307,661 | | | | — | | | | 16,080 | | | | 1,819,977 | | | | 2007 | | | | 508,333 | | | | — | | | | 857,077 | (4) | | | 298,542 | | | | — | | | | 19,140 | | | | 1,683,092 | |
President & Chief Operating Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | 2006 | | | | 486,667 | | | | — | | | | 1,009,569 | (4) | | | 328,306 | | | | — | | | | 16,080 | | | | 1,840,622 | |
David L. Stoehr | | | 2007 | | | | 228,333 | | | | 33,000 | | | | 86,287 | | | | 24,213 | | | | — | | | | 11,599 | | | | 383,432 | | | | 2008 | | | | 248,333 | | | | 47,000 | | | | 40,205 | | | | 3,329 | | | | — | | | | 12,305 | | | | 351,172 | |
Executive Vice | | | 2006 | | | | 208,333 | | | | 24,200 | | | | 99,906 | | | | 43,860 | | | | — | | | | 11,069 | | | | 387,368 | | | | 2007 | | | | 228,333 | | | | 33,000 | | | | 86,287 | | | | 24,213 | | | | — | | | | 11,599 | | | | 383,432 | |
President & Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | 2006 | | | | 208,333 | | | | 24,200 | | | | 99,906 | | | | 46,803 | | | | — | | | | 11,069 | | | | 390,311 | |
Richard B. Murphy | | | 2007 | | | | 313,250 | | | | 45,000 | | | | 193,376 | | | | 140,062 | | | | — | | | | 3,334 | | | | 695,022 | | | | 2008 | | | | 363,750 | | | | 50,000 | | | | 282,647 | | | | 129,625 | | | | — | | | | 3,912 | | | | 829,934 | |
Executive Vice | | | 2006 | | | | 267,750 | | | | 20,000 | | | | 144,941 | | | | 146,254 | | | | — | | | | 2,370 | | | | 581,315 | | | | 2007 | | | | 313,250 | | | | 45,000 | | | | 193,376 | | | | 140,062 | | | | — | | | | 3,334 | | | | 695,022 | |
President & Chief Credit Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | 2006 | | | | 267,750 | | | | 20,000 | | | | 144,941 | | | | 146,428 | | | | — | | | | 2,370 | | | | 581,489 | |
Randolph M. Hibben | | | 2007 | | | | 288,750 | | | | — | | | | 164,261 | | | | 16,120 | | | | — | | | | 15,130 | | | | 484,261 | | |
John S. Fleshood | | | | 2008 | | | | 274,750 | | | | 30,000 | | | | 34,103 | | | | 75,614 | | | | — | | | | 12,623 | | | | 427,090 | |
Executive Vice | | | 2006 | | | | 273,750 | | | | — | | | | 168,009 | | | | 159,229 | | | | — | | | | 14,477 | | | | 615,465 | | | | 2007 | | | | 274,417 | | | | — | | | | 49,333 | | | | 75,407 | | | | — | | | | 12,360 | | | | 411,517 | |
President — Markethead | | | | | | | | | | | | | | | | | | | | | | | | | |
President — Risk Management | | | | 2006 | | | | 264,583 | | | | — | | | | 70,617 | | | | 75,316 | | | | — | | | | 12,240 | | | | 422,756 | |
| | |
(1) | | The amounts shown in this column constitute restricted stock units granted under the 2007 Plan and the 1997 Plan. The amounts equal the financial statement compensation cost for Stock Awards as reported in our 2007 consolidated statementstatements of income for fiscal yearyears 2008, 2007 and 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, 20072008 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 2643 of this Proxy Statement. |
|
(2) | | The amounts shown in this column constitute options granted under the 2007 Plan and the 1997 Plan. The amounts equal the financial statement compensation cost for Stock Awards as reported in our consolidated statementstatements of income for fiscal yearyears 2008, 2007 and 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, 20072008 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 2643 of this Proxy Statement. |
|
(3) | | Amounts in this column include the value of the following perquisites paid to the NEOs in 2008, 2007 and 2006. Perquisites are valued at actual amounts paid to each provider of such perquisites. |
2542
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Club
| | | | | | | | | | | | Club
| | | | | | |
| | | | Corporate
| | Memberships
| | Life
| | | | | | | | Corporate
| | Memberships
| | Life
| | | | |
| | | | Automobile
| | Not Exclusively
| | Insurance
| | Supplemental
| | | | | | Automobile
| | Not Exclusively
| | Insurance
| | Supplemental
| | |
| | | | Usage
| | For Business Use
| | Premiums
| | Long-Term
| | | | | | Usage
| | for Business Use
| | Premiums
| | Long-Term
| | |
Named Executive Officer | | Year | | ($) | | ($) | | ($) | | Disability | | Total | | Year | | ($) | | ($) | | ($) | | Disability | | Total |
|
Edward J. Wehmer | | | 2007 | | | | 8,228 | | | | 16,800 | | | | 2,714 | | | | 1,402 | | | | 29,144 | | | | 2008 | | | | 6,906 | | | | 6,976 | | | | 2,299 | | | | 1,169 | | | | 17,350 | |
| | | 2006 | | | | 8,104 | | | | 14,551 | | | | 2,416 | | | | 1,424 | | | | 26,495 | | | | 2007 | | | | 8,228 | | | | 16,800 | | | | 2,714 | | | | 1,402 | | | | 29,144 | |
| | | | 2006 | | | | 8,104 | | | | 14,551 | | | | 2,416 | | | | 1,424 | | | | 26,495 | |
David A. Dykstra | | | 2007 | | | | 17,869 | | | | — | | | | 1,271 | | | | — | | | | 19,140 | | | | 2008 | | | | 19,024 | | | | — | | | | 1,193 | | | | — | | | | 20,217 | |
| | | 2006 | | | | 14,921 | | | | — | | | | 1,159 | | | | — | | | | 16,080 | | | | 2007 | | | | 17,869 | | | | — | | | | 1,271 | | | | — | | | | 19,140 | |
| | | | 2006 | | | | 14,921 | | | | — | | | | 1,159 | | | | — | | | | 16,080 | |
David L. Stoehr | | | 2007 | | | | 8,164 | | | | 2,700 | | | | 735 | | | | — | | | | 11,599 | | | | 2008 | | | | 9,411 | | | | 2,113 | | | | 781 | | | | — | | | | 12,305 | |
| | | 2006 | | | | 7,209 | | | | 3,240 | | | | 620 | | | | — | | | | 11,069 | | | | 2007 | | | | 8,164 | | | | 2,700 | | | | 735 | | | | — | | | | 11,599 | |
| | | | 2006 | | | | 7,209 | | | | 3,240 | | | | 620 | | | | — | | | | 11,069 | |
Richard B. Murphy | | | 2007 | | | | 1,282 | | | | 1,026 | | | | 1,026 | | | | — | | | | 3,334 | | | | 2008 | | | | 1,367 | | | | 1,476 | | | | 1,069 | | | | — | | | | 3,912 | |
| | | 2006 | | | | 631 | | | | 973 | | | | 766 | | | | — | | | | 2,370 | | | | 2007 | | | | 1,282 | | | | 1,026 | | | | 1,026 | | | | — | | | | 3,334 | |
| | | | 2006 | | | | 631 | | | | 973 | | | | 766 | | | | — | | | | 2,370 | |
Randolph M. Hibben | | | 2007 | | | | 12,000 | | | | 2,016 | | | | 1,114 | | | | — | | | | 15,130 | | |
John S. Fleshood | | | | 2008 | | | | 12,000 | | | | — | | | | 623 | | | | — | | | | 12,623 | |
| | | 2006 | | | | 12,000 | | | | 1,632 | | | | 845 | | | | — | | | | 14,477 | | | | 2007 | | | | 12,000 | | | | — | | | | 360 | | | | — | | | | 12,360 | |
| | | | 2006 | | | | 12,000 | | | | — | | | | 240 | | | | — | | | | 12,240 | |
| | |
(4) | | Entire amount reflects the compensation cost in 2008, 2007 and 2006 for stock awards made prior to February 2006 as reported in the Company’s 20072008 consolidated financial statements. Messrs. Wehmer and Dykstra did not receive stock awards relating to performance for the 2008, 2007 or 2006 calendar years. |
20072008 GRANTS OF PLAN-BASED AWARDS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | All
| | All
| | | | | | | | | | | | | | | | | | | | | All
| | All
| | | | Grant
| |
| | | | | | | | | | | | | | | | Other
| | Other
| | | | Grant
| | | | | | | | | | | | | | | | | Other
| | Other
| | | | Date
| |
| | | | | | | | | | | | | | | | Stock
| | Option
| | | | Date
| | | | | | | | | | | | | | | | | Stock
| | Option
| | | | Fair
| |
| | | | | | | | | | | | | | | | Awards:
| | Awards:
| | Exercise
| | Fair
| | | | | | | | | | | | | | | | | Awards:
| | Awards:
| | Exercise
| | Value of
| |
| | | | | | | | | | | | | | | | Number of
| | Number of
| | or Base
| | Value of
| | | | | Estimated Future Payouts
| | Estimated Future Payouts
| | Number of
| | Number of
| | or Base
| | Stock and
| |
| | | | Estimated Future Payouts
| | Estimated Future Payouts
| | Shares of
| | Securities
| | Price of
| | Stock and
| | | | | Under Non-Equity Incentive
| | Under Equity Incentive Plan
| | Shares of
| | Securities
| | Price of
| | Option
| |
| | Grant
| | Under Non-Equity Incentive Plan Awards | | Under Equity Incentive Plan Awards | | Stock or
| | Underlying
| | Option
| | Option
| | | Grant
| | Plan Awards | | Awards | | Stock or
| | Underlying
| | Option
| | Awards
| |
| | Date
| | Threshold
| | Target
| | Maximum
| | Threshold
| | Target
| | Maximum
| | Units (2)
| | Options
| | Awards
| | Awards (3)
| | | Date
| | Threshold
| | Target
| | Maximum
| | Threshold
| | Target
| | Maximum
| | Units (2)
| | Options
| | Awards
| | ($/Sh)
| |
Name
| | (1)
| | ($)
| | ($)
| | ($)
| | (#)
| | (#)
| | (#)
| | (#)
| | (#)
| | ($/Sh)
| | ($/Sh)
| | | (1)
| | ($)
| | ($)
| | ($)
| | (#)
| | (#)
| | (#)
| | (#)
| | (#)
| | ($/Sh)
| | (3)
| |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) | | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) | |
|
Edward J. Wehmer | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1/24/08 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9,000 | | | | 33.06 | | | | 102,431 | |
David A. Dykstra | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1/24/08 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 8,000 | | | | 33.06 | | | | 91,050 | |
David L. Stoehr | | | 1/25/07 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 681 | | | | — | | | | — | | | | 30,819 | | | | 1/24/08 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 665 | | | | — | | | | — | | | | 21,985 | |
| | | 1/25/07 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,000 | | | | — | | | | — | | | | 45,255 | | |
Richard B. Murphy | | | 1/25/07 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,215 | | | | — | | | | — | | | | 54,985 | | | | 1/24/08 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 907 | | | | — | | | | — | | | | 29,985 | |
| | | 7/25/07 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,000 | | | | — | | | | — | | | | 978,000 | | | | 1/24/08 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,500 | | | | 33.06 | | | | 73,978 | |
Randolph M. Hibben | | | 1/25/07 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 284 | | | | — | | | | — | | | | 12,852 | | |
John S. Fleshood | | | | 1/24/08 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,059 | | | | — | | | | — | | | | 35,011 | |
| | |
(1) | | In each case, the “Grant Date” reflects the date on which the Compensation CommitteeBoard of Directors acted to approve the grant of the award. All awards were made under the Company’s 2007 Plan. |
|
(2) | | This column shows the number of restricted stock units granted to the named executive officers in 2007.2008. |
|
(3) | | The value of the awards (which in 2007 are all restricted stock units awards)unit 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 officer.officers. The value of the stock option awards represents fair value at the date of grant using a Black-Scholes option pricing model using assumptions consistent with Statement of Financial Accounting Standard No. 123(R). For further discussion and details regarding the accounting treatment and underlying assumptions relative to stock-based compensation, see Note 18, “Employee Benefit and Stock Plans,” of the notes to Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2008. |
2643
“Change of control” is defined in the NEOs’ employment agreements by reference to the 19972007 Plan, which defines change of control as any of the following events:
The Directors Deferred Fee and Stock Plan (the “Director Plan”) is a program that allows non-employee Directors to receive their Director fees in either cash or common stock. This option does not apply to the retainer
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.Chair. If the ChairmanChair exercises this delegation of authority, heshe reports the action taken to the Audit Committee at its next regular meeting.
38
All audit and permissible non-audit services provided by Ernst & Young LLP to the Company for 20072008 were pre-approved by the Audit Committee in accordance with these procedures.
SHAREHOLDER PROPOSALS
Shareholders’ proposals intended to be presented at the Company’s 20092010 Annual Meeting of Shareholders must be received in writing by the Secretary of the Company no later than December 26, 200824, 2009 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 20092010 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 20092010 Annual Meeting is held on May 28, 2009,27, 2010, the deadline for such notice is February 27, 2009.March 28, 2010.
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
3956
ExhibitAppendix A
WINTRUST FINANCIAL CORPORATION
2005 DIRECTORS DEFERRED FEE AND
EMPLOYEE STOCK PURCHASE PLAN
Effective January 1, 2005, as Amended and Restated
Effective May 22, 2008
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TABLE OF CONTENTS
The purpose of the Wintrust Financial Corporation Employee Stock Purchase Plan is to encourage employee stock ownership, thereby enhancing employee commitment to Wintrust Financial Corporation (“Wintrust” or the “Corporation”) and providing an opportunity to share in the Corporation’s success. The Plan is amended and restated effective as of the date provided in Paragraph 21 hereof, as set forth herein.
| | Establishment; Purpose | | | A-1 | |
| 2. | Definitions |
(a) “Bank” means any banking subsidiary of the Corporation designated by the Committee with respect to any offering.
(b) “Board” means the Board of Directors of the Corporation.
(c) “Code” means the Internal Revenue Code of 1986, as amended.
(d) “Committee” means the Compensation Committee of the Board or any other committee designated by the Board to administer this Plan.
(e) “Common Stock” means of Common Stock, no par value, of the Corporation.
(f) “Considered Compensation” means compensation as defined by the Committee in accordance with Section 423 of the Code and applicable regulations, including total compensation or base compensation for any pay period during or at the beginning of, an Offering Period.
(g) “Fair Market Value” means the closing price as recorded by the NASDAQ National Market on the relevant valuation date or if no closing price has been recorded on such date, on the next preceding day on which such a closing price was recorded; provided, however, the Committee may specify some other definition of Fair Market Value.
(h) “Maximum Share Limit” means 331,680 shares of Common Stock.
(i) “Offering Period” means the term of any offering under the Plan as determined by the Committee which shall be at least three months in duration, but no more than 26 months in duration.
(j) “Participating Subsidiary” means any subsidiary or affiliate corporation of Wintrust designated by the Committee if on the first date of the Offering Period, Wintrust or a subsidiary or affiliate of Wintrust, individually or collectively, owns 50% or more of the total combined voting power of all classes of stock of such corporation.
(k) “Plan” means this Wintrust Financial Corporation Employee Stock Purchase Plan.
(l) “Purchase Date” means the last day of an Offering Period or any other day or days the Committee may prescribe under Paragraph 8(c)(ii).
(m) “Purchase Savings Account” means that portion of an aggregate account established with the Bank on behalf all participating employees that is attributable to a particular participating employee.
(n) “Wintrust”or“Corporation” means Wintrust Financial Corporation, an Illinois corporation.
The masculine pronoun wherever used herein is deemed to include the feminine, and the singular shall be deemed to include the plural whenever the context requires.
| | Participation | | | A-1 | |
| 3. | | | Participation and Deferral Election | | | A-1 | |
| 4. | | | Annual Retainer Election | | | A-1 | |
| 5. | | | Director Fee Election | | | A-2 | |
| 6. | | | Distribution Elections | | | A-2 | |
| 7. | | | Distribution Form | | | A-2 | |
| 8. | | | Acquired Directors | | | A-2 | |
| 9. | | | Available Shares | | | A-3 | |
| 10. | | | Shares | | | A-3 | |
| 11. | | | Securities Law Compliance | | | A-3 | |
| 12. | | | Adjustment in Capitalization | | | A-3 | |
| 13. | | | Nonassignment | | | A-3 | |
| 14. | | | Designation of Beneficiary | | | A-3 | |
| 15. | | | Administration | | | A-3 | |
| 16. | | | Federal Tax Withholding | | | A-3 | |
| 17. | | | Amendment | | | A-4 | |
| 18. | | | Governing Law | | | A-4 | |
The Plan shall be administered by the Committee. The Committee, by majority action thereof (whether taken during a meeting or by written consent), is authorized to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, to provide for conditions and assurances deemed necessary or advisable to
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protect the interests of the Corporation, and to make all other determinations necessary or advisable for the administration of the Plan. To the extent deemed necessary or advisable for purposes ofTHE 2005 WINTRUST FINANCIAL CORPORATION
DIRECTORS DEFERRED FEE AND STOCK PLANRule 16b-3 under the Securities Exchange Act of 1934, as amended, any member of the Committee who is not a “non-employee director” under such Rule may abstain or recuse himself from any action of the Committee, in which case a majority action of the remaining members shall constitute a majority action of the Committee.
1. Establishment; Purpose. Wintrust Financial Corporation (the “Company”) has established this 2005 Wintrust Financial Corporation Directors Deferred FeeThe Committee may employ such agents, attorneys, accountants or any other persons and Stock Plan (the “Plan”), fordelegate to them such powers, rights and duties, as the benefitCommittee may consider necessary to properly carry out the administration of the non-employee directors of the CompanyPlan. The interpretation and the non-employee directors of the Company’s subsidiaries, to be administeredconstruction by the Chief Operating OfficerCommittee of the Company (the “Administrator”). This Plan as set forth herein constitutes an amendment and restatementany provisions of the Plan effective May 22, 2008. The purposeand the terms and conditions of an offering including employee participation thereunder and any determination by the Committee pursuant to any provision of the Plan isshall be final and conclusive.
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| 4. | Offerings Under the Plan |
The Committee shall determine whether Wintrust shall make an offering to provide a means whereby directorsall of the Companythen eligible employees, provided, however, that it shall be under no obligation to do so. In the event of an offering under the Plan, an offering prospectus, or such other document as may then be required under applicable law, shall be prepared which outlines the specific terms and its subsidiariesconditions of such offering.
All employees of Wintrust or of any Participating Subsidiary shall be eligible to participate in an offering under the Plan except that the Committee may, defer,with respect to some futureany offering, exclude from eligibility (i) any employee who normally works less than 20 (or such lesser number determined by the Committee) hours a week, (ii) any employee who normally works less than five (or such lesser number determined by the Committee) months a year, (iii) any employee who, on the first date of the Annual Retainer Payment (if any) (referred to herein asapplicable Offering Period, has not been employed by Wintrust or a Participating Subsidiary for at least 24 (or such lesser number determined by the “Annual Retainer”)and/or meeting feesCommittee) months immediately prior thereto and Board or Committee Chair fees (referred to herein as “Director Fees”) payable to(iv) any employee who is a highly compensated employee (as defined in Section 414(q) of the director for servicesCode). In the case of an employee of a Participating Subsidiary who became employed as a director, as well asresult of the acquisition by Wintrust or a Participating Subsidiary of all or part of the assets or stock of such employee’s previous employer, the employee’s employment date will be considered to provide an incentive to such directors to remain as directors, increase their effortsbe the date he was employed by his previous employer solely for the successpurpose of applying provision (iii) above, unless otherwise determined by the Company, and encourage them to own additionalCommittee.
The shares of Common Stock ofoffered hereunder may be treasury shares, authorized and unissued shares, shares purchased in the Company (“Common Stock”), thereby aligning their interests more closelyopen market (on an exchange or in negotiated transactions) or any combination thereof. Subject to adjustment in accordance with the interestsprovisions of Paragraph 8(f), the shareholders of the Company. The Plan is intended as a means of maximizing the effectiveness and flexibility of the Company’s compensation arrangements for directors and as an aid in attracting and retaining individuals of outstanding abilities to serve as directors. This Plan supersedes and replaces all prior deferred compensation plans maintained by the Company or any of its subsidiaries for the benefit of directors.
2. Participation. An eligible director may become a participant in the Plan by making an election pursuant to paragraph 3 hereof. In the event a participant no longer meets the requirements for participation in this Plan, he or she shall become an inactive participant, retaining all the rights described under this Plan, except the right to make any further deferrals, until the time that he or she again becomes an active participant.
3. Participation and Deferral Election. Any director of the Company or any of its subsidiaries may elect to participate in the Plan by filing an election form with the Administrator. The election form is irrevocable with respect to the Plan Year (January 1 to December 31) to which it applies and shall be effective for subsequent Plan Years until the director files a notice of revocation or change of such election with the Administrator. To be effective, any election, revocation or change under this paragraph 3 must be filed by the December 31st (or such earlier date as set by the Company) immediately preceding the January 1st on which it is to take effect; provided, however, a newly eligible director may, within 30 days of the date he or she first becomes an eligible director, make an election which relates to fees otherwise payable to him or her provided such fees relate to future services.
4. Annual Retainer Election. A director may elect to receive his or her Annual Retainer: (a) currently in Common Stock or (b) in Common Stock and defer the Common Stock. A director may not elect to receive his or her Annual Retainer in cash or elect to defer receipt of his or her Annual Retainer in cash.
a. If a director elects to receive his or her Annual Retainer currently in Common Stock, all Annual Retainers earned by the director shall be paid in shares of Common Stock until the director shall cease to serve as a member of the Company’s Board of Directors or until December 31 of the Plan Year in which the director shall file a notice of revocation of such election, whichever first occurs. Thetotal number of shares of Common Stock which may be offered shall not exceed the Maximum Share Limit. If at any time participating employees elect to purchase more than the Maximum Share Limit, then the number of shares of Common Stock which may be purchased by each participating employee shall be reduced pro rata.
In the event that an employee’s participation under the Plan for any reason ends or is terminated and the shares which are subject to option are not purchased, such unpurchased shares of Common Stock shall again be available for offering under the Plan.
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| 7. | Number of Shares Which an Employee May Purchase |
Wintrust may grant to each participating employee, on a nondiscriminatory basis, an option to purchase such number of shares of Common Stock with respect to a given offering as shall have an aggregate purchase price not in excess of the lesser of (i) 20 percent of such employee’s Considered Compensation determined on the first date of the Offering Period or (ii) $50,000 or (iii) such lesser amount as the Committee may determine.
Alternatively, Wintrust may grant to each participating employee, on a nondiscriminatory basis, an option to purchase a fixed or maximum number of shares of Common Stock provided that the aggregate purchase price must comply with limitations set forth in the preceding sentence.
Notwithstanding the foregoing provisions of this Plan, no employee may participate in an offering under the Plan (i) if such participation would permit the employee to purchase shares of Common Stock under all the
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employee stock purchase plans of Wintrust and its Participating Subsidiaries qualified under Section 423 of the Code at a rate which exceeds $25,000 in fair market value of such shares for each calendar year in which such employee participates in the Plan (determined on the first date of the Offering Period), or (ii) if such employee, immediately after his participation commences, owns stock possessing five percent or more of the total combined voting power or value of all classes of stock of Wintrust or any Participating Subsidiary. For such purpose, the rules of Section 424(d) of the Code, as amended, shall apply in determining the stock ownership of an employee, and stock which the employee may purchase pursuant to his participation in the Plan and under all other plans or options of Wintrust or any Participating Subsidiary shall be treated as stock owned by the employee.
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| 8. | Terms and Conditions of Participation in an Offering Under the Plan |
An eligible employee’s participation in an offering under this Plan shall comply with and be subject to the following:
(a) Purchase Price. The purchase price per share of Common Stock shall be determined by the Committee at the outset of the offering; provided, however, the purchase price may not be lower than the lesser of 85 percent of the Fair Market Value of the shares of Common Stock on the first date of the Offering Period or 85 percent of the Fair Market Value of the shares of Common Stock on the Purchase Date.
(b) Purchase Savings Account. A participating employee shall authorize the withholding from his compensation, throughout the Offering Period, of a dollar amount or percent of salary per pay period, the maximum of which is subject to the limits of Paragraph 7 or other lesser limitations set by the Committee. Withheld amounts will be credited to the employee’s Purchase Savings Account. The employee shall not be entitled to make any other deposits to his Purchase Savings Account, unless the Committee so determines, and then, only to the extent permitted by the Committee and subject to the applicable limitations contained in Paragraph 7 hereof. No interest shall accrue at any time for any amount credited to a Purchase Savings Account.
After the employee’s withholding election has been received and approved by Wintrust, the employee shall not be entitled change such election during the Offering Period unless the Committee so determines, and then, only to the extent permitted by the Committee and subject to the applicable limitations contained in Paragraph 7 hereof.
Notwithstanding the foregoing, the employee may withdraw funds accumulated in his Purchase Savings Account at any time, except as the Committee may otherwise provide. The Bank reserves the right, as a condition of any Purchase Savings Account, to demand and receive thirty days’ notice, in writing, as a condition of the withdrawal of any sum or sums whenever such requirement may be deemed advisable by the Bank, in its discretion.
(c) Purchase of Shares.
(i) Subject to earlier purchase pursuant to Paragraphs 8(c)(ii), 8(e) and 8(g) hereof, each employee shall specify on or before the Purchase Date whether he desires to purchase all, a portion or none of the shares of Common Stock which he is entitled to purchase as a result of his participation in the offering. Except as set forth in the next paragraph, if the employee fails to deliver the notification referred to in this paragraph, such failure shall be deemed an election by the employee to exercise his right to purchase on the Purchase Date all of the shares of Common Stock which he is entitled to purchase.
On the Purchase Date, the Bank shall cause the funds then credited to the employee’s Purchase Savings Account to be applied to the purchase price of the shares of Common Stock the employee elected to purchase. Any funds remaining in the Purchase Savings Account after such purchase will be paid to a director shallthe employee and the Purchase Savings Account will be computed quarterly by dividingclosed unless the Annual Retainer earnedCommittee determines, in its discretion, to allow such amounts to remain in the Purchase Savings Account for purposes of the subsequent Offering Period. However, except as may otherwise be provided by the director in the quarter byCommittee under Paragraph 8(c)(ii), if the Fair Market Value of one share of Common Stock ason the Purchase Date is less than the purchase price for one share of the last business day on which trades in Common Stock, were reported duringWintrust shall cause the calendar quarter immediately preceding the quarter in which the Annual Retainer was earned. “Fair Market Value” as of any date means the average of the high and low sales prices of the Common Stock as reported on the Nasdaq National Market on that date. The number of sharesfunds then credited to his Purchase Savings Account to be paid to a director shall be issued,the employee and shares delivered to the director, on an annual basis, or more frequently as the Administrator shall determine, but in no event later than January 15th of the calendar year following the year in which the Annual Retainer is earned.
b. If a director elects to receive his or her Annual Retainer in Common Stock and to defer receipt of the Common Stock, the Company shall maintain on its books deferred stock units (“Units”) representing an obligation to issue shares of Common Stock to such director. Units shall be credited to the director at the time and in the amount that shares of Common Stock would otherwise have been determinedPurchase Savings Account to be payable under paragraph 4(a) in the absence of an election to defer. Additional Units shall be credited at the time dividends are paid on the Common Stock, as if such dividends were Annual Retainers subject to this Plan. No Common Stock shall actually be set asideclosed.
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for payment under(ii) The Committee may determine that Wintrust shall make an offering which shall have more than one Purchase Date and, in such case, the Units and any director to whom Units are credited underCommittee shall establish the Plan shall be deemeddates (each a general, unsecured creditor of the Company.
5. Director Fee Election. A director may elect to have his Director Fees: (a) paid in cash currently; (b) paid in Common Stock currently; (c) deferred in cash; or (d) paid in Common Stock and to defer the Common Stock.
a. If a director elects to receive his or her Director Fees currently in cash, all Director Fees earned by the director shall be paid in cash until the director shall cease to serve as a member of the Company’s Board of Directors or until December 31 of the year in which the director shall file a notice of revocation of such election, whichever first occurs. Director Fees that a director elects to receive currently shall be paid within 30 days after the date“Purchase Date”) on which such Director Fees are earned.
b. If a director elects to receive his or her Director Fees currently in Common Stock, all Director Fees earned by the director shall be paid in shares of Common Stock until the director shall cease to serve as a member of the Company’s Board of Directors or until December 31 of the year in which the director shall file a notice of revocation of such election, whichever first occurs. The numberpurchases of shares of Common Stock can or will be made by participating employees during an Offering Period. The Committee shall set the terms, conditions and other procedures necessary for the proper administration of such Offering.
(d) Termination of Participation by Employee. An employee who participates in an offering may at any time on or before the expiration of the Offering Period terminate participation by written notice of such termination on a form prescribed by the Committee and delivered to Wintrust. As soon as practicable thereafter, all funds then credited to his Purchase Savings Account will be paid to the employee and his Purchase Savings Account will be closed.
(e) Termination of Employment. In the event that a director shall be computed quarterly by dividing the total amount of Director Fees earned by the director in the quarter by the Fair Market Value of one share of Common Stock as of the last business day on which trades in Common Stock were reportedparticipating employee’s employment with Wintrustand/or a Participating Subsidiary terminates during the calendar quarter immediately preceding the quarter in which the Director Fees were earned. The numberterm of shares to be paid to a director shall be issued, and shares delivered to the director, on an annual basis, or more frequently as the Administrator shall determine, but in no event later than January 15th of the calendar year following the year in which the Director Fees are earned.
c. If a director elects to defer receipt ofOffering Period, his or her Director Fees in cash, all Director Fees earned by the director shall be maintained by the Company in a deferred compensation account. The amount of the Director fees shall be credited to this account as of the date such fees otherwise would be payable. No funds shall actually be set aside for payment under the Plan and any director to whom an amount is creditedparticipation under the Plan shall terminate immediately and within a reasonable time thereafter all funds then credited to his Purchase Savings Account will be deemed a general, unsecured creditorpaid to the employee. However, if any termination of employment is for reasons of death, total and permanent disability, or retirement (as determined by the Committee), then, as of the Company. All Director Fees credited to a deferred compensation account maintained inearlier of (i) the nameend of a director shall accrue interest at the rate per annum equal tothree month period commencing on the91-day Treasury Bill discount rate, adjusted quarterly, until paid. Accrued interest shall be credited to deferred compensation accounts as date of his death, total and permanent disability, or retirement and (ii) the last day of each calendar quarter.
d. If a director electsthe Offering Period, the employee (or his estate, personal representative, or beneficiary) shall have the right to receive hiselect to purchase all or her Director Fees in Common Stock and to defer receiptfewer than all of the Common Stock, the Company shall maintain on its books Units representing an obligation to issue shares of Common Stock which he is entitled to such director. Units shall be creditedpurchase or to receive the director at the time andproceeds of his Purchase Savings Account in the amount that shares of Common Stock would otherwise have been determined to be payable under paragraph 5(b) in the absence of an election to defer. Additional Units shall be credited at the time dividends are paid on the Common Stock, as if such dividends were Director Fees subject to this Plan. No Common Stock shall actually be set aside for payment under the Units and any director to whom Units are credited under the Plan shall be deemed a general, unsecured creditor of the Company.cash.
6.(f) Distribution ElectionsRecapitalization.. At the time of any deferral election, a director must make separate distribution elections for deferrals attributable to Director Fees and deferrals attributable to Annual Retainers. A director must elect whether to receive his or her deferrals (and any earnings on such amounts) on the January 15th immediately following: (a) the date the director ceases to be a director of the Company or any successor or (b) the 1st, 2nd, 3rd, 4th or 5th anniversary of the date the director ceased to be a director of the Company or any successor.
Any subsequent distribution election will not be effective for 12 months and must defer distribution 5 years from the date the original distribution would have been made.
7. Distribution Form. All distributions of Director Fees deferred in cash shall be made in a single lump sum and in cash. All other distributions under the Plan shall be made in a single lump sum and in Common Stock.
8. Acquired Directors. When the Company acquires a corporation or other entity (the “Acquisition”), the directors of such entity shall be eligible, anytime prior to thirty (30) days (or such other time period as designated by the Administrator) after the Acquisition, to make a one-time irrevocable election to transfer to the Plan the balance, if any, of his or her account under the acquired company’s deferred compensation plan in either cash or Common Stock. If the director elects to transfer his or her previous account balance in Common Stock, his or her account
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under the Plan will be credited with Units representing an obligation to issue shares of Common Stock to such director. The Units that will be credited to the director’s account under the Plan shall be computed by dividing the director’s previous account balance by the Fair Market Value of one share of Common Stock as of the date of the Acquisition. Whenever the computation of the number of Units to be transferred results in a fractional amount of one-half or greater, such amount shall be rounded up to the next greater whole number of Units and in all other cases such amount shall be rounded down to the next lower whole number of Units. Any account transferred to the Plan pursuant to this Section shall be payable in accordance with the terms of the deferred compensation plan maintained by the corporation or other entity acquired in the Acquisition and any distribution elections thereunder.
9. Available Shares. Subject to paragraph 12 (relating to adjustments upon changes in capitalization), as of any date the maximum number of shares of Common Stock issued and issuable under the Plan shall be 425,000.
10. Shares. Shares paid to directors under the Plan shall be paid with newly issued shares of Common Stock of the Company or treasury shares of Common Stock held by the Company. No fractional shares shall be issued. Whenever the computation of the number of shares to be paid results in a fractional amount of one-half or greater, such amount shall be rounded up to the next greater whole number of shares and in all other cases such amount shall be rounded down to the next lower whole number of shares.
11. Securities Law Compliance. The Administrator may impose such requirements and restrictions with respect to any shares of Common Stock acquired under the Plan as it may deem advisable including, without limitation, (a) legendsand/or stop-transfer orders restricting transferability, and (b) investment and other representations from directors.
12. Adjustment in Capitalization. In the event that any change in the outstanding shares of Common Stock occurs by reason of a stock dividend, stock split, recapitalization, merger, consolidation, combination, share exchange or similar corporate change, (a) theaggregate number of shares of Common Stock which may be issuedoffered under thisthe Plan, shall be appropriately adjusted, (b) the Units credited to any participant’s deferred compensation account shall be appropriately adjusted and (c) if shares of Common Stock cease to be listed on an established stock exchange or a national market system, the Board may cause any Units to cease to be measured by and distributed in the formnumber of shares of Common Stock which each employee is entitled to purchase as a result of his participation in an offering and insteadthe purchase price per share for each such offering 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 of Common Stock, effected without receipt of consideration by Wintrust; provided, however, that any fractional shares of Common Stock resulting from any such adjustment shall be eliminated.
Subject to any required action by stockholders, if Wintrust shall be the surviving or resulting corporation in any merger or consolidation, excluding for this purpose a merger or consolidation which, or the approval of which by the stockholders of Wintrust, constitutes a Change of Control (and, thus, the consequences of which are otherwise provided for in Paragraph 8(g) hereof), any employee’s rights to purchase stock pursuant to participation in an offering hereunder shall pertain to and apply to the shares of stock to which a holder of the number of shares of Common Stock subject to such rights would have been entitled; but a dissolution or liquidation of Wintrust or a merger or consolidation in which Wintrust is not the surviving or resulting corporation, excluding for this purpose a merger or consolidation which, or the approval of which by the stockholders of Wintrust, constitutes a Change of Control (and, thus, the consequences of which are otherwise provided for in Paragraph 8(g) hereof), shall cause all participation in any offering made under the Plan which is then in effect to terminate, except that the surviving or resulting corporation may, in its absolute and uncontrolled discretion, tender an offer to purchase its shares on terms and conditions both as to the number of shares and otherwise, which will substantially preserve the rights and benefits of employees participating in an offering then in effect under the Plan.
In the event of a change in Common Stock which is limited to a change in the designation thereof to “Capital Stock” or other similar designation, or to a change in par value thereof, or from par value to no par value, without increase in the number of issued shares, the shares resulting from any such change shall be deemed to be deemed investedCommon Stock within the meaning of the Plan.
(g) Change of Control. Anything in the Plan to the contrary notwithstanding, the date on which a “Change of Control” (as defined below) occurs shall be considered to be a Purchase Date with respect to all Offering Periods under the Plan and each employee who is a participant in the Plan shall thereupon have the right to purchase all or fewer than all of the shares of Common Stock which he is entitled to purchase as a result
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of his participation in the offering with the funds then credited to his Purchase Savings Account or to be promptly paid in cash all funds credited to his Purchase Savings Account. For this purpose, a “Change of Control” shall mean:
(i) The acquisition, other than from the Corporation, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership (within the meaning ofRule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of Common Stock 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 and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of all or substantially all directors is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the Common Stock and voting securities of the Corporation immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common Stock 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, as the case may be; or
(ii) Individuals who, as of the date hereof, constitute the Board (as of the date hereof the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall 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 Rule14a-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 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 generally 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.
(h) Assignability. No Purchase Savings Account, or option to purchase shares of, Common Stock hereunder shall be assignable, by pledge or otherwise, or transferable except by will or by the laws of descent and distribution; and no right of any employee to purchase stock pursuant to an offering made hereunder shall be subject to any obligation or liability of such employee or have a lien imposed upon it. During the lifetime of an employee, the shares of Common Stock which he is entitled to purchase under the Plan may be purchased only by the employee.
(i) Restrictions on Transferability. If, at the time of the purchase of shares of Common Stock under the Plan, in the opinion of counsel for Wintrust, it is necessary or desirable, in order to comply with any applicable laws or regulations relating to the purchase or sale of securities, that the employee purchasing such shares shall agree not to purchase or dispose of such shares otherwise than in compliance with the Securities Act of 1933 or the Exchange Act, as amended, and the rules and regulations promulgated thereunder, the employee will, upon the request of Wintrust, execute and deliver to Wintrust an agreement to such effect.
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(j) Rights as Stockholder. An employee who is a participant hereunder shall have no rights as a stockholder with respect to shares of Common Stock which he is entitled to purchase under the Plan until the date of the issuance of the shares of Common Stock to the employee.
(k) Miscellaneous. The terms and conditions of participation under the Plan may include such other investmentprovisions as the Board shall determine,deem advisable, including without limitation, provisions which may require participants to notify Wintrust promptly in writing if such participant disposes of stock acquired hereunder prior to the expiration of applicable holding periods under Section 423 of the Code.
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| 9. | Conformance With Tax and Securities Laws |
The Plan and all offerings under the Plan are intended to comply in all aspects with Section 423 of the Code (or its successor section) andRule 16b-3 promulgated under the Exchange Act, as amended from time to time. Should any of the terms of the Plan or offerings be found not to be in conformity with the terms of Section 423 orRule 16b-3, such terms shall be invalid and shall be omitted from the Plan or the offering but the remaining terms of the Plan shall not be affected. However, to the extent permitted by law, any provisions which could be deemed invalid and omitted shall first be construed, interpreted or revised retroactively to permit this Plan to be construed in compliance with all applicable laws (includingRule 16b-3) so as to foster the intent of this Plan.
The Board may alter, amend, suspend or discontinue the Plan or at any time prior to a Change of Control (as defined in Paragraph 8(g)) alter or amend any and all terms of participation in an offering made thereunder.
The proceeds received by Wintrust from the sale of Common Stock under the Plan, except as otherwise provided herein, will be used for general corporate purposes.
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| 12. | No Obligation to Purchase Shares |
Participation under the Plan shall impose no obligation upon the employee to purchase any shares of Common Stock which are the subject of his participation.
Any amounts to be paid or shares of Common Stock to be delivered by Wintrust under the Plan shall be reduced to the extent permitted or required under applicable law by any sums required to be withheld by Wintrust or any Participating Subsidiary.
Except where such laws may be superseded by Federal Law, this Plan and the terms and conditions of participation in the formPlan, shall be construed in accordance with and governed by the laws of cash.the State of Illinois; provided, however, in the event the Corporation’s state of incorporation shall be changed, then the law of such new state of incorporation shall govern.
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| 15. | Regulatory Authorities |
13. Nonassignment. Neither
Each and every obligation and undertaking of Wintrust hereunder is subject to the proviso that if at any time the Board determines that the listing, registration or qualification of the shares covered hereby or by an option issued hereunder upon any securities exchange or under any state or federal law, or the consent or approval of any governmental agency or regulatory body, is necessary or desirable as a director, during hiscondition to or her lifetime, nor hisin connection with the grant or her duly designated beneficiaryexercise of any option hereunder, such grant or exercise shall be deemed to be without effect hereunder until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any rightconditions not acceptable to assign, transfer, pledge or otherwise convey the right to receive any Common Stock or Units hereunder, and any such attempted assignment, transfer, other conveyance shall not be recognized by the Company.Board.
14. | | |
| 16. | Designation of Beneficiary. A director may designate the beneficiary which is to receive any unpaid cash or Common Stock or any deferred amounts payable in the form of cash or Common Stock following the director’s death. Such designation shall be effective by filing a written notification with the Administrator and may be changed from time to time by similar action. If no such designation is made by a director, any such balance shall be paid to the director’s estate. Deferred amounts payable to a director’s beneficiary shall be paid in a lump sum within 90 days after the date of the director’s death. |
Each employee may designate any person or entity as such employee’s beneficiary who shall, in the event of the employee’s death, receive shares of Common Stock under the Plan or the funds in the employee’s Purchase
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Savings Account. Each designation of a beneficiary by an employee will revoke all previous designations under the Plan made by that employee and will be effective only when filed in writing with Wintrust in accordance with procedures established by the Committee during the employee’s lifetime. If any employee fails to designate a beneficiary in the manner provided above, or if the beneficiary designated by an employee dies before the employee or before issuance of all shares of Common Stock due to the employee under the Plan is completed, the Board or the Committee shall distribute the employee’s shares to the legal representative or representatives of the estate of the later to die of the employee or the employee’s designated beneficiary.
15. | | |
| 17. | AdministrationIndemnification. The Administrator shall establish the procedures and maintain all books and records in connection with the Plan. The Administrator may, in his sole discretion, delegate any plan administration responsibilities |
Any person who is or was a director, officer, or employee of Wintrust or a Participating Subsidiary and each member of the Committee shall be indemnified and saved harmless by Wintrust to the extent legally permissible from and against any and all liability or claim of liability to which such person may be subjected by reason of any act done or omitted to be done in good faith with respect to the administration of the Plan, including all expenses reasonably incurred in his defense in the event that Wintrust fails to provide such defense.
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| 18. | Rights to one or more agents as he deemsEmployment |
Participation under the Plan shall not confer upon any employee any right with respect to continued employment by Wintrust or a Participating Subsidiary.
All expenses of administering the Plan shall be borne by Wintrust.
Whenever the Committee considers that an employee or a beneficiary entitled to shares of Common Stock or proceeds under the Plan is under a legal disability or is incapacitated in any way so as to be unable to manage his financial affairs, the Committee may direct that such shares of Common Stock or proceeds be issued directly to such employee or beneficiary, to the legal guardian or conservator of such employee or beneficiary, to a relative of such employee or beneficiary to be expended by such relative for the benefit of such employee or beneficiary, to a custodian for such beneficiary under a Uniform Transfers or Gifts to Minors Act or comparable statute of any state, or expended for the benefit of such employee or beneficiary, as the Committee considers advisable.
16. | | |
| 21. | Federal Tax WithholdingEffective Date |
This Plan, as amended and restated as set forth herein, is effective April 6, 2009, subject to approval by the shareholders of the Corporation at the 2009 annual meeting of the Corporation.
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Appendix B
WINTRUST FINANCIAL CORPORATION
2007 STOCK INCENTIVE PLAN
1. Purpose; Effect on Predecessor Plan. The purpose 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 replaces the Predecessor Plan. As of the Effective Date, no further awards shall be granted under the Predecessor Plan. The Plan is amended and restated, as set forth herein, effective as of the Restatement Date; provided, however, that if the Plan, as amended and restated, is not approved by the shareholders of the Corporation, the Plan shall remain in effect in accordance with its terms as previously amended and restated as of October 22, 2007.
(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 time to time.
(e) “Committee” means the Compensation Committee of the Board or such other committee of the Board as may be designated by the Board from time to time to administer this Plan and which also shall be entirely comprised of independent directors meeting the disinterested administration requirements ofRule 16b-3 under the Securities Exchange Act of 1934 and the “outside director” requirement of Section 162(m) of the Code.
(f) “Common Stock” means the Common Stock, no par 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” means January 9, 2007, the date of the approval of the Plan by the shareholders of the Corporation.
(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” means 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, the Committee may modify the definition of Fair Market Value to mean 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.
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(n) “Plan” means this 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 the Wintrust Financial Corporation 1997 Stock Incentive Plan, which incorporated the Crabtree Capital Corporation 1987 Stock Option Plan, The Credit Life Companies, Incorporated 1987 Stock Option Plan, the Crabtree Capital Corporation 1990 Stock Purchase Plan, the First Premium Services, Incorporated 1992 Stock Option Plan, the Lake Forest Bancorp, Inc. 1991 Stock Option Plan, the Lake Forest Bancorp, Inc. 1993 Stock Option Plan, the Hinsdale Bancorp, Inc. 1993 Stock Option Plan, the North Shore Community Bancorp, Inc. 1993 Stock Rights Plan, the North Shore Community Bancorp, Inc. 1994 Stock Option Plan, the Libertyville Bancorp, Inc. 1995 Stock Option Plan 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 predecessor to the Corporation.
(q) “Restatement Date” means May 28, 2009, the date of the approval of the Plan, as amended and restated, by the shareholders of the Corporation.
(r) “Subsidiary” means any corporation or other entity, whether domestic or foreign, 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 arrangement with the Corporation or a Subsidiary whom the Committee determines have a significant responsibility for the success and future growth and profitability of the Corporation.
4. Plan Administration.
(a) Except as otherwise determined by the Board, the Plan shall be administered by the Committee. The Committee shall make determinations with respect to the participation of Employees, Directors and consultants in the Plan and, except as otherwise required by law or this Plan, the terms of Awards, including vesting schedules, price, length of relevant performance, restriction or option periods, post-retirement and termination rights, payment alternatives such as cash, stock, contingent awards or other means of payment consistent with the purposes of this Plan, and such other terms and conditions as the Committee deems appropriate.
(b) No Award that contemplates exercise or conversion may be exercised 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 provisions of the Plan and the Award Agreements 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 Committee shall be entitled to indemnification and reimbursement in the manner provided in 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 directors of the Corporation for purposes of Section 16 of the Exchange Act 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.
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(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 the sum of (i) 325,000 shares plus (ii) the number of shares available under the Plan as of the Restatement Date, and the total number of such shares with respect to which Stock Awards may be granted on or after October 22, 2007 pursuant to Section 6(f) of the Plan shall not exceed 25,000 shares. For purposes of these limits, (i) each share of Common Stock with respect to a stock option or stock appreciation right (or an Award granted prior to the Restatement Date which is not a stock option or stock appreciation right) shall be counted as one share of Common Stock and (ii) each share of Common Stock with respect to an Award granted on or subsequent to the Restatement Date which is not a stock option or stock appreciation right shall be deemed to equal 1.73 shares of Common Stock. 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, and such number of shares shall be calculated in accordance with the previous sentence. 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 the date of grant of such Award.
(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. The exercise price of any stock appreciation right shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant of such Award.
(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.
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(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 by 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 orstart-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 based 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.
(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 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;
(iii) no performance-based Award may become fully exercisable or saleable prior to the first anniversary of the date of grant;
provided, that, such restrictions shall not apply to (w) Awards to newly hired Employees, (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
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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.
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| 8. | Other Terms and Conditions. If the Company or any of its subsidiaries becomes obligated to make federal tax withholding payments with respect to directors fees paid, the Company shall be entitled to withhold such amounts from the amounts payable to directors regardless of whether the directors have elected to be paid in cash or stock. If amounts are to be withheld out of shares issuable to a director, the reduction in the number of shares issuable shall be determined based on the fair market value of the Company’s Common Stock on the date of issuance. With respect to fees payable in stock, in lieu of reducing the number of shares to be issued, the Company may in its discretion require participants to pay cash to the Company in the amount of the tax withholding due prior to releasing the shares.
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(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).
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, death or other termination of a Participant’s employment or service, 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 holder 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.
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(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.
(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 or Cancellation for Cash. Notwithstanding anything in this Plan to the contrary and subject to Sections 10 and 12, without the approval of the shareholders of the Corporation, neither the Board nor the Committee will amend any previously granted Award to (i) reduce the exercise price of an outstanding stock option, incentive stock option or stock appreciation right or (ii) cancel an outstanding stock option, incentive stock option or stock appreciation right in exchange for cash or other Awards with a lower exercise price.
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 the number of shares made pursuant to Section 10); (ii) change the types of awards that may be granted under the Plan; (iii) expand the class of persons eligible to receive awards or otherwise participate in the Plan; or (iv) reduce the price at which an option is exercisable either 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, to the extent it is deemed necessary or desirable to preserve the intended benefits 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. Rights 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 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.
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| 12. | Amendment. The Plan may be amended or terminated at any time by actionChange of the Board of Directors of the Company, but no amendment shall adversely affect a director’s rights with respect to fees earned but not yet paid in either cash, Common Stock or Units without the director’s written consent. To the extent permitted by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the Board may provide that upon a termination of the Plan, the Company shall distribute all amounts credited to deferred compensation accounts not earlier than 12 months after the date of such termination (except as otherwise scheduled to be paid pursuant to a director’s election), and not later than 24 months after the date of such termination. In the event of a change in control event, within the meaning of section 409A of the Code (a “Change in Control”), the Board may, in its discretion and to the extent permitted by section 409A of the Code, terminate the Plan and accelerate the time for payment of all amounts credited to deferred compensation accounts, provided that such accounts are distributed within 12 months after the date of such Change in Control.18. Governing LawControl.. This Plan shall be governed by and construed in accordance with Illinois law.
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The Directors and Officers of
cordially invite you to attend our
2008 Annual Meeting of Shareholders
Thursday, May 22, 2008,
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(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 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) The acquisition, other than from the Corporation, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning ofRule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of Common Stock 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 and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of all or substantially all directors is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the Common Stock and voting securities of the Corporation immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common Stock of the Corporation or
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the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors, as the case may be; or
(ii) Individuals who, as of the date hereof, constitute the Board (as of the date hereof the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall 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 inRule 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 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 generally 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 accordance 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 (includingRule 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 (includingRule 16b-3) so as to foster the intent of this Plan.
15. Effective Date and Term. The Plan, as amended and restated as set forth herein, shall be effective as of the Restatement Date, subject to approval by the shareholders of the Corporation at the 2009 annual meeting of the Corporation. 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.
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The Directors and Officers of
cordially invite you to attend our
2009 Annual Meeting of Shareholders
Thursday, May 28, 2009, 10:00 a.m.
Deer Path Inn
255 East Illinois Road
Lake Forest, Illinois
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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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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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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 Proposals 1, 2, 3, 4 and 5. The undersigned revokes all proxies heretofore given to vote at such meeting and all adjournments or postponements. | | | | | |
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IMPORTANT
| | | | | | | | | | 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 | | | | 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, 2 and 3. The undersigned revokes all proxies heretofore given to vote at such meeting and all adjournments or postponements.
| | | | | | | | | | | | | | | | | | | | | | | Wintrust Financial Corporation | | | | | | | | | If you personally plan to attend the Annual Meeting of Shareholders, please check the box below and list names of attendees on reverse side. | | | | COMMON | | | | | | | | | | | | | | | | Dated | | | | | | | | | | | | Return this stub in the enclosed envelope with your completed proxy card. | | | | | | | | | |
| | | | | | | | | | | | | | | | | (Please sign here) | | | | | | | | | | | | | | | 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 2009 Annual Meeting. o | | |
| | | | | | | | | | TO VOTE BY MAIL | | | | | | | | | | | | | | | | 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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| | | | | | | | (Please sign here) | | | | | | | | | | | | | | | 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 2008 Annual Meeting. o
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| | | | | | | | | | TO VOTE BY MAIL | | | TO VOTE BY INTERNET | | | | | | | | | | | | | | | | 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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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 atwww.illinoisstocktransfer.com, click on the “Internet Voting” tab and enter your Voter Control Number and the last four digits of your Tax Identification Number that is associated with the account you are voting in the designated fields. Your Voter Control Number is printed on the front of this proxy card. | Please note that all votes cast by Internet must becompletedandsubmittedprior to Tuesday, May 26, 2009 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. | | | | | | | | If You Vote By INTERNET, Please Do Not Return Your Proxy Card By Mail
| | | | | | | TO VOTE BY INTERNET | | | | | | | | | | | | | | | | | | | | | | | 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.
| Please note that all votes cast by Internet must becompletedandsubmittedprior to Tuesday, May 20, 2008 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.
| | | | | | | | If You Vote By INTERNET, Please Do Not Return Your Proxy Card By Mail
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| | | | TO VOTE BY TELEPHONE | | | | | | | | | | | | | | | | | | | | | | | 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. | 4. You will also be asked to enter the last four digits of your Tax Identification Number that is associated with the account you are voting. | | | | | | | | | | | TO VOTE BY TELEPHONE | | | | | | | | | | | | | | | | | | | | | | | 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 Tuesday, May 20, 2008Please note that all votes cast by telephone must becompletedandsubmittedprior to Tuesday, May 26, 2009 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. | | | | | | | | | | | 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 Peter D. Crist 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 Annual Meeting of Shareholders to be held on May 28, 2009 or any adjournment thereof. If any other business is presented at the Annual 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. | | | | | | | Wintrust Financial Corporation | | REVOCABLE PROXY | Proposal 1 — | | Election of the following Directors with a term ending 2010 |
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints | | | | | | | | | | | | | | | | | | | | | | | | | | For | Withhold | | | | For | Withhold | | | | | | | | 01 Peter D. Crist and | o | o | 08 Albin F. Moschner | o | o | | | | | 02 Bruce K. Crowther | o | o | 09 Thomas J. Neis | o | o | | | | | 03 Joseph F. Damico | o | o | 10 Christopher J. Perry | o | o | | | | | 04 Bert A. Getz, Jr. | o | o | 11 Hollis W. Rademacher | o | o | | | | | 05 H. Patrick Hackett, Jr. | o | o | 12 Ingrid S. Stafford | o | o | | | | | 06 Scott K. Heitmann | o | o | 13 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 Annual Meeting of Shareholders to be held on May 22, 2008 or any adjournment thereof. If any other business is presented at the Annual Meeting, including whether or not to adjourn the meeting, this proxy will be voted, | o | o | | | | | 07 Charles H. James III | o | o | | | | | | | | | | | | | | | | | | | | | | | | | | Proposal 2 — | | Amendment to the extent legally permissible, by those namedEmployee Stock Purchase Plan to increase the number of shares authorized for issuance under the Plan | | | | | | | | | | | | | | | | | | | | | | o | | For | | o | | Against | | o | | Abstain | | | | | | Proposal 3 — | | Amendment to the 2007 Stock Incentive Plan as described in this proxy in their best judgment. | | | | | | | | | | | | | | | | | | | Proposal 1 — | | Election of the following Directors with a term endingthe accompanying Proxy Statement | | | | | | | | | | | | | | | | | | | | | | | o | | For | | o | | Against | | o | | Abstain | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proposal 4 — | | Advisory vote to approve the Company's 2008 executive compensation | | | | | | | | | | | | | | | | | | | | | | | o | | For | | o | | Against | | o | | Abstain | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proposal 5 — | | Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for the year 2009 | | | | | | | | | | | | | | | | | | | | | | | | | | | For | Withhold | | | | For | Withhold | | | | | | | | 01 Allan E. Bulley, Jr. | o | o | 08 Charles H. James III | o | o | | | | | 02 Peter D. Crist | o | o | 09 Albin F. Moschner | o | o | | | | | 03 Bruce K. Crowther | o | o | 10 Thomas J. Neis | o | o | | | | | 04 Joseph F. Damico | o | o | 11 Hollis W. Rademacher | o | o | | | | | 05 Bert A. Getz, Jr. | o | o | 12 Ingrid S. Stafford | o | o | | | | | 06 H. Patrick Hackett, Jr. | o | o | 13 Edward J. Wehmer | o | o | | | | | 07 Scott K. Heitmann | o | o | | | | | | | | | | | | | | | | | | | | | | | | | Proposal 2 — | | Amendment to the Company’s Directors Deferred Fee and Stock Plan to increase the number of shares authorized for issuance under the plan | | | | | | | | | | | | | | | | | | | | | | o | | For | | o | | Against | | o | | Abstain | | | | | | Proposal 3 — | | Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for the year 2008 | | | | | | | | | | | | | | | | | | | | | | o | | For | | o | | Against | | o | | Abstain | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (to be signed on the other side) |
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