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Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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o | Preliminary Proxy Statement |
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x | Definitive Proxy Statement |
o | Definitive Additional Materials |
o | Soliciting Material Pursuant to Rule §240.14a-12 |
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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First Midwest Bancorp, Inc. 1 Pierce Place, Suite 1500 Itasca, Illinois 60143 (630) 875-7450 |
April 11, 2005
Dear Stockholder:
You are cordially invited to attend the 2005 Annual Meeting of Stockholders of First Midwest Bancorp, Inc. The meeting will be held on Wednesday, May 18, 2005 at 9:30 a.m. at the Wyndham Northwest Chicago, 400 Park Boulevard, Itasca, Illinois 60143.
The Notice of Annual Meeting, Proxy Statement and Proxy Card are enclosed.
Your vote is important. We encourage you to read the Proxy Statement and vote your shares as soon as possible over the Internet, by telephone or by returning your signed Proxy Card in the accompanying envelope. Specific instructions on how to vote via the Internet or by telephone are described on the Proxy Card.
Whether or not you plan to attend the Annual Meeting, we encourage you to vote at your earliest opportunity.
Yours very truly,
![](https://capedge.com/proxy/DEF 14A/0001206774-05-000551/jmomearasig.jpg)
John M. O’Meara
President and
Chief Executive Officer
![](https://capedge.com/proxy/DEF 14A/0001206774-05-000551/fmblogo.jpg)
First Midwest Bancorp, Inc. 1 Pierce Place, Suite 1500 Itasca, Illinois 60143 (630) 875-7450 |
TO BE HELD MAY 18, 2005
To the Stockholders of
FIRST MIDWEST BANCORP, INC.:
1) | Re-electing three directors: Thomas M. Garvin, John M. O’Meara and John E. Rooney; and |
2) | Transacting such other business as may be properly brought before the Annual Meeting or any adjournment or postponement thereof. |
![](https://capedge.com/proxy/DEF 14A/0001206774-05-000551/sshapirosig.jpg)
Steven H. Shapiro
Executive Vice President and
Corporate Secretary
![](https://capedge.com/proxy/DEF 14A/0001206774-05-000551/fmblogo.jpg)
Proxy Statement | 1 | ||
Record Date and Share Ownership | 1 | ||
Your Vote is Very Important | 1 | ||
Methods of Voting | 1 | ||
Revoking Your Proxy | 1 | ||
Vote Required | 2 | ||
Abstentions and Broker Non-Votes | 2 | ||
Other Business | 2 | ||
Voting of Shares in the First Midwest Bancorp, Inc. Dividend Reinvestment Plan | 2 | ||
Voting by Participants in Employee Plans | 2 | ||
Election of Directors | 3 | ||
Nominees for Director to Serve Until 2008 | 3 | ||
Directors Continuing to Serve Until 2006 | 3 | ||
Directors Continuing to Serve Until 2007 | 4 | ||
Board of Directors’ Operations | 5 | ||
Meetings | 5 | ||
Executive Sessions | 5 | ||
Committees | 5 | ||
Audit Committee | 5 | ||
Compensation Committee | 5 | ||
Nominating and Corporate Governance Committee | 5 | ||
Board of Directors’ Compensation | 7 | ||
Deferred Compensation Plan for Non-Employee Directors | 7 | ||
Non-Employee Directors’ Stock Option Plan | 7 | ||
Security Ownership of Certain Beneficial Owners & Management | 8 | ||
Management Ownership | 8 | ||
Other Security Ownership | 9 | ||
Executive Compensation | 9 | ||
Summary Compensation Table | 9 | ||
Stock Option Grants in 2004 | 11 | ||
Aggregated Option Exercises in 2004 and Year End Option Values | 13 | ||
Defined Benefit or Actuarial Pension and Retirement Plans | 13 | ||
Consolidated Pension Plan Table | 13 | ||
Nonqualified Retirement Plan — Pension Component | 14 | ||
Executive Employment Agreements | 14 |
![](https://capedge.com/proxy/DEF 14A/0001206774-05-000551/fmblogo.jpg)
Retirement and Consulting Agreement | 15 | ||
Compensation Committee Report on Executive Compensation | 15 | ||
Base Salary | 15 | ||
First Midwest Bancorp, Inc. Short-Term Incentive Compensation Plan | 16 | ||
First Midwest Bancorp, Inc. Omnibus Stock and Incentive Plan | 16 | ||
Chief Executive Officer Compensation | 17 | ||
Review of all Components of Chief Executive Compensation | 17 | ||
Compensation Committee’s Conclusion | 17 | ||
Compensation Committee Meetings | 17 | ||
Deductibility of Executive Compensation | 17 | ||
Stock Performance Graph | 18 | ||
Audit Committee Report | 19 | ||
Section 16(a) Beneficial Ownership Reporting Compliance | 20 | ||
Certain Relationships and Related Transactions | 20 | ||
Independent Auditors | 20 | ||
Independent Auditor Fee Information | 21 | ||
Other Auditors | 21 | ||
Code of Ethics and Standards of Conduct | 21 | ||
Other Business | 21 | ||
Incorporation by Reference | 21 | ||
Stockholder Proposals | 22 | ||
Notice of Business to be Conducted at Meeting | 22 | ||
Cost of Solicitation | 22 | ||
Exhibit A — Audit Committee Charter | A-1 |
![](https://capedge.com/proxy/DEF 14A/0001206774-05-000551/fmblogo.jpg)
First Midwest Bancorp, Inc. 1 Pierce Place, Suite 1500 Itasca, Illinois 60143 (630) 875-7450 |
PROXY STATEMENT
FOR ANNUAL MEETING TO BE HELD ON MAY 18, 2005
Record Date and Share Ownership
Your Vote is Very Important
Methods of Voting
• | All stockholders may vote by mail by filling out the enclosed Proxy Card, signing it and mailing it in the enclosed envelope. |
• | Stockholders of record, as well as participants in First Midwest employee benefit plans, can vote via the Internet or by telephone. |
• | Stockholders who hold their shares through a bank or broker can vote via the Internet or by telephone if the bank or broker offers these options. |
Revoking Your Proxy
• | Sending a written statement to that effect to the Corporate Secretary of First Midwest; |
• | Submitting a properly signed Proxy Card with a later date; |
• | Voting by telephone or via the Internet at a later time; or |
• | Voting in person at the Annual Meeting (except for shares held in the First Midwest employee benefit plans). |
Vote Required
Abstentions and Broker Non-Votes
Other Business
Voting of Shares in the First Midwest Bancorp, Inc. Dividend Reinvestment Plan
Voting by Participants in Employee Plans
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the same name. If all of the accounts are not registered in the same name, the employee will receive a separate proxy for each account that is registered in a different name.
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTOR TO SERVE UNTIL 2008
Thomas M. Garvin, 69 (Director since 1989) Mr. Garvin retired in 2001 as President and Chief Executive Officer of G.G. Products Company, Oakbrook, Illinois (a food business acquirer). He is a director of Specialty Foods Group (an income trust). Mr. Garvin is “independent” as defined by the listing standards of the Nasdaq Stock Market (“Nasdaq”). Board policy requires Mr. Garvin to submit his resignation when he reaches age 70 on December 31, 2005.
John M. O’Meara, 59 (Director since 1982) Mr. O’Meara has served as President and, since January 1, 2003, Chief Executive Officer of First Midwest. He also serves as Chairman and Chief Executive Officer of First Midwest Bank, a wholly owned subsidiary of First Midwest (the “Bank”). Previously, he was President and Chief Operating Officer of First Midwest. He is the brother of Robert P. O’Meara.
John E. (Jack) Rooney, 62 (Director since 2005) Since April 10, 2000, Mr. Rooney has served as the President and Chief Executive Officer of U. S. Cellular Company, Chicago, Illinois (a cellular communications provider). He was previously employed by Ameritech Corporation for more than five years, most recently as President of Ameritech Consumer Services and, prior to that, as President of Ameritech Cellular Services. Mr. Rooney has also served as a director of U. S. Cellular since 2000. Mr. Rooney is “independent” as defined by Nasdaq’s listing standards.
DIRECTORS CONTINUING TO SERVE UNTIL 2006
Bruce S. Chelberg, 70 (Director since 1989) Mr. Chelberg retired in 2000 as Chairman and Chief Executive Officer of Whitman Corporation, Rolling Meadows, Illinois (a diversified, multinational holding company). He is a director of Snap-On Tools Corporation, Northfield Laboratories, Inc. and Actuant
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Corporation. Mr. Chelberg is “independent” as defined by Nasdaq’s listing standards. In accordance with Board policy, Mr. Chelberg submitted his resignation when he reached age 70 on August 14, 2004, but the Board extended Mr. Chelberg’s term.
Joseph W. England, 64 (Director since 1986) Mr. England retired in 2000 as Senior Vice President of Deere & Company, Moline, Illinois (a mobile power equipment manufacturer). He is a director of Winnebago Industries. Mr. England is “independent” as defined by Nasdaq’s listing standards.
Patrick J. McDonnell, 61 (Director since 2002) Since July 2000, Mr. McDonnell has served as the President and Chief Executive Officer of the McDonnell Company LLC, Lake Forest, Illinois (a business consulting company). From September 1999 through June 2000, Mr. McDonnell served as the President and Chief Executive Officer of Jordan Professional Services, a professional services firm. From September 1998 through August 1999, Mr. McDonnell served as the President and Chief Operating Officer of LAI Worldwide, an executive recruitment firm. From July 1998 through August 1998, Mr. McDonnell served as Director of Global Assurance for PricewaterhouseCoopers LLP, an accounting firm. Prior to that time, Mr. McDonnell served as the Vice Chairman of Business Assurance for Coopers & Lybrand LLP. He is a director of SS&C Technologies, Inc. Mr. McDonnell is “independent” as defined by Nasdaq’s listing standards.
Robert P. O’Meara, 67 (Director since 1982) Mr. O’Meara is Chairman of the Board. Mr. O’Meara served as Chief Executive Officer of First Midwest from 1987 through 2002. He is the brother of John M. O’Meara.
DIRECTORS CONTINUING TO SERVE UNTIL 2007
Brother James Gaffney, FSC, 62 (Director since 1998) Brother James Gaffney is President of Lewis University, Romeoville, Illinois (an independent private institution of higher education). Brother Gaffney is “independent” as defined by Nasdaq’s listing standards.
John L. Sterling, 61 (Director since 1998) Mr. Sterling is the President and owner of Sterling Lumber Company, Blue Island, Illinois (a lumber distributor). Mr. Sterling is “independent” as defined by Nasdaq’s listing standards.
J. Stephen Vanderwoude, 61 (Director since 1991) Mr. Vanderwoude is Chairman and Chief Executive Officer of Madison River Communications, Mebane, North Carolina (an operator of rural telephone companies). He is a director of Centennial Communications. Mr. Vanderwoude is “independent” as defined by Nasdaq’s listing standards.
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BOARD OF DIRECTORS’ OPERATIONS
Meetings
Executive Sessions
Committees
The Board has established three standing committees: Audit, Compensation and Nominating and Corporate Governance Committees.
Audit Committee
Compensation Committee
The current members of the Compensation Committee are: J. Stephen Vanderwoude, Chairman; Thomas M. Garvin; and John L. Sterling. All members of the Compensation Committee are “independent” directors as defined by Nasdaq’s listing standards. The functions of this Committee are to determine and recommend to the Board the compensation of First Midwest’s directors, the Chief Executive Officer and First Midwest’s other executive officers and to review the propriety of First Midwest’s compensation and benefits programs. The Compensation Committee operates pursuant to a written charter that outlines these and other responsibilities and processes of the Compensation Committee. The Compensation Committee met five times in 2004.
Nominating and Corporate Governance Committee
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• | The principal occupation or employment of the proposed nominee; |
• | Any other information relating to the proposed nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder; |
• | Any other information the stockholder believes is relevant concerning the proposed nominee; |
• | A written consent of the proposed nominee(s) to being named as a nominee and to serve as a director if elected; |
• | Whether the proposed nominee is going to be nominated at the annual meeting of stockholders or is only being provided for consideration by the Nominating Committee; |
• | The name and record address of the stockholder who is submitting the notice; |
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• | The class or series and number of shares of voting stock of First Midwest that are owned of record or beneficially by the stockholder who is submitting the notice; |
• | A description of all arrangements or understandings between the stockholder who is submitting the notice and any other person (naming such person) pursuant to which the nomination is being made by the stockholder who is submitting the notice; and |
• | If the stockholder who is submitting the notice intends to nominate the proposed nominee at the Annual Meeting of stockholders, a representation that the stockholder intends to appear in person or by proxy at the Annual Meeting to nominate the proposed nominee named in the notice. |
Board of Directors’ Compensation
Deferred Compensation Plan for Non-Employee Directors
Non-Employee Directors’ Stock Option Plan
The Non-Employee Directors’ Stock Option Plan (the “Directors’ Plan”) provides for the granting of nonqualified stock options for shares of Common Stock to non-employee Board members. A maximum of 281,250 shares of Common Stock are reserved for issuance thereunder. The timing, amounts, recipients and other terms of the option grants are determined by the provisions of, or formulas in, the Directors’ Plan. The exercise price of the options is equal to the fair market value of the Common Stock
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on the date of grant. All options have a term of ten years from the date of grant and become exercisable one year from the grant date subject to accelerated vesting in the event of end of Board service, death, disability or a change-in-control, as defined in the Directors’ Plan. In 2005, each non-employee director was granted options to purchase 2,961 shares of Common Stock at a weighted average exercise price of $34.45 per share. Directors first elected during the service year are granted options on a pro rata basis to those granted to the directors at the start of the service year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT
Management Ownership
Beneficial Owner | Number of Shares(1)(2) | Percent of Class | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Vernon A. Brunner | 23,341 | * | ||||||||
Bruce S. Chelberg | 47,626 | * | ||||||||
Mark M. Dietrich | 40,645 | * | ||||||||
Joseph W. England | 28,406 | * | ||||||||
Brother James Gaffney | 14,471 | * | ||||||||
Thomas M. Garvin | 38,675 | * | ||||||||
Patrick J. McDonnell | 12,641 | * | ||||||||
John M. O’Meara | 600,697 | 1.3 | % | |||||||
Robert P. O’Meara | 763,722 | 1.7 | % | |||||||
John E. Rooney | — | * | ||||||||
Thomas J. Schwartz | 128,601 | * | ||||||||
Michael L. Scudder | 53,300 | * | ||||||||
Steven H. Shapiro | 6,058 | * | ||||||||
John L. Sterling | 88,121 | * | ||||||||
J. Stephen Vanderwoude | 20,262 | * |
* | Less than 1% |
(1) | The number of shares stated are based on information furnished by the persons listed and include shares personally owned of record by each person and shares which under applicable regulations are deemed to be otherwise beneficially owned by each person including shares allocated to directors and executive officers under the Employee Benefits Plans. Under these regulations, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares voting power or investment power with respect to the security. Voting power includes the power to vote or to direct the voting of the security. Investment power includes the power to dispose or to direct the disposition of the security. A person will also be considered the beneficial owner of a security if the person has a right to acquire beneficial ownership of the security within sixty days. |
(2) | The Profit Sharing Plan holds 1,793,060 (3.9%) shares of Common Stock. Pursuant to the Profit Sharing Plan, participants exercise voting rights with respect to the portion of the shares of Common Stock allocated to their accounts and also direct the Trustee with respect to the investment of their accounts among the investment funds maintained under the Profit Sharing Plan account of the persons and groups listed above are included in the above table. |
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Other Security Ownership
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Merrill Lynch Investment Managers, an operating division of Merrill Lynch & Co., Inc. World Financial Center, North 250 Vesey Street New York, NY 10381 | 2,427,219 shares | 5.23 | % |
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information with respect to annual and other compensation earned during the last three years by First Midwest’s Chief Executive Officer and each of First Midwest’s other four most highly compensated executive officers during 2004.
Annual Compensation(1)(2) | Long-Term Compensation Awards | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name and Principal | Fiscal Year | Salary ($) | Bonus ($) | Securities Underlying Options (#) | All Other Compensation ($)(3) | |||||||||||||||
John M. O’Meara | 2004 | $ | 560,000 | $ | 441,966 | $ | 124,553 | $ | 62,444 | |||||||||||
President & Chief | 2003 | 520,000 | 371,709 | 53,476 | 63,801 | |||||||||||||||
Executive Officer | 2002 | 460,000 | 370,019 | 110,739 | 58,430 | |||||||||||||||
Thomas J. Schwartz | 2004 | 340,260 | 176,358 | 38,744 | 33,977 | |||||||||||||||
Group President — | 2003 | 318,000 | 153,780 | 19,331 | 35,552 | |||||||||||||||
Commercial Banking, | 2002 | 302,640 | 168,532 | 16,526 | 33,030 | |||||||||||||||
First Midwest Bank | ||||||||||||||||||||
Michael L. Scudder | 2004 | 262,150 | 135,188 | 14,407 | 26,209 | |||||||||||||||
Executive Vice President | 2003 | 245,000 | 119,053 | 13,997 | 25,827 | |||||||||||||||
& Chief Financial Officer | 2002 | 185,000 | 103,776 | 9,671 | 19,253 | |||||||||||||||
Steven H. Shapiro(4) | 2004 | 225,000 | 110,630 | 11,348 | 8,438 | |||||||||||||||
Executive Vice President & | 2003 | 201,115 | 123,121 | (5) | 11,998 | — | ||||||||||||||
Corporate Secretary | ||||||||||||||||||||
Mark M. Dietrich | 2004 | 201,267 | 102,181 | 13,810 | 20,122 | |||||||||||||||
Group Executive Vice | 2003 | 188,100 | 91,403 | 10,747 | 20,610 | |||||||||||||||
President & Chief Operations | 2002 | 180,000 | 92,693 | 11,284 | 19,569 | |||||||||||||||
Officer, First Midwest Bank |
(1) | Does not include other annual compensation received in the form of perquisites that did not exceed the lesser of $50,000 or 10% of the executive’s total salary and bonus. |
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(2) | Includes amounts deferred at the direction of these executives pursuant to First Midwest’s qualified and, if applicable, nonqualified defined contribution retirement plans. Amounts in the “Bonus” column relate to the year shown but were actually paid in the succeeding year. |
(3) | “All Other Compensation” represents contributions by First Midwest to its qualified and nonqualified defined contribution retirement plans. |
(4) | Joined First Midwest as Executive Vice President and Corporate Secretary on January 14, 2003. |
(5) | Includes a signing bonus of $25,000. |
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Stock Option Grants in 2004
Individual Grants | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Type(1) | # of Securities Underlying Options Granted in 2004(2)(3) | % of Total Options Granted to Employees in 2004 | Per Share Exercise Price ($) | Expiration Date | Grant Date Present Value ($)(4) | |||||||||||||||
John M. O’Meara | NQSO | 46,217 | 7.93 | % | $ | 32.72 | 2/24/14 | $185,938 | |||||||||||||
NQSO | 5,135 | 0.89 | % | 32.75 | 5/20/14 | 20,390 | |||||||||||||||
NQSO-R | 28,767 | 4.94 | % | 37.17 | 2/16/10 | 35,670 | |||||||||||||||
NQSO-R | 30,872 | 5.30 | % | 37.17 | 2/21/11 | 76,563 | |||||||||||||||
NQSO-R | 3,511 | 0.60 | % | 37.17 | 2/20/12 | 8,707 | |||||||||||||||
NQSO-R | 4,673 | 0.80 | % | 37.17 | 8/18/09 | 11,589 | |||||||||||||||
NQSO-R | 5,378 | 0.92 | % | 37.17 | 2/17/09 | 13,337 | |||||||||||||||
21.38 | % | ||||||||||||||||||||
Thomas J. Schwartz | NQSO | 15,601 | 2.68 | % | $ | 32.72 | 2/24/14 | $62,765 | |||||||||||||
NQSO | 1,560 | 0.27 | % | 32.75 | 5/20/14 | 6,195 | |||||||||||||||
NQSO-R | 3,320 | 0.57 | % | 35.78 | 2/26/10 | 7,780 | |||||||||||||||
NQSO-R | 3,919 | 0.67 | % | 35.78 | 2/21/11 | 9,184 | |||||||||||||||
NQSO-R | 6,138 | 1.05 | % | 35.78 | 2/20/12 | 14,384 | |||||||||||||||
NQSO-R | 981 | 0.17 | % | 35.78 | 8/18/09 | 2,299 | |||||||||||||||
NQSO-R | 1,093 | 0.19 | % | 32.20 | 2/16/04 | 792 | |||||||||||||||
NQSO-R | 1,042 | 0.20 | % | 35.78 | 2/15/05 | 1,317 | |||||||||||||||
NQSO-R | 1,099 | 0.24 | % | 35.78 | 2/21/06 | 2,576 | |||||||||||||||
NQSO-R | 1,157 | 0.25 | % | 35.78 | 2/19/07 | 2,711 | |||||||||||||||
NQSO-R | 1,389 | 0.24 | % | 35.78 | 2/18/08 | 3,255 | |||||||||||||||
NQSO-R | 1,445 | 0.25 | % | 35.78 | 2/17/09 | 3,386 | |||||||||||||||
6.78 | % | ||||||||||||||||||||
Michael L. Scudder | NQSO | 12,020 | 2.06 | % | $ | 32.72 | 2/24/14 | $48,358 | |||||||||||||
NQSO | 1,202 | 0.21 | % | 32.75 | 5/20/14 | 4,773 | |||||||||||||||
NQSO-R | 1,185 | 0.20 | % | 36.80 | 2/21/06 | 2,902 | |||||||||||||||
2.47 | % | ||||||||||||||||||||
Steven H. Shapiro | NQSO | 10,316 | 1.78 | % | $ | 32.72 | 2/24/14 | $41,503 | |||||||||||||
NQSO | 1,032 | 0.17 | % | 32.75 | 5/20/14 | 4,098 | |||||||||||||||
1.95 | % | ||||||||||||||||||||
Mark M. Dietrich | NQSO | 9,228 | 1.58 | % | $ | 32.72 | 2/24/14 | $37,126 | |||||||||||||
NQSO | 923 | 0.16 | % | 32.75 | 5/20/14 | 3,665 | |||||||||||||||
NQSO-R | 687 | 0.12 | % | 34.93 | 2/20/11 | 1,630 | |||||||||||||||
NQSO-R | 1,118 | 2.04 | % | 34.93 | 2/15/05 | 2,183 | |||||||||||||||
NQSO-R | 642 | 0.11 | % | 36.37 | 2/15/05 | 627 | |||||||||||||||
NQSO-R | 1,142 | 0.20 | % | 36.37 | 2/15/05 | 1,115 | |||||||||||||||
4.21 | % |
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(1) | Nonqualified Stock Option (NQSO) or Nonqualified Reload Stock Option (NQSO-R). |
(2) | The options listed in the first and second lines opposite each executive officer’s name are 2004 original options granted under First Midwest’s Omnibus Stock and Incentive Plan (the “Omnibus Plan”), which vest over a period of three years (subject to accelerated vesting in connection with death, disability or a change-in-control), include reload features (See Note 3) and are nontransferable except to family members, family trusts or partnerships; all other options in 2004 are reload stock options described in Note 3 below. |
(3) | Optionees may tender previously acquired shares of the Common Stock in payment of the exercise price of a stock option and may tender previously acquired shares or request First Midwest to withhold sufficient shares to pay the taxes arising from the exercise. The options described above as “reload stock options” are nonqualified stock options granted to replace the number of shares thus tendered. The reload stock option will have an exercise price equal to the fair market value of the Common Stock on the exercise date of the underlying exercised option, will vest on the earlier of six months after the reload grant date or 30 days before the expiration of the underlying option for which the reload was granted. All reload stock options become fully exercisable in connection with a change-in-control of First Midwest (as defined in the Omnibus Plan). The term of a reload stock option is the same as the remaining term of the underlying nonqualified option being exercised. The reload stock options are nontransferable except to family members, family trusts or partnerships. |
(4) | The “Grant Date Present Value” was determined using the Black-Scholes option-pricing model, a theoretical method for estimating the present value of stock options based on complex assumptions about the stock’s price volatility and dividend rate of the underlying stock, interest rates and the expected life of the options. Because of the unpredictability of the assumptions required, the Black-Scholes model, or any other valuation model, is incapable of placing an accurate present value on options to purchase stock. In performing the calculations, the following assumptions were used: (i) the volatility of the stock price was equal to 19%; (ii) an expected dividend yield of 2.7%; (iii) a risk-free interest rate of 2.385% based on the ten-year U.S. Treasury Note effective on the date of grant, to correspond to the expected life of the options; (iv) an expected option life of three years for non-reload options and not to exceed one year for reload options from the date of grant; and (v) no adjustments were made for risk of forfeiture. The ultimate value of the options will depend on the future price of the Common Stock, which cannot be forecast with reasonable accuracy. The actual value, if any, an executive may realize upon the exercise of an option will depend on the excess of the stock price of the Common Stock, on the date the option is exercised, over the exercise price of the option and any future appreciation if the stock continues to be held. |
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Aggregated Option Exercises in 2004 and Year End Option Values
Shares Acquired on Exercise | Value Realized(1) | Number of Securities Underlying Unexercised Options at Dec. 31, 2004 | Value of Unexercised In-the Money Options at Dec. 31, 2004(2) | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||||
John M. O’Meara | 119,986 | $ | 1,699,509 | 57,120 | 199,670 | $ | 348,880 | $ | 901,472 | |||||||||||||||
Thomas J. Schwartz | 37,293 | 561,905 | — | 63,471 | — | 320,850 | ||||||||||||||||||
Michael L. Scudder | 3,585 | 88,316 | 34,471 | 33,239 | 523,833 | 228,272 | ||||||||||||||||||
Steven H. Shapiro | — | — | — | 23,346 | — | 164,084 | ||||||||||||||||||
Mark M. Dietrich | 15,107 | 173,900 | 8,251 | 27,386 | 62,428 | 183,394 |
(1) | The value realized was deferred by election of the named executives into First Midwest’s Nonqualified Stock Option Gain Deferral Plan in the form of 45,718 shares of Common Stock for Mr. O’Meara, 15,710 for Mr. Schwartz, 2,400 for Mr. Scudder and 1,448 for Mr. Dietrich. |
(2) | Options are considered “in-the-money” if the fair market value of the underlying Common Stock exceeds the exercise price of the related stock option. For “in-the-money” options, the “Value of Unexercised In-the-Money Options at December 31, 2004” represents the difference between the closing price of the Common Stock on December 31, 2004 ($36.29) and the exercise price of the underlying options, multiplied by the number of applicable options. Since the adoption of the Omnibus Plan in 1989, no stock options have been repriced. |
Defined Benefit or Actuarial Pension and Retirement Plans
Consolidated Pension Plan Table Years of Service as of December 31, 2004 | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Average Final Earnings | 10 | 15 | 20 | 25 | 30 | 35 | |||||||||||||||||||||
$125,000 | $ | 16,735 | $ | 21,805 | $ | 27,281 | $ | 32,859 | $ | 38,437 | $ | 44,015 | |||||||||||||||
$150,000 | $ | 20,532 | $ | 26,827 | $ | 33,549 | $ | 40,377 | $ | 47,205 | $ | 54,033 | |||||||||||||||
$175,000 | $ | 24,330 | $ | 31,850 | $ | 39,816 | $ | 47,894 | $ | 55,972 | $ | 64,050 | |||||||||||||||
$200,000 | $ | 28,127 | $ | 36,872 | $ | 46,084 | $ | 55,412 | $ | 64,740 | $ | 74,068 | |||||||||||||||
$225,000 | $ | 31,925 | $ | 41,895 | $ | 52,351 | $ | 62,929 | $ | 73,507 | $ | 84,085 |
The table above illustrates the amount of annual retirement income, computed on an actuarial basis using the “straight-life annuity method” provided by First Midwest’s consolidated defined benefit pension plan at normal retirement age (65) in specified average earnings and service classifications. (Benefits are payable for life, or if spousal benefits are elected, a reduced amount is payable for the life of the employee and of the surviving spouse.)
“Average Final Earnings” are determined substantially on the basis of the annual compensation included in the Summary Compensation Table, subject to the provisions of the Internal Revenue Code (the “Code”), limiting the amount of annual compensation that may be taken into account. (The limitation for 2004 was $205,000. For the five years prior to 2004, the limitations were as follows: 2003 and 2002 — $200,000; 2001 and 2000 — $170,000; and 1999 — $160,000.) The amounts shown in the pension table above are not offset by any available Social Security benefits. At December 31, 2004, the years of credited service for First Midwest’s consolidated defined benefit pension plan for the executives
13
included in the Summary Compensation Table were as follows: John M. O’Meara, Thomas J. Schwartz and Mark M. Dietrich — twenty-five; and Michael L. Scudder — eighteen; and Steven H. Shapiro — one.
Nonqualified Retirement Plan — Pension Component
Executive Employment Agreements
14
paid to mitigate the excise taxes, if any) that would be owed to the executives listed in the Summary Compensation Table after a change-in-control, respectively, was: John O’Meara $4,686,516; Thomas J. Schwartz $1,537,886; Michael L. Scudder $1,124,635; Steven H. Shapiro $895,599; and Mark M. Dietrich $852,652.
Retirement and Consulting Agreement
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Base Salary
15
First Midwest Bancorp, Inc. Short-Term Incentive Compensation Plan
First Midwest Bancorp, Inc. Omnibus Stock and Incentive Plan
16
Chief Executive Officer Compensation
Review of all Components of Chief Executive Compensation
Compensation Committee’s Conclusion
Compensation Committee Meetings
Deductibility of Executive Compensation
Submitted by the Compensation Committee of First Midwest’s Board of Directors
J. Stephen Vanderwoude,Chairman
Thomas M. Garvin
John L. Sterling
17
Stock Performance Graph
![](https://capedge.com/proxy/DEF 14A/0001206774-05-000551/d16774line.jpg)
First Midwest, the S&P 500 and the S&P SmallCap Banks(1)
1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
First Midwest | 100 | 111.66 | 145.33 | 136.40 | 170.15 | 195.33 | ||||||||||||||||||||
S&P 500 | 100 | 90.90 | 80.90 | 62.39 | 80.29 | 89.03 | ||||||||||||||||||||
S&P SmallCap Banks(2) | 100 | 138.34 | 158.44 | 169.66 | 232.48 | 285.40 |
(1) | Assumes $100 invested on December 31, 1999 in First Midwest’s Common Stock, the S&P 500 and the S&P SmallCap Banks with the reinvestment of all related dividends. |
(2) | The S&P SuperCap Regional Banks index was used for periods prior to 2002. |
18
AUDIT COMMITTEE REPORT
Submitted by the Audit Committee of the Board of Directors
Joseph W. England,Chairman
Bruce S. Chelberg
Patrick J. McDonnell
John E. Rooney
J. Stephen Vanderwoude
19
SECTION 16(a) Beneficial Ownership Reporting Compliance
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INDEPENDENT AUDITORS
20
Independent Auditor Fee Information
2004 | 2003 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Audit Fees | $ | 720,000 | $ | 302,000 | ||||||
Audit-Related Fees | 176,000 | 103,500 | ||||||||
Tax Fees | 49,200 | 83,100 | ||||||||
All Other Fees | 1,500 | 1,201 | ||||||||
Total | $ | 946,700 | $ | 489,801 |
Other Auditors
CODE OF ETHICS AND STANDARDS OF CONDUCT
OTHER BUSINESS
INCORPORATION BY REFERENCE
21
the Audit Committee” (to the extent permitted by the rules of the SEC) and“Stock Performance Graph” as well as Exhibit A to this Proxy Statement, will not be deemed incorporated, unless specifically provided otherwise in such filing. This Proxy Statement includes several website addresses. These website addresses are intended to provide inactive, textual references only. The information on these websites is not part of this Proxy Statement.
STOCKHOLDER PROPOSALS
NOTICE OF BUSINESS TO BE CONDUCTED AT MEETING
COST OF SOLICITATION
By order of the Board of Directors:
![](https://capedge.com/proxy/DEF 14A/0001206774-05-000551/sshapirosig.jpg)
Steven H. Shapiro
Executive Vice President and
Corporate Secretary
22
Exhibit A
FIRST MIDWEST BANCORP, INC.
AUDIT COMMITTEE CHARTER
Purpose
Membership
Meetings
Responsibilities and Authority
A-1
In addition, the Committee, to the extent it deems necessary or appropriate, shall:
1. | Discuss with management and the independent auditors the annual audited financial statements including disclosures made in management’s discussion and analysis. The Committee shall recommend to the Board whether the audited financial statements should be included in the Company’s Form 10-K. |
2. | Discuss with management and the independent auditors the quarterly financial statements, including the results of the independent auditors’ review of the quarterly financial statements. |
3. | Discuss with management and the independent auditors significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including significant changes in the Company’s selection or application of accounting principles. |
4. | Review and discuss with management and the independent auditors the Company’s assessment of the effectiveness of internal controls over financial reporting and the independent auditors’ attestation report on the Company’s assessment. |
5. | Discuss reports from the independent auditors on: |
(a) | all critical accounting policies and practices to be used; |
(b) | all alternative treatments of financial information within U.S. generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and |
(c) | other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences. |
6. | Discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance. |
7. | Discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management. |
8. | Review disclosures made to the Audit Committee by the Company’s CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company’s internal controls. |
9. | Discuss with the independent auditors the overall planning and scope of the financial statement audit. |
10. | Discuss the qualifications, performance, and independence of the independent auditors, including considering whether: (1) the auditors’ quality controls are adequate; (2) material issues have been raised in any internal quality control review, peer reviews or governmental or other inquiry or investigation; and (3) the provision of permissible non-audit services is compatible with maintaining the auditors’ independence, taking into account the opinion of management and internal auditors. |
11. | Oversee the appointment and replacement of the outsourced internal audit service provider and Audit Services Director. |
12. | Discuss with the internal auditor the timing and scope of the internal audit plan. |
A-2
13. | Establish procedures for the receipt, retention, and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters. |
14. | Obtain reports from management with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Ethics and Standards of Conduct. |
15. | Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company’s financial statements or accounting policies. |
16. | Discuss with management any legal matters that may have a material impact on the financial statements or the Company’s compliance policies and internal controls. |
Limitations of Audit Committee Role
A-3
1 Pierce Place, Suite 1500
P.O. Box 4169
Itasca, IL 60143
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED |
FIRST MIDWEST BANCORP, INC.
The Board of Directors Recommends a Vote FOR the Directors | |||||||||||
Vote on Directors | For All / / | Withhold All / / | For All Except / / | To withhold authority to vote for any individual, mark “For All Except” and write the nominee’s number on the line below. | |||||||
1. | ELECTION OF DIRECTORS: | ||||||||||
Nominees: | 01) Thomas M. Garvin 02) John M. O’Meara 03) John E. Rooney | ||||||||||
The Proxies are authorized to vote in their discretion on such other business as may properly come before the meeting or any adjournment or postponement thereof. | |||||||||||
Each joint owner should sign. Signatures should correspond with the names printed on this Proxy. Attorneys, executors, administrators, guardians, trustees, corporate officers or others signing in a respective capacity should give full title. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
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FIRST MIDWEST BANCORP, INC.
PROXY
Proxy Solicited on Behalf of the Board of Directors
Annual Meeting of Stockholders to be Held May 18, 2005
The undersigned hereby appoints Steven H. Shapiro, Barbara E. Briick and Andrea L. Stangl, or any of them, each with full power of substitution, to represent and act as proxies of the undersigned, and to vote, as designated on the reverse side, all shares of First Midwest Bancorp, Inc. (the “Company”) Common Stock held of record by the undersigned at the close of business on March 24, 2005 at the Annual Meeting of Stockholders of the Company to be held on May 18, 2005 or any adjournment or postponement thereof as fully as the undersigned might or could do if personally present.
If shares of the Company’s Common Stock are issued to or held for the account of the undersigned under employee plans and voting rights attached to such shares (any of such plans, a “Voting Plan”), then the undersigned hereby directs the respective trustee of each applicable Voting Plan to vote in the undersigned’s name and/or account under such Voting Plan, as designated on the reverse side, all shares of the Company’s Common Stock subject to voting direction by the undersigned at the 2005 Annual Meeting of Stockholders or any adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted (i) FOR the election of all Nominees for Director; and (ii) as to any other item of business as may properly come before the 2005 Annual Meeting of Stockholders or any adjournment or postponement thereof, at the discretion of the named proxies.
(Continued, and to be signed and dated, on the reverse side)
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P.O. BOX 4169
ITASCA, IL 60143
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ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
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DETACH AND RETURN THIS PORTION ONLY | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
FIRST MIDWEST BANCORP, INC.
The Board of Directors Recommends a Vote FOR the Directors | ||||||||||||
Vote on Directors | ||||||||||||
1. | ELECTION OF DIRECTORS: Nominees: | 01) Thomas M. Garvin 02) John M. O’Meara 03) John E. Rooney | For All ¨ | Withhold All ¨ | For All Except ¨ | To withhold authority to vote, mark “For All Except” and write the nominee’s number on the line below. | ||||||
The Proxies are authorized to vote in their discretion on such other business as may properly come before the meeting or any adjournment or postponement thereof. | ||||||||||||
Each joint owner should sign. Signatures should correspond with the names printed on this Proxy. Attorneys, executors, administrators, guardians, trustees, corporate officers or others signing in a respective capacity should give full title. | ||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
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FIRST MIDWEST BANCORP, INC.
PROXY
Proxy Solicited on Behalf of the Board of Directors
Annual Meeting of Stockholders to be Held May 18, 2005
(Continued, and to be signed and dated, on the reverse side) VOTE BY INTERNET - www.proxyvote.com ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS VOTE BY PHONE - 1-800-690-6903 VOTE BY MAIL FIRST MIDWEST BANCORP, INC. To withhold authority to vote, mark “For All Except” and write the nominee’s number on the line below.
P.O. BOX 4169
ITASCA, IL 60143 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: FMBC01 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY The Board of Directors Recommends a Vote
FOR the Directors Vote on Directors
1.
ELECTION OF DIRECTORS:
Nominees:
01) Thomas M. Garvin
02) John M. O’Meara
03) John E. Rooney For
All
¨Withhold
All
¨ For All
Except
¨ Each joint owner should sign. Signatures should correspond with the names printed on this Proxy. Attorneys, executors, administrators, guardians, trustees, corporate officers or others signing in a respective capacity should give full title.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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FIRST MIDWEST BANCORP, INC.
PROXY
Proxy Solicited on Behalf of the Board of Directors
Annual Meeting of Stockholders to be Held May 18, 2005
(Continued, and to be signed and dated, on the reverse side)