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 / / Confidential, for Use of the
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material under Rule 14a-12
AMERIANA BANCORP
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(Name of Registrant as Specified in Its Charter)
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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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[AMERIANA BANCORP LETTERHEAD]
April 16, 2004
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Annual Meeting") of Ameriana Bancorp (the "Company"), to be held at the main
office of Ameriana Bank and Trust, SB, 2118 Bundy Avenue, New Castle, Indiana,
on Thursday, May 20, 2004, at 10:00 a.m.
The attached notice of the Annual Meeting and proxy statement describe the
formal business to be transacted at the Annual Meeting. During the Annual
Meeting, we will also report on the operations of the Company. Directors and
officers of the Company will be present to respond to appropriate questions of
shareholders.
Detailed information concerning our activities and operating performance
during our fiscal year ended December 31, 2003, is contained in our annual
report, which is also enclosed.
Please sign, date and promptly return the enclosed proxy card. If you
attend the Annual Meeting, you may vote in person even if you have previously
mailed a proxy card.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Harry J. Bailey
Harry J. Bailey
President and Chief Executive Officer
AMERIANA BANCORP
2118 Bundy Avenue
New Castle, Indiana 47362
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 20, 2004
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The Annual Meeting of Shareholders (the "Annual Meeting") of Ameriana
Bancorp (the "Company") will be held at 2118 Bundy Avenue, New Castle, Indiana,
on Thursday, May 20, 2004, at 10:00 a.m.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of BKD, LLP as auditors for the
Company for the fiscal year ending December 31, 2004; and
3. Such other matters as may properly come before the Annual Meeting or
any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Annual Meeting may be adjourned. Shareholders
of record at the close of business on April 2, 2004, are the shareholders
entitled to vote at the Annual Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Annual
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Nancy A. Rogers
Nancy A. Rogers
Secretary
New Castle, Indiana
April 16, 2004
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
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PROXY STATEMENT
OF
AMERIANA BANCORP
2118 BUNDY AVENUE
NEW CASTLE, INDIANA 47362
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ANNUAL MEETING OF SHAREHOLDERS
May 20, 2004
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Ameriana Bancorp (the "Company") to be used
at the Company's Annual Meeting of Shareholders (the "Annual Meeting"), which
will be held at the main office of its wholly owned subsidiary, Ameriana Bank
and Trust, SB (the "Bank"), 2118 Bundy Avenue, New Castle, Indiana, on Thursday,
May 20, 2004, at 10:00 a.m. The accompanying notice of meeting and this Proxy
Statement are being first mailed to shareholders on or about April 16, 2004.
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VOTING AND REVOCATION OF PROXIES
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Shareholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Annual Meeting and all adjournments thereof. Proxies may be revoked by
written notice to the Secretary of the Company or by the filing of a later-dated
proxy prior to a vote being taken on a particular proposal at the Annual
Meeting. A written notice of revocation of a proxy should be sent to the
Secretary, Ameriana Bancorp, 2118 Bundy Avenue, New Castle, Indiana 47362 and
will be effective if received by the Secretary prior to the Annual Meeting. A
previously submitted proxy will also be revoked if a shareholder attends the
Annual Meeting and votes in person. Proxies solicited by the Board of Directors
will be voted in accordance with the directions given therein. Where no
instructions are indicated, proxies will be voted for the nominees for directors
set forth below and in favor of the other proposals set forth in this Proxy
Statement for consideration at the Annual Meeting. Any proxies marked as
abstentions will not be counted as votes cast. In addition, any shares held in
street name which have been designated by brokers on proxy cards as not voted
will not be counted as votes cast. Any proxies marked as abstentions or as
broker non-votes will, however, be treated as shares present for purposes of
determining whether a quorum is present.
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VOTING SECURITIES AND SECURITY OWNERSHIP
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Shareholders of record as of the close of business on April 2, 2004 (the
"Record Date") are entitled to one vote for each share then held. As of the
Record Date, the Company had 3,148,788 shares of common stock, par value $1.00
per share (the "Common Stock"), issued and outstanding. The presence, in person
or by proxy, of at least a majority of the total number of shares of Common
Stock outstanding and entitled to vote will be necessary to constitute a quorum
at the Annual Meeting.
The following table sets forth information as of the Record Date (i) with
respect to any person who was known to the Company to be the beneficial owner of
more than five percent (5%) of the Common Stock, and (ii) as to the Common Stock
beneficially owned by each director of the Company, by each executive officer of
the Company named in the "Summary Compensation Table" below and by all directors
and executive officers of the Company as a group. All beneficial ownership is by
sole voting and investment power, except as otherwise indicated.
As of Record Date
Amount and
Nature of
Beneficial Percent of
Beneficial Owner Ownership (1) Common Stock (2)
---------------- ------------- ----------------
Harry J. Bailey 68,766 2.17%
Donald C. Danielson 108,657 3.45%
Charles M. Drackett, Jr. 18,480 .59%
R. Scott Hayes 30,600 .97%
Michael E. Kent 25,300 .80%
Paul W. Prior 118,431 3.74%
Ronald R. Pritzke 22,122 .70%
Timothy G. Clark 31,100 .98%
Bradley L. Smith 4,000 .13%
All Directors and Executive 515,121 15.59%
Officers as a Group (15 persons)
Jeffrey L. Gendell 194,527 (3) 6.2%
Tontine Financial Partners, L.P.
Tontine Management, L.L.C
55 Railroad Avenue, 3rd Floor
Greenwich, CT 06830
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(1) As to the Company's directors and named executive officers, includes
23,351, 0, 8,800, 8,800, 8,800, 8,250, 8,800, 21,500 and 4,000 shares which
may be acquired by Messrs. Bailey, Danielson, Drackett, Hayes, Kent, Prior,
Pritzke, Clark and Smith, respectively, and 153,865 shares which may be
acquired by all directors and executive officers as a group upon the
exercise of stock options which are exercisable within 60 days of the
Record Date.
(2) In calculating the percentage ownership of any individual or group, the
number of shares of Common Stock outstanding is deemed to include any
shares which the individual or group may acquire through the exercise of
options exercisable within 60 days as of the Record Date.
(3) Jeffrey L. Gendell, Tontine Financial Partners, L.P. and Tontine
Management, L.L.C. collectively reported shared or sole voting and
dispositive power with respect to 194,527 shares of the Company's Common
Stock on a Schedule 13D/A dated as of January 8, 2004.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Board of Directors of the Company is comprised of seven members and is
divided into three classes as nearly equal in number as possible. Directors
serve for staggered three-year terms with one class standing for election at
each annual meeting. At the Annual Meeting, two current directors will stand for
election. The Board of Directors has nominated Donald C. Danielson and Paul W.
Prior to serve as directors for the terms indicated below. Directors are elected
by a plurality of the votes cast. If any nominee is unable to serve, the shares
represented by all valid proxies will be voted for the election of such
substitute director as the Board of Directors may recommend. At this time, the
Board knows of no reason why any nominee might be unable to serve.
2
The following table sets forth for each nominee and for each director
continuing in office, such person's name and age and the year he first became a
director of the Company.
Year First
Elected or Current
Appointed Term
Name Age (1) Director To Expire
---- ------- -------- ---------
BOARD NOMINEES FOR A TERM TO EXPIRE IN 2007
Donald C. Danielson 84 1989 2004
Paul W. Prior 82 1989 2004
DIRECTORS CONTINUING IN OFFICE
Harry J. Bailey 61 1989 2005
Charles M. Drackett, Jr. 53 1989 2005
Ronald R. Pritzke 56 1992 2005
R. Scott Hayes 57 1989 2006
Michael E. Kent 63 1989 2006
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(1) At December 31, 2003.
Listed below is certain information about the directors of the Company.
DONALD C. DANIELSON is Vice Chairman of City Securities Corporation of
Indianapolis. He served on the Board of Trustees of Indiana University for 21
years and was Chairman of the Board for 11 years. He currently is a member of
the James Whitcomb Riley Children's Foundation Board of Governors, a Director of
the Indiana University Foundation, Indiana Chamber of Commerce, National
Fellowship of Christian Athletes, Indiana Basketball Hall of Fame, Henry County
Community Foundation and Chairman of the Board for the Walther Cancer
Foundation. He served as a member of President Bush's Credit Standards Advisory
Committee in 1991. He has been a Director of the Bank since 1971 and Director of
the Company since its formation.
PAUL W. PRIOR is the Chairman of the Boards of the Company and the Bank. He
joined the Bank as Chairman of the Board, President and Chief Executive Officer
in January 1973, after having served another savings institution as Chief
Executive Officer for 20 years. He became Chairman of the Board, President and
Chief Executive Officer of the Company at the time of its formation in 1989. Mr.
Prior served as National Chairman of the United States League of Savings
Institutions in 1984. He is a life member of the Board of Directors of the
Indiana Chamber of Commerce.
HARRY J. BAILEY has been President of the Company and the Bank since May
1990, and was appointed Chief Executive Officer in December 1990. Mr. Bailey had
been the Executive Vice President and Chief Operating Officer of the Company
since its formation in 1989 and of the Bank since February 1984. He has been a
Director of the Bank since 1987 and a Director of the Company since its
formation. From June 1983 to January 1984, Mr. Bailey, an attorney, acted as a
consultant to financial institutions and for 15 years before, served in the
legal department and as operations officer for thrift institutions in the
Chicago area. He is a Trustee of the Henry County Memorial Hospital, Director of
the New Castle/Henry County Economic Development Corporation, is a past member
of the Board of Directors of the Federal Home Loan Bank of Indianapolis, past
Chairman and Director of the Indiana Bankers Association, and past Director of
the Henry County Community Foundation.
CHARLES M. (KIM) DRACKETT, JR. is Chairman, President and General Manager
of Fairholme Farms Inc. in Lewisville, Indiana. He is a graduate of Dartmouth
College, the Indiana Institute of Food and Nutrition in
3
Indianapolis and the Purdue University Short Course in Agriculture. Mr. Drackett
currently serves as a Trustee of the Indiana Pork Producers Association and just
completed his term as a Director of The Cincinnati Nature Center where he was
Chairman of its Agricultural Operations Committee. He has been a Director of the
Bank since 1989 and Director of the Company since its formation.
RONALD R. PRITZKE is a partner in the law firm Pritzke & Davis in
Greenfield, Indiana. He is past President of the Greater Greenfield Chamber of
Commerce. He is also a founding member, past President and served for the past
twelve years on the Hancock County Community Foundation Board. In addition, he
is a founding member and past President of Regreening Greenfield, Inc. and a
co-founding member and Director of PARCS, Inc. (Park Advocacy Research and
Conservation Society). Mr. Pritzke served as a member of the Greenfield Public
Library Board for ten years. He is a former member of the Board of the Hancock
County Cancer Society. Mr. Pritzke has been a Director of the Company and the
Bank since his appointment in December 1992.
R. SCOTT HAYES is a partner in Hayes Copenhaver Crider, New Castle,
Indiana, the law firm which serves as General Counsel to the Company. He is
President of the Henry County Redevelopment Commission. He is past Chairman and
a Director of the New Castle/Henry County Economic Development Corporation,
President of the Board of Trustees of Wittenbraker YMCA and a Director of BETA
MU Chapter House Association, Inc. He has been a Director of the Bank since 1984
and Director of the Company since its formation.
MICHAEL E. KENT is a private investor. Prior to his retirement in January
1996, Mr. Kent was Chairman, President and Chief Executive Officer of
Modernfold, Inc. He was past President and is currently an Advisory Director of
the Alumni Board of the Department of Mechanical and Industrial Engineering at
the University of Illinois. He has been a Director of the Bank since 1987 and
Director of the Company since its formation.
The Board of Directors has determined that each of the following directors
meet the definition of "independent" set forth in Rule 4200(a)(15) of the
National Association of Securities Dealers' Manual: Donald C. Danielson, Paul W.
Prior, Charles M. Drackett, Jr., Ronald R. Pritzke, R. Scott Hayes and Michael
E. Kent. Since the Common Stock of the Company is quoted on The Nasdaq Stock
Market, Inc., the Company is required to have a Board of Directors composed in
the majority of independent directors. The Company is in compliance with this
listing standard. The only director who does not meet the NASD definition of
"independent" is Harry J. Bailey, who is the Chief Executive Officer and
President of the Company and the Bank.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Board of Directors of the Company conducts its business through
meetings of the Board and its committees. During the fiscal year ended December
31, 2003, the Company's Board of Directors held twelve regular meetings. No
director of the Company attended fewer than 75% of the total meetings of the
Board of Directors and committees on which such director served during this
period. Each member of the Board of Directors of the Company also serves as a
member of the Board of Directors of the Bank and various committees thereof.
The Company's Board of Directors has an Audit Committee, which is
responsible for the review and evaluation of the Company's annual audit and
related financial matters. This committee consists of Chairman Kent and
Directors Drackett and Pritzke. The members of the Audit Committee are
"independent," as defined in Rule 4200(a)(15) of the National Association of
Securities Dealers' listing standards and as defined in Section 10A(m)(3) and
Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Board of Directors has determined that Director Kent is the audit
committee member with "financial sophistication" as defined by NASD Rule
4250(d)(2)(A). However, the Board has also determined that neither Director
Kent, nor any other member of the Audit Committee, has the attributes to meet
the definition of an "audit committee financial expert" as defined in Item
401(h) of Regulation S-K. Therefore, the Company does not have an "audit
committee financial expert" serving on its audit committee. The Board of
Directors has determined that by satisfying the requirements of the listing
standards of the National Association of Securities Dealers with a member of the
audit committee that has the requisite "financial sophistication"
qualifications, the Company's Audit Committee has the financial expertise
necessary to fulfill the duties and the obligations of the audit committee. The
Board of Directors has concluded that the appointment of an additional director
to the Audit Committee is not necessary at this time.
4
The Company's Board of Directors has adopted a written charter for the
Audit Committee, which was recently amended and is attached hereto as Annex A.
The Audit Committee met six times during fiscal 2003.
All of the directors of the Company who are "independent", as defined in
NASD Rule 4200(a)(15), and who are not nominees for any given year act as the
Company's nominating committee for the annual selection of its nominees for
election as directors that year. The nominating committee met one time in this
capacity during fiscal 2003. For this year's Annual Meeting, the directors who
are serving on the nominating committee are: Charles M. Drackett, Jr., Ronald R.
Pritzke, R. Scott Hayes and Michael E. Kent. The Board of Directors has adopted
a charter for its nominating committee which is included as Annex B hereto,
which will apply to director nominations commencing in 2005.
In its deliberations, the nominating committee considers a candidate's
knowledge of the banking business and involvement in community, business and
civic affairs, and also considers whether the candidate would provide for
adequate representation of the Company's market area. Any nominee for director
made by the nominating committee must be highly qualified with regard to some or
all the attributes listed in the preceding sentence. In searching for qualified
director candidates to fill vacancies on the Board, the nominating committee
solicits its then current directors for the names of potential qualified
candidates. The nominating committee may also ask its directors to pursue their
own business contacts for the names of potentially qualified candidates. The
nominating committee would then consider the potential pool of director
candidates, select the top candidate based on the candidates' qualifications and
the nominating committee's needs, and conduct a thorough investigation of the
proposed candidate's background to ensure there is no past history that would
cause the candidate not to be qualified to serve as a director of the Company.
In the event a stockholder has submitted a proposed nominee, in accordance with
the procedures in the Company's Articles of Incorporation, the nominating
committee would consider the proposed nominee, along with any other proposed
nominees recommended by individual directors, in the same manner in which the
nominating committee would evaluate nominees for director recommended by the
Board of Directors.
The nominating committee will consider recommendations for directorships
submitted by shareholders. Shareholders who wish the nominating committee to
consider their recommendations for nominees for the position of director should
submit their recommendations in writing to the nominating committee in care of
the Secretary, Ameriana Bancorp, 2118 Bundy Avenue, New Castle, Indiana 47362.
Each such written recommendation must set forth (i) the name of the recommended
candidate, (ii) the number of shares of stock of the Company which are
beneficially owned by the shareholder making the recommendation and the
recommended candidate, and (iii) a detailed statement explaining why the
shareholder believes the recommended candidate should be nominated for election
as a director. In addition, the shareholder making such recommendation must
promptly provide any other information reasonably requested by the nominating
committee. In order to be considered by the nominating committee for nomination
for election at an annual meeting of shareholders, the recommendation must be
received by the January 1 preceding that annual meeting. Recommendations by
shareholders that are made in accordance with these procedures will receive the
same consideration given to other candidates recommended by directors or
executive management.
BOARD POLICIES REGARDING COMMUNICATIONS WITH THE BOARD OF DIRECTORS AND
ATTENDANCE AT ANNUAL MEETINGS
The Board of Directors maintains a process for shareholders to communicate
with the Board of Directors. Shareholders wishing to communicate with the Board
of Directors should send any communication to the Secretary, Ameriana Bancorp,
2118 Bundy Avenue, New Castle, Indiana 47362. Any such communication must state
the number of shares beneficially owned by the shareholder making the
communication. The Secretary will forward such communication to the full Board
of Directors or to any individual director or directors to whom the
communication is addressed unless the communication is unduly hostile,
threatening, illegal or similarly inappropriate, in which case the Secretary has
the authority to discard the communication or take appropriate legal action
regarding the communication.
The Company does not have a policy regarding Board member attendance at
annual meetings of shareholders. All of the Company's directors attended the
Company's 2003 annual meeting of shareholders.
5
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Company's
Board of Directors has also appointed a Committee on Compensation and Stock
Options, which serves as the Company's Compensation Committee and is responsible
for administering the wage, salary and stock option plans of the Company and the
Bank. This committee consists of Chairman Danielson and Directors Hayes and
Kent, each of whom are "independent" as defined in NASD Rule 4200(a)(15). During
the past fiscal year, Mr. Hayes' law firm has performed services for the Company
and the Bank. See "Transactions with Management." This committee met four times
during fiscal 2003.
The Company and the Bank had no "interlocking" relationships that existed
during the year ended December 31, 2003 in which (i) any executive officer of
the Company or the Bank served as a member of the compensation committee (or
other board committee performing equivalent functions or, in the absence of any
such committee, the entire board of directors) of another entity (other than the
Bank and the Company), one of whose executive officers served on the
Compensation Committee of the Company or the Bank, (ii) any executive officer of
the Company or the Bank served as a director of another entity, one of whose
executive officers served on the Compensation Committee of the Company or the
Bank, or (iii) any executive officer of the Company or the Bank served as a
member of the compensation committee (or other board committee performing
equivalent functions or, in the absence of any such committee, the entire board
of directors) of another entity (other than the Company and the Bank), one of
whose executive officers served as a member of the Company or the Bank's Board
of Directors.
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DIRECTOR COMPENSATION
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DIRECTORS FEES. All of the members of the Company's Board of Directors are
also members of the Bank's Board of Directors. The Company's directors, except
the Chairman, receive fees of $6,600 annually. The Company's Chairman receives
fees of $12,600. The Bank's directors receive annual fees of $6,000 in addition
to $500 for each Board meeting they attend. Employees who serve as directors do
not receive directors' fees. The Bank's directors, except employee directors,
also received fees of $300 for each Board committee meeting they attended.
DIRECTOR SUPPLEMENTAL RETIREMENT PROGRAM. In order to provide retirement
benefits for non-employee directors, the Bank has established a director
supplemental retirement program that became effective June 4, 1999. Pursuant to
the program, the Bank has established a pre-retirement account for the benefit
of each non-employee director, which is increased or decreased each year by an
amount equal to the difference between the after-tax earnings on specified
adjustable life insurance contracts less that year's premium expense and less
the Bank's cost of funds expense on premiums paid to date (the "Index Retirement
Benefit"). If the director continues in office until normal retirement age (the
later of 65 or five years from the effective date of the program), he will be
entitled to receive the balance in his pre-retirement account in ten equal
annual installments, plus any additional Index Retirement Benefit accruing to
his account for each year thereafter. In the event of disability, a director
will become 100% vested and entitled to immediately begin receiving retirement
benefits. In the event of a director's death, the remaining unpaid balance of
his account shall be paid in a lump sum to his designated beneficiaries. If a
director resigns prior to normal retirement age, he will be entitled to receive
a percentage of the balance in his pre-retirement account plus a percentage of
the Index Retirement Benefit accruing thereafter. The applicable percentage will
be equal to 10% times his number of years of service up to 100%. In the event
his service is terminated following a change in control, he will be entitled to
receive his benefits at normal retirement age as if he had been continuously
serving until that time. For purposes of the Director Supplemental Retirement
Program, a change in control will occur if any corporation, person or group
acquires more than 25% of the voting stock of the Company or the Bank. At
December 31, 2003, the balances in the pre-retirement accounts of Messrs. Prior,
Danielson, Drackett, Hayes, Kent and Pritzke were $138,794, $90,854, $38,555,
$72,241, $207,918 and $45,857, respectively. Prior service cost has not been
allocated against the individual balances.
In order to fund the benefits payable under the Director Supplemental
Retirement Program, the Bank has purchased life insurance policies on each
director. The policies are designed to offset the program's costs during the
lifetime of the participant and to provide complete recovery of all the
program's costs at their death. The Bank has entered into split dollar
agreements with each of the directors pursuant to which their beneficiaries are
entitled to a death benefit equal to 80% of the net-at-risk insurance portion of
the policy proceeds (total proceeds less cash value of the policy) if a director
dies while serving on the Board or has retired or terminated service due to
disability. If a
6
director is otherwise not serving on the Board at his death, his beneficiaries
will be entitled to a reduced death benefit.
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EXECUTIVE COMPENSATION
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SUMMARY COMPENSATION TABLE. The following table sets forth information
regarding cash and noncash compensation for each of the last three fiscal years
awarded to or earned by (i) the Company's Chief Executive Officer, and (ii) the
two other most highly compensated executive officers ("Named Executive
Officers") of the Company and subsidiaries who were serving as such at the end
of the fiscal year and whose total salary and bonus for the year exceeded
$100,000 for services rendered in all capacities to the Company and its
subsidiaries.
Annual Compensation
-------------------------------------- All Other
Name and Principal Position Year Salary Bonus Other Annual (1) Compensation
- --------------------------- ------ ------ ----- ---------------- ------------
Harry J. Bailey 2003 $ 267,000 $ -- $ -- $ 2,548 (2)
President and Chief Executive 2002 267,000 -- -- 2,094
Officer of the Company 2001 255,000 57,000 -- 1,970
and the Bank
Timothy G. Clark 2003 $ 157,500 $ -- $ -- $ 635 (2)
Executive Vice President and 2002 157,500 -- -- 569
Chief Operating Officer of the 2001 147,500 26,500 -- 533
Company and the Bank
Bradley L. Smith * 2003 $ 112,500 $ -- $ -- $ --
Senior Vice President - 2002 105,000 -- -- --
Treasurer of the Company
and the Bank
- -----------
* Mr. Smith commenced his employment with the Company and the Bank on April
10, 2002.
(1) The value of perquisites and personal benefits received by any named
executive officer did not exceed the lesser of $50,000 or 10% of salary and
bonus in 2003, 2002 or 2001.
(2) Consists of income attributable to split dollar plan agreement.
The Company did not grant any stock options or stock appreciation rights in
2003.
YEAR-END OPTION VALUES. The following table sets forth information
regarding the number and value of options held by the Named Executive Officers
at the end of 2003. No Named Executive Officer exercised options during the last
fiscal year.
Number of Value of
Securities Underlying Exercisable
Unexercised Options In-the-Money Options
at Year-End at Year-End (1)
------------------------------- -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
Harry J. Bailey 23,851 -- $7,246 $ --
Timothy G. Clark 21,500 -- 1,250 --
Bradley L. Smith 4,000 4,000 1,000 1,000
- ---------------
(1) Options are considered in-the-money if the market value of the underlying
securities exceeds the exercise price of the options.
EMPLOYMENT AND OTHER AGREEMENTS. The Bank has employment agreements with
Harry J. Bailey as President and Chief Executive Officer, Timothy G. Clark as
Chief Operating Officer and Bradley L. Smith as Chief Financial Officer,
respectively. The agreements currently provide for minimum annual salaries of
$267,000, $166,000 and $119,000, respectively, and terms of three years. Each
agreement provides for annual salary review by the Board of Directors, as well
as inclusion of the executives in any discretionary bonus plans, customary
fringe
7
benefits, vacation and sick leave. The agreements provide that the Bank may
terminate the executives at any time. In the event an executive is terminated
for a reason other than "cause," as defined in the agreements, normal retirement
or disability, the Bank will continue to pay the executive (or his beneficiary
or estate) at his highest monthly salary rate for the remainder of the term of
the agreement, provided that the total of such payments does not exceed three
times his annual rate of salary as of the date of termination.
Each of these agreements provides that in the event of disability, the
executive shall continue to receive their full compensation for the first 18
months from the date of such disability, at which time the Bank may terminate
the agreement and the executive shall receive 60% of his monthly salary at the
time he became disabled until the earlier of his death or his normal retirement
date under the Bank's pension plan. The agreements provide that these amounts
shall be offset by any amounts paid to the executives under any other disability
program maintained by the Bank.
The agreements further provide that if: (a) after a change in control of
the Bank or the Company, the Bank (i) terminates the employment of the
executives for any reason other than cause, retirement or disability, (ii)
otherwise changes the present capacity or circumstances of their employment, or
(iii) reduces their responsibilities, authority, compensation or benefits
(including, in the case of Mr. Bailey, the failure to elect or re-elect him to
the Board of Directors of the Bank or the Company) without their written
consent; (b) the executive voluntarily terminates their employment within 30
days following a change in control; or (c) during the period beginning six
months before a change in control and ending on the later of one year after the
change in control or the expiration date of the agreement, the Bank changes the
present capacity or circumstances of their employment or reduces their
responsibilities, authority, compensation or benefits (including, in the case of
Mr. Bailey, the failure to elect or re-elect him to the Board of Directors of
the Bank or the Company) without their written consent, the Bank shall promptly
pay the executives a sum equal to 2.99 times the average annual compensation
paid to them for the five most recent taxable years ending before the change in
control, subject to such reduction as may be required to prevent the payment
from being deemed an "excess parachute payment" under Section 280G of the
Internal Revenue Code of 1986. "Change in control" generally refers to the
acquisition by any person or entity of the ownership or power to vote more than
25% of the Company's stock, the ability to control the election of a majority of
the Bank's or the Company's directors, controlling influence over the management
or policies of the Bank or the Company by any person or group or a change in the
majority of the Board of Directors over any two-year period which was not
approved by two-thirds of the incumbent directors. In the event of termination
of employment in connection with a change in control which would activate such
severance payment provisions, the estimated amounts payable to Messrs. Bailey,
Clark and Smith would be $755,872, $439,231 and $325,162, respectively, based
upon their compensation during the five years ended December 31, 2003.
PENSION PLAN. The following table shows the estimated annual benefits
payable under the Bank's defined-benefit pension plan based upon the respective
years-of-service and compensation indicated below as calculated under the plan.
Average of High Years of Service at Age 65
Five Years ----------------------------------------------------------------
Compensation 5 10 20 30 40
------------- ------- ------ ------ ------ ------
$ 50,000 $ 3,800 $ 7,500 $15,000 $22,500 $ 30,000
75,000 5,600 11,300 22,500 33,800 45,000
100,000 7,500 15,000 30,000 45,000 60,000
150,000 11,300 22,500 45,000 67,500 90,000
200,000 15,000 30,000 60,000 90,000 120,000
The compensation covered by the plan consists of the employee's salary and
bonus (as set forth under "Annual Compensation" in the Summary Compensation
Table above) up to applicable legal limits ($200,000 for the 2002 plan year and
$200,000 for the 2003 plan year). As of December 31, 2003, Messrs. Bailey, Clark
and Smith had 20, 6 and 1 year(s) of service, respectively, under the plan.
Participants are not eligible for benefits under the plan until they have
completed five years of service. Benefits under the plan are computed on the
basis of compensation and years of service and are not subject to any deduction
for social security or other offset amounts.
8
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN. In order to supplement the
retirement benefits to which executive officers are entitled under the Company's
pension plan, the Bank entered into executive supplemental retirement plan
agreements with Messrs. Bailey and Clark effective February 23, 1999, as amended
effective November 24, 2003. The agreements with the executives establish
pre-retirement accounts similar to those established under the Director
Supplemental Retirement Program agreements described in "Director Compensation."
If the executives remain in the employment of the Bank until age 65, they will
be entitled to receive the balance in their pre-retirement account in 10 equal
annual installments plus any additional Index Retirement Benefits accruing each
year thereafter. In the event of disability, the executives will become 100%
vested in their accounts and entitled to immediately begin receiving their
retirement benefits. In the event of the executive's death, the remaining unpaid
balance of his account shall be paid in a lump sum to his designated
beneficiaries. If the executive voluntarily resigns, he will be entitled to
receive 5% times the number of full years that he served the Bank from February
23, 2004 (to a maximum of 100%) times the balance in his pre-retirement account
payable over 10 years in equal installments commencing when the executive
attains 65 years of age. In addition to these payments, the executive will be
entitled to receive each year for the period, beginning in the year he attains
age 65 until his death, 5% times the number of full years that he served the
Bank since February 23, 2004 (to a maximum of 100%) times the Index Retirement
Benefit for each year. If the executive is terminated without cause prior to age
65, he will be entitled to receive 10% times the number of full years that he
served the Bank (to a maximum of 100%) times the balance in his pre-retirement
account payable in equal installments over the course of 10 years, commencing
when the executive attains 65 years of age. In addition to these payments, the
executive is entitled to receive, each year beginning in the year in which he
attains age 65 until his death, 10% times the number of full years that he
served the Bank (to a maximum of 100%) times the Index Retirement Benefit for
each year. In the event the executives are terminated following a change in
control, they will be entitled to receive their benefits at age 65 as if they
had been continuously employed until age 65. For purposes of the agreements, a
change in control will occur if any corporation, person or group acquires more
than 25% of the voting stock of the Company or the Bank. If an executive is
discharged at any time for cause, he will forfeit all benefits under the
agreements. At December 31, 2003, the balances in the pre-retirement accounts of
Messrs. Bailey and Clark were $765,276 and $55,356 respectively. Prior service
cost has not been allocated against the individual balances.
In order to fund the benefits payable under the Executive Supplemental
Retirement Plan, the Bank has purchased variable life insurance policies on
Messrs. Bailey and Clark. The policies are designed to offset the program's
costs during the lifetime of the participant and to provide complete recovery of
all the program's costs at their death. The Bank is the sole owner of these
policies and has exclusive rights to the cash surrender value. The Company has
entered into split dollar agreements with the executives similar to those
entered into with directors.
REPORT OF COMMITTEE ON COMPENSATION AND STOCK OPTIONS
The Committee on Compensation and Stock Options (the "Compensation
Committee") of the Board of Directors is composed entirely of directors who are
independent as defined in NASD Rule 4200(a)(15) and it has overall
responsibility to review and recommend compensation plans and structure to the
Board with respect to the Company's executive compensation policies. In
addition, the Compensation Committee recommends on an annual basis the
compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Company. The Committee also reviews and makes
recommendations on annual cash bonus programs, long-term incentive programs,
grants of stock options and other executive benefits. The Committee has
available to it access to independent compensation data.
The Compensation Committee's executive compensation philosophy is to
provide competitive levels of compensation, integrate management's pay with the
achievement of the Company's annual and long-term performance goals, reward
exceptional corporate performance, recognize individual initiative and
achievement and assist the Company in attracting and retaining qualified
management. Management compensation is intended to be set at levels that the
Compensation Committee believes is consistent with others in the Company's
industry, with attention given to rewarding management based upon the Company's
level of performance.
The Compensation Committee endorses the position that equity ownership by
management is beneficial in aligning management's and shareholders' interests in
the enhancement of shareholder value.
9
Base salaries for all employees are determined by evaluating the
responsibilities of the position held and by reference to the competitive
marketplace for talent, including a comparison of base salaries for comparable
positions at comparable companies within the banking industry. Minimum, midpoint
and maximum levels are then established within the base salary ranges that are
used to recognize the performance of an individual.
Annual salary adjustments are determined by evaluating changes in
compensation in the marketplace, the performance of the company, the performance
of the executive and any increased responsibilities assumed by the executive.
Above-average performance is recognized and rewarded by placing an executive at
a higher level in the salary range. Based on the Company's performance this
year, Mr. Bailey, Chief Executive Officer, informed the Compensation Committee
that he would not accept a raise.
The Company has an annual incentive plan for executive officers. The
purpose of this plan is to provide a direct financial incentive in the form of
annual cash bonuses to executives if the Company's annual goals relating to net
income and return on equity are met. Threshold, target and maximum performance
goals are set by the Board of Directors at the beginning of each fiscal year, as
well as the maximum percentage of base salary that can be earned. Individual
performance is taken into account in determining a portion of the bonus, but no
bonus is paid unless predetermined threshold levels of net income and return on
equity are met.
A stock option program is the Company's long-term incentive plan for
executive officers and key employees. The objectives of the program are to align
executive and shareholder long-term interests by creating a strong and direct
link to shareholder return, and to enable executives to develop and maintain a
significant, long-term ownership position in the Company's Common Stock.
The base salary of the Chief Executive Officer is established by the terms
of the employment agreement entered into between Mr. Bailey and the Bank. The
Chief Executive Officer's base salary under the agreement was determined on the
basis of the Committee's review and evaluation of the compensation of chief
executives of other financial institutions similar in size to the company. The
Chief Executive Officer's bonus is determined under the same criteria used for
all executive officers as a group.
In fiscal 2003, the Company did not exceed the targeted performance
objectives under the incentive bonus plan and no bonus was awarded.
COMMITTEE ON COMPENSATION AND STOCK OPTIONS
AMERIANA BANCORP
Donald C. Danielson (Chairman)
R. Scott Hayes
Michael E. Kent
10
STOCK PERFORMANCE
The following graph shows the cumulative total return on the Common Stock
over the last five years, compared with the cumulative total return of the
Nasdaq index for stocks of savings institutions (U.S. Companies, SIC 6030-39)
(the "Industry Index") and the Index for the Nasdaq Stock Market (U.S.
Companies, all SIC) (the "Market Index") over the same period, as if $100 were
invested on December 31, 1998 in the Common Stock and each index. Cumulative
total return represents the total increase in value since December 31, 1998,
assuming reinvestment of all dividends paid.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
December 31, 1998 through December 31, 2003
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100 December 2003
[Line graph appears here depicting the cumulative total stockholder return
of $100 invested in the Common Stock as compared to $100 invested in all
companies whose equity securities are traded on the Nasdaq US Stock Market and
as compared to the equity securities of savings institutions and savings
institution holding companies traded on the Nasdaq Stock Market. Line graph
plots the cumulative total return from December 31, 1998 to December 31, 2003.
Plot points are provided below.]
- -------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
------ ------ ------ ------ ------ ------
Ameriana Bancorp $100.00 $ 84.10 $ 65.25 $ 87.37 $ 78.50 $103.76
- -------------------------------------------------------------------------------------
Nasdaq US 100.00 186.12 113.20 89.65 61.65 93.10
- -------------------------------------------------------------------------------------
Savings Institutions Index 100.00 88.07 107.04 134.85 173.93 258.89
- -------------------------------------------------------------------------------------
11
- -------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- -------------------------------------------------------------------------------
The Bank offers mortgage and consumer loans to its directors, officers and
employees. In the opinion of management, these loans do not involve more than
the normal risk of collectibility and are made in the ordinary course of
business and on substantially the same terms, including interest rates, as those
prevailing at the time for nonaffiliated persons.
The law firm of Hayes Copenhaver Crider, of which R. Scott Hayes, a
director of the Company and the Bank and a member of the Committee on
Compensation and Stock Options, is a partner, serves as General Counsel to the
Company and performs legal services to the Company and the Bank on a regular
basis. Estimated legal fees for services rendered to the Company and its
subsidiaries by the law firm of Hayes Copenhaver Crider during 2003 amounted to
approximately $182,000.
- -------------------------------------------------------------------------------
PROPOSAL II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- -------------------------------------------------------------------------------
BKD, LLP, which was the Company's independent auditing firm for 2003, has
been retained by the Board of Directors to be the Company's auditors for 2004,
subject to ratification by the Company's shareholders. A representative of BKD,
LLP is expected to be present at the Annual Meeting, and he will have the
opportunity to make a statement if he desires to do so and will be available to
respond to appropriate questions.
AUDIT FEES
During the fiscal years ended December 31, 2002 and 2003, the aggregate
fees to BKD, LLP for professional services rendered in the audit of the
Company's annual financial statements and the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q filed during
the fiscal years ended December 31, 2002 and 2003, were $95,476 and $79,569,
respectively.
AUDIT-RELATED FEES
During the fiscal years ended December 31, 2002 and 2003, the aggregate
fees for assurance and related services by BKD, LLP that were reasonably related
to the performance of the audit and review of the Company's financial statements
(other than audit fees) were $14,990 and $10,233, respectively.
TAX FEES
During the fiscal years ended December 31, 2002 and 2003, the aggregate
fees by BKD, LLP for professional services rendered by BKD, LLP to the Company
for tax compliance, tax advice and tax planning were $22,300 and $29,950,
respectively.
ALL OTHER FEES
For the fiscal year ended December 31, 2002 and 2003, the aggregate fees
paid by the Company to BKD, LLP for all other services (other than audit,
audit-related and tax fees) were $24,041 and $26,510, respectively.
The Audit Committee's charter provides that the Audit Committee will
pre-approve all audit and non-audit services to be provided by the independent
auditor (subject to any exceptions permitted by the SEC), review the independent
auditor's proposed audit scope and approach, and disclose to investors in
periodic reports filed with the SEC all non-audit services and all reportable
fees paid to the independent auditor. The authority to grant pre-approvals may
be delegated to one or more members of the Committee, so long as any decision of
such designated director is presented to the full Committee for its approval at
its next schedule meeting. During fiscal years ended December 31, 2002 and 2003,
the Audit Committee approved 100% of all of "audit-related", "tax" and "other
fees".
12
The appointment of the auditors must be ratified by a majority of the votes
cast by the shareholders of the Company at the Annual Meeting. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF AUDITORS.
- -------------------------------------------------------------------------------
REPORT OF THE AUDIT COMMITTEE
- -------------------------------------------------------------------------------
The Audit Committee of the Board of Directors (the "Audit Committee") has:
1. Reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2003, with the management of the Company;
2. Discussed with the Company's independent auditors the matters required
to be discussed by Statement of Auditing Standards No. 61, as the same
was in effect on the date of the Company's financial statements; and
3. Received the written disclosures and the letter from the Company's
independent auditors required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), as the same
was in effect on the date of the Company's financial statements and
discussed with the independent auditors their independence.
Based on the foregoing materials and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements for
the fiscal year ended December 31, 2003, be included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2003.
MEMBERS OF THE AUDIT COMMITTEE
Michael E. Kent
Charles M. Drackett, Jr.
Ronald R. Pritzke
- -------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- -------------------------------------------------------------------------------
Pursuant to regulations promulgated under the Exchange Act, the Company's
officers and directors and all persons who own more than 10% of the Common Stock
("Reporting Persons") are required to file reports detailing their ownership and
changes of ownership in the Common Stock and to furnish the Company with copies
of all such ownership reports that are filed. Based solely on the Company's
review of the copies of such ownership reports which it has received in the past
fiscal year or with respect to the past fiscal year, or written representations
that no annual report of changes in beneficial ownership were required, the
Company believes that during fiscal year 2003 all Reporting Persons have
complied with these reporting requirements.
- -------------------------------------------------------------------------------
OTHER MATTERS
- -------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Annual Meeting, it
is intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the determination of a majority of the Board of
Directors.
13
- -------------------------------------------------------------------------------
MISCELLANEOUS
- -------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, directors and officers of the Company may
solicit proxies personally or by telegraph or telephone without additional
compensation.
The Company's Annual Report to Shareholders for 2003 accompanies this proxy
statement. Such Annual Report is not to be treated as a part of the proxy
solicitation materials nor as having been incorporated herein by reference. A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2003, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO SHAREHOLDERS AS OF THE RECORD DATE, UPON WRITTEN
REQUEST TO THE SECRETARY, AMERIANA BANCORP, 2118 BUNDY AVENUE, NEW CASTLE,
INDIANA 47362.
- -------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- -------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials for
next year's annual meeting of shareholders, any shareholder proposal to take
action at such meeting must be received at the Company's headquarters, 2118
Bundy Avenue, New Castle, Indiana 47362, no later than December 17, 2004. Any
such proposals shall be subject to the requirements of the proxy rules adopted
under the Exchange Act.
Shareholder proposals, other than those submitted pursuant to the Exchange
Act, must be delivered or mailed in writing, in the form prescribed by the
Company's Articles of Incorporation, to the Secretary of the Company at the
address given in the preceding paragraph not less than thirty days nor more than
sixty days prior to any such meeting; provided, however, that if less than
thirty-one days' notice of the meeting is given to shareholders, such written
notice shall be delivered or mailed, as prescribed, to the Secretary of the
Company not later than the close of the tenth day following the day on which
notice of the meeting was mailed to shareholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Nancy A. Rogers
Nancy A. Rogers
Secretary
New Castle, Indiana
April 16, 2004
14
ANNEX A
AMERIANA BANCORP
----------------
AUDIT COMMITTEE CHARTER
-----------------------
The responsibility of the Audit Committee (the "Committee") of Ameriana
Bancorp (the "Corporation") shall be to assist the Board of Directors in
fulfilling its responsibilities to the shareholders by determining that
management has established a system to provide reasonable assurance that
financial disclosures reasonably portray the Corporation's financial condition
and results of operations. The Committee shall establish and maintain lines of
communications between itself and the Board of Directors, the Internal Auditor,
the Corporation's independent auditors, and management. The Committee intends to
fulfill its responsibilities as follows:
COMPOSITION
-----------
A. The Committee shall consist of three or more independent directors, each
of whom is "independent" as such term is defined in Section 10A(m)(3) of the
Securities Exchange Act of 1934, as amended (the "Act") and regulations
promulgated thereunder by the Securities and Exchange Commission (the "SEC"),
the ("SEC Regulations"), or whose failure to be "independent" shall fall within
one of the exemptions set forth in the Act and SEC Regulations, and is
independent under the rules of the Nasdaq Stock Market ("Nasdaq") as set forth
in the National Association of Securities Dealers' Manual (the "Manual").
B. Each Committee member shall be free from any relationship that, in the
opinion of the Board of Directors, as evidenced by its annual selection of such
Committee members, would interfere with the exercise of independent judgment as
a Committee member. Each Committee member shall be able to read and understand
financial statements (including the Corporation's balance sheet, income
statement and cash flow statement.) Additionally, at least one Committee member
shall have past employment experience in Finance or accounting, requisite
professional certification in accounting, or other comparable experience or
background resulting in the individual's financial sophistication, including
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
These requirements are intended to satisfy the Act and the Nasdaq listing
requirements relating to the composition of audit committees, and shall be
construed accordingly.
FINANCIAL REPORTING
-------------------
A. The Committee will be responsible for reviewing, on a periodic basis,
the bank's external auditing program.
B. The Committee will oversee the quarterly regulatory reporting process by
annually reviewing the process with the CFO. The Committee will also review
copies of all filings made with the SEC.
C. The Committee will review management reports on all cases of financial
misconduct by employees, officers or directors and consider the implications
thereof on the adequacy of internal controls.
D. The Committee will make itself available to consult with management when
management seeks a second opinion on accounting or auditing questions.
E. The Committee will have the authority to engage independent counsel and
other advisers, as it determines necessary to carry out its duties. The
Corporation will provide the Committee with appropriate funding, as determined
by the committee, for payment of: (a) compensation to any independent auditors
engaged for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Corporation; (b) compensation to
any advisers employed by the audit committee; and (c) ordinary administrative
expenses of the audit committee that are necessary or appropriate in carrying
out its duties.
A-1
INDEPENDENT AUDITORS
--------------------
A. The Committee will annually review the independence of the external
auditor.
B. The Committee will review the responsibilities of the external auditor
and require that the independent auditor rotate all "audit partners" as required
by the regulations issued by the SEC.
C. The Committee will appoint, compensate, retain and oversee the work of
the independent auditors employed for the purpose of preparing and issuing an
audit report with respect to the Corporation or preparing other audit, review or
attest services for the Corporation; such independent auditors shall be duly
registered with the Public Accounting Oversight Board; and, such independent
auditors shall be instructed to report directly to the Committee.
D. The Committee will pre-approve all audit and non-audit services to be
provided by the independent auditor (subject to any exceptions permitted by the
SEC), review the independent auditor's proposed audit scope and approach, and
disclose to investors in periodic reports filed with the SEC all non-audit
services and all reportable fees paid to the independent auditor.
E. The authority to grant pre-approvals will be delegated to one or more
members of the Committee, so long as any decision of such designated director is
presented to the full Committee for its approval at its next scheduled meeting.
F. The Committee will receive and review a timely report from the
independent auditors performing the audit of the Corporation, which details: (1)
all "critical accounting policies and practices" to be used in the audit; (2)
all alternate presentation and disclosure of financial information within
generally accepted accounting principles that have been discussed with
management officials of the Corporation, ramifications of the use of such
alternative disclosure and the treatment preferred by the independent auditors;
and (3) other material written communication between the independent auditors
and the management of the Corporation, including, but not limited to, any
management letter or scheduled or unadjusted differences.
G. The Committee will review management's response to the auditor's
recommendations regarding internal control, significant accounting policies and
financial reporting issues.
H. The Committee will resolve disagreements between management and the
accountants regarding financial reporting.
I. The Committee will discuss with the independent auditors the matters
required to be discussed by SAS 61 Communication with Audit Committees and SAS
90 Audit Committee Communications, which include:
(a) methods used to account for significant unusual transactions;
(b) the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
(c) the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditor's conclusions
regarding the reasonableness of those estimates;
(d) disagreements with management over the application of accounting
principles, the basis for management's accounting estimates, and the
disclosures in the financial statements; and
(e) information regarding the auditor's judgment about quality, not just
acceptability, of the Corporation's auditing principles.
INTERNAL CONTROL
----------------
A. The Committee will be responsible for reviewing, on an annual basis, the
Corporation's internal audit plan and audit policies and the adequacy of this
written Audit Committee Charter.
B. The Committee will be responsible for reviewing, on a periodic basis,
the Corporation's internal audit reports.
A-2
C. The Committee will direct special investigations into significant
matters brought to its attention within the scope of its duties.
D. The Committee will report its activities to the Board on a regular
basis.
E. The Committee will establish procedures for the receipt, retention, and
treatment of complaints received from employees by the bank regarding
accounting, internal accounting controls, or auditing matters and the
confidential, anonymous submission by bank employees of concerns regarding
questionable accounting or auditing matters.
A-3
ANNEX B
CHARTER
OF THE
NOMINATING AND GOVERNANCE COMMITTEE
OF THE
BOARD OF DIRECTORS OF AMERIANA BANCORP
AS APPROVED BY THE BOARD OF DIRECTORS
ON March 29, 2004
I. AUTHORITY AND COMPOSITION
The Committee is established pursuant to Section 14 of the Restated Bylaws of
Ameriana Bancorp (the "Corporation"). Committee members should be appointed
annually by the Board and may be replaced by the Board. The Committee may
appoint a Secretary, who need not be a Director. The Committee Chairman shall be
appointed by the Board.
The Committee shall be comprised of at least three (3) members, each of whom
shall meet the independence requirements of NASD Rule 4350(c)(4) and NASD Rule
4200(a)(15) and shall meet any other standards of independence as may be
prescribed for purposes of any federal securities laws relating to the
Committee's duties and responsibilities.
II. PURPOSE OF THE COMMITTEE
The Committee's purpose is to assist the Board in (i) identifying individuals
qualified to become Board members and recommending that the Board select a group
of director nominees for each annual meeting of the Corporation's stockholders,
and (ii) promoting the best interests of the Corporation and its shareholders
through the implementation of sound corporate governance principles and
practices.
III. RESPONSIBILITIES OF THE COMMITTEE
THE FOLLOWING ACTIVITIES ARE SET FORTH AS A GUIDE WITH THE UNDERSTANDING THAT
THE COMMITTEE MAY DIVERGE FROM THIS GUIDE AS IT CONSIDERS APPROPRIATE.
(a) Identify potential candidates for nomination as Directors on an
ongoing basis, in such manner as the Committee deems appropriate;
(b) Recommend to the Board the number of Directors to be elected and a
slate of nominees for election as Directors at the Corporation's
annual meeting of shareholders;
(c) As the need arises to fill vacancies, recommend to the Board persons
to be appointed as Directors in the interval between annual meetings
of the Corporation's shareholders;
(d) Recommend to the Board standards for determining director independence
consistent with the requirements of the NASD Rules and other legal or
regulatory corporation governance requirements and review and assess
these standards on a periodic basis;
(e) Review the qualifications and independence of the members of the Board
and its various Committees on a periodic basis and make
recommendations the Committee members may deem appropriate from time
to time concerning any recommended changes in the composition of the
Board and its Committees;
(f) Oversee the Corporation's director orientation and continuing
education programs;
B-1
(g) Jointly with the Compensation Committee, oversee matters related to
the compensation and benefits of outside, non-employee Directors and
make such recommendations to the Board as the Committee deems
appropriate;
(h) Recommend to the Board a retirement policy for Directors and a policy
relating to Directors who have experienced a change in the job
responsibilities they held at the time they became a Director;
(i) Recommend to the Board such changes to the Board's Committee structure
and Committee functions as the Committee deems advisable;
(j) Confirm that each standing Committee of the Board has a Charter in
effect and that such Charter is reviewed at least annually by its
Committee;
(k) Recommend to the Board a Common Stock Purchase Guideline for outside
Directors and interpret and implement the Guideline in such manner as
the Committee deems appropriate;
(l) Review shareholder proposals and nominations duly and properly
submitted to the Corporation and recommend appropriate action to the
Board;
(m) Review any proposed amendments to the Corporation's Articles of
Incorporation and Bylaws and recommend appropriate action to the
Board;
(n) Review and assess the Corporation's compliance with the corporate
governance requirements established by the Nasdaq and the requirements
established under the Sarbanes-Oxley Act, by federal banking laws and
regulations or otherwise as applicable to each of the Corporation and
its subsidiaries and controlled affiliates;
(o) Monitor the Board's and the Corporation's compliance with any
commitments made to the Corporation's regulators or otherwise
regarding changes in corporate governance practices;
(p) Recommend to the Board such additional actions related to corporate
governance matters as the Committee may deem necessary or advisable
from time to time;
(q) Review and assess the quality and clarity of the information provided
to the Board and the Committee and make recommendations to management
as the Committee deems appropriate from time to time for improving
such materials;
(r) Evaluate the effectiveness of the Board's oversight of management
activities and the major operations of the Corporation and its
subsidiaries and controlled affiliates;
(s) Review and assess the Board's effectiveness in monitoring exceptions
to Board-approved policies and guidelines;
(t) Review Board and Committee processes for assessing the adequacy and
completeness of their respective minutes, the process for the review
and approval of such minutes and the retention of such minutes and any
related materials presented to the Board and its Committees for
review; and
(u) Receive comments from all Directors and report annually to the Board
with an assessment of the Board's performance, to be discussed with
the full Board near or following the end of each fiscal year.
WITH RESPECT TO THE RESPONSIBILITIES LISTED ABOVE, THE COMMITTEE SHALL:
(a) Report regularly to the Board on its activities;
B-2
(b) Maintain minutes of its meetings and records relating to those
meetings and the Committee's activities;
(c) Have the sole authority to retain and terminate any search firm to be
used to identify Director candidates and to approve the search firm's
fees and other retention terms;
(d) Have authority to obtain advice and assistance from internal or
external legal, accounting or other advisors;
(e) Form and delegate authority to subcommittees of one or more Committee
members when appropriate;
(f) Review and reassess the adequacy of this Charter and Code of Ethics
annually and recommend to the Board any proposed changes to this
Charter; and
(g) Annually review the Committee's own performance.
IV. GENERAL
In performing their responsibilities, Committee members are entitled to rely in
good faith on information, opinions, reports or statements prepared or presented
by:
(a) One or more officers and employees of the Corporation whom the
Committee member reasonably believes to be reliable and competent in
the matters presented;
(b) Counsel, independent auditors, or other persons as to matters which
the Committee member reasonably believes to be within the professional
or expert competence of such person; or
(c) Another Committee of the Board as to matters within its designated
authority which Committee the Committee member reasonably believes to
merit confidence.
B-3
PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE AMERIANA BANCORP
WITH-
ANNUAL MEETING OF SHAREHOLDERS I. The election as director of all FOR HOLD EXCEPT
May 20, 2004 nominees listed below (except as
marked to the contrary below): / / / / / /
The undersigned hereby appoints the full Board of Directors
of the Company or a majority thereof with full powers of
substitution, to act as attorneys and proxies for the Donald C. Danielson
undersigned, and to vote all shares of common stock of the Paul W. Prior
Company which the undersigned is entitled to vote at the
Annual Meeting of Shareholders, to be held at the main
office of Ameriana Bank and Trust, SB, 2118 Bundy Avenue,
New Castle, Indiana, Thursday, May 20, 2004, at 10:00 a.m.
and at any and all adjournments thereof, as follows:
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, MARK "EXCEPT" AND WRITE THAT NOMINEE'S
NAME IN THE SPACE PROVIDED BELOW.
----------------------------------------------------
FOR AGAINST ABSTAIN
II. The ratification of the
appointment of BKD, LLP / / / / / /
as auditors for the fiscal
year ending December 31,
2004
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH
NOMINEE AND THE LISTED PROPOSITION.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE
VOTED FOR EACH OF THE NOMINEES AND THE
PROPOSITION STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY
WILL BE VOTED IN ACCORDANCE WITH THE DETERMINA
-TION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT
THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE
ANNUAL MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY ON THE BOARD OF
DIRECTORS TO VOTE WITH RESPECT TO APPROVAL OF
THE MINUTES OF THE PRIOR ANNUAL MEETING OF
SHAREHOLDERS, THE ELECTION OF ANY PERSON AS
DIRECTOR WHERE THE NOMINEE IS UNABLE TO SERVE OR
FOR GOOD CAUSE WILL NOT SERVE, AND MATTERS
INCIDENT TO THE CONDUCT OF THE 2004 ANNUAL
MEETING.
Please be sure to sign and date -----------------------
this proxy in the box below / Date /
- -------------------------------------------------------------------
/ /
/Shareholder sign above. Co-holder (if any) sign above /
- -------------------------------------------------------------------
/ /
- -------------------------------------------------------------------
Detach above card, date, sign and mail in postage-paid envelope provided.
AMERIANA BANCORP
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
- -------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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