SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
First Merchants Corporation
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(Name of Registrant as Specified In Its Charter)
Larry R. Helms
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock
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to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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previously. Identify the previous filing by registration statement number,
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FIRST MERCHANTS CORPORATION
200 EAST JACKSON STREET
MUNCIE, INDIANA 47305
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 11, 2002
The annual meeting of the shareholders of First Merchants Corporation (the
"Corporation") will be held at the Horizon Convention Center, 401 South High
Street, Muncie, Indiana 47305, on Thursday, April 11, 2002, at 3:30 p.m. for the
following purposes:
(1) To elect five directors, to hold office for a term of three years and until
their successors are duly elected and qualified.
(2) To transact such other business as may properly come before the meeting.
Only those shareholders of record at the close of business on February 14, 2002
shall be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Larry R. Helms
Secretary
Muncie, Indiana
February 26, 2002
YOUR VOTE IS IMPORTANT!
YOU ARE URGED TO SUBMIT YOUR PROXY VIA THE INTERNET OR TO SIGN, DATE
AND RETURN YOUR PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
AS SOON AS POSSIBLE SO THAT YOUR SHARES CAN BE VOTED AT THE MEETING
IN ACCORDANCE WITH YOUR INSTRUCTIONS.
February 26, 2002
FIRST MERCHANTS CORPORATION
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 11, 2002
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by and on behalf of the Board of Directors of First Merchants
Corporation (the "Corporation") for use at the annual meeting of shareholders of
the Corporation to be held April 11, 2002. The distribution of these proxy
materials is expected to commence on February 26, 2002.
Please sign, date and return your proxy card or submit your proxy via the
Internet as soon as possible so that your shares can be voted at the meeting in
accordance with your instructions. Internet voting is quick, convenient and your
vote is immediately submitted. Our Internet voting site is available 24 hours a
day, 7 days a week. To submit your proxy via the Internet, log on to the website
www.proxytrust.com, click on the "Investors" tab, and follow the simple
instructions on the screen. You will be required to enter your unique 10-digit
control number found in the box near the right margin of your First Merchants
Corporation proxy card in order to vote on the electronic equivalent of the
proxy card. Similar instructions are included on the enclosed proxy card. Your
Internet vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed and returned your proxy card.
Any shareholder giving a proxy has the right to revoke it any time before it is
exercised by giving written notice of revocation to the Secretary received prior
to the meeting, by voting again in writing or via the Internet, or by voting in
person at the meeting. The shares represented by proxies will be voted in
accordance with the instructions on the proxies. In the absence of specific
instructions to the contrary, proxies will be voted in favor of election to the
Board of Directors of all nominees listed in Item 1 of the proxy. If any
director nominee named in this proxy statement shall become unable or declines
to serve (an event which the Board does not anticipate), the persons named as
proxies will have discretionary authority to vote for a substitute nominee named
by the Board, if the Board determines to fill such nominee's position.
VOTING SECURITIES
Only shareholders of record at the close of business on February 14, 2002 will
be entitled to notice of and to vote at the annual meeting. 12,776,415 shares of
common stock were outstanding and entitled to vote as of February 14, 2002.
Each share of the Corporation's common stock is entitled to one vote. Directors
are elected by a plurality of the votes cast by the shares entitled to vote in
the election at a meeting at which a quorum is present. Shareholders do not have
a right to cumulate their votes for directors. The affirmative vote of a
majority of the shares present and voting at the meeting in person or by proxy
is required for approval of all items submitted to the shareholders for their
consideration other than the election of directors. The Secretary will count the
votes and announce the results of the voting at the meeting. Abstentions will be
counted for the purpose of determining whether a quorum is present but for no
other purpose. Broker non-votes will not be counted.
The Corporation's subsidiaries held 1,188,502 shares of the Corporation's common
stock as of February 14, 2002 in various fiduciary capacities, in regular,
nominee or street name accounts, consisting of 9.30% of the Corporation's
outstanding shares. Beneficial ownership of shares so held is disclaimed by the
Corporation. It is the practice of the respective subsidiaries when holding
shares as sole trustee or sole executor to vote the shares but, where shares are
held as co-executor or co-trustee, approval is obtained from the co-fiduciary
prior to voting.
ELECTION OF DIRECTORS
Five directors will be elected at the annual meeting.
The persons named below have been nominated for election to the Board of
Directors (the "Board"), with terms expiring as of the 2005 annual meeting of
shareholders. All of the nominees are currently members of the Board.
Those persons nominated as directors include:
Name and Age Present Occupation Director Since
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Class II (Terms expire 2005):
Stefan S. Anderson Chairman of the Board of the Corporation and First 1982
Age 67 Merchants Bank, National Association ("First
Merchants"), a wholly-owned subsidiary of the
Corporation
Jerry M. Ault(1) Chairman of the Board, President and Chief Executive 2001
Age 65 Officer, Frances Slocum Bank ("Frances Slocum"), a
wholly-owned subsidiary of the Corporation
Blaine A. Brownell President, Ball State University 2001
age 59
Thomas B. Clark Retired Chairman of the Board, President and Chief 1989
age 56 Executive Officer, Alltrista Corporation (Alltrista
Corporation manufactures metal and plastic products.)
John E. Worthen President Emeritus, Ball State University 1987
age 68
Those persons named below continue to serve as directors:
Class I (Terms expire 2004):
Dennis A. Bieberich(2) President and Chief Executive Officer, Decatur Bank 2000
age 51 and Trust Company ("Decatur"), a wholly-owned
subsidiary of the Corporation
Michael L. Cox President and Chief Executive Officer of the 1984
age 57 Corporation
Norman M. Johnson Retired Executive Vice President, Stein Roe & 1996
age 67 Farnham, Investment Counsel
George A. Sissel Chairman of the Board, Ball Corporation (Ball 1995
age 65 Corporation manufactures metal and plastic packaging
products and technology products and services.)
Robert M. Smitson Chairman of the Board, Maxon Corporation (Maxon 1982
age 65 Corporation designs and manufactures specialty
industrial combustion systems and valves.)
Class III (Term expires 2003):
Roger M. Arwood Executive Vice President of the Corporation and 2000
age 50 President and Chief Executive Officer, First Merchants
James F. Ault(3) Chairman of the Board, The Madison Community Bank 1999
age 66 ("Madison"), a wholly-owned subsidiary of the
Corporation, and retired executive of General Motors
Corporation
- 2 -
Name and Age Present Occupation Director Since
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Frank A. Bracken Retired Attorney, Bingham McHale LLP 1994
age 67
Barry J. Hudson(3) Chairman of the Board, First National Bank of Portland 1999
age 61 ("First National"), a wholly-owned subsidiary of the
Corporation
(1) Under an Agreement of Reorganization and Merger between the Corporation and
Francor Financial, Inc., the Board appointed Mr. J. M. Ault as a member of
the Board on August 14, 2001 and agreed to nominate him for election for a
full 3-year term as a director at the 2002 annual meeting of shareholders.
(2) Under an Agreement of Reorganization and Merger between the Corporation and
Decatur Financial, Inc., the Board appointed Mr. Bieberich as a member of
the Board on August 8, 2000 and agreed to nominate him for election to a
full 3-year term as a director at the 2001 annual meeting of shareholders.
(3) Under Agreements of Reorganization and Merger between the Corporation and
Jay Financial Corporation, and among the Corporation, Pendleton Banking
Company ("Pendleton"), and Anderson Community Bank ("Anderson"), the Board
appointed Messrs. Hudson and J. F. Ault as members of the Board on May 11,
1999 and agreed to nominate them for election to full 3-year terms as
directors at the 2000 annual meeting of shareholders.
The occupations set forth above have been the principal occupations of the
director-nominees and continuing directors during the past 5 years except as
follows:
Mr. Anderson was also President of the Corporation from 1982 to 1998 and CEO
from 1982 to 1999, and he was President of First Merchants from 1979 to 1996 and
CEO from 1979 to 1999. Mr. Arwood was the Executive Vice President and Chief
Credit Officer of Boatmen's Bank from 1988 until 1997, when he became Executive
Vice President, Credit Risk Management, of NationsBank/Bank of America. He
joined the Corporation and First Merchants in 2000 and became President and CEO
of First Merchants later in the same year. Mr. J. F. Ault became Chairman of the
Board of Anderson when it was formed in 1995, and he became Chairman of the
Board of Madison in 1999 when Anderson was merged into Pendleton to form
Madison. Mr. Bracken was Of Counsel with the Bingham Summers Welsh & Spilman LLP
law firm until his retirement on January 1, 2001. The firm changed its name to
Bingham McHale LLP, effective January 1, 2002. Dr. Brownell was Provost and Vice
President for Academic Affairs at the University of North Texas from 1990 to
1998 and Executive Director of the Center for International Programs and
Services at the University of Memphis from 1998 to 2000. He became President of
Ball State University in 2000. Mr. Clark served as President and CEO of
Alltrista Corporation from 1995 to 2001, and as Chairman of the Board from 2000
to 2001. Mr. Cox became President of First Merchants in 1996, President of the
Corporation in 1998, and CEO of both in 1999. He was succeeded by Mr. Arwood as
President and CEO of First Merchants in 2000. Mr. Hudson has served as Chairman
of the Board of First National since 1982, and he was also President of First
National from 1982 to 1998 and CEO from 1982 until 2000. Mr. Sissel has served
as Chairman of the Board of Ball Corporation since 1996. He was CEO of Ball
Corporation from 1994 until his retirement in 2001. Mr. Smitson was President of
Maxon Corporation from 1979 to 1997, CEO from 1985 to 1998, and Vice Chairman of
the Board from 1989 to 1998. Dr. Worthen was President of Ball State University
from 1984 to 2000.
Messrs. Bracken and Sissel are also directors of Ball Corporation. Dr. Worthen
is also a director of Crossmann Communities, Inc.
- 3 -
CERTAIN COMMITTEES OF THE BOARD
Executive Committee
The Corporation's Executive Committee functions as a nominating committee. It
recommends to the Board: (a) candidates to fill any vacancies on the Board, and
(b) a slate of directors to be elected each year at the annual meeting of
shareholders. The Committee will consider nominees recommended by shareholders.
Any such recommendation should be in writing and addressed to the Secretary,
First Merchants Corporation, 200 East Jackson Street, Muncie, Indiana 47305. The
members of the Executive Committee are Messrs. Smitson (Chairman), Anderson,
Arwood, Bracken, Clark, Cox, Hudson and Sissel. John W. Hartmeyer, who is a
director of First Merchants, serves as a non- voting member of the Committee.
The Committee did not meet during 2001. Its functions as a nominating committee
were carried out by the Board.
Compensation and Human Resources Committee
The Corporation has a Compensation and Human Resources Committee whose functions
are: (a) to review and approve the compensation and benefits to be paid to the
executive officers and senior management employees of the Corporation and the
chief executive officers of its subsidiaries, and (b) to review and approve the
compensation and benefits to be paid to the executive officers and senior
management employees and the compensation ranges and benefits for other officers
and employees of the Corporation's subsidiaries. The authority to periodically
adjust the compensation and benefits of employees, other than executive officers
and senior management of the Corporation and the chief executive officers of its
subsidiaries, has been delegated by the Committee to the chief executive
officers of the subsidiaries. The Committee is responsible for the
administration of the Corporation's incentive compensation and stock plans. The
members of the Committee are Messrs. Smitson (Chairman), Anderson, Bracken,
Clark and Johnson. Mr. Hartmeyer serves as a non-voting member of the Committee.
The Committee met 3 times during 2001.
Audit Committee
The Corporation has an Audit Committee which assists the Board in monitoring the
integrity of the Corporation's financial statements, the Corporation's
compliance with legal and regulatory requirements, and the performance and
independence of the Corporation's internal and external auditors. In discharging
its duties, the Committee: (a) meets with the independent auditor to review the
scope and results of the annual audits; (b) meets with the internal audit staff,
the independent auditor and management to consider and review the adequacy of
the Corporation's internal controls, and meets separately with each of these
groups to discuss any other matters that the Committee or these groups believe
should be discussed privately; and (c) recommends the selection of the
independent auditor for approval by the Board, and approves the independent
auditor's compensation. The Board of Directors has adopted a written charter for
the Audit Committee. The members of the Audit Committee are Messrs. J. F. Ault
(Chairman), Anderson, Clark and Worthen. Philip H. Barger, who is a director of
Decatur, Daniel Eichhorn, who is a director of the Corporation's wholly-owned
subsidiary, First United Bank ("First United"), Suzanne L. Gresham and Nelson W.
Heinrichs, who are directors of First Merchants, George R. Likens, who is a
director of Madison, Greg Moser, who is a director of First National, Gerald S.
Paul, who is a director of the Corporation's wholly-owned subsidiary, The Union
County National Bank of Liberty ("Union County"), and Thomas E. Chalfant, who is
a director of the Corporation's wholly-owned subsidiary, Randolph County Bank
("Randolph County"), serve as non-voting members of the Committee. All of the
members of the Audit Committee are "independent directors," as defined in Rule
4200(a)(15) of the NASD's listing standards, except for Mr. Anderson, who has
been employed by the Corporation and First Merchants within the past three
years. Mr. Anderson retired as the Chief Executive Officer of the Corporation
and First Merchants on April 16, 1999. The Board has determined, in accordance
with Rule 4460(d)(2) of the NASD's listing standards, that Mr. Anderson's
membership on the Committee is required by the best interests of the Corporation
and its shareholders due to his unique understanding of financial matters
acquired during his many years of service to the banking industry, including 6
years as a member of the Federal Reserve Board of Chicago. The Audit Committee
met 4 times during 2001.
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MEETINGS OF THE BOARD
The Board of Directors of the Corporation held 7 meetings during 2001. The only
director who attended fewer than 75% of the total number of meetings of the
Board and the committees on which he served was Mr. J. M. Ault, who attended 2
of the 3 meetings (67%) held during the period for which he has been a director.
COMPENSATION OF DIRECTORS
The directors of the Corporation who are employees of the Corporation or one of
its subsidiaries received no separate compensation for their services as
directors in 2001, except as follows: For his services as a director and
Chairman of the Board of Directors of Frances Slocum, Mr. J. M. Ault was paid a
retainer of $3,600 and $300 for each Board meeting he attended.
The directors of the Corporation who are not employees were paid an annual
retainer of $5,000 in 2001, except that Mr. Anderson was paid an annual retainer
of $12,000 for his services as Chairman of the Board of Directors of the
Corporation. The directors who are not employees also received $400 for each
Board meeting and $250 for each committee meeting they attended, except that the
Board and committee chairmen were paid 150% of the regular meeting fee. Messrs.
Anderson and Smitson also serve as directors of First Merchants, for which Mr.
Smitson received an annual retainer of $3,400 in 2001 and Mr. Anderson, as
Chairman of the First Merchants Board, received an annual retainer of $8,000.
They also received $400 for each First Merchants Board meeting they attended,
except that Mr. Anderson, as Board Chairman, received $600. Messrs. Anderson,
Smitson and Worthen serve on committees of First Merchants and were paid $250
for each committee meeting they attended, except that Mr. Smitson, as Chairman
of the First Merchants Executive Committee, received $375 per meeting. For his
services as a director and Chairman of the Board of Directors of Madison, Mr. J.
F. Ault was paid $250 for each Board meeting and $50 for each committee meeting
he attended. For his services as a director and Chairman of the Board of First
National, Mr. Hudson was paid $5,832, of which $4,356 was deferred compensation
under an insurance-funded deferred compensation plan maintained by First
National. For his services as a director and Chairman of the Executive Committee
of Union County, Mr. Johnson was paid a retainer of $4,200 and $350 for each
Board and Executive Committee meeting he attended. Union County also paid him a
bonus of $770 and provided him life insurance coverage in the amount of $40,000
for these services.
On July 1, 2001, options were granted under the provisions of the Corporation's
1999 Long-term Equity Incentive Plan to each of the non-employee directors to
purchase shares of the Corporation's common stock. Taking into account the 5%
common stock dividend that was distributed on September 24, 2001 to shareholders
of record at the close of business on September 3, 2001, each option is for
1,050 shares at an option price of $21.7524 per share, the market price on the
date of the grants.
The Corporation maintains an unfunded deferred compensation plan which gives
each director an annual election to defer the receipt of director's fees. Any
amounts reflected in a director's account under the plan are credited with
interest at a rate equal to First Merchants' 18-month variable rate IRA account
rate. Payments commence when the participant is no longer a director of the
Corporation or First Merchants. During 2001, one of the Corporation's directors
participated in the plan, deferring fees totaling $8,000.
COMPENSATION OF EXECUTIVE OFFICERS
The tables in this section of the Proxy Statement contain information concerning
the compensation of the Corporation's Chief Executive Officer and its 4 most
highly compensated executive officers other than the Chief Executive Officer as
of the Corporation's most recent fiscal year-end, December 31, 2001. The
information in these tables concerning stock options has been adjusted to give
retroactive effect to the 5% common stock dividend that was distributed on
September 24, 2001 to shareholders of record at the close of business on
September 3, 2001.
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Summary Compensation Table
The following table contains information concerning the compensation paid by the
Corporation and its subsidiaries for the years 1999, 2000 and 2001 to the
Corporation's Chief Executive Officer and its 4 most highly compensated
executive officers other than the Chief Executive Officer.
SUMMARY COMPENSATION TABLE
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Annual Compensation Long Term
Compensation
---------------------------------------------------
Awards
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Name and Securities
Principal Underlying All Other
Position Year Salary Bonus(1) Options Compensation(2)
($) ($) (#) ($)
- ------------------------------------------------------------------------------------------------------------------------
Michael L. Cox 2001 255,359 63,450 10,500 3,125
President and Chief Executive 2000 234,969 70,732 10,500 2,625
Officer, Corporation 1999 194,105 56,772 10,500 2,375
Roger M. Arwood 2001 188,834 35,201 8,400 0
Executive Vice President, 2000 133,883 13,750 8,400 0
Corporation; President and Chief
Executive Officer, First
Merchants(3)
Roy A. Eon 2001 147,328 23,049 4,200 0
Senior Vice President,
Corporation and First Merchants(4)
Larry R. Helms 2001 115,422 16,690 4,830 1,404
Senior Vice President, General 2000 111,014 10,325 4,830 1,350
Counsel and Secretary, Corporation; 1999 106,654 19,898 5,250 1,298
Executive Vice President, First
Merchants
James L. Thrash, 2001 108,516 12,503 4,830 1,060
Senior Vice President, Corporation 2000 104,353 8,679 4,830 1,020
and First Merchants; Chief Financial 1999 100,421 18,787 5,250 980
Officer, Corporation
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(1) The Corporation restructured its incentive compensation program for senior
management in 2000. Under the restructured program, the bonuses earned by
each executive officer for 2000 and 2001was paid 2/3 in cash following the
end of the fiscal year and 1/3 in "deferred stock units" which are payable
in cash two years after the date of grant, unless the units are forfeited
due to termination of the executive officer's employment for cause or
because the executive officer voluntarily terminated employment (except on
account of retirement, death or disability) prior to payment. The portion
of the bonus paid in deferred stock units is not reportable in the Summary
Compensation Table, but is disclosed in the Long-term Incentive Plan Awards
Table below.
(2) Represents employer matching contributions for fiscal year to First
Merchants Corporation Retirement Savings Plan (a ss.401(k) plan).
(3) Mr. Arwood was employed as Executive Vice President of the Corporation and
First Merchants on March 1, 2000. He became President and CEO of First
Merchants on September 19, 2000.
(4) Mr. Eon was employed as Senior Vice President of the Corporation and First
Merchants on January 8, 2001.
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Option Grants Table
The 1999 Long-term Equity Incentive Plan, which became effective as of July 1,
1999, authorizes the Compensation Committee to grant stock-based incentive
awards, including stock options, to eligible employees of the Corporation or any
subsidiary. The following table contains information concerning individual
grants of stock options under the plan made during 2001 to each of the executive
officers named in the Summary Compensation Table above. Each option was to
purchase the Corporation's common stock at a price not less than the market
price of the stock on the date of grant.
OPTION GRANTS IN LAST FISCAL YEAR(1)
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Individual Grants
Potential Realizable
- ------------------------------------------------------------------------------------------ Value at Assumed
Number of Percent of Annual Rates of Stock
Securities Under- Total Options Price Appreciation for
lying Options Granted to Exercise Option Term
Granted Employees in Price -----------------------
Name (#) Fiscal Year ($/Sh) Expiration Date 5%($) 10%($)
- --------------------------------------------------------------------------------------------------------------------
Michael L. Cox 10,500 9.59 21.7524 July 1, 2011 143,892 363,156
Roger M. Arwood 8,400 7.67 21.7524 July 1, 2011 115,114 290,525
Roy A. Eon 2,100 1.92 20.0893 January 8, 2011 26,578 67,078
2,100 1.92 21.7524 July 1, 2011 28,778 72,631
Larry R. Helms 4,830 4.41 21.7524 July 1, 2011 66,190 167,052
James L. Thrash 4,830 4.41 21.7524 July 1, 2011 66,190 167,052
- --------------------------------------------------------------------------------------------------------------------
(1) Mr. Eon was granted an option for 2,100 shares on January 8, 2001, which is
exercisable on or after January 8, 2003. This option is not exercisable
after January 8, 2011. The other options were granted on July 1, 2001 and
are exercisable on or after July 1, 2003. These options are not exercisable
after July 1, 2011.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table contains information concerning (1) each exercise of stock
options during 2001 under the 1989 Stock Option Plan, the 1994 Stock Option
Plan, or the 1999 Long-term Equity Incentive Plan by each of the executive
officers named in the Summary Compensation Table above, and (2) the value as of
December 31, 2001 of each of the named executive officer's unexercised options
on an aggregated basis.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options
on Value Options at Fiscal Year-End at Fiscal Year-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------------------------------------------------------------------------------------
Michael L. Cox 0 0 50,037 / 26,547 389,771 / 77,500
Roger M. Arwood 0 0 5,250 / 11,550 2,668 / 31,242
Roy A. Eon 0 0 0 / 4,200 0 / 13,016
Larry R. Helms 0 0 27,215 / 9,665 180,259 / 29,649
James L. Thrash 0 0 8,395 / 9,665 12,353 / 29,649
- ------------------------------------------------------------------------------------------------------------------
- 7 -
Long-term Incentive Plan Awards Table
Under the restructured Senior Management Incentive Compensation Program, which
became effective in 2000, the annual bonuses earned by participating employees
are payable 2/3 in cash following the end of the fiscal year and 1/3 in
"deferred stock units" two years after the bonus is earned. When payable, the
units are valued at an amount equal to the fair market value of the
Corporation's common stock on the date of payment, plus accumulated dividends.
Payments for the units are made in cash, not stock. If the participant's
employment is terminated for cause or is voluntarily terminated by the
participant (except on account of retirement, death or disability) prior to the
date of payment, the units are forfeited. The following table contains
information concerning deferred stock unit awards for 2001 under the Senior
Management Incentive Compensation Program to each of the executive officers
named in the Summary Compensation Table above. The section of this Proxy
Statement entitled "Compensation and Human Resources Committee Report on
Executive Compensation -- Incentive Compensation" contains additional
information about the Senior Management Incentive Compensation Program.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
Name Number of Shares, Performance or Other Period
Units or Other Rights Until Maturation or Payout
- --------------------------------------------------------------------------------
Michael L. Cox 1,321 1/29/02 - 1/29/04
Roger M. Arwood 733 1/29/02 - 1/29/04
Roy A. Eon 480 1/29/02 - 1/29/04
Larry R. Helms 348 1/29/02 - 1/29/04
James L. Thrash 260 1/29/02 - 1/29/04
- --------------------------------------------------------------------------------
Pension Plans
The Corporation has a qualified defined benefit pension plan , the First
Merchants Corporation Retirement Pension Plan, covering, in general, all
full-time employees of the Corporation and its subsidiaries. The Corporation
also has a nonqualified plan, the First Merchants Corporation Supplemental
Executive Retirement Plan , which provides benefits to designated executives
that would otherwise be payable under the qualified plan if incentive
compensation were included in compensation and Internal Revenue Code Section
401(a)(17) did not limit the amount of compensation that can be considered for
purposes of calculating pension benefits accruing under the qualified plan. For
plan years beginning on or after January 1, 2000, $170,000 is the maximum amount
of compensation that can be considered for purposes of calculating pension
benefits accruing under the qualified plan. This maximum amount increases to
$200,000 for plan years beginning on or after January 1, 2002.
The following table shows the estimated annual benefits payable upon retirement
at age 65 to persons born in 1947 (the average of the birth years of the
executive officers named in the Summary Compensation Table above) in specified
compensation and years of service classifications under the plans. The benefit
amounts shown in the table include amounts payable under both the qualified and
the nonqualified plans, for those executives who participate in both.
- 8 -
PENSION PLAN TABLE
- -----------------------------------------------------------------------------------------------
Compensation Years of Service
- -----------------------------------------------------------------------------------------------
15 20 25 30 35
- -----------------------------------------------------------------------------------------------
$ 125,000 $ 34,805 $ 46,406 $ 58,008 $ 58,008 $ 58,008
150,000 42,680 56,906 71,133 71,133 71,133
200,000 58,430 77,906 97,383 97,383 97,383
250,000 74,180 98,906 123,633 123,633 123,633
300,000 89,930 119,906 149,883 149,883 149,883
350,000 105,680 140,906 176,133 176,133 176,133
400,000 121,430 161,906 202,383 202,383 202,383
450,000 137,180 182,906 228,633 228,633 228,633
- -----------------------------------------------------------------------------------------------
Participants in the qualified plan who had at least 15 credited years of service
and whose combined age and years of service totaled at least 65 as of January 1,
1991, including Mr. Helms, are entitled to a pension benefit calculated under
the formula that was in effect prior to 1990 if that will produce a greater
benefit. The following table shows the estimated annual benefits payable upon
retirement at age 65 under the formula that was in effect prior to 1990 in
specified compensation and years of service classifications under the plans. The
benefit amounts shown in the table include amounts payable under both the
qualified and the nonqualified plans, for those executives who participate in
both.
PENSION PLAN TABLE (Pre-1990 Formula)
- -----------------------------------------------------------------------------------------------
Compensation Years of Service
- -----------------------------------------------------------------------------------------------
15 20 25 30 35
- -----------------------------------------------------------------------------------------------
$ 125,000 $ 37,500 $ 50,000 $ 62,500 $ 62,500 $ 62,500
150,000 45,000 60,000 75,000 75,000 75,000
200,000 60,000 80,000 100,000 100,000 100,000
250,000 75,000 100,000 125,000 125,000 125,000
300,000 90,000 120,000 150,000 150,000 150,000
350,000 105,000 140,000 175,000 175,000 175,000
400,000 120,000 160,000 200,000 200,000 200,000
450,000 135,000 180,000 225,000 225,000 225,000
- -----------------------------------------------------------------------------------------------
Benefits under the plans are determined primarily by average final compensation
and years of service (to a maximum of 25 years) and are computed on the basis of
straight-life annuity amounts. They are not subject to any deduction for Social
Security or other offset amounts.
Compensation for purposes of the qualified plan consists of the base salary and
service award components of the salary amounts reported in the Summary
Compensation Table above. Compensation for purposes of the nonqualified plan
also includes the bonus amounts reported in the Summary Compensation Table
above. All of the executive officers named in the Summary Compensation Table
above are participants in the qualified plan, except for Mr. Eon, who isn't
eligible yet. Mr. Cox and Mr. Arwood are also participants in the nonqualified
plan. The 2001 compensation used for purposes of calculating pension benefits
under the plans, and the credited years of service as of January 1, 2002, of the
executive officers named in the Summary Compensation Table who are participants
in either or both of the plans are: Mr. Cox, $345,210 (7.7 years), Mr. Arwood,
$237,801 (1.8 years), Mr. Helms, $112,470 (30.3 years), and Mr. Thrash, $106,200
(24.0 years).
Termination of Employment and Change of Control Arrangements
The Corporation and First Merchants have change of control agreements with
Messrs. Cox, Arwood, Eon, Helms and Thrash which provide severance benefits in
the event of both a change of control of the Corporation or First Merchants and
a termination or constructive termination of the employment of the executive
within 24 months after the change of
- 9 -
control, unless such termination was for cause, because of the executive's death
or disability, or by the executive other than on account of constructive
termination. In general, a "change of control" means an acquisition by any
person of 25% or more of the Corporation's or First Merchants' voting shares, a
change in the makeup of a majority of the Corporation's or First Merchants'
Board of Directors over a 24-month period, a merger of the Corporation or First
Merchants in which the shareholders before the merger own 50% or less of the
Corporation's or First Merchants' voting shares after the merger, or approval by
the Corporation's shareholders of a plan of complete liquidation of the
Corporation or First Merchants or an agreement to sell or dispose of
substantially all of the Corporation's or First Merchants' assets. A
"constructive termination" means, generally, a significant reduction in duties,
compensation or benefits or a relocation of the executive's office outside of
Muncie, Indiana unless agreed to by the executive. The severance benefits
payable to Messrs. Cox and Arwood, in addition to base salary and incentive
compensation accrued through the date of termination would be: a lump sum
payment equal to 299% of the sum of (1) their annual base salary and (2) their
largest bonus under the Corporation's Senior Management Incentive Compensation
Program during the 2 years preceding termination. The benefits payable to
Messrs. Eon, Helms and Thrash would be determined in a similar manner, except
that the percentage would be 200% for Messrs. Eon and Helms, and 150% for Mr.
Thrash, instead of 299%. The executives would also be paid an amount equal to
any excise tax imposed under Section 4999 of the Internal Revenue Code on any
"excess parachute payment,"and they would be entitled to 2 years of life,
disability, accident and health insurance benefits, the bargain element value of
then outstanding stock options, outplacement services, and reasonable legal fees
and expenses incurred as a result of the termination. The agreements were not
entered into in response to any effort to acquire control of the Corporation or
First Merchants, and the Board of Directors is not aware of any such effort.
COMPENSATION AND HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following non-employee directors comprise the Compensation and Human
Resources Committee of the Corporation: Robert M. Smitson (Chairman), Stefan S.
Anderson, Frank A. Bracken, Thomas B. Clark, and Norman M. Johnson. John W.
Hartmeyer, who is a director of First Merchants, serves as a non-voting member
of the Compensation and Human Resources Committee. Mr. Anderson was the Chief
Executive Officer of the Corporation and First Merchants until his retirement on
April 16, 1999.
COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Human Resources Committee is responsible for administering
the Corporation's executive compensation program, which includes its incentive
compensation and equity-based plans. The manner in which the Committee
establishes the compensation of the Corporation's chief executive officer, Mr.
Cox, as well as the compensation of the other executive officers of the
Corporation, is described below. The compensation of the other executive
officers is determined after consideration of the chief executive officer's
recommendations.
General Policy on Executive Compensation. The executive compensation program is
intended to provide incentives to executive officers to achieve both current and
long-term strategic management goals of the Corporation, with the ultimate
objective of obtaining a superior return on the shareholders' investment. To
this end, the compensation program for executive officers is comprised of cash
and equity-based components which recognize performance as measured against the
Corporation's annual and long-term goals, as well as performance evaluated in
comparison to industry peers.
The Corporation's executive compensation program is designed to assist the
Corporation in achieving its business objectives by: maintaining a competitive
compensation program to attract and retain qualified executives; providing
performance-based incentive compensation that is directly related to the
Corporation's financial performance and individual contributions to that
performance; and linking compensation to factors which affect short-term and
long-term stock performance. The Compensation and Human Resources Committee
believes that the executive compensation program is a significant contributor to
the Corporation's excellent performance compared to industry peers. The
Corporation's earnings have increased every year since it was formed in 1982.
In general, the Committee tries to set the total compensation of the executive
officers of the Corporation - comprised of salary, incentive compensation, and
equity-based compensation - at or near the median of the compensation paid to
- 10 -
executive officers with similar responsibilities at Indiana and Midwestern banks
and bank holding companies of similar size.
Salaries. The salaries paid to the Corporation's executive officers, including
the chief executive officer, for 2001 were subjectively determined after
consideration of the executive officer's individual responsibilities,
performance, and experience, the evaluation by the chief executive officer of
the executive officers other than the chief executive officer, a review of
several measurements of the Corporation's short-term and long-term financial
results compared with industry peers, various industry salary surveys, and other
factors such as budgetary considerations and inflation rates.
Incentive Compensation. The Committee believes that performance-based pay should
be a significant component of the executive officers' total compensation
package. Therefore, under the Corporation's Senior Management Incentive
Compensation Program, each of the executive officers is covered by an incentive
plan whose purpose is to provide incentive compensation which will reward the
executive based on performance, link compensation to achievement of
organizational and individual goals, motivate and retain key personnel, and
attract qualified talent to the Corporation.
Under the Program, each executive officer, including the chief executive
officer, is assigned a target bonus for the following calendar year which is a
percentage of salary. If actual performance for the year is higher than the
target performance level, then the actual incentive compensation for such year
will be higher than the target. The executive officers, other than the chief
executive officer, will earn a bonus by meeting or exceeding pre-established
performance levels for the year with respect to the Corporation's and/or
relevant subsidiary bank's operating earnings and, except for the chief
executive officers of the Corporation and First Merchants, by achieving
pre-established individual benchmarks. The bonus of the Corporation's chief
executive officer is based on whether he meets or exceeds pre- established
performance levels for the year with respect to the Corporation's operating
earnings per share, diluted GAAP earnings per share and return on equity. To
further the purpose of executive retention, 2/3 of the bonus is payable in cash
following the end of the calendar year, and the other 1/3 is payable in
"deferred stock units" two years after the bonus is earned (unless the portion
payable in deferred stock units is less than $1,000, in which case the entire
bonus is payable in cash). When payable, the deferred stock units are valued at
an amount equal to the fair market value of the Corporation's common stock on
the date of payment, plus accumulated dividends. Payment is made to the
executive in cash rather than stock. The deferred stock units are forfeited if
the executive's employment is terminated for cause or is voluntarily terminated
by the executive (except on account of retirement, death or disability) prior to
the date of payment. The executive may elect to defer payment of all or part of
the cash portion of the bonus by filing an election to do so in the manner
described in the Program. Deferred amounts will be credited with interest
quarterly based on the current 5-year U.S. Treasury Bond rate. In order to avoid
wide swings in payouts and to better focus the Program participants on long-term
results, the Program provides that 60% of any bonus paid to the executive
officers will be based on current year performance and 40% will be based on
performance for the prior year.
The cash portion of the bonuses for 2001 for the executive officers named in the
Summary Compensation Table is set forth in the "Bonus" column of that Table, and
the deferred stock unit portion of the bonuses is set forth in the Long- Term
Incentive Plan Awards Table. Mr. Cox's target bonus for 2001 under the Program
was 45% of annual base salary. His actual bonus, based 60% on 2001 performance
and 40% on 2000 performance, was 38.07% of annual base salary. The target
bonuses of Messrs. Arwood, Eon, Helms and Thrash were 40%, 25%, 30% and 25%,
respectively, of annual base salary. Their actual bonuses, based 60% on 2001
performance and 40% on 2000 performance (100% on 2001 performance for Mr. Eon,
since he wasn't an employee in 2000), were 28.54%, 23.05%, 22.29% and 17.68%,
respectively, of annual based salary.
Equity-based Compensation. Equity-based compensation, including compensation
under the Corporation's Long-term Equity Incentive Plan and Employee Stock
Purchase Plan, is intended to encourage ownership and retention of the
Corporation's common stock by key employees, thereby giving them a meaningful
stake in the Corporation's continued success and aligning their interests with
those of other shareholders.
The Long-term Equity Incentive Plan is briefly described in the paragraph above
the Option Grants Table. During 2001 the Compensation and Human Resources
Committee awarded options under the plan for the following number of shares to
the executive officers named in the Summary Compensation Table (as adjusted to
give retroactive effect to the 5%
- 11 -
common stock dividend that was distributed on September 24, 2001 to shareholders
of record at the close of business on September 3, 2001): 10,500 shares to Mr.
Cox, 8,400 shares to Mr. Arwood, 4,200 shares to Mr. Eon, and for 4,830 shares
each to Messrs. Helms and Thrash.
The Employee Stock Purchase Plan generally provides that full-time employees of
the Corporation or a participating subsidiary with more than 6 months of service
may elect, prior to the offering period (July 1 to June 30), to purchase common
shares of the Corporation at a price equal to 85% of the lesser of the market
price of the stock at the beginning of the period and the market price at the
end of the period. For the offering period ending June 30, 2001, Mr. Eon was not
eligible to participate in the Employee Stock Purchase Plan; and Messrs. Cox,
Arwood, Helms and Thrash, the other executive officers named in the Summary
Compensation Table, purchased 827, 0, 150 and 451 shares, respectively, under
the 1999 Employee Stock Purchase Plan. The 1999 Employee Stock Purchase Plan
covers 5 offering periods expiring on June 30, 2004.
Other Compensation. The executive officers are also covered by medical and
retirement plans which are generally applicable to full-time employees of the
Corporation and its subsidiaries. The retirement plans covering each of the
executive officers are the First Merchants Corporation Retirement Pension Plan,
a defined benefit pension plan (described in the "Pension Plans" section), and
the First Merchants Corporation Retirement Savings Plan, an Internal Revenue
Code Section 401(k) plan (referred to in note (1) to the Summary Compensation
Table). Mr. Cox and Mr. Arwood are also covered by the First Merchants
Corporation Supplemental Executive Retirement Plan, a nonqualified SERP plan
(described in the section of this Proxy Statement entitled "Compensation of
Executive Officers -- Pension Plans").
The above report is submitted by:
FIRST MERCHANTS CORPORATION COMPENSATION
AND HUMAN RESOURCES COMMITTEE
Robert M. Smitson, Chairman Thomas B. Clark
Stefan S. Anderson John W. Hartmeyer
Frank A. Bracken Norman M. Johnson
AUDIT COMMITTEE REPORT
The Audit Committee reports as follows: (a) the Committee has reviewed and
discussed the audited financial statements of the Corporation for 2001 with the
Corporation's management; (b) the Committee has discussed with BKD, LLP, the
Corporation's independent auditor for 2001, the matters required to be discussed
by SAS 61 (Codification of Statements on Auditing Standards, AU ss.380), as
modified or supplemented from time to time; and (c) the Committee has received
the written disclosures and the letter from the Corporation's independent
auditor required by Independence Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, Independent Discussions with Audit Committees),
as modified or supplemented from time to time, and has discussed with the
independent auditor the independent auditor's independence. Based on the review
and discussions referred to in clauses (a) - (c) of the preceding sentence, the
Audit Committee recommended to the Board, and the Board has approved, that the
audited financial statements of the Corporation be included in the Corporation's
Annual Report on Form 10-K (17 CFR ss.249.310) for the 2001 fiscal year for
filing with the Securities and Exchange Commission.
The above report is submitted by:
FIRST MERCHANTS CORPORATION AUDIT COMMITTEE
James F. Ault, Chairman Suzanne L. Gresham
Stefan S. Anderson Nelson W. Heinrichs
Philip H. Barger George R. Likens
Thomas E. Chalfant Greg A. Moser
Thomas B. Clark Gerald S. Paul
Daniel Eichhorn John E. Worthen
- 12 -
PERFORMANCE GRAPH
The following graph compares the yearly change in the Corporation's cumulative
total shareholder return on its common stock during the last 5 years with (1)
the cumulative total return of the Russell 2000 Index, and (2) the cumulative
total return of the Russell 2000 Financial Services Sector Index. The graph
assumes $100 was invested on January 1, 1997 in the Corporation's common stock,
and in each of the two indexes shown, and all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG FIRST MERCHANTS CORPORATION, RUSSELL 2000
AND RUSSELL 2000 FINANCIAL SERVICES SECTOR
[LINE GRAPH OMITTED]
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
FMC 100 ............145.32...........157.40............165.21...........148.47...........171.65
Russell 2000 100 ............122.36...........119.24............144.59...........140.22...........143.71
Russell 2000 Finl Serv 100 ............136.03...........126.24............118.83...........143.84...........166.34
- 13 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Corporation is not aware of any person who is the beneficial owner of more
than 5% of the Corporation's outstanding common stock. The following is a
summary of the amount and percent of the Corporation's common stock beneficially
owned on February 14, 2002 by each director and director nominee, by each
executive officer named in the Summary Compensation Table above, and by all
directors and executive officers as a group. Unless otherwise noted, the
beneficial owner has sole voting and investment power.
Amount and Nature Percent
Beneficial Owner of Beneficial Ownership(1) of Class
- ---------------- -------------------------- --------
Stefan S. Anderson (14) 103,507 (2) *
Roger M. Arwood 5,355 *
James F. Ault 22,702 (3) *
Jerry M. Ault 49,247 (4) *
Dennis A. Bieberich 80,510 (5) *
Frank A. Bracken (14) 86,002 (6) *
Blaine A. Brownell 1,050 (7) *
Thomas B. Clark 9,257 *
Michael L. Cox 65,655 (8) *
Barry J. Hudson 547,431 (9) 4.28%
Norman M. Johnson 388,377 (10) 3.04%
George A. Sissel 7,283 (11) *
Robert M. Smitson (14) 17,652 (12) *
John E. Worthen 9,186 *
Roy A. Eon 0 *
Larry R. Helms 43,266 (13) *
James L. Thrash 23,717 *
Directors and Executive
Officers as a Group (17 persons) (14) 1,460,197 11.27%
(1) The information contained in this column is based upon information
furnished to the Corporation by the persons and entities named above and
shareholder records of the Corporation. The shares shown include the
following shares which may be acquired during the next 60 days under a
stock option plan by the executive officers named above: Mr. Arwood, 5,250
shares; Mr. Cox, 54,651 shares; Mr. Helms, 27,215 shares; and Mr. Thrash,
8,395 shares; and the following shares which may be acquired during the
next 60 days under a stock option plan by the directors named above: Mr.
Anderson, 31,185 shares; Messrs. Clark and Worthen, 7,875 shares each;
Messrs. Bracken, Sissel and Smitson, 6,930 shares each; Mr. Johnson, 5,040
shares; Mr. Hudson, 4,200 shares; Mr. J. F. Ault, 3,150 shares; and Dr.
Brownell, 950 shares. The shares shown for directors and executive officers
as a group include 176,576 shares which may be acquired during the next 60
days under a stock option plan.
(2) Includes 1,968 shares held by his spouse, Joan Anderson, in which he
disclaims any beneficial interest.
(3) Includes 12,684 shares held by his spouse, Marilyn Ault, in which he
disclaims any beneficial interest.
(4) Includes 509 shares held by his spouse, Christina Ault, in which he
disclaims any beneficial interest.
(5) Includes 30,522 shares held by his spouse, Melanie Bieberich, in which he
disclaims any beneficial interest.
- 14 -
(6) Includes 4,378 shares held by his spouse, Judy Bracken, in which he
disclaims any beneficial interest.
(7) Includes 100 shares held by his spouse, Mardi Brownell, in which he
disclaims any beneficial interest.
(8) Includes 4,505 shares held jointly with his spouse, Sharon Cox.
(9) Includes 297,286 shares owned by Mutual Security, Inc.; 187,749 shares held
jointly with his spouse, Elizabeth Hudson; and 10,910 shares held by his
spouse as custodian for his children, in which he disclaims any beneficial
interest.
(10) Includes 25,717 shares held by his spouse, Julia Johnson, in which he
disclaims any beneficial interest; and 77,931 shares held in trust for
family members for which Mr, Johnson, as co-trustee, has shared voting and
investment power.
(11) Includes 353 shares held jointly with his spouse, Mary Sissel.
(12) Includes 5,315 shares held by his spouse, Marilyn Smitson, in which he
disclaims any beneficial interest.
(13) Includes 16,051 shares held jointly with his spouse, Sandra Helms.
(14) Messrs. Anderson, Bracken and Smitson serve as directors of the George and
Frances Ball Foundation, Muncie, Indiana, which owns 217,569 shares (1.70%)
of the Corporation's outstanding common stock. The Foundation's Board of
Directors, which has 6 members, has the voting and investment power over
the shares held by the Foundation. The Foundation's shares are not included
in the totals of the shares beneficially owned by Messrs. Anderson, Bracken
and Smitson or by directors and executive officers as a group.
* Percentage beneficially owned is less than 1% of the outstanding shares.
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
Certain directors and executive officers of the Corporation and its subsidiaries
and their associates are customers of, and have had transactions with, the
Corporation's subsidiary banks from time to time in the ordinary course of
business. Additional transactions may be expected to take place in the ordinary
course of business in the future. All loans and commitments included in such
transactions were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons and did not involve more than the normal risk of collectibility or
present other unfavorable features.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Corporation's directors and executive officers to file reports of ownership and
changes in ownership of the Corporation's stock with the Securities and Exchange
Commission. Based on its records and the written representations of its
directors and executive officers, the Corporation believes that during 2001 its
directors and executive officers complied with all Section 16(a) filing
requirements.
INDEPENDENT PUBLIC ACCOUNTANTS
Selection of Independent Public Accountants
The Board has selected BKD, LLP as the Corporation's independent public
accountants for 2002. Representatives of the firm are expected to be present at
the annual shareholders' meeting. They will have an opportunity to make a
statement, if they desire to do so, and are expected to be available to respond
to appropriate questions.
- 15 -
Audit Fees
BKD, LLP billed the Corporation and its affiliates aggregate fees totaling
$158,650 for professional services rendered for the audit of the Corporation's
annual financial statements for 2001 and the reviews of the financial statements
included in the Corporation's Forms 10-Q for 2001.
Financial Information Systems Design and Implementation Fees
BKD, LLP did not perform any financial information systems design or
implementation services for the Corporation in 2001.
All Other Fees
The aggregate fees for all services rendered by BKD, LLP to the Corporation for
2001, other than those described in the two immediately preceding paragraphs,
totaled $72,128.
The Audit Committee has considered whether the provision by BKD, LLP of the
services covered by the fees other than the audit fees is compatible with
maintaining BKD, LLP's independence and believes that it is compatible.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2003 annual meeting of
the shareholders must be received by the Secretary of the Corporation at the
Corporation's principal office by October 29, 2002, for inclusion in the
Corporation's 2003 proxy statement and form of proxy relating to that meeting.
Shareholder proposals, if any, intended to be presented at the 2002 annual
meeting that were not submitted for inclusion in this proxy statement will be
considered untimely unless they were received by the Secretary of the
Corporation at the Corporation's principal office by January 9, 2002.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Corporation. In addition to
solicitations by mail, proxies may be solicited personally or by telephone or
other electronic means, but no solicitation will be made by specially engaged
employees or paid solicitors.
The Board and management are not aware of any matters to be presented at the
annual meeting of the shareholders other than the election of the directors.
However, if any other matters properly come before such meeting or any
adjournment thereof, the holders of the proxies are authorized to vote thereon
at their discretion, provided the Corporation did not have notice of any such
matter on or before January 9, 2002.
By Order of the Board of Directors
Muncie, Indiana Larry R. Helms
February 26, 2002 Secretary
- 16 -
FIRST MERCHANTS BANK, N.A. PROXY SOLICITED ON BEHALF OF THE
Transfer Agent BOARD OF DIRECTORS OF FIRST MERCHANTS CORPORATION
75 Oser Avenue MUNCIE, INDIANA
Hauppauge, NY 11788 The undersigned hereby appoints Clell W. Douglass
and Hamer D. Shafer, and each of them, as proxies
with power of substitution, to represent and to
vote all shares of common stock of First Merchants
Corporation which the undersigned would be
entitled to vote at the Annual Meeting of
Shareholders of First Merchants Corporation to be
held at the Horizon Convention Center, 401 South
High Street, Muncie, Indiana 47305, at 3:30 PM EST
on April 11, 2002, and at any adjournment thereof,
with all of the powers the undersigned would
possess if personally present. If any of the
nominees for election as Directors is unable or
declines to serve for any reason, the persons
listed above have the authority to vote for any
substitute nominee named by the Board of Directors
of First Merchants Corporation.
INTERNET VOTING OPTION: Available 24 hours a day, 7 days a week, Internet voting
is quick, convenient and your vote is immediately submitted. Simply log on to
www.proxytrust.com, click on the INVESTORS tab and follow the instructions on
the screen. You will be asked to enter your 10-digit control number (found below
right) in order to vote on the electronic equivalent of this proxy card. Your
Internet vote authorizes the named proxies to vote your shares to the same
extent as if you marked, signed and returned your proxy card. If you vote by
Internet, please do not return your proxy by mail.
----------
Your Control Number: 1234567890
----------
FIRST MERCHANTS CORPORATION ANNUAL MEETING OF SHAREHOLDERS
APRIL 11, 2002
THE BOARD OF DIRECTORS AND MANAGEMENT OF FIRST MERCHANTS CORPORATION RECOMMEND A
VOTE "FOR" THE PROPOSALS LISTED.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' AND MANAGEMENT'S
RECOMMENDATIONS, JUST SIGN BELOW; NO BOXES NEED TO BE CHECKED.
1. Election of Directors: FOR all nominees listed to the left (except
Stefan S. Anderson as specified in the space below)
Jerry M. Ault WITHHOLD VOTE (do not vote for any
Blaine A. Brownell of the nominees listed to the left)
Thomas B. Clark
John E. Worthen
(Instruction: To withhold authority to vote for
any individual nominee, write that nominee's
name in the space provided to the right.) _________________________________
2. In their discretion, the proxies are authorized to vote on such other
matters as may properly come before the meeting, provided the Corporation
did not have notice of any such matter on or before January 9, 2002.
This proxy will be voted as directed, but if not
otherwise directed this proxy will be voted "FOR"
election to the Board of Directors of all nominees
listed in item 1 above.
___________________________Dated________
(Signature of Shareholder)
___________________________Dated________
(Signature of Shareholder)
(Joint owners should each sign personally.
Trustees and others signing in a representative
capacity should indicate the capacity in which
they sign).
Please check this box if you plan to attend the Annual Meeting. Number
attending: _______