SCHEDULE 14A
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: Yes.
Filed by a Party other than the Registrant: No.
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
RIVER VALLEY BANCORP
(Name Of Registrant As Specified In Its Charter)
RIVER VALLEY BANCORP
(Name of Person(s) Filing Proxy Statement)
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: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid:
[ ] 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. N/A
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
River Valley Bancorp
430 Clifty Drive
P.O. Box 1590
Madison, Indiana 47250-0590
(812) 273-4949
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
To Be Held On April 21, 2004
Notice is hereby given that the Annual Meeting of Shareholders of River
Valley Bancorp (the "Holding Company") will be held at 430 Clifty Drive,
Madison, Indiana, on Wednesday, April 21, 2003, at 3:00 p.m., Eastern Standard
Time.
The Annual Meeting will be held for the following purposes:
1. Election of Directors. Election of one director of the Holding Company for
a term expiring in 2005, and one director for a term expiring in 2007.
2. Other Business. Such other matters as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on February 26, 2004, are
entitled to vote at the meeting or any adjournment thereof.
We urge you to read the enclosed Proxy Statement carefully so that you may
be informed about the business to come before the meeting, or any adjournment
thereof. At your earliest convenience, please sign and return the accompanying
proxy in the postage-paid envelope furnished for that purpose.
A copy of our Annual Report for the fiscal year ended December 31, 2003, is
enclosed. The Annual Report is not a part of the proxy soliciting material
enclosed with this letter.
By Order of the Board of Directors
/s/ Matthew P. Forrester
Matthew P. Forrester, President
Madison, Indiana
March 17, 2004
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
River Valley Bancorp
430 Clifty Drive
P.O. Box 1590
Madison, Indiana 47250-0590
(812) 273-4949
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PROXY STATEMENT
---------------
FOR
ANNUAL MEETING OF SHAREHOLDERS
April 21, 2004
This Proxy Statement is being furnished to the holders of common stock,
without par value (the "Common Stock"), of River Valley Bancorp (the "Holding
Company"), an Indiana corporation, in connection with the solicitation of
proxies by the Board of Directors of the Holding Company to be voted at the
Annual Meeting of Shareholders to be held at 3:00 p.m., Eastern Standard Time,
on April 21, 2004, at 430 Clifty Drive, Madison, Indiana, and at any adjournment
of such meeting. The principal asset of the Holding Company consists of 100% of
the issued and outstanding shares of common stock, $.01 par value per share, of
River Valley Financial Bank (the "Bank"). This Proxy Statement is expected to be
mailed to the shareholders of the Holding Company on or about March 17, 2004.
The proxy solicited hereby, if properly signed and returned to the Holding
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for each of the matters described below and, upon
the transaction of such other business as may properly come before the meeting,
in accordance with the best judgment of the persons appointed as proxies.
Any shareholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Holding Company
written notice thereof (Lonnie D. Collins, 430 Clifty Drive, P.O. Box 1590,
Madison, Indiana 47250-0590), (ii) submitting a duly executed proxy bearing a
later date, or (iii) by appearing at the Annual Meeting and giving the Secretary
notice of his or her intention to vote in person. Proxies solicited hereby may
be exercised only at the Annual Meeting and any adjournment thereof and will not
be used for any other meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on February 26, 2004
("Voting Record Date"), will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 1,623,728 shares of the Common Stock issued and
outstanding, and the Holding Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at the Annual
Meeting on all matters properly presented at the Annual Meeting. As of December
26, 2003, the Holding Company declared a 2-for-1 stock split of shares of Common
Stock. All share figures set forth in this Proxy Statement have been adjusted to
reflect that stock split. The holders of over 50% of the outstanding shares of
Common Stock as of the Voting Record Date must be present in person or by proxy
at the Annual Meeting to constitute a quorum. In determining whether a quorum is
present, shareholders who abstain, cast broker non-votes, or withhold authority
to vote on one or more director nominees will be deemed present at the Annual
Meeting.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of February 26, 2004, by each person who is
known by the Holding Company to own beneficially 5% or more of the Common Stock.
Unless otherwise indicated, the named beneficial owner has sole voting and
dispositive power with respect to the shares.
Number of Shares
Name and Address of Common Stock Percent
of Beneficial Owner(1) Beneficially Owned (1) of Class
- ---------------------------------------- ---------------------- --------
River Valley Financial Bank 168,920 10.4%
430 Clifty Drive
Madison, IN 47250
Jeffrey L. Gendell 155,000 9.5%
Tontine Financial Partners, L.P.
Tontine Management, L.L.C
237 Park Avenue, 9th Floor
New York, NY 10017
Thomas M. and Mary E. Davee 117,800 7.3%
215 West Main Street
Madison, IN 47250
Wellington Management Company, LLP 90,000 5.5%
First Financial Fund, Inc.
75 State Street
Boston, MA 02109
- -----------------------------
(1) The information in this chart is based on Schedule 13D and 13G Report(s)
filed by the above-listed person(s) with the Securities and Exchange
Commission (the "SEC") containing information concerning shares held by
them. It does not reflect any changes in those shareholdings which may have
occurred since the date of such filings.
(2) These shares are held by the Trustee of the River Valley Bancorp Employee
Stock Ownership Plan and Trust (the "ESOP"). The Employees participating in
the ESOP are entitled to instruct the Trustee how to vote shares held in
their accounts under the ESOP. Unallocated shares held in a suspense
account under the ESOP are required under the ESOP terms to be voted by the
Trustee in the same proportion as allocated shares are voted.
(3) These shares are held by Tontine Partners, L.P., a Delaware limited
partnership. Tontine Management, L.L.C. is its general partner and Mr.
Gendell is the managing member of the general partner. These persons share
voting and investment power with respect to the shares.
(4) Thomas M. Davee and Mary E. Davee are married and jointly own 58,200 of
these shares. They share voting and dispositive power as to such shares.
(5) In a Schedule 13G filed with the SEC, the entities listed above indicate
that they may be the beneficial owners of the foregoing shares. Wellington
Management Company, LLP ("WMC") is a Massachusetts limited partnership and
a registered investment advisor. First Financial Fund, Inc. is one of its
clients, with whom WMC shares investment power. First Financial Fund, Inc.,
Gateway Center Three, 100 Mulberry Street, 9th Floor, Newark, New Jersey
07102-7503, has sole voting power with respect to these shares.
PROPOSAL I -- ELECTION OF DIRECTORS
The Board of Directors consists of seven members. All of the directors
except Matthew P. Forrester meet the standards for independence of Board members
set forth in the Listing Standards for the National Association of Securities
Dealers. The By-Laws provide that the directors are to be divided into three
classes as nearly equal in number as possible. The members of each class are to
be elected for a term of three years and until their successors are elected and
qualified. One class of directors is to be elected annually. Directors must have
their principal domicile in either Jefferson County, Indiana or Trimble County,
Kentucky, must have had a loan or deposit relationship with the Bank for a
continuous period of twelve months prior to their nomination to the Board, and
non-employee directors must have served as a member of a civic or community
organization based in Jefferson County, Indiana or Trimble County, Kentucky for
at least a continuous period of twelve months during the five years prior to
their nomination to the Board.
The two nominees for election as a director this year are Jonnie L. Davis
and Charles J. McKay, each of whom currently serves as a director whose current
term will expire upon completion of the election at the Annual Meeting. Mr.
McKay has been nominated to serve for a three-year term expiring in 2007.
Because no director of the Holding Company may serve beyond the year in which he
or she turns age 70, Jonnie L. Davis has been nominated to serve for a one-year
term expiring in 2005.
Unless otherwise directed, each proxy executed and returned by a
shareholder will be voted for the election of the nominees listed below. If any
person named as a nominee should be unable or unwilling to stand for election at
the time of the Annual Meeting, the proxy holders will nominate and vote for a
replacement nominee recommended by the Board of Directors. At this time, the
Board of Directors knows of no reason why the nominees listed below may not be
able to serve as directors if elected.
The following table sets forth certain information regarding the nominees
for the position of director of the Holding Company, including the number and
percent of shares of Common Stock beneficially owned by such persons as of the
Voting Record Date. Unless otherwise indicated, each nominee has sole investment
and/or voting power with respect to the shares shown as beneficially owned by
him. Fred W. Koehler is the cousin of John Muessel, the Bank's Vice
President-Trust Services. Apart from this relationship, no nominee for director
or director is related to any other nominee for director, director, or executive
officer of the Holding Company by blood, marriage, or adoption, and there are no
arrangements or understandings between any nominee and any other person pursuant
to which such nominee was selected. The table also sets forth the number of
shares of Holding Company Common Stock beneficially owned by all directors and
executive officers of the Holding Company as a group.
Common Stock
Expiration of Director of the Beneficially
Term as Holding Owned as of Percentage
Name Director Company Since February 26, 2004(1) of Class
- ------------------------ ------------- --------------- -------------------- ----------
Director Nominees
Jonnie L. Davis 2005 1997 11,288 (2) .7%
Charles J. McKay 2007 2000 3,600 (3) .2%
Directors
Continuing in Office
Robert W. Anger 2006 1996 24,580 (4) 1.5%
Matthew P. Forrester 2006 1999 47,176 (5) 2.9%
Michael J. Hensley 2005 1996 18,332 (6) 1.1%
Fred W. Koehler 2005 1996 59,080 (7) 3.6%
L. Sue Livers, M.S., R.D 2005 2002 300 .02%
All directors and
executive officers
as a group (15 persons) 286,712 (8) 16.9%
- --------------------------
(1) Based upon information furnished by the respective director nominees. Under
applicable regulations, shares are deemed to be beneficially owned by a
person if he or she directly or indirectly has or shares the power to vote
or dispose of the shares, whether or not he or she has any economic power
with respect to the shares. Includes shares beneficially owned by members
of the immediate families of the directors residing in their homes.
(2) Of these shares, 2,471 are held jointly by Mrs. Davis and her spouse.
(3) 1,600 of these shares are held jointly by Mr. McKay and his spouse.
(4) Of these shares, 2,046 are held jointly by Mr. Anger and his spouse and
11,312 are subject to stock options granted under the River Valley Bancorp
Stock Option Plan (the "Option Plan").
(5) Of these shares, 9,852 are held jointly by Mr. Forrester and his spouse,
2,000 are held under the River Valley Bancorp Recognition and Retention
Plan and Trust (the "RRP"), 192 are held by him as custodian for his minor
children, 18,648 are subject to a stock option granted under the Option
Plan, and 3,174 were held under the ESOP as of December 31, 2002. Excludes
8,000 shares subject to stock options granted under the Option Plan which
may not be exercised within 60 days following the Voting Record Date.
(6) Of these shares, 10,000 are held jointly by Mr. Hensley and his spouse.
(7) Of these shares, 9,902 are subject to stock options granted under the
Option Plan.
(8) Of these shares, 5,080 are held under the RRP, 77,020 are subject to stock
options granted under the Option Plan, and 30,236 were allocated to such
persons under the ESOP as of December 31, 2002. Excludes 22,400 shares
subject to stock options granted under the Option Plan which may not be
exercised within 60 days following the Voting Record Date.
Presented below is certain information concerning the director nominees of
the Holding Company:
Robert W. Anger (age 66) served as the Bank's Vice President -- Lending
from August, 1995 until his retirement in January, 1999. Prior to that, Mr.
Anger served as the Bank's President and Chief Executive Officer.
Jonnie L. Davis (age 69) is retired. From July, 1995 to December, 1998, Ms.
Davis served as an administrative assistant with Fewel, Pettitt, Bender &
Associates, a surveying firm in Hanover, Indiana. From July 1994 to July 1995,
Ms. Davis served as an accounting clerk for Stockdale Motors, an automobile
retailer in Madison, Indiana. From April 1984 to December 1994, Ms. Davis served
as a bookkeeping clerk for D&B Enterprises, a partnership involved in owning and
operating apartment complexes and other nonresidential real estate ventures.
Matthew P. Forrester (age 47) became President and Chief Executive Officer
of the Holding Company and the Bank in October, 1999; theretofore he served as
Senior Vice President, Treasurer and Chief Financial Officer of Home Loan Bank
and Home Loan Bancorp in Fort Wayne, Indiana for more than five years.
Sue Livers, M.S., R.D. (age 54) has served as Director of Nutrition
Services, The King's Daughters' Hospital and Health Services since 1971.
Michael J. Hensley (age 48) is a partner in the law firm Kemper, Collins &
Hensley. Mr. Hensley served as a Compliance Officer, Assistant Trust Officer and
the General Counsel to The Madison Bank & Trust Company from 1980 to January,
1989.
Fred W. Koehler (age 63) is retired. He formerly owned and operated Koehler
Tire Co., a tire and automotive parts store in Madison, Indiana, and served as
the Jefferson County Auditor for eight years.
Charles J. McKay (age 51) is a partner with the accounting firm Scott,
Callicotte, & McKay LLC, which is based in Madison, Indiana.
THE DIRECTORS SHALL BE ELECTED UPON RECEIPT OF A PLURALITY OF VOTES CAST AT
THE ANNUAL SHAREHOLDERS MEETING. PLURALITY MEANS THAT INDIVIDUALS WHO RECEIVE
THE LARGEST NUMBER OF VOTES CAST ARE ELECTED UP TO THE MAXIMUM NUMBER OF
DIRECTORS TO BE CHOSEN AT THE MEETING. ABSTENTIONS, BROKER NON-VOTES, AND
INSTRUCTIONS ON THE ACCOMPANYING PROXY TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR
MORE OF THE NOMINEES WILL RESULT IN THE RESPECTIVE NOMINEE RECEIVING FEWER
VOTES. HOWEVER, THE NUMBER OF VOTES OTHERWISE RECEIVED BY THE NOMINEE WILL NOT
BE REDUCED BY SUCH ACTION.
The Board of Directors and its Committees
During the fiscal year ended December 31, 2003, the Board of Directors of
the Holding Company acted by written consent or held meetings seven times. No
director attended fewer than 75% of the aggregate total number of meetings
during the last fiscal year of the Board of Directors of the Holding Company
held while he served as director and of meetings of committees which he served
during that fiscal year. The Board of Directors of the Holding Company has an
Audit Committee, a Stock Compensation Committee, Compensation Committee and a
Nominating Committee, among its other Board Committees. All committee members
are appointed by the Board of Directors.
The Audit Committee, comprised of all directors except Matthew P.
Forrester, recommends the appointment of the Holding Company's independent
accountants, and meets with them to outline the scope and review the results of
such audit. The Audit Committee met six times during the fiscal year ended
December 31, 2003.
The Stock Compensation Committee administers the Option Plan and the RRP.
The members of that Committee are all directors except Matthew P. Forrester. The
Stock Compensation Committee met one time during the fiscal year ended December
31, 2003.
The Compensation Committee establishes the compensation of the Holding
Company's executive officers. Its members include all outside directors. All of
these members meet the standards for independence for compensation committee
members set forth in the Listing Standards of the National Association of
Securities Dealers. The Compensation Committee did not meet during 2003 as it
was formed in 2004.
The Governance and Nominating Committee selects the individuals who will
run for election to the Holding Company's Board of Directors each year. Its
members for this year's nominations were Fred W. Koehler, Robert W. Anger and L.
Sue Livers. All of these members meet the standards for independence for
nominating committee members set forth in the Listing Standards of the National
Association of Securities Dealers. It met one time in 2003. Its charter is
attached hereto as Exhibit A.
Although the Governance and Nominating Committee will consider nominees
recommended by shareholders, it has not actively solicited recommendations for
nominees from shareholders nor has it established procedures for this purpose,
as it will address nominations on a case by case basis. When considering a
potential candidate for membership on the Holding Company's Board of Directors,
the Governance and Nominating Committee considers issues of diversity; age;
skills relevant to the Holding Company's business; community involvement;
professional and business experience; and ethical conduct. The Governance and
Nominating Committee will also consider the qualification requirements for
Directors in the Holding Company's By-laws as described on pages 2 to 3 of this
Proxy Statement. The Governance and Nominating Committee does not have specific
minimum qualifications that must be met by a Governance and Nominating
Committee-recommended candidate other than those prescribed by the By-laws and
it has no specific process for identifying such candidates. There are no
differences in the manner in which the Governance and Nominating Committee
evaluates a candidate that is recommended for nomination for membership on the
Holding Company's Board of Directors by a shareholder. The Governance and
Nominating Committee has not received any recommendations from any of the
Holding Company's shareholders in connection with the Annual Meeting.
Article III, Section 12 of the Holding Company's By-Laws provides that
shareholders entitled to vote for the election of directors may name nominees
for election to the Board of Directors but there are certain requirements that
must be satisfied in order to do so. Among other things, written notice of a
proposed nomination must be received by the Secretary of the Holding Company not
less than 120 days prior to the Annual Meeting; provided, however, that in the
event that less than 130 days' notice or public disclosure of the date of the
meeting is given or made to shareholders (which notice or public disclosure
includes the date of the Annual Meeting specified in the Holding Company's
By-Laws if the Annual Meeting is held on such date), notice must be received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
The Holding Company has adopted a policy for its shareholders to send
written communications to the Holding Company's directors. Under this policy,
shareholders may send written communications in a letter by first-class mail
addressed to any director at the Holding Company's main office. The Holding
Company has also adopted a policy that strongly encourages its directors to
attend each Annual Meeting of shareholders. All of the Holding Company's seven
directors attended the Annual Meeting of shareholders on April 16, 2003.
Management Remuneration and Related Transactions
Remuneration of Named Executive Officer
During the fiscal year ended December 31, 2003, no cash compensation was
paid directly by the Holding Company to any of its executive officers. Each of
such officers was compensated by the Bank.
The following tables set forth information as to annual, long term and
other compensation for services in all capacities paid to the President and
Chief Executive Officer of the Holding Company (the "Named Executive Officer")
for the last three fiscal years. There were no other executive officers of the
Holding Company who earned over $100,000 in salary and bonuses during the fiscal
year ended December 31, 2003.
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards
------------------------------------- -----------------------
Other All
Annual Restricted Securities Other
Name and Fiscal Compen- Stock Underlying Compen-
Principal Position Year Salary ($)(1) Bonus sation(2) Awards($) Options(#) sation($)(3)
- ------------------ ------ ------------- ----- --------- ----------- ----------- ------------
Matthew P. Forrester, 2003 $145,225 $4,671 -- -- -- $4,030
President and Chief 2002 $133,251 $6,144 -- -- -- $3,881
Executive Officer 2001 $122,892 $3,934 -- -- -- $3,381
- ----------------------
(1) Includes directors fees.
(2) The Named Executive Officer received certain perquisites, but, except as
otherwise noted, the incremental cost of providing such perquisites did not
exceed the lesser of $50,000 or 10% of his salary and bonus.
(3) Constitutes matching contributions made by the Bank to the Holding
Company's 401(k) Plan.
Stock Options
The following table includes information relating to option exercises by
the named Executive Officer during fiscal 2003 and the number of shares covered
by stock options held by Matthew P. Forrester as of December 31, 2003. Also
reported are the values for "in-the-money" options (options whose exercise price
is lower than the market value of the shares at fiscal year end) which represent
the spread between the exercise price of any such existing stock options and the
fiscal year-end market price of the stock.
Option Values as of 12/31/03
----------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at Fiscal Year End at Fiscal Year End (1)
Acquired on Value ----------------------------- -----------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable(2) Exercisable Unexercisable(2)
- -------------------- ------------ ------------ ----------- ---------------- ----------- ----------------
Matthew P. Forrester 3,352 $43,040 18,648 8,000 $426,967 $182,210
- ------------------------------------
(1) Amounts reflecting gains on outstanding options are based on the closing
price for the shares on December 31, 2003, which was $29.425 per share.
(2) The shares represented could not be acquired by the Named Executive Officer
as of December 31, 2003.
No stock options were granted to the Named Executive Officer during the
fiscal year ended December 31, 2003.
Employment Contracts
The Bank has entered into an employment agreement with Matthew P.
Forrester, the Bank's President and Chief Executive Officer. The agreement is
for a three-year term and extends annually for an additional one-year term to
maintain its three-year term if the Bank's Board of Directors determines to so
extend it. Under the agreement, the employee receives an initial annual salary
equal to his current salary, subject to increases approved by the Board of
Directors. The agreement also provides, among other things, for the employee's
participation in other bonus and fringe benefit plans available to other
employees. The employee may terminate his employment upon ninety (90) days'
prior written notice to the Bank. The Bank may discharge the employee for just
cause (as defined in the agreement) at any time or in certain events specified
by applicable law or regulations. If the Bank terminates the employee's
employment for other than just cause or the employee is constructively
discharged and such termination does not occur within twelve months after a
change in control of the Bank or the Holding Company, the agreement provides for
the employee's receipt of a lump-sum or periodic payment of an amount equal to
the sum of (A) his base salary through the end of the then-current term, plus
(B) his base salary for an additional twelve-month period, plus (C) in the
employee's sole discretion and in lieu of continued participation in his
employer's fringe benefit plans, cash in an amount equal to the cost of
obtaining all health, life, disability and other benefits in which the employee
would otherwise be eligible to participate. In the event the Bank terminates the
employee's employment for other than just cause or the employee is
constructively discharged within twelve months following a change in control of
the Bank or the Holding Company, the agreement provides for the employee's
receipt of a lump-sum payment of an amount equal to the difference between (A)
the product of 2.99 times his "base amount" (as defined in Section 280G(b)(3) of
the Internal Revenue Code of 1986, as amended ("Code")) and (B) the sum of any
other parachute payments, as determined under Section 280G(b)(2) of the Code. If
the payments provided for under the agreement, together with any other payments
made to the employee by the Bank, are determined to be payments in violation of
the "golden parachute" rules of the Code, such payments will be reduced to the
largest amount which would not cause the Bank to lose a tax deduction for such
payments under those rules. As of the date hereof, the cash compensation that
would be paid to Mr. Forrester under the agreement if such agreement were
terminated after a change in control of the Bank would be $414,000. The Holding
Company has guaranteed the obligations of the Bank under this employment
agreement.
A similar contract has been entered into with one other executive officer
of the Holding Company. The cash compensation which would be paid under this
contract if the affected employee were terminated after a change of control of
the Holding Company without cause by the Bank, or for cause by the employee,
would be $231,000.
Compensation of Directors
Directors of the Holding Company are paid directors' fees of $250 for each
meeting attended.
All directors of the Bank are entitled to receive monthly director fees in
the amount of $1,000 for their services. Jerry Allen also receives $1,000 per
month as a Director Emeritus of the Bank. Outside directors of the Bank also
receive fees in the amount of $250 for each special meeting of the Board.
Directors attending Loan Committee meetings are paid $50 for each such meeting.
Total fees paid to or deferred by directors, former advisory directors, and Mr.
Allen for the year ended December 31, 2003 were $147,447.
The Bank's directors and directors emeritus may, pursuant to deferred
compensation agreements, defer payment of some or all of such monthly directors'
fees or salary for a maximum period of five years. Upon reaching the retirement
age specified in their respective joinder agreements, directors who participate
in the deferred compensation plan receive fixed monthly payments for a specific
period ranging from 60 to 180 months, depending on the specific director's
election in his joinder agreement, but may also elect to receive their benefits
in a lump sum in the event of financial hardship. The agreements also provide
for death and disability benefits.
The Bank has purchased paid-up life insurance on the lives of directors and
directors emeritus participating in the deferred compensation plan to fund
benefits payable thereunder. The insurance is provided by Jefferson Pilot,
Pacific Mutual, Southland and Transamerica. At December 31, 2003, the cash
surrender value of the policies was carried on the books of the Bank at
approximately $2,042,164. The Bank expensed $2,250 in connection with these
agreements for the year ended December 31, 2003.
Transactions With Certain Related Persons
The Bank has followed a policy of offering to its directors, officers, and
employees real estate mortgage loans secured by their principal residence and
other loans. These loans are made in the ordinary course of business with the
same collateral, interest rates and underwriting criteria as those of comparable
transactions prevailing at the time and do not involve more than the normal risk
of collectibility or present other unfavorable features.
Audit Committee Report, Charter, and Independence
Audit Committee Report. The Audit Committee reports as follows with respect
to the audit of the Holding Company's financial statements for the fiscal year
ended December 31, 2003, included in the Holding Company's Shareholder Annual
Report accompanying this Proxy Statement ("2003 Audited Financial Statements"):
The Committee has reviewed and discussed the Holding Company's 2003 Audited
Financial Statements with the Company's management.
The Committee has discussed with its independent auditors (BKD, LLP) the
matters required to be discussed by Statement on Auditing Standards 61, which
include, among other items, matters related to the conduct of the audit of the
Holding Company's financial statements.
The Committee has received written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1
(which relates to the auditor's independence from the Holding Company and its
related entities) and has discussed with the auditors the auditors' independence
from the Holding Company. The Committee considered whether the provision of
services by its independent auditors, other than audit services and reviews of
Forms 10-QSB, is compatible with maintaining the auditors' independence.
Based on review and discussions of the Holding Company's 2003 Audited
Financial Statements with management and discussions with the independent
auditors, the Audit Committee recommended to the Board of Directors that the
Holding Company's 2003 Audited Financial Statements be included in the Holding
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
2003.
This Report is respectfully submitted by the Audit Committee of the Holding
Company's Board of Directors.
Audit Committee Members
-----------------------
Robert W. Anger
Jonnie L. Davis
Michael J. Hensley
L. Sue Livers
Fred W. Koehler
Charles J. McKay
Audit Committee Charter. The Board of Directors has adopted a written
charter for the Audit Committee. The Board of Directors reviews and approves
changes to the Audit Committee Charter annually. A copy of that Charter is
attached hereto as Exhibit B.
Independence of Audit Committee Members. The Holding Company's Audit
Committee is comprised of all of the directors except Matthew P. Forrester. Each
of these members meets the requirements for independence set forth in the
Listing Standards of the National Association of Securities Dealers. In
addition, the Board of Directors has determined that Charles J. McKay is a
"financial expert" as that term is defined in Item 401(h)(2) of Regulation S-K
promulgated under the Securities Exchange Act of 1934.
ACCOUNTANTS
BKD, LLP has served as auditors for the Holding Company since 2000. It is
anticipated that a representative of BKD, LLP will be present at the Annual
Meeting with the opportunity to make a statement if he or she so desires. He or
she will also be available to respond to any appropriate questions shareholders
may have. The Audit Committee has not yet completed the process of selecting an
independent public accounting firm to audit its books, records and accounts for
the fiscal year ended December 31, 2004.
Accountants' Fees
Audit Fees. The firm of BKD, LLP ("BKD") served as our independent public
accountants for each of our last two fiscal years ended December 31, 2002 and
2003. The aggregate fees billed by BKD for the audit of our financial statements
included in our annual report on Form 10-KSB and for the review of our financial
statements included in our quarterly reports on Form 10-QSB for our fiscal years
ended December 31, 2002 and 2003, and were $62,296 and $46,794, respectively.
Audit-Related Fees. The aggregate fees billed in each of fiscal 2002 and
2003 for assurance and related services by BKD that are reasonably related to
the audit or review of our financial statements and that were not covered in the
Audit Fees disclosure above, were $4,785 and $713, respectively. These services
included benefit plan accounting and reporting assistance.
Tax Fees. The aggregate fees billed in each of fiscal 2002 and 2003 for
professional services rendered by BKD for tax compliance, tax advice or tax
planning were $8,775 and $8,750, respectively.
All Other Fees. Also in 2002, the Bank recorded $2,900 in internal control
consulting fees. In 2003, the expense was $17,000 for internal control
consulting as the Bank continued to expand its internal audit function, and
$3,900 in fees for a review of the Bank's Trust Department.
Audit Committee Pre-Approval. Our Audit Committee formally adopted
resolutions pre-approving our engagement of BKD to act as our independent
auditor for the last two fiscal years ended December 31, 2003. The Audit
Committee has not adopted pre-approval policies and procedures in accordance
with paragraph (c) (7) (i) of Rule 2-01 of Regulation S-X, because it
anticipates that in the future the engagement of BKD will be made by the Audit
Committee and all non-audit and audit services to be rendered by BKD will be
pre-approved by the Audit Committee. The Audit Committee pre-approved any
audit-related and tax services provided by BKD in the last two fiscal years. Our
independent auditors performed all work described above with their respective
full-time, permanent employees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 ("1934 Act")
requires that the Holding Company's officers and directors and persons who own
more than 10% of the Holding Company's Common Stock file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"SEC"). Officers, directors and greater than 10% shareholders are required by
SEC regulations to furnish the Holding Company with copies of all Section 16(a)
forms that they file.
Based solely on its review of the copies of such forms received by it,
and/or written representations from certain reporting persons that no Forms 5
were required for those persons, the Holding Company believes that during the
fiscal year ended December 31, 2003, all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners with respect to
Section 16(a) of the 1934 Act were satisfied in a timely manner; provided
however that Fred Koehler reported the exercise of stock options for 1,000
shares on August 1, 2003, about one month late and reported the acquisition of
300 shares on October 27, 2003, about three months late; L. Sue Livers reported
the purchases of 50 shares on August 21, 2003, about 3 1/2 weeks late; Charles
J. McKay reported the exercise of stock options for 300 shares on May 29, 2003,
about two months late; Matthew Forrester reported the exercise of options for
1,676 shares on August 1, 2003, about one month late; Loy Skirvin, Director of
Human Resources of the Bank, reported the sale of 200 shares on October 27,
2003, about one week late; and Larry Fouse, Vice President of Finance of the
Bank reported the exercise of stock options for 2,000 shares and the sale of
those shares on August 28, 2003, about two days late.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder wishes to have presented at the next
Annual Meeting of the Holding Company must be received at the main office of the
Holding Company for inclusion in the proxy statement no later than 120 days in
advance of March 17, 2005. Any such proposal should be sent to the attention of
the Secretary of the Holding Company at 430 Clifty Drive, P.O. Box 1590,
Madison, Indiana 47250, and will be subject to the requirements of the proxy
rules under the Securities Exchange Act of 1934 and, as with any shareholder
proposal (regardless of whether included in the Holding Company's proxy
materials), the Holding Company's articles of incorporation, by-laws and Indiana
law.
A shareholder proposal being submitted for presentation at the Annual
Meeting but not for inclusion in the Holding Company's proxy statement and form
of proxy, will normally be considered untimely if it is received by the Holding
Company later than 120 days prior to the Annual Meeting. If, however, less than
130 days' notice or prior public disclosure of the date of the next Annual
Meeting is given or made to shareholders (which notice or public disclosure of
the date of the meeting shall include the date of the Annual Meeting specified
in publicly available By-Laws, if the Annual Meeting is held on such date), such
proposal shall be considered untimely if it is received by the Holding Company
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
If the Holding Company receives notice of such proposal after such time, each
proxy that the Holding Company receives will confer upon it the discretionary
authority to vote on the proposal in the manner the proxies deem appropriate,
even though there is no discussion of the proposal in the Holding Company's
proxy statement for the next Annual Meeting.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than those matters described in the Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Holding Company.
The Holding Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them in sending
proxy material to the beneficial owners of the Common Stock. In addition to
solicitation by mail, directors, officers, and employees of the Holding Company
may solicit proxies personally or by telephone without additional compensation.
Each shareholder is urged to complete, date and sign the proxy and return
it promptly in the enclosed envelope.
By Order of the Board of Directors
/s/ Matthew P. Forrester
Matthew P. Forrester
March 17, 2004
Exhibit A
River Valley Bancorp
Governance and Nominating Committee Charter
Purpose
The Governance and Nominating Committee is appointed by the Board of Directors
to:
o identify individuals qualified to become board members; and
o select, or recommend that the Board select, the director nominees for
the next annual meeting of shareholders.
Committee Membership
The Committee will be composed entirely of directors who satisfy the definition
of "independent" under the listing standards of The Nasdaq Stock Market
(Nasdaq). The Committee members will be appointed by the Board annually and may
be removed by the Board in its discretion. No Committee member shall vote on his
or her own nomination to serve on the Board of Directors for an additional term.
The Committee shall have the authority to delegate any of its responsibilities
to subcommittees as the Committee may deem appropriate, provided the
subcommittees are composed entirely of independent directors.
Meetings
The Committee shall meet as often as its members deem necessary to perform the
Committee's responsibilities.
Committee Authority and Responsibilities
The Committee will have the authority, to the extent it deems necessary or
appropriate, to retain a search firm to be used to identify director candidates.
The Committee shall have sole authority to retain and terminate any such search
firm, including sole authority to approve the firm's fees and other retention
terms. The Committee shall also have authority, to the extent it deems necessary
or appropriate, to retain other advisors. The Company will provide for
appropriate funding, as determined by the Committee, for payment of compensation
to any search firm or other advisors employed by the Committee.
The Committee, to the extent it deems necessary or appropriate, will:
o Identify individuals qualified to become members of the Board.
o Select, or recommend to the Board, director nominees to be presented
for shareholder approval at the annual meeting.
o Recommend to the Board director nominees to fill vacancies on the
Board in the interval between annual meetings of the Company's
shareholders.
o Make recommendations to the Board regarding the size and composition
of the Board and develop and recommend to the Board criteria (such as,
independence, experience relevant to the needs of the Company,
leadership qualities, diversity and ability to represent the
shareholders) for the selection of individuals to be considered as
candidates for election to the Board.
o Make sure director nominees satisfy any director qualification
requirements in the Company's articles of incorporation or bylaws.
o Consider shareholder nominations of directors consistent with the
requirements of the Company's articles of incorporation and bylaws,
and recommend to the Board of Directors actions to be taken with
respect to such nominations.
Exhibit B
CHARTER OF THE AUDIT COMMITTEE
OF
THE BOARD OF DIRECTORS
OF
RIVER VALLEY BANCORP
The Board of Directors of River Valley Bancorp hereby establishes its Audit
Committee. The Audit Committee shall consist of at least three (3) directors,
all of whom are independent of management of the Corporation and any of its
subsidiaries and free from any relationship that, in the judgment of the Board
of Directors, would interfere with the exercise of independent judgment
respecting the matters over which the Committee is given authority. Directors
will not be deemed independent if they accept consulting, advisory or other fees
from the Corporation (other than in their capacity as directors or director
committee members), subject to any de minimus exceptions which shall be
permitted by the Securities Exchange Commission, or if they beneficially own
directly or indirectly 5% or more of the Corporation's outstanding securities.
The members of the Audit Committee shall be elected annually by the Board
of Directors in connection with the annual meeting of the board or by unanimous
written consent of the Board of Directors in lieu thereof. Members shall be
elected by the Board of Directors with due regard to such member's training in,
or experience with, accounting and financial reporting issues. To the extent
possible, at least one director who would be a "financial expert," as defined in
Section 407(b) of the Sarbanes-Oxley Act of 2002, shall be added to the
Committee. Members of the Committee may be removed, and vacancies on the
Committee may be filled by the Board of Directors in accordance with the Code of
By-laws of the Corporation. The Chairman of the Audit Committee may be
designated by the Board of Directors and, in the absence of such designation,
may be elected by the Audit Committee from among their members.
The Audit Committee shall assist the Board of Directors to oversee the
Corporation's financial reporting processes, its internal financial control
structures and its external financial audit processes. The Audit Committee shall
facilitate communication on Financial Matters (defined below) among the Board of
Directors, management and the Corporation's independent auditors. The Audit
Committee possesses and is hereby granted the power and authority of the Board
of Directors over the foregoing and over the Corporation's Financial Matters to
the extent necessary to allow the Committee to carry out its purposes. The
matters over which the Audit Committee has oversight authority include the
following (collectively, referred to herein as "Financial Matters"):
o The quality, accuracy and integrity of the Corporation's annual and
quarterly financial statements, including footnotes and related
disclosures.
o The quality, scope and procedures of the independent auditors' audits
of the Corporation's financial statements.
o The quality, appropriateness and implementation of the Corporation's
significant accounting policies.
o Audit conclusions respecting significant estimates and adjustments.
o The disclosure, treatment or resolution of any material weakness in
financial reporting or controls or reportable conditions identified by
management or the independent auditors.
o The quality, adequacy and appropriateness of the Corporation's
internal financial control structures, including any circumstances in
which such controls may be overridden or compromised.
o Disagreements among management or the independent auditors.
o The assessment of material risks or contingencies that may affect the
Corporation's financial reporting including the risk of liability
associated with litigation or noncompliance with law.
o Such other matters affecting the quality, integrity or accuracy of the
Corporation's financial reporting as the Committee deems relevant to
any of the foregoing matters.
Authority Respecting Independent Auditors
The independent auditors shall ultimately be accountable to the Audit
Committee, as representatives of the shareholders and the Corporation's other
constituencies, and shall report directly to the Audit Committee. The Audit
Committee shall be responsible for the appointment, compensation, and oversight
of the work of the independent auditors. The costs and fees of such independent
auditors shall be paid by the Corporation.
The Audit Committee shall take such action as it deems appropriate to
ensure that the Corporation receives annually from the independent auditors a
formal written statement, consistent with Independence Standards Board Standard
1, delineating all relationships between the auditors and the Corporation that
may be deemed to affect the independence of the independent auditors, including
any management consulting services provided, or proposed to be provided, by the
independent auditors for the Corporation or any of its affiliates and the fees
paid or proposed to be paid for such services. The Audit Committee shall meet at
least annually with the independent auditors to engage in a dialogue with the
auditors with respect to any disclosed relationships or services that may affect
the objectivity and independence of the auditors.
The Audit Committee has the following specific authority respecting the
independent auditors:
(a) To engage or dismiss the independent auditors.
(b) To assess any matter that may affect the independence of the
independent auditors and the appearance of propriety of any such
matter and to take, or to direct management to take, appropriate
action to confirm, oversee or improve the independence of the
auditors.
(c) To direct the independent auditors to meet with the Audit Committee
from time to time, separately or in the presence of management or
others, to discuss Financial Matters or to prepare and submit reports
to the Committee respecting Financial Matters.
(d) To take action to resolve any disagreement respecting accounting
principles, the implementation or application of such principles or
Financial Matters between Management and the independent auditor.
(e) To review with management and the independent auditors the
Corporation's audited annual financial statements and the independent
auditors' opinion rendered with respect to such financial statements,
including a review of the nature and extent of any significant changes
in accounting principles or the application thereof and determine
whether to recommend the inclusion of such audited financial
statements in the Corporation's Annual Report for the year.
(f) To prepare a report to be included in the Corporation's proxy
statements stating that the Audit Committee has (i) reviewed and
discussed the audited financial statements with management; (ii)
discussed with the independent auditor matters required to be
discussed by SAS No. 61; and (iii) obtained and discussed with
independent auditors disclosures required by Independence Standards
Board Standard No. 1.
Prior Approval of Audit Services and Non-Audit Services
In connection with the agreement of the Corporation's independent auditors
to provide services to the Corporation from time to time, the Audit Committee
shall take reasonable steps to identify which of the services to be provided
would be deemed non-audit services which may be provided to the Corporation by
the independent auditors, and which would be deemed auditing services, within
the meaning of Sections 201 and 202 of the Sarbanes-Oxley Act of 2002. To the
extent required by those statutory provisions, all of such services shall be
pre-approved by the Audit Committee, or one or more independent director members
of the Audit Committee to whom such pre-approval authority shall have been
delegated by the Audit Committee. In no event shall the Audit Committee
authorize or permit the independent auditors to provide any of the prohibited
non-audit services described in Section 201 of the Sarbanes-Oxley Act of 2002.
Authority Over Management Activities Relating To Financial Matters
The Audit Committee has the following specific authority over the
activities of management in Financial Matters:
(a) To direct the chief financial officer or other members of management
to meet with the Audit Committee or the Board of Directors from time
to time, separately or in the presence of the independent auditors, or
others, to discuss Financial Matters or to prepare and submit reports
to the Committee respecting Financial Matters.
(b) To assess the quality, adequacy and appropriateness of the accounting
principles and policies implemented and applied by the Corporation and
the quality, integrity and accuracy of the Corporation's financial
reporting, and, in the Committee's discretion, from time to time or
upon request, to approve or disapprove such principles or policies or
to approve, disapprove or mandate any changes therein.
Authority Respecting Complaints
The Audit Committee shall establish procedures for the receipt, retention
and treatment of complaints received by the Corporation regarding accounting,
internal accounting controls, or auditing matters. Procedures shall also be
established by the Audit Committee for the confidential, anonymous submission by
employees of the Corporation of concerns regarding questionable accounting or
auditing matters.
Investigations And Obtaining Advice
The Audit Committee has the authority to require investigations and to
obtain advice respecting the Corporation's Financial Matters and the Committee's
exercise of its authority, as the Committee deems necessary or appropriate.
Without limiting the foregoing, the Committee has authority to direct
management, including the Corporation's legal counsel, or the independent
auditors to investigate any Financial Matters and related issues and to provide
reports to the Committee respecting such investigation. The Committee has
authority to meet with the Corporation's external general counsel, to obtain
advice respecting the exercise of the Committee's authority and to direct such
external counsel to investigate such legal issues relating to Financial Matters
and to report to the Committee regarding same, as the Committee deems necessary
or appropriate. The Committee has authority, on behalf of the Corporation, to
engage independent advisors whom the Committee may designate to provide advice
and guidance to the Committee respecting the exercise of its authority and
issues relating to Financial Matters as the Committee deems necessary or
appropriate, including, without limitation, independent legal counsel, and
independent financial advisors which may include investment banking firms or
accounting firms, other than the independent auditors. The Committee has
authority to meet separately with, and to receive private and, where
appropriate, privileged, written or oral communications from any of such
advisors. The costs and fees of such advisors shall be paid by the Corporation.
Procedural Matters
The Audit Committee shall meet from time to time at the call of its
Chairman or at the direction of the Board of Directors. The Chairman of the
Audit Committee shall call a meeting of the Committee upon the request of any
member of the Committee or the Chairman of the Board of Directors. The
provisions of the Code of By-laws of the Corporation respecting notice of
meetings and for action to be taken by the Board of Directors shall apply to
meetings and actions of the Audit Committee. The Audit Committee shall annually
update and review the Audit Committee Charter.
The Chairman of the Audit Committee shall report on the activities of the
Committee to the Board of Directors from time to time upon request of the
Chairman of the Board of Directors or of the Board of Directors.
Limitation
Nothing in this charter is intended to alter in any way the standard of
conduct that applies to any of the directors of the Corporation under the
Indiana Business Corporation Law, as amended ("IBCL"), and this Charter does not
impose, nor shall it be interpreted to impose any duty on any director greater
than, or in addition to, the duties or standard established by the IBCL.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
RIVER VALLEY BANCORP
Annual Meeting of Shareholders
April 21, 2004
The undersigned hereby appoints Lonnie D. Collins, with full power of
substitution, to act as attorney and proxy for the undersigned to vote all
shares of common stock of River Valley Bancorp which the undersigned is entitled
to vote at the Annual Meeting of Shareholders to be held at 430 Clifty Drive,
Madison, Indiana, on Wednesday, April 21, 2004, at 3:00 p.m., and at any and all
adjournments thereof, as follows:
For Withhold For All Except
1. The election as directors of all [_] [_] [_]
nominees listed below, except as
marked to the contrary
Jonnie L. Davis Charles J. McKay
(for a one-year term) (for a three-year term)
INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below;
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In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" each of the listed propositions.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This Proxy may be revoked at any time prior to the voting thereof.
The undersigned acknowledges receipt from River Valley Bancorp, prior to the
execution of this Proxy, of a Notice of the Meeting, a Proxy Statement and an
Annual Report to Shareholders.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
Please be sure to sign and date this Proxy in the box below.
[Date: ]
[ ] [ ]
Shareholder sign above Co-holder (if any) sign above
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Detach above card, sign, date and mail in postage paid envelope provided.
RIVER VALLEY BANCORP
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Please sign as your name appears on the envelope in which this card was mailed.
When signing as attorney, executor, administrator, trustee or guardian, please
give your full title. If shares are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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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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