SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as
[X] Definitive proxy statement permitted by Rule
14a-6(e) (2) )
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
REPUBLIC BANCORP,INC.
(Name of Registrant as Specified in Its Charter)
_________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: ______
______________________________________________________________________
(2) Aggregate number of securities to which transaction applies: ________
______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction: _____________________
______________________________________________________________________
(5) Total fee paid: ______________________________________________________
[ ] Fees paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid: _____________________________________________
(2) Form, schedule or registration statement no.: _______________________
(3) Filing party: _______________________________________________________
(4) Date filed: _________________________________________________________
[ Letterhead of Republic Bancorp Inc. ]
Notice Of Annual Meeting Of Shareholders
The Annual Meeting of Shareholders of Republic Bancorp Inc. (the
"Company") will be held at the Novi Hilton, 21111 Haggerty Road, Novi,
Michigan 48050, on Wednesday, April 22, 1998 at 9:00 a.m., local time, for
the following purposes:
1. To elect fifteen (15) directors of the Company to hold office
until the next annual meeting of shareholders or until their
successors are elected and qualified.
2. To approve the adoption of the Republic Bancorp Inc. 1998 Stock
Option Plan.
3. To approve the adoption of the Republic Bancorp Inc. Voluntary
Management Stock Accumulation Program.
4. To ratify amendments to the Company's Restricted Stock Plan.
5. To consider and act upon any other matters which may properly
come before the meeting.
Shareholders of record at the close of business on March 6, 1998 are
entitled to notice of and to vote at the meeting and at any adjournments
thereof.
By order of the Board of Directors,
/s/ George E. Parker III
-----------------------------------
George E. Parker III
General Counsel and
Corporate Secretary
Dated: March 18, 1998
- -----------------------------------------------------------------------------
It is important that your shares be represented at the meeting,
even if you expect to attend.
PLEASE SIGN AND RETURN YOUR PROXY CARD PROMPTLY.
- -----------------------------------------------------------------------------
PROXY STATEMENT
Annual Meeting of Shareholders
Republic Bancorp Inc.
April 22, 1998
GENERAL INFORMATION
This Proxy Statement is furnished to shareholders of Republic
Bancorp Inc. in connection with the solicitation of proxies by the Company's
Board of Directors for use at the Annual Meeting of Shareholders to be held
at 9:00 a.m., local time, on April 22, 1998 at the Novi Hilton, 21111
Haggerty Road, Novi, Michigan 48050, and at any adjournments thereof. It is
expected that the proxy materials will be mailed to shareholders on or about
March 18, 1998.
The registered office of the Company is located at 122 South Main
Street, Ann Arbor, Michigan 48104, telephone number (313) 665-4030.
Shareholders who have questions regarding the matters to be voted on at the
Annual Meeting should address them to George E. Parker III General Counsel
and Corporate Secretary, 18720 Mack Avenue, Grosse Pointe Farms, Michigan
48236, telephone number (313) 882-6400.
All votes will be tabulated by employees of Boston EquiServe, the
Company's transfer agent for the Common Stock, who will serve as inspectors
of election. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting.
A proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted by (1) filing with the
Corporate Secretary of the Company, at or before the Annual Meeting, a
written notice of revocation bearing a date later than that of the proxy, (2)
duly executing a subsequent proxy relating to the same shares and delivering
it to the Corporate Secretary of the Company, or (3) attending the Annual
Meeting and voting in person. Any written notice of revocation should be sent
to the Company at its principal office, Attention: George E. Parker III
General Counsel and Corporate Secretary. All proxies will be voted in
accordance with the direction of the shareholder executing such proxy and, to
the extent no directions are given, they will be voted "for" approval for
election of the nominees for directors and "for" each of the three proposals
to be presented.
Solicitation of proxies will be made by mail, personally or by
telephone, by directors, officers and regular employees of the Company. The
Company will request brokerage houses and other custodians, nominees and
fiduciaries to forward soliciting materials to the beneficial owners of the
voting securities of the Company held of record by such persons, and will
reimburse them for their reasonable charges and out-of-pocket expenses in
connection therewith. All expenses of solicitation of proxies will be paid by
the Company.
1
ELECTION OF DIRECTORS
The directors of the Company who have been nominated for reelection
to the Board for a one year term, and their respective positions with the
Company are as follows:
Officer/
Name Position Director Since
- ---- -------- --------------
Jerry D. Campbell Chairman of the Board and 1985
Chief Executive Officer
Dana M. Cluckey President, Chief Operating 1986/1995
Officer and Director
Bruce L. Cook Director 1985
Richard J. Cramer, Sr. Director 1991
George A. Eastman Director 1990
Howard J. Hulsman Director 1985
Gary Hurand Director 1990
Dennis J. Ibold Director 1993
Stephen M. Klein Director 1988
John J. Lennon Director 1993
Sam H. McGoun Director 1990
Kelly E. Miller Director 1990
Joe D. Pentecost Director 1985
George B. Smith Director 1987
Jeoffrey K. Stross Director 1993
Each of the above-listed directors is willing to serve another term
on the Board. If any director at the time of reelection is unable to serve,
or is otherwise unavailable for election, and if other nominees are
designated, the persons named in the enclosed form of proxy shall have the
discretionary authority to vote or refrain from voting in accordance with
their judgment on such other nominees. If any nominees are substituted by the
Board of Directors, however, the persons named in the accompanying form of
proxy intend to vote for such nominees.
The Bylaws of the Company provide for a Board of Directors (the
"Board") of not less than six (6) nor more than thirty (30) persons. The
current Board of Directors has determined that the number of directors who
shall serve on the Board for the ensuing term shall be fifteen (15) persons.
The terms of each current director will expire at the Annual Meeting. It is
therefore the intention of the persons named on the enclosed form of proxy to
vote such proxy for reelection of the above-listed current Board members,
each of whose term shall expire at the 1999 Annual Meeting. Nominees
receiving a plurality of votes cast at the meeting will be elected directors.
All proxies will be voted in accordance with the direction of the shareholder
executing such proxy and, to the extent no directions are given, they will be
voted "for" approval for election of the nominees for directors.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION
OF ALL NOMINEES AS DIRECTORS.
2
ADOPTION OF REPUBLIC BANCORP INC. 1998 STOCK OPTION PLAN
Background
In 1997 the Company adopted the 1997 Stock Option Plan covering a
maximum of 825,000 shares of Common Stock. As of February 1, 1998, options
covering 222,090 shares have been issued and are outstanding under the 1997
Stock Option Plan. In furtherance of the same purposes as the 1997 Stock
Option Plan, the Board of Directors on February 19, 1998 adopted the Republic
Bancorp Inc. 1998 Stock Option Plan (the "1998 Plan"), subject to the
approval of the Company's shareholders. The Board believes that the 1998 Plan
will further assist the Company in attracting, retaining and motivating the
best qualified officers and other key employees, and will further enhance the
long-term mutuality of interest between the Company's shareholders and its
officers and key employees. The principal features of the 1998 Plan are
summarized below.
The maximum number of shares of Common Stock that may be issued
under the 1998 Plan is 1,000,000. Of the 1,000,000 shares of Common Stock
authorized for issuance under the 1998 Plan, up to 800,000 shares may be
issued pursuant to options which may be granted under the Voluntary
Management Stock Accumulation Program. Reference is made to the description
of that Program under the heading "Adoption of Republic Bancorp Inc.
Voluntary Management Stock Accumulation Program" in this Proxy Statement.
Summary of Principal Features of the 1998 Plan
Under the 1998 Plan, the Personnel, Nominating and Compensation
Committee ("Compensation Committee") may grant options to officers and other
key employees of the Company and its subsidiaries ("participants"). The
number of participants and the number of shares of Common Stock subject to
options awarded to each participant may vary from year to year. The maximum
number of shares of Common Stock for which a participant may receive awards
of options is limited to 50,000 shares of Common Stock over a one-year
period, provided that such annual maximum shall not include tandem options
issued under the Voluntary Management Stock Accumulation Program, which are
subject to maximum limits established by the terms of that Program. Reference
is made to the description of that Program under the heading "Adoption of
Republic Bancorp Inc. Voluntary Management Stock Accumulation Program" in
this Proxy Statement. As of the date of this Proxy Statement, no
determination has been made regarding the identity of the officers and key
employees to whom awards of options may be made under the 1998 Plan or the
number and type of such awards that will be made to any such officer or key
employee. The Company estimates that approximately 100 employees of the
Company will be eligible to receive options under the 1998 Plan, including
the Chief Executive Officer and the other most highly compensated executive
officers named in the Summary Compensation Table.
The shares of Common Stock may be unissued shares or issued shares
that were reaquired by the Company. The aggregate number of shares of Common
Stock available for options under the 1998 Plan, the shares subject to any
option, and the price per share, will all be proportionately adjusted for any
subsequent increase or decrease in the number of issued shares of Common
Stock resulting from (i) a subdivision or consolidation of shares or any
other capital adjustment, (ii) the payment of a stock dividend, or (iii)
other increase or decrease in such shares effected without receipt of
consideration by the Company. Upon dissolution or liquidation of the Company,
all options outstanding under the 1998 Plan will terminate; provided,
however, that each participant (and each other person entitled under the 1998
Plan to exercise an option) will have the right, immediately prior to such
dissolution or liquidation, to exercise such options in whole or in part, but
only to the extent that such options are otherwise exercisable under the
terms of the 1998 Plan. If shares of Common Stock under an option are not
issued, those shares will again be available for inclusion in future grants.
Grants Under The 1998 Plan
The Committee may grant participants options qualifying as incentive
stock options under Section 422 of the Internal Revenue Code (the "Code") or
non-qualified stock options. The exercise price of either a non-qualified
stock option or an incentive stock option will be equal to the greater of the
fair market value of the shares of Common Stock on the date of grant or the
par value per share of Common Stock. With respect to any individual who owns
10% or more of the total combined voting power of all classes of stock of the
Company or a subsidiary (a "10% Owner"), the exercise price for an incentive
stock option will be not less than 110% of the fair market value of the
shares of Common Stock on the date of grant. For purposes of the 1998 Plan,
fair market value means, on any date, the closing price of the shares of
Common Stock as reported on the Nasdaq Stock Market on such date.
3
The exercise price of an option will be payable (i) in full in cash
or check made payable to the Company's order; or (ii) in full through a sale
and remittance procedure pursuant to which a participant will (A) provide
irrevocable written instructions to a designated brokerage firm to effect the
immediate sale of the shares of Common Stock to be purchased and remitted to
the Company, which out of the sale proceeds available on the settlement date
sufficient funds will be available to cover the aggregate exercise price
payable for the shares of Common Stock to be purchased and (B) concurrently
provide written directives to the Company to deliver the certificates for the
shares of Common Stock to be purchased directly to such brokerage firm in
order to complete the sale transaction ("cashless exercise"). The term of
each option will be fixed by the Compensation Committee but may not exceed
ten years from the date of grant. With respect to a 10% Owner, the term of
any incentive stock option may not exceed five years from the date of grant.
The Compensation Committee will determine the time or times when each option
may be exercised. Options may be exercisable in installments, and the
exercisability of options may be accelerated by the Compensation Committee.
The Compensation Committee may, in its discretion, include in any
option granted under the 1998 Plan a condition that the grantee of an option
agree to remain in the employ, and to render services to the Company or any
of its subsidiaries for a special period of time following the date the
option is granted. No such condition or agreement will impose upon the
Company or any of its subsidiaries, however, any obligation to employ such
individual for any period of time.
Absent special action by the Compensation Committee options granted
will vest and may be exercised to the extent of 25% of shares covered only
after the first anniversary of the grant, to the extent of an additional 25%
of shares covered only after the second anniversary of the grant, to the
extent of an additional 25% of shares covered only after the third
anniversary of the grant and to the full extent of shares covered after the
fourth anniversary of the grant. However, options granted pursuant to the
Company's Voluntary Management Stock Accumulation Program will not vest and
will not be exercisable for a three year period after grant except in
circumstances of death, disability or retirement of the Program participant.
Reference is made to the description of the Program under the heading
"Adoption of Republic Bancorp Inc. Voluntary Management Stock Accumulation
Program" in this Proxy Statement.
If a participant ceases to be employed by the Company or any of its
subsidiaries, then his or her options will terminate immediately. If a
participant's cessation of employment with the Company and its subsidiaries
is due to retirement with the consent of the Company or any of its
subsidiaries, he or she may, at any time within six (6) months after such
cessation of employment, exercise his or her options to the extent that he or
she was entitled to exercise them on the date of cessation of employment, but
in no event shall any option be exercisable more than ten (10) years from the
date it was granted. If a participant's cessation of employment with the
Company and its subsidiaries is due to permanent disability (within the
meaning of Code Section 22(e)(3)), the participant will have six (6) months
after the date of termination of employment, but in no event after the stated
expiration date of the participant's options, to exercise options that the
participant was entitled to exercise on the date the participant's employment
terminated as a result of the disability. The Compensation Committee may
cancel an option during the six (6) month period referred to in this
paragraph if the participant engaged in employment or activities contrary, in
the opinion of the Compensation Committee, to the best interests of the
Company or any of its subsidiaries.
Awards under the 1998 Plan are not transferable except by will or
the laws of descent and distribution and during a participant's lifetime may
be exercised only by the participant. If a participant dies while employed by
the Company or any of its subsidiaries or within six (6) months after having
retired with the consent of the Company or any of its subsidiaries, and
without having fully exercised his or her options, the executors or
administrators, or legatees or heirs, of the participant's estate will have
the right to exercise such options to the extent that such deceased
participant was entitled to exercise the options on the date of the
participant's death.
The Board, by resolution, may terminate, amend or revise the 1998
Plan at any time but such termination, amendment or revision will not affect
any options then outstanding under the 1998 Plan. Unless terminated by action
of the Board, the 1998 Plan will continue in effect until February 18, 2008,
but awards granted prior to such date will continue in effect until they
expire in accordance with their terms. The Compensation Committee may amend,
modify or terminate any outstanding option held by a participant, including
substituting therefor another option of the same or a different type,
changing the date of exercise or vesting and converting an incentive stock
option to a non-qualified stock option, provided that the participant's
consent to such action will be required unless the Compensation Committee
determines in its sole discretion that the action, taking into account any
related action, would not materially and adversely affect the participant.
4
Federal Income Tax Consequences
Non-qualified Stock Options. An individual will not recognize income
upon the grant of a non-qualified stock option. The individual will generally
recognize ordinary income upon the exercise of a non-qualified stock option,
in which event the Company will receive a tax deduction for compensation
equal to the amount of income recognized, for the excess of the fair market
value on the exercise date of the shares of Common Stock acquired over the
aggregate exercise price paid. Any ordinary income recognized by an
individual upon the exercise of a non-qualified stock option will increase
such individual's tax basis for the shares of Common Stock received. Upon a
subsequent sale or exchange of such shares, the individual will recognize
capital gain or loss to the extent of the difference between the selling
price of such shares and his tax basis in such shares. Such gain or loss will
be long-term or short-term capital gain or loss, depending on the
individual's holding period for such shares of Common Stock.
Incentive Stock Options. An employee will not recognize income upon
either the grant of an incentive stock option or upon the exercise of the
incentive stock option. The employee will recognize gain or loss, depending
on such individual's basis in the shares of Common Stock (which is generally
equal to the exercise price paid for the shares of Common Stock), upon the
sale or other disposition of the shares of Common Stock acquired upon
exercise. If certain statutory holding periods are met, such gain or loss
will be long-term capital gain or loss and the Company will not be entitled
to any Federal income tax deduction. If the holding periods are not met, the
employee may be required to recognize ordinary income and the Company will be
entitled to a tax deduction for compensation equal to the amount of ordinary
income, if any, recognized, provided that applicable withholding requirements
are satisfied. Incentive stock options will be treated as non-qualified stock
options to the extent that the aggregate fair market value of the shares of
Common Stock (determined at the time the options are granted) with respect to
which incentive stock options are exercisable for the first time by an
individual during a calendar year (whether as a result of acceleration of
exercisability or otherwise) exceeds $100,000. An employee who exercises an
incentive stock option may be subject to an alternative minimum tax since,
for purposes of the alternative minimum tax, the option will be treated as a
non-qualified stock option. Accordingly, the taxable event for alternative
minimum tax purposes will generally occur on the exercise of the option.
Other Matters. The 1998 Plan is intended to comply with Section
162(m) of the Code which was enacted as part of the Omnibus Budget
Reconciliation Act of 1993. Upon the approval of the 1998 Plan by the
shareholders, options awarded under the 1998 Plan will qualify as
performance-based compensation as defined in Code Section 162(m) and the
regulations issued by the Department of the Treasury under such section. As
such, the income attributable to such options will not be subject to the $1
million deduction limit of Code Section 162(m).
Recommendation and Vote
To be approved, this proposal requires the affirmative vote of the
holders of a majority of the voting stock of the Company present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon.
Abstentions on this proposal will be counted for quorum purposes but not
voted.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
ADOPTION OF THE REPUBLIC BANCORP INC. 1998 STOCK OPTION PLAN.
5
ADOPTION OF REPUBLIC BANCORP INC. VOLUNTARY MANAGEMENT STOCK
ACCUMULATION PROGRAM
Background
On February 19, 1998 the Company's Board of Directors approved a
Voluntary Management Stock Accumulation Program (the "Program") covering a
maximum of 400,000 shares of Common Stock. The Program is designed to
encourage the Company's senior management to increase and maintain its
investment in the Company's common stock. The Board believes that a
significant investment in the Company's Common Stock by senior management is
desirable as it further aligns the interest of management with the interests
of the Company's shareholders. The principal features of the Program are
summarized below.
Summary of Principal Features of the Program
Under the Program the Company's Personnel, Nominating and
Compensation Committee ("Compensation Committee") may select key management
personnel, determined by the Compensation Committee, who will have the right
to acquire shares of the Company's Common Stock at fair market value; and if
shares are so acquired under the Program, the key management employee will be
granted two tandem options, exercisable at the current fair market value
price, for every one share purchased. The participant's purchased shares may
not be sold, transferred, encumbered or otherwise disposed of for a three
year period so long as the participant remains in the employ of the Company
or one of its subsidiaries. The tandem options may not be exercised until
they have been held for three years and expire ten years from the date of
grant. However, the options expire automatically upon termination of a
participant's employment, except for:
a) disability or retirement, in which case three additional
months will be allowed to exercise the options, or
b) death, in which case the estate or beneficiary will be
allowed six additional months to exercise the options;
provided, in any of those situations, that the options could have been
exercised in full at the time employment terminated. Additionally, a
participant who retires with ten years of service, becomes disabled or dies,
and who has held any tandem options for less than three years at the time of
termination of participant's employment, may exercise a pro-rata fraction of
his or her tandem options based upon the number of months from date of grant
to termination date divided by 36 months.
The Program provides for a one time annual election procedure to
purchase the Company's Common Stock. Once each year there will be a period of
ten business days, following public release of the Company's earnings, during
which a participant may elect to purchase program shares. It is anticipated
that the 1998 ten-day period will follow the Company's annual shareholders'
meeting scheduled for April 22, 1998. In future years, the window period will
follow release of the Company's earnings for the prior calendar year.
However, the Program provides for delay of the window period if there is any
material information regarding the Company that has not been publicly
disclosed. Each participant will be invited to return an election form during
the ten-day period, indicating the dollar amount of stock he or she wishes to
purchase. Shortly after the ten-day period is over, the purchase price will
be determined and stock will be purchased.
The Program authorizes up to 100,000 common shares per year for sale
as program shares, subject to an overall maximum of 400,000 shares while the
Program is in effect. Consequently, an annual maximum of 200,000 common
shares is authorized for tandem options (subject to an overall maximum of
800,000 option shares). There are annual individual limits of 10,000 program
shares and 20,000 tandem options. The Compensation Committee may impose lower
annual aggregate limits. If participants elect to purchase more shares than
have been authorized in a given year, the authorized shares will be ratably
allocated in proportion to the number of shares that each participant has
elected to purchase.
Federal Income Tax Consequences
Program shares are purchased at current market value with after-tax
dollars so that increases in share value would be taxed at capital gain rates
upon sale of the shares. Dividends would be taxed as ordinary income.
6
If the program shares are held until death, the participant's beneficiaries
would receive a step-up in basis to the date-of-death value (in effect
eliminating income tax on gain during the participant's lifetime).
The tandem options will be issued under the 1998 Stock Option Plan.
Reference is made to the description of the federal income tax consequences,
grant and exercise of non-qualified stock options of the 1998 Stock Option
Plan under the heading "Adoption of Republic Bancorp Inc. 1998 Stock Option
Plan" in this Proxy Statement.
Recommendation and Vote
To be approved, this proposal requires the affirmative vote of the
holders of a majority of the voting stock of the Company present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon.
Abstentions on this proposal will be counted for quorum purposes but not
voted.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
ADOPTION OF THE REPUBLIC BANCORP INC. VOLUNTARY MANAGEMENT STOCK
ACCUMULATION PROGRAM.
7
PROPOSAL TO RATIFY AMENDMENTS TO THE COMPANY'S RESTRICTED STOCK PLAN
Background
In March 1986 the Company adopted a Restricted Stock Plan (the
"Plan") which was approved by the shareholders in April 1986, and was
thereafter amended and approved by the shareholders on April 28, 1993. The
Restricted Stock Plan was subsequently amended by the Board of Directors on
January 16, 1997 and February 19, 1998, adding additional shares to the
Restricted Stock Plan and extending the restriction period from three to four
years.
The Plan provides for the discretionary grant of shares of the
Company's common stock to salaried and commissioned employees of the Company
and its subsidiaries by the Personnel, Compensation and Nominating Committee
("Compensation Committee"). As of February 1, 1998, approximately 200
employees were eligible to receive an award of restricted stock under the
Plan. Shares are awarded by the Compensation Committee to those eligible
employees who play a key role in the Company's business operations. The
restricted stock is subject to a vesting requirement requiring the employee
to remain in the employ of the Company or one of its subsidiaries for a
period of four years from the date of the award (for awards made prior to
January 16, 1997 the period is three years). By its terms the Plan may be
amended from time to time by the Company's Board of Directors.
On January 16, 1997 the Board amended the Plan to increase the
number of shares under the Plan to 331,301 shares and to extend the
restriction period to four years. On February 19, 1998 the Board further
amended the Plan so that the total number of shares of restricted Common
Stock that may be outstanding at any time under the Plan shall not exceed
five percent (5%) of the issued and outstanding Common Stock of the Company.
If as a result of a stock dividend, stock split, reverse stock split,
recapitalization or other adjustment in the Common Stock of the Company or as
a result of a merger, consolidation or other reorganization of Company there
shall be any increase, decrease or adjustment in the Common Stock of the
Company, an appropriate adjustment shall be made by the Board in the
aggregate number of shares subject to the Plan; provided, however, that any
fractional shares resulting from any such adjustment shall be eliminated.
Shares of Common Stock that may be awarded under the Plan may either be
authorized and unissued shares or issued shares that have been reacquired by
the Company. As of February 1, 1998, 212,503 shares have been awarded and are
still subject to restrictions under the Plan.
In the event of termination of employment during the restriction
period for any reason other than death, permanent disability (as defined in
Internal Revenue Code Section 22(e)(3)) or normal retirement (defined as
retirement age 65 or at an earlier age with the consent of the Compensation
Committee and ten years service as an employee), the participant's right to
the restricted stock shall cease and terminate at the date of termination. In
the event of termination of employment during the restriction period by
reason of death, permanent disability or normal retirement, the participant
on termination shall be entitled to that fraction of each restricted stock
award, the numerator of which is the number of full calendar months elapsed
from the date of award to the date of termination and the denominator of
which is the number of full calendar months in the applicable restriction
period. A new certificate for such number of shares to which the participant
is entitled shall be issued to the participant and such shares may be
transferred free of the restrictions under this Plan. All remaining
restricted stock in the name of the participant shall be surrendered to the
Company and the participant's rights to such remaining restricted stock shall
cease and terminate as of the date of termination.
8
The following table sets forth the number of shares of restricted
stock that have been awarded and are outstanding to employees under the Plan
as of February 1, 1998:
Name and Position Number of Shares
----------------- ----------------
Jerry D. Campbell 5,500
Chairman of the Board
and Chief Executive Officer
Dana M. Cluckey, President 9,350
and Chief Operating Officer
Barry J. Eckhold 4,510
Vice President and
Chief Credit Officer
Thomas F. Menacher 1,100
Senior Vice President, Treasurer
and Chief Financial Officer
George E. Parker III 2,750
General Counsel and
Corporate Secretary
Executive Officer Group 23,210
Non-Executive Director Group --
Non-Executive Officer Group 189,293
The Company requests shareholders' ratification of the amendments to
the Plan from January 16, 1997 and February 19, 1998 in order to satisfy
Nasdaq Stock Market requirements.
Recommendation and Vote
To be approved, this proposal requires the affirmative vote of the
holders of a majority of the voting stock of the Company present in person or
represented by proxy at the Annual Meeting and entitled to vote thereon.
Abstentions on this proposal will be counted for quorum purposes but not
voted.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY
THE RESTRICTED STOCK PLAN, AS AMENDED.
9
VOTING SECURITIES
Holders of record of Republic Bancorp Inc. Common Stock, $5.00 par
value "Common Stock", at the close of business on March 6, 1998, will be
entitled to vote at the annual meeting of shareholders on April 22, 1998, and
any adjournments of that meeting. As of March 6, 1998, there were 18,678,846
shares of Common Stock issued and outstanding. Each share of Common Stock is
entitled to one vote on each matter presented for shareholder action.
The following table sets forth certain information concerning the
number of shares of the Company's Common Stock as of December 31, 1997, of
each of the Company's directors, each of the named executive officers, and
for all directors and executive officers of the Company as a group. There are
no shareholders known to Republic Bancorp Inc. management to have been the
beneficial owner of more than 5% of the outstanding shares of Common Stock as
of December 31, 1997.
Percentage of
Outstanding
Name of Shares Common Shares
Beneficial Owner Beneficially Owned (1) Beneficially Owned
- ---------------- ---------------------- ------------------
Jerry D. Campbell,
Chairman of the Board and
Chief Executive Officer 182,515 (2) *
Dana M. Cluckey, President,
Chief Operating Officer and Director 87,781 (3) *
Barry J. Eckhold, Vice President,
Chief Credit Officer 48,367 (4) *
Thomas F. Menacher, Senior Vice
President, Treasurer and
Chief Financial Officer 45,380 (5) *
George E. Parker III
General Counsel and
Corporate Secretary 18,025 (6) *
Bruce L. Cook, Director 73,413 (7) *
Richard J. Cramer, Director 56,355 (8) *
George A. Eastman, Director 177,003 (9) *
Howard J. Hulsman, Director 421,570 (10) 2.25%
Gary Hurand, Director 65,352 (11) *
Dennis J. Ibold, Director 118,932 (12) *
Stephen M. Klein, Director 85,557 (13) *
John J. Lennon, Director 26,075 (14) *
Sam H. McGoun, Director 35,861 (15) *
Kelly E. Miller, Director 142,173 (16) *
Joe D. Pentecost, Director 286,413 (17) 1.53%
George B. Smith, Director 601,799 (18) 3.22%
Jeoffrey K. Stross, Director 24,871 (19) *
All Directors and Executive
Officers as a group (18 persons) 2,497,442 (20) 13.13%
<FN>
- ----------------------------
* Indicates that the designated individual owns less than one percent of the
Company's Common Shares.
10
(1) The numbers of shares stated are based on information furnished by
each person listed and include shares personally owned of record by
that person and shares that are considered to be otherwise
beneficially owned by that person. 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 dispositive power with respect to the
security. Voting power includes the power to vote or direct the
voting of the security. Dispositive power includes the power to
dispose or 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
60 days. Unless otherwise indicated below, each beneficial owner
named has sole voting and investment power with respect to the
shares identified.
(2) Of the 182,515 shares beneficially owned by Mr. Campbell, (i) 11,000
shares are owned directly by Mr. Campbell, (ii) 37,042 shares are
owned by a trust of which Mr. Campbell is trustee, (iii) 15,022
shares are owned by Mr. Campbell and held in the Company's 401(k)
plan, (iv) 2,238 shares are owned by Volar Corporation, a
corporation wholly owned by Mr. Campbell, (v) 5,500 shares are
Restricted Stock in which Mr. Campbell maintains full voting rights,
and (vi) 111,713 shares are available to Mr. Campbell upon exercise
of options he holds.
(3) Of the 87,781 shares beneficially owned by Mr. Cluckey, (i) 23,276
shares are owned jointly with his spouse, (ii) 7,906 shares are
owned by Mr. Cluckey and held in the Company's 401(k) plan, (iii)
22,660 shares are Restricted Stock in which Mr. Cluckey maintains
full voting rights, (iv) 33,000 shares are available upon exercise
of options he holds, and (v) 939 shares are available upon exercise
of warrants he holds.
(4) Of the 48,367 shares beneficially owned by Mr. Eckhold, (i) 14,028
are owned jointly with his spouse, (ii) 12,237 shares are owned by
Mr. Eckhold and held in the Company's 401(k) plan, (iii) 4,510
shares are Restricted Stock in which Mr. Eckhold maintains full
voting rights, and (iv) 17,592 shares are available upon exercise of
options he holds.
(5) Of the 45,380 shares beneficially owned by Mr. Menacher, (i) 2,740
shares are owned directly by Mr. Menacher, (ii) 3,322 shares are
owned by Mr. Menacher and held in the Company's 401(k) plan, (iii)
1,464 are owned jointly with his spouse, (iv) 14,410 shares are
Restricted Stock in which Mr. Menacher maintains full voting rights,
and (v) 23,444 shares are available upon exercise of options he
holds.
(6) Of the 18,025 shares beneficially owned by Mr. Parker, (i) 294
shares are owned directly by Mr. Parker, (ii) 5,948 shares are held
in an individual retirement account over which Mr. Parker maintains
investment control, (iii) 2,750 shares are Restricted Stock in which
Mr. Parker maintains full voting rights, (iv) 3,533 shares are held
by Mr. Parker's spouse, and (v) 5,500 shares are available upon
exercise of options he holds.
(7) Of the 73,413 shares beneficially owned by Mr. Cook, (i) 51,525
shares are owned directly by Mr. Cook, (ii) 9,610 are owned by the
estate of his father of which Mr. Cook is administrator, and (iii)
12,278 shares are available upon exercise of warrants he holds.
(8) Of the 56,355 shares beneficially owned by Mr. Cramer, (i) 36,550
shares are owned by a trust of which he is trustee, (ii) 1,749
shares are owned by a trust of which his spouse is trustee, and
(iii) 18,056 shares are available upon exercise of warrants he
holds.
(9) Of the 177,003 shares beneficially owned by Mr. Eastman, (i) 159,063
shares are held jointly with his spouse, and (ii) 17,940 shares are
available upon exercise of warrants he holds.
(10) Of the 421,570 shares beneficially owned by Mr. Hulsman, (i) 243,238
shares are owned directly by Mr. Hulsman, (ii) 156,803 shares are
owned by trusts of which Mr. Hulsman is trustee, and (iii) 21,529
shares are available upon exercise of warrants he holds.
(11) Of the 65,352 shares beneficially owned by Mr. Hurand, (i) 41,504
shares are owned directly by Mr. Hurand, (ii) 2,226 shares are owned
by a partnership in which he has an interest, (iii) 2,918 are owned
jointly with his spouse, and (iv) 18,704 shares are available upon
exercise of warrants he holds.
11
(12) Of the 118,932 shares beneficially owned by Mr. Ibold, (i) 100,201
shares are owned directly by Mr. Ibold, (ii) 7,519 shares are held
by his spouse, (iii) 4,831 shares are owned by Mr. Ibold's son, (iv)
121 shares are owned by Mr. Ibold's stepson, and (v) 6,260 shares
are available upon exercise of warrants he holds.
(13) Of the 85,557 shares beneficially owned by Mr. Klein, (i) 73,569
shares are controlled by Mr. Klein through a trust for which he is
custodian, and (ii) 11,988 shares are available upon exercise of
warrants he holds.
(14) Of the 26,075 shares beneficially owned by Mr. Lennon, (i) 19,815
shares are owned directly by Mr. Lennon and (ii) 6,260 shares are
available upon exercise of warrants he holds.
(15) Of the 35,861 shares beneficially owned by Mr. McGoun, (i) 2,321
shares are directly owned by Mr. McGoun, (ii) 25,670 shares are
controlled by his spouse through a trust for which she is the
custodian, and (iii) 7,870 shares are available upon exercise of
warrants he holds.
(16) Of the 142,173 shares beneficially owned by Mr. Miller, (i) 133,128
shares are controlled by Mr. Miller through a trust for which he is
trustee, and (ii) 9,045 shares are available upon exercise of
warrants he holds.
(17) Of the 286,413 shares beneficially owned by Mr. Pentecost, (i)
118,042 shares are controlled by Mr. Pentecost through a trust for
which he is custodian, (ii) 7,920 shares are held by his spouse,
(iii) 4,194 shares are owned jointly by his spouse and several
grandchildren, (iv) 149,997 shares are held by Better Properties
Inc., a corporation of which he is President, and (v) 6,260 shares
are available upon exercise of warrants he holds.
(18) Of the 601,799 shares beneficially owned by Mr. Smith, (i) 578,654
shares are owned jointly by Mr. Smith and his spouse, and (ii)
23,145 shares are owned by Mr. Smith and held in the Company's
401(k) plan.
(19) Of the 24,871 shares beneficially owned by Mr. Stross, (i) 17,001
shares are owned directly by Mr. Stross, and (ii) 7,870 shares are
available upon exercise of warrants he holds.
(20) Includes 191,249 and 144,999 shares of Common Stock available upon
exercise of options and warrants, respectively, for all directors
and executive officers as a group.
12
BOARD OF DIRECTORS:
Biographical information concerning nominees for election to the Board of
Directors at the annual meeting is presented below:
JERRY D. CAMPBELL He has served as Chairman of the Board since the
Company was organized and has served as Chief Executive
Officer since April 1986. From April 1986 to January
1996, Mr. Campbell also served as President of the
Company. Mr. Campbell is a director of Newcor, Inc. and
a director of Professionals Insurance Company
Management Group, both publicly held companies. Mr.
Campbell has a B.S. degree in liberal arts from Central
Michigan University, an M.B.A. degree from Wayne State
University and an M.B.A. degree from The University of
Michigan. Mr. Campbell is 57.
DANA M. CLUCKEY He has served as President of the Company since January
1996, and has been employed by the Company since
September 1986. From November 1992 to January 1996 he
was Executive Vice President and Treasurer, from
October 1987 to November 1992 he was the Chief
Financial Officer of the Company and from September
1986 to October 1987 he was the Controller of the
Company and Cashier of Republic Bank. Mr. Cluckey has a
B.B.A. degree from The University of Michigan and is a
Certified Public Accountant. Mr. Cluckey is 38.
BRUCE L. COOK He is Chairman of Wolverine Sign Works of Owosso,
Michigan, a family-owned company specializing in
outdoor advertising, and has served in that capacity,
or as President of the company for several years. Mr.
Cook was also President and owner of Fairlane Builders,
Inc., a residential construction and development
company, from 1954 through 1971. Mr. Cook has both a
B.B.A. and an M.B.A. degree from The University of
Michigan. Mr. Cook is 69.
RICHARD J. CRAMER He is President of Dee Cramer, Inc., sheet metal,
heating and air conditioning contractors, where he has
been employed since 1964. Mr. Cramer has a B.S. degree
from the University of Notre Dame and an M.S. degree
from Michigan State University. Mr. Cramer is 57.
GEORGE A. EASTMAN He is an Orthodontic Consultant. Dr. Eastman previously
had a private practice in Flint, Michigan since 1963.
Dr. Eastman has an M.S. degree from The University of
Michigan and a D.D.S degree from The University of
Michigan. Dr. Eastman is 63.
HOWARD J. HULSMAN He is Chairman of the Board of Ross Learning, Inc.,
a private educational concern of Oak Park, Michigan,
and has served in that capacity since July 1984. From
August 1973 to July 1984, he served as the President of
Ross Learning, Inc. Mr. Hulsman has a B.S. degree from
Ferris State College and an M.A. degree from Central
Michigan University. Mr. Hulsman is 59.
GARY HURAND He is President of Dawn Donut Systems, Inc., and has
served in that capacity since 1971. Mr. Hurand is a
Trustee of BRT Realty Trust, a publicly held company
located in Great Neck, New York. Mr. Hurand has a B.A.
degree from Michigan State University. Mr. Hurand is
51.
DENNIS J. IBOLD He is President of Petersen & Ibold (attorneys at law)
of Chardon, Ohio and has been with the firm since 1973.
Mr. Ibold has a B.A. degree from Marquette University
and a J.D. degree from Cleveland State University. Mr.
Ibold is 49.
13
STEPHEN M. KLEIN He is Chairman and Chief Executive Officer of Omni
Financial Services, Inc., a consumer finance company,
and has served in this capacity since 1993. Mr. Klein
served as Chairman of the Board of Diversified
Insurance Services from 1989 through 1993, Chief
Executive Officer from 1985 through 1989, and President
from 1972 through 1985. Mr. Klein has a J.D. degree
from John Marshall Law School. Mr. Klein is 44.
JOHN J. LENNON He is retired. From 1977 to 1987, Mr. Lennon was
Chairman and Chief Executive Officer of White Engines,
Inc. of Canton, Ohio. Mr. Lennon is 61.
SAM H. MCGOUN He is President and Chief Executive Officer of Willis
Corroon Corporation of Michigan, Inc., an insurance
agency, and has served in that capacity since 1985. Mr.
McGoun has a B.S. degree from Miami University of Ohio.
Mr. McGoun is 58.
KELLY E. MILLER He is President and Chief Executive Officer of Miller
Exploration Company, a publicly held oil and gas
exploration and production company headquartered in
Traverse City, Michigan, and has served in this
capacity since its founding in 1997. Mr. Miller was
also President of Miller Oil Corporation, a joint
venture capital company concentrating in the oil and
gas industry, from 1986 through 1997. Mr. Miller has a
B.S. and B.B.A. degrees from the University of
Oklahoma. Mr. Miller is 43.
JOE D. PENTECOST He has served as President of Better Properties Inc.,
a commercial real estate development company of
Lansing, Michigan since 1965. Mr. Pentecost is 66.
GEORGE B. SMITH He is Chairman of the Board of Republic Bancorp
Mortgage Inc. ("Republic Mortgage"), a subsidiary of
Republic Bank headquartered in Farmington Hills,
Michigan, and has served in that capacity since 1987.
From 1983 to 1987, Mr. Smith served as Chairman of the
Board of Republic Mortgage's predecessor, Mayflower
Mortgage Company. Mr. Smith served as Chairman of the
Board and President of Ann Arbor Mortgage Corporation
from 1969 to 1983, and previously was a real estate
broker in Wayne County, Michigan. Mr. Smith has a B.S.
degree from Michigan State University. Mr. Smith is 69.
JEOFFREY K. STROSS He is a Professor of Internal Medicine, University
Medical Center, The University of Michigan. He has a
B.S. degree from The University of Michigan and an M.D.
degree from The University of Michigan. Dr. Stross is
56.
14
COMMITTEES AND MEETINGS
The Board of Directors has four standing Committees as follows:
The Executive Committee meets in place of the full board, on special
issues or when scheduling make it difficult to convene all of the
Directors. The Committee may act on behalf of the Board on all but
major corporate matters. All actions taken by the Committee are
reported at the Board's next meeting. Messrs. Campbell, Cluckey,
Cook, Hulsman, Miller, Pentecost and Smith are members of the
Executive Committee.
The Audit Committee represents the Board in discharging its
responsibilities relating to the accounting, reporting and financial
control practices of the Company and its subsidiaries. The Committee
annually reviews the qualifications of the independent certified
public accountants, makes recommendations to the Board as to their
selection, reviews the scope, fees and results of their audit and
approves their non-audit services and related fees. The Committee
reviews the distribution of, and compliance with, the Company's
conflict of interest policy, which is sent to all Directors and
appropriate managerial employees of the Company and its
subsidiaries, and receives reports as to any exceptions. The
Committee also reviews the scope of the internal auditors' plans
each year and the results of their audits. Messrs. Hulsman, Cook,
Cramer, Eastman, Hurand and Lennon are members of the Audit
Committee.
The Loan Committee reviews and approves or declines loan
applications submitted from the Company's affiliates (principally
Republic Bank and Republic Savings Bank) on loans of, or related
loans totaling, $1,500,000 and above. The Committee also reviews the
consolidated allowance for loan losses, charge-offs and problem
loans on a periodic basis. Messrs. Hurand, Campbell, Cluckey,
Cramer, Ibold, and Pentecost are members of the Loan Committee.
The Personnel, Compensation and Nominating Committee identifies and
recommends candidates for election to the Board. It advises the
Board on terms of tenure and related matters, including issues
involving potential conflicts of interest. The Committee approves
standards for setting compensation levels for Company executives and
grants the specific awards made under the Company's incentive bonus
plan. The Committee also approves compensation of employees whose
salaries are above specified levels and makes recommendations to the
Board for action on compensation of executives on all matters
requiring full Board approval. It also reviews senior management
development and appraisal programs. Messrs. Cook, Eastman, Hulsman,
Ibold, McGoun, Miller and Stross are members of the Personnel,
Compensation and Nominating Committee.
During 1997, there were five regularly scheduled meetings of the
Board of Directors of the Company, eleven meetings of the Executive
Committee, three meetings of the Audit Committee, twelve meetings of the Loan
Committee and four meetings of the Personnel, Compensation and Nominating
Committee. All directors attended at least 75% of the aggregate number of
meetings of the Board of Directors and meetings of committees on which they
served during the year, except for Mr. Klein who attended 55% of the meetings
and Mr. Miller who attended 60% of the meetings.
Each director (excluding directors who are also officers of the
Company) was entitled to a fee of $770 for each board meeting and $275 for
each committee meeting attended prior to September 30, 1997. Effective
October 1, 1997 each director is entitled to a fee of $800 for each board
meeting and $600 for each committee meeting which is not held in conjunction
with a Board or another committee meeting. If the committee meeting is held
in conjunction with a Board or another committee meeting, the attendance fee
is $300. Director fees are payable in the Company's Common Stock under the
Company's Director Compensation Plan. In addition, at the annual meeting of
the Board of Directors, each director (excluding directors who are also
officers of the Company) receives a warrant to acquire 1,500 shares of the
Company's Common Stock at the fair market value on the date the warrant is
granted as an annual retainer fee.
15
PERSONNEL, COMPENSATION AND NOMINATING COMMITTEE REPORT
The report which follows is provided to shareholders by the members
of the Personnel, Compensation and Nominating Committee of the Board of
Directors of the Company ("Compensation Committee").
General. The Compensation Committee has been a standing committee of
the Board since 1985. Throughout its history, only "outside" non-employee
Directors have served on the Compensation Committee. Among its other duties,
the Compensation Committee is charged with the responsibilities, subject to
Board of Directors' approval, of establishing, periodically reevaluating and,
as appropriate, adjusting and administering Company policies concerning the
compensation of management personnel, including the Chief Executive Officer
("CEO") and all other Executive Officers. In discharging such duties, the
Compensation Committee is responsible for annually determining and
recommending to the entire Board the annual base salary for each Executive
Officer and for establishing the criteria under which cash incentive bonuses
may be paid to such executives for the year. In addition, the Compensation
Committee is responsible for administering the Company's current Management
Incentive Bonus Plan (the "Incentive Bonus Plan"), the Republic Bancorp Inc.
1997 Stock Option Plan and the Amended and Restated Restricted Stock Plan of
Republic Bancorp Inc. (the "Restricted Stock Plan"). If the Republic Bancorp
Inc. 1998 Stock Option Plan and the Republic Bancorp Inc. Voluntary
Management Stock Accumulation Program receive shareholder approval, the
Compensation Committee will also be responsible for administering them. No
grants or awards have been made under the 1998 Option Plan or the Program,
and as of the date of this Proxy Statement, no determination has been made by
the Compensation Committee regarding the identity of individuals to whom
awards may be made or the number and type of such awards that will be made to
any such individual.
For a number of years, including fiscal 1997, a basic tenet of the
Company's compensation policy as set by the Compensation Committee has been
that a substantial portion of the annual compensation of Executive Officers,
as well as other key management personnel, should be directly linked to
operating performance for the year. Since its adoption in 1991, this policy
has been implemented through the Incentive Bonus Plan. The 1997 Stock Option
Plan, the Republic Bancorp Inc. Non-Qualified Stock Option Plan, which
concluded in accordance with its terms in 1996, and the Restricted Stock
Plan, have been implemented by the Compensation Committee to further another
basic tenet of the Company's compensation philosophy that a component of
potential compensation for such key employees should be tied to the market
value of the Company's Common Stock. Assuming the 1998 Stock Option Plan and
the Voluntary Management Stock Accumulation Program receive shareholder
approval, the Compensation Committee currently intends to implement them in a
fashion similar to that utilized in connection with the 1997 Stock Option
Plan and the Restricted Stock Plan. This compensation philosophy closely
aligns the interests of such employees with those of the shareholders and
provides an incentive for the creation of increasing shareholder value over
the long term.
Overall, during fiscal 1997 as in prior years, the Executive
Officers' compensation policies administered by the Compensation Committee
have been aimed at providing Executive Officers with compensation
opportunities competitive with those provided executives with comparable
experience and responsibilities at comparable companies, while at the same
time tying a substantial portion of such potential compensation to the
achievement of performance goals determined by the Compensation Committee.
Base Salaries. Base salaries for Executive Officers are initially
established by evaluating the responsibilities of the position to be held and
the experience of the individual, and by reference to the competitive
marketplace for executive talent, including a comparison to base salaries for
comparable positions at other companies. In determining its recommendations
for annual adjustments to such Executive Officers' base salaries, the
Compensation Committee focuses primarily on similar "executive marketplace"
data, including survey material on salary movements and range improvement for
peer executives, along with consideration to the extent of the Company's
success in meeting net earnings goals for the most recently completed fiscal
year and its assessment of the performance rendered by such Executive
Officers during the year. Based upon survey data on base salaries, the
Compensation Committee believes the base salaries of the Executive Officers
are less than those of its peer group.
Mr. Campbell's 1997 base salary was $164,151. The last increase in
base salary received by Mr. Campbell was in 1993. Mr. Campbell's base salary
in 1998 was set at $255,000. Based on survey data, his salary as Chief
Executive Officer remains less than peer group.
16
Incentive Bonus Plan. Any cash bonuses awarded to Executive Officers
for fiscal 1997 were pursuant to the Incentive Bonus Plan. That plan enables
Executive Officers to earn an annual cash bonus generally ranging from 100%
to 500% of base salary for the fiscal year, but only if Company net earnings
(including bonuses) for the year have met or exceeded a target amount
established at the start of the year. If less than that target but at least a
certain minimum net earnings amount is achieved, which is established at the
start of the year, the maximum cash bonus which an Executive Officer may be
awarded for the year is reduced proportionately. Both the target and minimum
net earnings amount are determined by the Compensation Committee, after
analyzing historical data, strategic issues and general business conditions.
After fiscal year-end, the cash bonus potentially awardable to an
Executive Officer for that year is determined as described above. For fiscal
1997, the Company exceeded the minimum net earnings amount established by the
Compensation Committee. As a result, Mr. Campbell and other Executive
Officers received bonus awards based on achieving their respective net
earnings amount. Mr. Campbell received a bonus of $754,500 for fiscal 1997.
1997 Stock Option Plan, Restricted Stock Plan, 1998 Stock Option
Plan and Voluntary Management Stock Accumulation Program. The 1997 Stock
Option Plan and Restricted Stock Plan provide for the grant of options to
purchase Common Stock and awards of restricted stock, respectively, to
Executive Officers and key employees of the Company and its subsidiaries who,
in the judgment of the Compensation Committee, are expected to contribute
materially to the Company's success in the future. The awards of options and
restricted stock made to Executive Officers and key employees during 1997
were determined in light of the above criterion and after consideration of
performance factors similar to those applicable under the Incentive Bonus
Plan, including the Company's target net earnings amount for fiscal 1997.
Each named officer was awarded options and restricted stock during 1997. The
amount of each grant is shown in the Summary Compensation Table on page 19
and the Options Grants During 1997 Table on page 21.
If the 1998 Stock Option Plan and the Voluntary Management Stock
Accumulation Program receive shareholder approval, then the Compensation
Committee may grant options and awards to officers and other key employees of
the Company and its subsidiaries. The number of grantees and the number of
shares of Common Stock subject to options and awards that could be awarded to
each grantee may vary from year to year. As of the date of this Proxy
Statement, no determination has been made by the Compensation Committee
regarding the identity of the officers and key employees to whom options and
awards or the number and type of such options and awards that will be made to
any such officer or key employee.
Certain Tax Developments. In mid-1993, Section 162(m) was added to
the Code. Subject to certain exceptions (including exceptions relating to
stock options and for "performance-based" compensation if certain conditions
are met), Code Section 162(m) prohibits the deduction of compensation in
excess of $1 million paid in any year beginning with 1994 by a publicly-held
corporation to any Named Officers for the year. Although Mr. Campbell's total
compensation exceeded $1 million in 1997, the income realized by him as a
result of the exercise of options is exempt from the $1 million deduction
limit because the Option Plan was previously approved by the shareholders.
For fiscal 1997, the salary and bonus paid to each of the Company's Named
Officers was below $1 million, and the Committee expects the same will be
true for the current fiscal year with the exception of Mr. Campbell, whose
compensation may exceed $1 million. To the extent that Mr. Campbell's
compensation exceeds $1 million, a portion may be non-deductible by the
Company in accordance with Code Section 162(m). The 1998 Stock Option Plan
and the Voluntary Management Stock Accumulation Program are intended to
comply with Section 162(m) of the Code and if approved by the shareholders,
income attributable to the exercise of options granted under the 1998 Stock
Option Plan and awards granted under the Voluntary Management Stock
Accumulation Program will not be subject to the $1 million deduction limit.
Personnel, Compensation and Nominating Committee Members
Bruce L. Cook, Chairperson Sam H. McGoun
George A. Eastman Kelly E. Miller
Howard J. Hulsman Jeoffrey K. Stross
Dennis J. Ibold
17
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
on the Company's Common Stock for the last five fiscal years with the
cumulative total return on (1) The Nasdaq Stock Market Index, which is
comprised of all United States common shares traded on The Nasdaq Stock
Market and (2) The Nasdaq Bank Stocks Index, which is comprised of bank and
bank holding company common shares traded on The Nasdaq Stock Market over the
same period. The graph assumes the investment of $100 in the Company's Common
Stock, The Nasdaq Stock Market Index and The Nasdaq Bank Stocks Index on
December 31, 1992 and the reinvestment of all dividends. The shareholder
return shown on the graph is not necessarily indicative of future
performance.
Comparison of Five Year Cumulative Total Return
[ GRAPH ]
The dollar values for total shareholder return plotted in the graph above are
shown in the table below.
Nasdaq
Stock Market Nasdaq
RBNC (U.S. Companies) Bank Stocks
---- ---------------- -----------
1992 100.0 100.0 100.0
1993 128.3 114.8 114.0
1994 104.0 112.2 113.6
1995 128.2 158.7 169.2
1996 157.9 195.2 223.4
1997 328.0 239.5 377.4
18
COMPENSATION OF EXECUTIVE OFFICERS
The following summary compensation table shows the compensation
paid in all capacities by the Company and its subsidiaries during fiscal
years 1997, 1996 and 1995 to those persons who, at December 31, 1997, were
(i) the Company's Chief Executive Officer, and (ii) the only other executive
officers of the Company whose salary and bonus for 1997 exceeded $100,000
(Named Officers):
Summary Compensation Table
Long-Term
Compensation
Annual Compensation (1) Awards
----------------------- ----------------------
Name and Principal Restricted Stock All Other
Position Year Salary(2) Bonus(2) Stock Options Compensation(3)
- ------------------ ---- --------- -------- ---------- ------- ---------------
Jerry D. Campbell 1997 $164,151 $754,500 $ 62,500(4) 33,000 $ 4,750
Chairman and 1996 164,151 367,200 -- -- 4,750
Chief Executive 1995 164,151 -0- -- -- 4,620
Officer
Dana M. Cluckey 1997 $150,000 $609,000 $ 37,500(5) 33,000 $ 4,750
President and Chief 1996 125,000 275,400 57,187(5) -- 4,541
Operating Officer 1995 74,304 -0- 106,250(5) -- 2,600
Barry J. Eckhold 1997 $130,000 $383,393 $ 37,500(6) 13,200 $ 4,750
Vice President 1996 112,212 174,859 11,437(6) -- 4,750
and Chief Credit 1995 92,212 80,000 -- -- 4,620
Officer
Thomas F. Menacher 1997 $100,000 $352,250 $ 12,500(7) 11,000 $ 3,446
Senior Vice President, 1996 80,000 183,600 -- -- 2,965
Treasurer and Chief 1995 65,000 -0- 106,250(7) -- 2,221
Financial Officer
George E. Parker III 1997 $100,000 $ 56,800 $ 31,250(8) 5,500 --
General Counsel and 1996 -- -- -- -- --
Corporate Secretary 1995 -- -- -- -- --
<FN>
(1) The aggregate amount of perquisites and other personal benefits for any
Named Officer did not exceed the lesser of $50,000 or 10% of the total
of annual salary and bonus for any such Named Officer, and is therefore
not reflected in the table.
(2) Includes compensation deferred under the Republic Bancorp Inc. Deferred
Compensation Plan. During 1997 Mr. Campbell deferred $50,000 of salary
and $377,250 of bonus, Mr. Cluckey deferred $254,500 of bonus, Mr.
Eckhold deferred $35,000 of bonus and Mr. Menacher deferred $252,250 of
bonus under the Deferred Compensation Plan.
(3) The Company has a tax-deferred savings plan qualified under Internal
Revenue Code Sections 401(a) and 401(k). Participants may voluntarily
reduce the wages paid to them by having the Company pay a portion of
their wages into the plan and the Company may contribute money to the
plan which will match a portion of each participant's deferral. During
1997, 1996, and 1995, the Company paid the above amounts to the
accounts of Messrs. Campbell, Cluckey, Eckhold, and Menacher, as
matching contributions.
(4) Amount represents the value of 5,500 shares of Restricted Stock issued
on February 10, 1997, the grant date to Mr. Campbell. The aggregate
value and number of shares of Restricted Stock owned by Mr. Campbell at
December 31, 1997 was $117,563 and 5,500 shares, respectively. The
5,500 shares owned by Mr. Campbell vest in February 2001. Mr. Campbell
is entitled to all dividends paid on such shares of Restricted Stock.
19
(5) Amounts represent the value of 3,300 shares of Restricted Stock issued
on February 10, 1997, 6,050 shares of Restricted Stock issued on June
20, 1996, and 13,310 shares of Restricted Stock issued on January 19,
1995, the grant dates to Mr. Cluckey. The aggregate value and number of
shares of Restricted Stock owned by Mr. Cluckey at December 31, 1997
was $484,358 and 22,660 shares, respectively. Of the 22,660 shares
owned by Mr. Cluckey, 13,310 shares vest in January 1998, 6,050 shares
vest in June 1999 and 3,300 vest in February 2001. Mr. Cluckey is
entitled to all dividends paid on such shares of Restricted Stock.
(6) Amount represents the value of 3,300 shares of Restricted Stock issued
on February 10, 1997 and 1,210 shares of Restricted Stock issued on
June 20, 1996, the grant dates to Mr. Eckhold. The aggregate value and
number of shares of Restricted Stock owned by Mr. Eckhold at December
31, 1997 was $96,401 and 4,510 shares, respectively. Of the 4,510
shares owned by Mr. Eckhold, 1,210 vest in June 1999 and 3,300 vest in
February 2001. Mr. Eckhold is entitled to all dividends paid on such
shares of Restricted Stock.
(7) Amount represents the value of 1,100 shares of Restricted Stock issued
on February 10, 1997 and 13,310 shares of Restricted Stock issued on
January 19, 1995, the grant dates to Mr. Menacher. The aggregate value
and number of shares of Restricted Stock owned by Mr. Menacher at
December 31, 1997 was $308,014 and 14,410 shares, respectively. Of the
14,410 shares owned by Mr. Menacher, 13,310 vest in January 1998 and
1,100 vest in February 2001. Mr. Menacher is entitled to all dividends
paid on such shares of Restricted Stock.
(8) Amount represents the value of 2,750 shares of Restricted Stock issued
on February 10, 1997, the grant date to Mr. Parker. The aggregate value
and number of shares of Restricted Stock owned by Mr. Parker at
December 31, 1997 was $58,781 and 2,750 shares, respectively. The 2,750
shares owned by Mr. Parker vest in February 2001. Mr. Parker is
entitled to all dividends paid on such shares of Restricted Stock.
20
The following table sets forth certain information concerning options
granted in 1997 under the Company's 1997 Stock Option Plan to the Named
Officers.
Stock Option Grants During 1997
Number of Percentage of
Shares Total Options Exercise
Underlying Granted to Price Expiration Grant Date
Name Options Employees (Per Share) Date Present Value (1)
- ---- ---------- ------------- ----------- ---------- -----------------
Jerry D. Campbell 33,000 13.15% $11.70 4/2007 $137,940
Dana M. Cluckey 33,000 13.15% $11.70 4/2007 $137,940
Barry J. Eckhold 13,200 5.26% $11.70 4/2007 $55,176
Thomas F. Menacher 11,000 4.38% $11.70 4/2007 $45,980
George E. Parker III 5,500 2.19% $11.70 4/2007 $22,990
<FN>
(1) The grant date present value is based on the Black-Scholes Option
pricing model and results in a grant date present value of $4.18 per
share. The calculation included the following assumptions: estimated
volatility of 25.9%; risk-free interest rate of 7.05% (based on returns
available through U.S. Treasury bonds); a dividend yield of 2.61% paid
through expiration; and 10 years to expiration of options. Option values
are dependent on general market conditions and the performance of the
Company's Common Stock. There can be no assurances that the values in
this table will be realized.
Shown below is information with respect to the stock options exercised
by the Named Officers during 1997 and their holdings of options at December
31, 1997.
Aggregated Option Exercises in Last Fiscal Year
and Year-End Option Values
Number of Shares
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
December 31, 1997 December 31, 1997(2)
Number of ------------------------- -------------------------
Shares Value
Acquired Realized
Name on Exercise (Pre-tax)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- ------------ ------------------------- -------------------------
Jerry D. Campbell 215,000 $1,927,214 111,713 / -0- $1,756,584 / -0-
Dana M. Cluckey -- -- 33,000 / -0- $319,110 / -0-
Barry J. Eckhold -- -- 17,592 / -0- $178,789 / -0-
Thomas F. Menacher -- -- 23,444 / -0- $255,870 / -0-
George E. Parker III -- -- 5,500 / -0- $3,185 / -0-
<FN>
(1) For purposes of this column, "value" is determined for each exercised
option by subtracting the exercise price from the sales price received
by the Named Officer for the Company's Common Stock on the exercise
date, as reported on The Nasdaq Stock Market.
(2) For purposes of this column, "value" is determined for each unexercised
option by subtracting the aggregate exercise price for the option shares
from the closing price for the Company's Common Stock on The Nasdaq
Stock Market of $21.375 as of December 31, 1997.
21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. George B. Smith, Chairman of the Board of Republic Mortgage and
a director of the Company, receives a base salary of $50,000, together with a
bonus plan based upon office profitabiltiy and Republic Mortgage's return on
equity. For 1997, a bonus of $116,002 was paid to Mr. Smith. Mr. Smith's base
salary and bonus plan were approved by the Personnel, Compensation and
Nominating Committee and the Board of Directors.
The Company's subsidiary banks, Republic Bank and Republic Savings
Bank have, in the normal course of business, made loans to certain of the
Company's directors and officers and to organizations in which certain
directors and officers have an interest. In the opinion of management, such
loans were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unrelated parties and did not involve more than the normal risk of
collectibility. The Company's Named Officers do not have any loans with any
of the Company's subsidiaries.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Ernst & Young LLP, independent certified public accountants for
fiscal 1997, have been reappointed by the Board of Directors for fiscal 1998.
Representatives of Ernst & Young LLP will be present at the Annual Meeting to
respond to appropriate questions by shareholders and to make a statement if
they so desire.
PROPOSALS OF SHAREHOLDERS
A proposal submitted by a shareholder for the 1999 annual meeting
must be received by the Secretary of the Company at its principal office by
November 30, 1998, in order to be eligible to be included in the Company's
proxy statement and form of proxy relating to that meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and Executive Officers of the Company and beneficial
owners of more than 5% of its Common Stock are required to file initial
reports of ownership and reports of changes in ownership of Company
securities pursuant to Section 16(a) of the Exchange Act. Since May 1, 1991,
such persons also have been required to provide the Company with copies of
such reports. The Company has reviewed all such copies as it has received
from persons known to the Company to be (or during fiscal year 1997 to have
been) subject to these Section 16(a) provisions and also has received and
reviewed written representations from certain persons to the effect that
other reports have not been required of them. Based solely on such review,
the Company believes that for fiscal year 1997 its directors and officers all
complied with all applicable filing requirements.
22
MISCELLANEOUS
The Company's Form 10-K annual report, including financial
statements for the year ended December 31, 1997, has been provided with this
notice of the 1998 Annual Meeting and Proxy Statement.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or
the Exchange Act, which might incorporate future filings, including this
Proxy Statement, in whole or in part, the Compensation Committee Report and
the Stock Performance Graph contained herein shall not be incorporated by
reference in any such filings.
It is not expected that any other matters are likely to be brought
before the meeting. However, if any other matters are to be presented, it is
the intention of the persons named in the proxy to vote the proxy in
accordance with their best judgment.
It is important that proxies be returned promptly to avoid
unnecessary expense. Therefore, shareholders who do not expect to attend in
person are urged, regardless of the number of shares of stock owned, to mark,
sign, date, and return the enclosed proxy in the return envelope.
23
[FRONT OF CARD]
REPUBLIC BANCORP INC.
Common Stock, $5.00 Par Value
Proxy Solicited on Behalf of the Board of Directors
for the Annual Meeting of Shareholders to be Held April 22, 1998
The undersigned hereby appoints Jerry D. Campbell and Dana M. Cluckey, or
either of them, with power of substitution in each, proxies to vote all
Common Stock of the undersigned in Republic Bancorp Inc. (the "Company") at
the Annual Meeting of Shareholders to be held on April 22, 1998, and at all
adjournments thereof, upon all matters coming before said meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED "FOR" THE NOMINEES FOR DIRECTOR AND "FOR" PROPOSALS 2, 3 AND 4.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
This proxy must be signed as the name(s) appear(s) on the stock certificate.
When shares are held by joint tenants, both should sign. Executors,
administrators, personal representatives, trustees, etc. should give full
title as such. If the signer is a corporation, please sign full corporate name
by a duly authorized officer.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_________________________ _________________________
_________________________ _________________________
_________________________ _________________________
[BACK OF CARD]
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE /X/
REPUBLIC BANCORP INC.
Mark box at right if an address change or comment has been noted on
the reverse side of this card. / /
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date______________________
________________________________ ________________________________
Shareholder sign here Co-owner sign here
1. ELECTION OF DIRECTORS
Nominees as Directors:
With- For All
For hold Except
/ / / / / /
Jerry D. Campbell Howard H. Hulsman Sam H. McGoun
Dana M. Cluckey Gary Hurand Kelly E. Miller
Bruce L. Cook Dennis J. Ibold Joe D. Pentecost
Richard J. Cramer Stephen M. Klein George B. Smith
George A. Eastman John J. Lennon Jeoffrey K. Stross
INSTRUCTION: If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line through the
name(s) of the nominee(s). Your shares will be voted for the remaining
nominee(s).
To vote for an individual other than a nominee listed above, write the
individual's name in the space provided below. You may vote for a total
of fifteen (15) individuals.
2. To approve the adoption of the Republic Bancorp Inc. 1998 Stock Option
Plan
|_|For |_| Against |_| Abstain
3. To approve the adoption of the Republic Bancorp Inc. Voluntary
Management Stock Accumulation Program.
|_|For |_| Against |_| Abstain
4. To ratify amendments to the Company's Restricted Stock Plan.
|_|For |_| Against |_| Abstain
5. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
[DETACH CARD] [DETACH CARD]
REPUBLIC BANCORP INC.
Dear Shareholder:
The 1998 Annual Meeting of Shareholders of Republic Bancorp Inc. will be held
at 9:00 a.m. on Wednesday, April 22, 1998, at the Novi Hilton, 21111 Haggerty
Road, Novi, Michigan 48050.
The vote of each shareholder is important. Please mark the boxes on this
proxy card to indicate how your shares will be voted. Then sign and date the
card, detach it and return your proxy vote in the enclosed postage paid
envelope as soon as possible.
Your vote must be received prior to the Annual Meeting of Shareholders on
April 22, 1998.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Jerry D. Campbell
Chairman and Chief Executive Officer