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:
[ X] Preliminary Proxy Statement [ ] Confidential,
for Use
of the Commission
Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
HEARTLAND FINANCIAL USA, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[LOGO]
Heartland Financial USA, Inc.
April 4, 2001
Dear Fellow Stockholder:
You are cordially invited to attend the annual stockholders'
meeting of Heartland Financial USA, Inc. to be held at the
corporate headquarters, located at 1398 Central Avenue, Dubuque,
Iowa, on Wednesday, May 16, 2001, at 1:30 p.m. The accompanying
notice of annual meeting of stockholders and proxy statement
discuss the business to be conducted at the meeting. A copy of
our 2000 Annual Report to Stockholders is enclosed. At the
meeting we shall report on operations and the outlook for the
year ahead.
Your board of directors has nominated three persons to serve
as Class II directors and also proposes to amend our certificate
of incorporation to increase the number of authorized shares of
common stock from 12,000,000 to 16,000,000 shares. Additionally,
our management has selected and recommends that you ratify the
selection of KPMG LLP to continue as our independent public
accountants for the year ending December 31, 2001.
We recommend that you vote your shares for each of the
director nominees and in favor of the proposals.
We encourage you to attend the meeting in person. Whether
or not you plan to attend, however, please complete, sign and
date the enclosed proxy and return it in the accompanying
postpaid return envelope as promptly as possible. This will
ensure that your shares are represented at the meeting.
We look forward with pleasure to seeing you and visiting
with you at the meeting.
With best personal wishes,
/s/ Lynn B. Fuller
-----------------------------
Lynn B. Fuller
Chairman of the Board
1398 Central Avenue - Dubuque, Iowa 52001 - (319) 589-2100
[LOGO]
Heartland Financial USA, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2001
TO THE STOCKHOLDERS:
The annual meeting of stockholders of HEARTLAND FINANCIAL
USA, INC. will be held at our corporate headquarters, 1398
Central Avenue, Dubuque, Iowa, on Wednesday, May 16, 2001, at
1:30 p.m., for the purpose of considering and voting upon the
following matters:
1. to elect three Class II directors.
2. to amend Article IV of our certificate of incorporation
to increase the number of authorized shares of common
stock, $1.00 par value per share, from 12,000,000 to
16,000,000 shares.
3. to approve the appointment of KPMG LLP as independent
public accountants for the fiscal year ending December
31, 2001.
4. to transact such other business as may properly be
brought before the meeting or any adjournments or
postponements of the meeting.
The board of directors is not aware of any other business to
come before the meeting. Stockholders of record at the close of
business on March 21, 2001, are the stockholders entitled to vote
at the meeting and any adjournments or postponements of the
meeting. In the event there are not sufficient votes for a
quorum or to approve or ratify any of the foregoing proposals at
the time of the annual meeting, the meeting may be adjourned or
postponed in order to permit further solicitation of proxies.
By order of the Board of Directors
/s/ Lois K. Pearce
----------------------------------
Lois K. Pearce
Secretary
Dubuque, Iowa
April 4, 2001
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE US THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE
MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES.
[LOGO]
Heartland Financial USA, Inc.
PROXY STATEMENT
This proxy statement is furnished in connection with the
solicitation by the board of directors of Heartland Financial
USA, Inc. of proxies to be voted at the annual meeting of
stockholders. This meeting is to be held at our corporate
headquarters located at 1398 Central Avenue, Dubuque, Iowa, on
Wednesday, May 16, 2001, at 1:30 p.m. local time, or at any
adjournments or postponements of the meeting.
Heartland Financial, a Delaware corporation, is a diversified
financial services holding company headquartered in Dubuque,
Iowa. We offer full-service community banking through six
banking subsidiaries with a total of 31 banking locations in
Iowa, Illinois, Wisconsin and New Mexico. In addition, we have
separate subsidiaries in the consumer finance, vehicle
leasing/fleet management, insurance agency and investment
management businesses. Our primary strategy is to balance our
focus on increasing profitability with asset growth and
diversification through acquisitions, de novo bank formations,
branch openings and expansion into non-bank subsidiary
activities.
The proxy statement and the accompanying notice of meeting
and proxy are first being mailed to holders of shares of common
stock, par value $1.00 per share, on or about April 4, 2001.
Voting Rights and Proxy Information
All shares of common stock represented at the annual meeting
by properly executed proxies received prior to or at the annual
meeting, and not revoked, will be voted at the annual meeting in
accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the
nominees and for adoption of the proposals set forth in this
proxy statement. A majority of the shares of the common stock
present in person or represented by proxy will constitute a
quorum for purposes of the meeting. Abstentions and broker non-
votes will be counted for purposes of determining a quorum.
Stockholders of record on our books at the close of business
on March 21, 2001, will be entitled to vote at the meeting or any
adjournments or postponements of the meeting. On March 21, 2001,
we had outstanding 9,618,210 shares of common stock, with each
share entitling its owner to one vote on each matter submitted to
a vote at the annual meeting. Directors shall be elected by a
plurality of the votes present in person or represented by proxy
at the meeting and entitled to vote. In order to approve the
proposal to amend the certificate of incorporation and increase
the number of authorized shares, the affirmative vote of the
majority of shares entitled to vote on the proposal is required.
In all other matters, the affirmative vote of the majority of
shares present in person or represented by proxy at the meeting
and entitled to vote on the subject matter shall be required to
constitute stockholder approval. Abstentions will be treated as
votes against any proposal, and broker non-votes will have no
effect on the vote.
We would like to have all stockholders represented at the
annual meeting. Whether or not you plan to attend, please
complete, sign and date the enclosed proxy and return it in the
accompanying postpaid return envelope as promptly as possible. A
proxy given pursuant to this solicitation may be revoked at any
time before it is voted by:
- executing and delivering to our corporate secretary
a later dated proxy relating to the same shares prior to
the exercise of such proxy;
- filing with our corporate secretary, at or before
the meeting, a written notice of revocation bearing a
later date than the proxy; or
- attending the meeting and voting in person (although
attendance at the meeting will not in and of itself
constitute revocation of a proxy).
Any written notice revoking a proxy should be delivered to
Ms. Lois K. Pearce, Secretary, Heartland Financial USA, Inc.,
1398 Central Avenue, Dubuque, Iowa 52001.
ELECTION OF DIRECTORS
At the annual meeting to be held on May 16, 2001, you will
be entitled to elect three Class II directors for terms expiring
in 2004. The directors are divided into three classes having
staggered terms of three years. Each of the nominees for
election as a Class II director is an incumbent director. We
have no knowledge that any of the nominees will refuse or be
unable to serve, but if any of the nominees become unavailable
for election, the holders of proxies reserve the right to
substitute another person of their choice as a nominee when
voting at the meeting.
Set forth below is information concerning the nominees for
election and for the other directors whose terms of office will
continue after the meeting, including the age, year first elected
a director and business experience of each during the previous
five years as of March 21, 2001. Unless otherwise indicated,
each person has held the positions indicated for at least five
years. The nominees for Class II directors, if elected at the
annual meeting, will serve for a three-year term expiring in
2004. The board of directors recommends that you vote your shares
FOR each of the nominees for director.
NOMINEES
Served as
Heartland
Financial Position with Heartland
USA, Inc. Financial USA, Inc. and
Name Director its Subsidiaries and
(Age) Since Principal Occupation
- ------------------ --------- ------------------------
CLASS II
(Term Expires 2004)
Mark C. Falb 1995 Director of Dubuque Bank and
(Age 53) Trust; Director of Citizens
Finance (1997-present);
Chairman of the Board and
Chief Executive Officer of
Westmark Enterprises, Inc. and
Kendall/Hunt Publishing
Company
John K. Schmidt(1) 2001 Executive Vice President and
(Age 41) Chief Financial Officer of
Heartland Financial;
President and Chief Executive
Officer (2000-present) and
Senior Vice President and
Chief Financial Officer (1992-
2000) of Dubuque Bank and
Trust; Director of Keokuk
Bancshares, Inc. (1997-
present); Vice President of
ULTEA (1996-present) and
Treasurer of Citizens
Finance
Robert Woodward 1987 Director of Dubuque Bank and
(Age 64) Trust and Citizens Finance;
Chairman of the Board and
Chief Executive Officer of
Woodward Communications, Inc.
(1) Mr. Schmidt was appointed in February 2001 to fill the
vacancy on the board of directors created by the death of James
A. Schmid, the Vice Chairman of the Board who had served as a
director of Heartland Financial since 1981.
CONTINUING DIRECTORS
Served as
Heartland
Financial Position with Heartland
USA, Inc. Financial USA, Inc. and
Name Director its Subsidiaries and
(Age) Since Principal Occupation
- ------------------ --------- ------------------------
CLASS III
(Term Expires 2002)
James F. Conlan 2000 Director of Dubuque Bank and
(Age 37) Trust (1999-present); Attorney
at Law, Partner (1996-present)
and Associate(1988-1996) of
Sidley & Austin
Evangeline K. Jansen 1981 Director of Dubuque Bank and
(Age 84 Trust and Citizens Finance
CLASS I
(Term Expires 2003)
Lynn B. Fuller 1987 Chairman of the Board (2000-
(Age 51) present), President (1990-
present) and Chief Executive
Officer (1999-present) of
Heartland Financial; Director,
Vice Chairman of the Board
(2000-present), President
(1987-1999) and Chief
Executive Officer (1986-1999)
of Dubuque Bank and Trust;
Director of Wisconsin
Community Bank (1997-present),
New Mexico Bank & Trust (1998-
present), Galena State Bank,
First Community Bank,
Riverside Community Bank and
Keokuk Bancshares; Director
and President of Citizens
Finance; Director and Chairman
of ULTEA (1996-present)
Gregory R. Miller 1994 Executive Vice President of
(Age 52) of Heartland Financial(1996-
1998); Director (1987-
present), Vice Chairman(1998-
present), President and Chief
Executive Officer (1988-1997)
of First Community Bank;
President and Chief Executive
Officer of Keokuk Bancshares
(1990-1997); Senior Vice
President and Portfolio Manager
of Chicago Capital Fund Management
(1998-2000); President and Chief
Executive Officer of Erlang
Technologies (2000-present)
All of our directors will hold office for the terms
indicated, or until their respective successors are duly elected
and qualified. There are no arrangements or understandings
between Heartland Financial and any other person pursuant to
which any of our directors have been selected for their
respective positions. With the exception of Mr. Conlan, who is
the brother-in-law of Mr. Fuller, no member of the board of
directors is related to any other member of the board of
directors.
Meetings of the Board of Directors and Committees
Regular meetings of the board of directors are held
quarterly. During 2000, the board of directors held four regular
meetings and six special meetings. With the exception of
directors Miller and Conlan, all directors during their terms of
office in 2000 attended at least 75% of the total number of
meetings of the board of directors and of meetings held by all
committees of the board on which any such director served. We do
not currently have a standing nominating committee. Rather, the
entire board participates in the process of selecting nominees to
fill vacancies on the board. The board of directors will consider
nominees recommended by stockholders provided any such
recommendation is made in writing and delivered to the corporate
secretary as further provided in our bylaws.
The compensation committee, currently consisting of directors
Falb, Jansen, Woodward and Miller, meets to review the salary,
other compensation and performance of the chief executive officer
and each of the other executive officers named in the summary
compensation table and recommends adjustments. James A. Schmid
had served as chairman of the compensation committee until his
death in February 2001. During 2000, the compensation committee
met twice.
The audit committee recommends independent auditors to the
board, reviews the results of the auditors' services, reviews
with management and the internal auditor the systems of internal
control and internal audit reports and assures that the books and
records are kept in accordance with applicable accounting
principles and standards. The audit committee charter is
attached as Exhibit A. Currently, the members of the audit
committee are directors Falb, Jansen, Woodward and Miller. James
A. Schmid had served as chairman of the audit committee until his
death in February 2001. During 2000, the audit committee met
twice.
Compensation of Directors
Each of our directors is paid a fee of $450 for each board
meeting attended and $275 for each committee meeting attended,
except that Messrs. Fuller and Schmidt receive no fees for their
services as director.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information with
respect to the beneficial ownership of our common stock at March
21, 2001, by each person known by us to be the beneficial owner
of more than 5% of the outstanding common stock, by each director
or nominee, by each executive officer named in the summary
compensation table below and by all directors and executive
officers of Heartland Financial USA, Inc. as a group. Unless
otherwise noted, the address of each five percent stockholder is
1398 Central Avenue, Dubuque, Iowa 52001.
Amount and Nature
Name of Individual and of Beneficial Percent of
Number of Persons in Group Ownership (1) Class
- -------------------------- ------------------ ----------
5% Stockholders and Directors
Dubuque Bank and Trust Company 733,786 (2) 7.6%
Lynn S. Fuller 884,570 (3) 9.2%
Heartland Partnership, L.P. 556,000 (4) 5.8%
James F. Conlan 42,364 (5) *
Mark C. Falb 182,574 (6) 1.9%
Lynn B. Fuller 358,980 (7) 3.7%
Evangeline K. Jansen 915,902 (8) 9.5%
Gregory R. Miller 221,908 (9) 2.3%
John K. Schmidt 93,724 (10) 1.0%
Robert Woodward 443,334 (11) 4.6%
Other Executive Officers
Kenneth J. Erickson 103,233 (12) 1.1%
Douglas J. Horstmann 99,721 (13) 1.0%
Paul J. Peckosh 83,820 (14) *
All directors and
executive officers
as a group (11 persons) 2,627,256 27.3%
* Less than one percent
(1) The information contained in this column is based upon
information furnished to Heartland Financial by the persons named
above and the members of the designated group. Amounts reported
include shares held directly as well as shares which are held in
retirement accounts and shares held by certain members of the
named individuals' families or held by trusts of which the named
individual is a trustee or substantial beneficiary, with respect
to which shares the respective director may be deemed to have
sole or shared voting and/or investment power. Also included are
shares obtainable through the exercise of options within 60 days
of the date of the information presented in this table in the
following amounts: Mr. Lynn B. Fuller - 96,000 shares; Mr.
Miller - 44,000 shares; Mr. Peckosh - 48,000 shares; Messrs.
Schmidt, Erickson and Horstmann - 64,000 shares and all directors
and executive officers as a group - 444,000 shares. The nature
of beneficial ownership for shares shown in this column is sole
voting and investment power, except as set forth in the footnotes
below. Inclusion of shares shall not constitute an admission of
beneficial ownership or voting and investment power over included
shares.
(2) Includes 335,492 shares over which Dubuque Bank and
Trust, Heartland Financial's leading bank subsidiary, has sole
voting and investment power and 398,296 shares over which Dubuque
Bank and Trust has shared voting or investment power.
(3) Includes shares held by the Heartland Partnership,
L.P., over which Mr. Fuller has sole voting and investment power,
as well as 37,284 shares held by a trust for which Mr. Fuller's
spouse is a trustee and 77,848 shares held in a trust for which
Mr. Fuller serves as co-trustee, over which Mr. Fuller has shared
voting and investment power.
(4) Mr. Lynn S. Fuller, a former director of Heartland
Financial and a stockholder of more than 5% of the outstanding
shares, is the general partner of Heartland Partnership, L.P.,
and in such capacity exercises sole voting and investment power
over such shares.
(5) Includes 19,000 shares held by Mr. Conlan's spouse,
over which Mr. Conlan has shared voting and investment power, and
14,000 shares held by the Heartland Partnership, L.P., over which
Mr. Conlan has no voting or investment power but in which Mr.
Conlan's spouse does have a beneficial interest.
(6) Includes 109,376 shares over which Mr. Falb has shared
voting and investment power and 44,704 shares held by Mr. Falb's
spouse, as trustee, over which Mr. Falb has no voting or
investment power.
(7) Includes an aggregate of 4,465 shares held by Mr.
Fuller's spouse and minor children and 77,848 shares held in a
trust for which Mr. Fuller serves as co-trustee, over which Mr.
Fuller has shared voting and investment power. Includes 14,000
shares held by the Heartland Partnership, L.P., over which Mr.
Fuller has no voting or investment power but in which Mr. Fuller
does have a beneficial interest.
(8) Represents shares held in certain trusts for which Ms.
Jansen serves as trustee or co-trustee. Voting and investment
power is shared with respect to 288,512 of such shares.
(9) Includes an aggregate of 66,100 shares held by Mr.
Miller's spouse, over which Mr. Miller has shared voting and
investment power.
(10) Includes an aggregate of 550 shares held by Mr.
Schmidt's minor children and 488 shares held by Mr. Schmidt
jointly with his spouse, over which Mr. Schmidt has shared voting
and investment power.
(11) Includes an aggregate of 261,200 shares held by various
trusts of which Mr. Woodward is a trustee and over which Mr.
Woodward has shared voting and investment power over 248,400
shares and sole voting and investment power over 12,800 shares.
Mr. Woodward also has full power of attorney for the 5,712 shares
held by his mother.
(12) Includes 6,333 shares held by Mr. Erickson jointly with
his spouse, over which Mr. Erickson has shared voting and
investment power.
(13) Includes 18,000 shares held by Mr. Horstmann's spouse,
over which Mr. Horstmann has shared voting and investment power.
(14) Includes 3,063 shares held by Mr. Peckosh jointly with
his spouse, over which Mr. Peckosh has shared voting and
investment power, and 1,600 shares held by Mr. Peckosh's spouse,
over which Mr. Peckosh has no voting and investment power.
Section 16(a) of the Securities Exchange Act of 1934 requires
that our directors, executive officers and 10% stockholders file
reports of ownership and changes in ownership with the Securities
and Exchange Commission. Such persons are also required to
furnish us with copies of all Section 16(a) forms they file.
Based solely upon our review of such forms, we are not aware that
any of our directors, executive officers or 10% stockholders
failed to comply with the filing requirements of Section 16(a)
during 2000, except Mr. Gregory R. Miller was late in filing one
report required by Section 16(a) of the Exchange Act for a
transaction that occurred in 2000.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the
compensation paid or granted to our chief executive officer and
to each of the other four most highly compensated executive
officers of Heartland Financial or our subsidiaries for the
fiscal year ended December 31, 2000:
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
(a) (b) (c) (d)
Fiscal
Year
Ended
Name and Principal December Salary Bonus
Position 31st ($)(1) ($)(2)
- ------------------------- ---------- --------- --------
Lynn B. Fuller 2000 $200,000 $100,101
President and Chief 1999 180,000 81,707
Executive Officer of 1998 170,000 58,155
Heartland Financial
John K. Schmidt 2000 $135,000 $ 63,585
Executive Vice President 1999 118,000 32,931
and Chief Financial Officer of 1998 108,000 28,346
Heartland Financial
Kenneth J. Erickson 2000 $118,000 $ 31,899
Executive Vice President of 1999 109,000 36,040
Heartland Financial 1998 104,000 17,538
Douglas J. Horstmann 2000 $108,000 $ 24,361
Senior Vice President of 1999 105,000 28,234
Heartland Financial 1998 102,000 17,200
Paul J. Peckosh 2000 $ 98,000 $ 28,578
Senior Vice President of 1999 94,250 25,828
Heartland Financial 1998 91,500 25,093
Long-term
Compensation
Awards
---------------------
(a) (b) (f) (g) (h)
Fiscal
Year Securities
Ended Restricted Underlying All Other
Name and Principal December Stock Options/ Compensa-
Position 31st Awards ($) SARs(#) tion($)(3)
- ------------------ ---------- ---------- ---------- ----------
Lynn B. Fuller 2000 $ --- 9,000 $22,671
President and Chief 1999 --- 24,000 21,974
Executive Officer of 1998 --- 24,000 24,636
Heartland Financial
John K. Schmidt 2000 $ --- 6,000 $20,719
Executive Vice 1999 --- 16,000 19,497
President and 1998 --- 16,000 18,382
Chief Financial
Officer of Heartland
Financial
Kenneth J. Erickson 2000 $ --- 3,000 $19,290
Executive Vice 1999 --- 12,000 16,015
President of Heartland 1998 --- 16,000 18,024
Financial
Douglas J. Horstmann 2000 $ --- 2,000 $17,054
Senior Vice President 1999 --- 6,000 15,443
of Heartland Financial 1998 --- 16,000 16,150
Paul J. Peckosh 2000 $ --- 1,500 $15,622
Senior Vice President 1999 --- 6,000 15,191
of Heartland Financial 1998 --- 12,000 15,191
(1) Includes amounts deferred under our retirement plan.
(2) The amounts shown represent amounts received under our
management incentive compensation plan.
(3) The amounts shown represent amounts contributed on
behalf of the respective officer to the retirement plan, the
aggregate value of the discount to market price of shares
purchased under the employee stock purchase plan and/or the
executive restricted stock purchase plan, and the allocable
portion of the premium paid for life insurance under the
executive death benefit program. For Mr. Fuller, the amounts
shown include an automobile allowance of $1,611 for 2000, $1,463
for 1999 and $1,698 for 1998. For Mr. Schmidt, the amounts shown
include an automobile allowance of $2,280 for 2000 and $1,082 for
1999. For 2000 and 1999, the amount contributed for each officer
under the retirement plan was $20,500 and $19,988 for Mr. Fuller,
$20,581 and $18,283 for Mr. Schmidt, $19,068 and $15,808 for Mr.
Erickson, $16,864 and $15,266 for Mr. Horstmann and $15,328 and
$14,909 for Mr. Peckosh. There was no discount realized on
shares purchased under the stock plans during 2000 and 1999. For
1998, the amount contributed for each officer under the
retirement plan and the aggregate value of the discount realized
by each named individual was $20,000 and $2,490 for Mr. Fuller,
$17,487 and $780 for Mr. Schmidt, $15,825 and $2,028 for Mr.
Erickson, $15,590 and $414 for Mr. Horstmann and $14,555 and
$1,167 for Mr. Peckosh.
Stock Option Information
The following table sets forth certain information
concerning the number and value of stock options granted in the
last fiscal year to the individuals named in the summary
compensation table:
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
(a) (b) (c) (d)
% of Total
Options Granted
Options to Employees Exercise or
Granted in Fiscal Base Price
Name (#) (1) Year ($/Share)
- ----------------------- ------------ ----------- -----------
Lynn B. Fuller 9,000 22.50% $18.00
John K. Schmidt 6,000 15.00% 18.00
Kenneth J. Erickson 3,000 7.50% 18.00
Douglas J. Horstmann 2,000 5.00% 18.00
Paul J. Peckosh 1,500 3.75% 18.00
(a) (e) (f)
Grant Date
Expiration Present Value
Name Date ($) (2)(3)
- ---------------------- ---------- -------------
Lynn B. Fuller 01/17/10 $ 39,690
John K. Schmidt 01/17/10 26,460
Kenneth J. Erickson 01/17/10 13,230
Douglas J. Horstmann 01/17/10 8,820
Paul J. Peckosh 01/17/10 6,615
(1) Options become exercisable in three equal portions on
the day after the third, fourth and fifth anniversaries of the
January 17, 2000 date of grant.
(2) The Black-Scholes valuation model was used to determine
the grant date present values. Significant assumptions include:
risk-free interest rate, 5.00%; expected option life, 10 years;
expected volatility, 13.04%; expected dividends, 2.00%.
(3) The ultimate value of the options will depend on the
future market price of our common stock, which cannot be forecast
with reasonable accuracy. The actual value, if any, an executive
may realize upon the exercise of an option will depend on the
excess of the market value of our common stock, on the date the
option is exercised, over the exercise price of the option.
The following table sets forth certain information
concerning the stock options at December 31, 2000, held by the
named executive officers. No stock options were exercised during
2000 by any of the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
(a) (b) (c) (d)
Number of Securities
Shares Underlying Unexercised
Acquired On Value Options/SARs at FY-End
Exercise Realized (#)
Name (#) ($) Exercisable Unexercisable
- ------------------ --------- ------- ----------- -------------
Lynn B. Fuller --- $--- 72,000 81,000
John K. Schmidt --- --- 48,000 54,000
Kenneth J. Erickson --- --- 48,000 47,000
Douglas J. Horstmann --- --- 48,000 40,000
Paul J. Peckosh --- --- 36,000 31,500
(a) (e)
Value of Unexercised
In-the-Money
Options/SARs at FY-End
($)
Name Exercisable Unexercisable
- -------------------- ----------- -------------
Lynn B. Fuller $335,920 $ 56,960
John K. Schmidt 223,948 37,972
Kenneth J. Erickson 223,948 37,972
Douglas J. Horstmann 223,948 37,972
Paul J. Peckosh 167,960 28,480
Change of Control Agreements
We have entered into a separate change of control agreement
with each of the named executive officers and certain other of
our officers. These agreements provide that if employment is
terminated six months prior to a change in control of Heartland
Financial (as defined in the agreements) or within one year
thereafter, the terminated officer is to be paid severance
compensation equal to a multiple of such officer's total
compensation (as defined in the agreements) at the time of
termination. The multiple varies for each officer, up to a
maximum of four times total compensation. Additionally, the
agreements provide for the continuation of medical and dental
benefits for up to two years after such termination and the
payment of expenses for out-placement counseling for a period of
one year, up to a maximum amount equal to twenty-five percent of
total compensation. Messrs. Fuller, Schmidt and Erickson are
prohibited by their respective agreements from competing with us
or our subsidiaries within a designated geographic area for a
period of two years following the termination of employment.
Compensation Committee Report on Executive Compensation
(The incorporation by reference of this proxy statement into
any document filed with the Securities and Exchange Commission by
Heartland Financial shall not be deemed to include the following
report unless such report is specifically stated to be
incorporated by reference into such document.)
Our compensation program is administered by the compensation
committee. In determining appropriate levels of executive
compensation, the committee has at its disposal independent
reference information regarding compensation ranges and levels
for executive positions in comparable companies. In determining
compensation to be paid to executive officers, primary
consideration is given to quality long-term earnings growth
accomplished by achieving both financial and non-financial goals
such as return on equity, earnings per share and asset and
deposit growth. The primary objectives of this philosophy are
to:
- encourage a consistent and competitive return to
stockholders;
- reward bank and individual performances;
- provide financial rewards for performance of those
having a significant impact on corporate profitability;
and
- provide competitive compensation in order to attract
and retain key personnel.
There are three major components of our executive officer
compensation: base salary, annual incentive awards and long-term
incentive awards. The process utilized by the committee in
determining executive officer compensation levels for all of
these components is based upon the committee's subjective
judgment and takes into account both qualitative and quantitative
factors. No specific weights are assigned to such factors with
respect to any compensation component. Among the factors
considered by the committee are the recommendations of the
president with respect to the compensation of our other key
executive officers. However, the committee makes the final
compensation decisions concerning such officers.
We have adopted the Heartland Financial USA, Inc. 1993 Stock
Option Plan. The stock option plan is intended to promote equity
ownership in Heartland Financial by our directors and selected
officers and employees to increase their proprietary interest in
the success of Heartland Financial and to encourage them to
remain in the employ of Heartland Financial or our subsidiaries.
We have also purchased split-dollar life insurance policies on
each of our executive officers.
The compensation of Mr. Fuller, the chief executive officer,
during 2000 was based upon a number of factors, including:
- our compensation program;
- the individual's performance, substantial experience,
expertise and length of service with our organization;
- progress toward our performance objectives; and
- compensation of officers with similar duties and
responsibilities at comparable organizations.
Respectfully,
Mark C. Falb
Evangeline K. Jansen
Robert Woodward
Gregory R. Miller
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
During the last completed fiscal year, in addition to
each of the members of the committee, Messrs. Lynn B. Fuller and
John K. Schmidt also participated in committee deliberations
concerning executive compensation. However, no one participated
in any decisions regarding their own compensation. Mr. Fuller
serves as chairman of the board, president and chief executive
officer of Heartland Financial. Mr. Schmidt is the executive
vice president and chief financial officer of Heartland Financial
and president and chief executive officer of Dubuque Bank and
Trust. All of the regular members of the committee also serve as
directors of Dubuque Bank and Trust, the leading bank subsidiary
of Heartland Financial, except for Mr. Miller.
Stockholder Return Performance Presentation
(The incorporation by reference of this proxy statement into
any document filed with the Securities and Exchange Commission by
Heartland Financial shall not be deemed to include the following
performance graph and related information unless such graph and
related information is specifically stated to be incorporated by
reference into such document.)
The following graph shows a five-year comparison of
cumulative total returns for Heartland Financial USA, Inc., the
Nasdaq Stock Market (U.S.) and an index of Nasdaq Bank Stocks.
Our shares are traded in the over-the-counter market under the
symbol "HTLF" and are eligible for quotation on the OTC Bulletin
Board. Figures for our common stock represent inter-dealer
quotations, without retail markups, markdowns or commissions and
do not necessarily represent actual transactions. The graph was
prepared at our request by Research Data Group,Inc.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ASSUMES $100 INVESTED ON DECEMBER 31, 1995
[GRAPH DEPICTING VALUES ON THE FOLLOWING TABLE]
*Total return assumes reinvestment of dividends
Cumulative Total Return Performance
December 31,
----------------------------------
1995 1996 1997 1998 1999 2000
Heartland Financial USA, Inc. 100 143 151 219 236 170
Nasdaq Stock Market (U.S.) 100 123 151 213 395 238
Nasdaq Bank 100 132 221 220 211 241
TRANSACTIONS WITH MANAGEMENT
Directors and officers of Heartland Financial and our
subsidiaries, and their associates, were customers of and had
transactions with us and one or more of our subsidiaries during
2000. Additional transactions may be expected to take place in
the future. All outstanding loans, commitments to loan,
transactions in repurchase agreements and certificates of deposit
and depository relationships, in the opinion of management, were
made in the ordinary course of business, on substantially the
same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
persons and did not involve more than the normal risk of
collectibility or present other unfavorable features.
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
Our board of directors has unanimously approved an amendment
to Article IV of the certificate of incorporation that would
increase the number of authorized shares of common stock, $1.00
par value per share, from 12,000,000 shares to 16,000,000 shares.
As of March 21, 2001, we had 9,618,210 shares of common stock
issued and outstanding. The board of directors has proposed
adoption of the amendment for several reasons, including those
set forth below.
First, the amendment will provide for the additional shares
of common stock necessary to effectuate additional stock
dividends, should the board of directors determine that such
dividends are in the best interests of Heartland Financial and
its stockholders.
Second, the additional shares authorized by the amendment
will provide management with enough shares of common stock to
enter into certain transactions involving the use of common stock
that may be advisable from time to time. Such transactions could
include, but are not limited to, the acquisition by Heartland
Financial of additional branch locations, subsidiaries or bank
and thrift holding companies. Although no such transactions are
planned for the immediate future, management and the board of
directors believe that it is in our best interests to have
available a sufficient number of authorized shares of common
stock if such transactions become advisable.
Third, the additional shares of common stock authorized by
the amendment could be used to raise additional working capital
for Heartland Financial or our subsidiaries. The board of
directors does not currently have any plans to raise capital
through the issuance of additional shares or otherwise, but these
shares would be available for that purpose.
The increase in the number of shares of common stock
authorized by the amendment will allow for the possibility of
substantial dilution of the voting power of current stockholders
of Heartland Financial, although no dilution will occur as a
direct result of any stock dividends that may be declared in the
future. The degree of any dilution which would occur following
the issuance of any additional shares of common stock, including
any newly authorized common stock, would depend upon the number
of shares of common stock that are actually issued in the future,
which number cannot be determined at this time. Issuance of a
large number of such shares could significantly dilute the voting
power of existing stockholders.
The existence of a substantial number of authorized and
unissued shares of common stock could also impede an attempt to
acquire control of Heartland Financial because we would have the
ability to issue additional shares of common stock in response to
any such attempt. We are not aware of any such attempt to
acquire control at this time, and no decision has been made as to
whether any or all newly authorized but unissued shares of common
stock would be issued in response to any such attempt.
To be approved by our stockholders, the amendment must
receive the affirmative vote of a majority of shares entitled to
vote on the amendment at the annual meeting. Your board of
directors recommends that you vote your shares FOR the amendment.
AUDIT COMMITTEE REPORT
(The incorporation by reference of this proxy statement into
any document filed with the Securities and Exchange Commission by
Heartland Financial shall not be deemed to include the following
report unless such report is specifically stated to be
incorporated by reference into such document.)
The audit committee assists the board in carrying out its
oversight responsibilities for our financial reporting process,
audit process and internal controls. The audit committee also
reviews the audited financial statements and recommends to the
board that they be included in our annual report on Form 10-K.
The committee is comprised solely of independent directors.
The audit committee has reviewed and discussed our audited
financial statements for the fiscal year ended December 31, 2000
with our management and KPMG LLP, our independent auditors. The
committee has also discussed with KPMG LLP the matters required
to be discussed by SAS 61 (Codification for Statements on
Auditing Standards) as well as having received and discussed the
written disclosures and the letter from KPMG LLP required by
Independence Standards Board Statement No. 1 (Independence
Discussions with Audit Committees). Based on the review and
discussions with management and KPMG LLP, the committee has
recommended to the board that the audited financial statements be
included in our annual report on Form 10-K for the fiscal year
ending December 31, 2000 for filing with the Securities and
Exchange Commission.
Respectfully,
Mark C. Falb
Evangeline K. Jansen
Robert Woodward
Gregory R. Miller
RELATIONSHIP WITH INDEPENDENT AUDITORS
Our board of directors has appointed KPMG LLP, independent
auditors, to be the auditors for the fiscal year ending December
31, 2001, and recommends that the stockholders ratify the
appointment. KPMG LLP has been our auditors since June, 1994. A
representative of KPMG LLP is expected to attend the meeting and
will be available to respond to appropriate questions and to make
a statement if he or she so desires. If the appointment of
auditors is not ratified, the matter of the appointment of
auditors will be considered by the board of directors. The board
of directors recommends that you vote your shares FOR
ratification of this appointment.
Audit Fees
Our independent auditor during 2000 was KPMG LLP. The
aggregate fees and expenses billed by KPMG LLP in connection with
the audit of our annual financial statements as of and for the
year ended December 31, 2000 and for the required review of our
financial information included in our Form 10-Q filings for the
year 2000 was $83,000.
Financial Information Systems Design and Implementation Fees
There were no fees incurred for these services for the year
2000.
All Other Fees
The aggregate fees and expenses billed by KPMG LLP for all
other services rendered to us for 2000 was $85,700.
The audit committee, after consideration of the matter, does
not believe the rendering of these services by KPMG LLP is
incompatible with maintaining its independence as our principal
accountant.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any proposals of stockholders intended for presentation at
the 2002 annual meeting of stockholders must be received by us on
or before December 2, 2001, and must otherwise comply with our
bylaws.
OTHER MATTERS
We are not aware of any business to come before the meeting
other than those matters described above in this proxy statement.
However, if any other matter should properly come before the
meeting, it is intended that holders of the proxies will act in
accordance with their best judgment.
We will bear the cost of solicitation of proxies. We will
reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending
proxy materials to the beneficial owners of our common stock. In
addition to solicitation by mail, directors, officers and regular
employees of Heartland Financial or our subsidiaries may solicit
proxies personally or by telegraph or telephone without
additional compensation.
FAILURE TO INDICATE CHOICE
If any stockholder fails to indicate a choice in items (1),
(2) or (3) on the proxy card, the shares of such stockholder
shall be voted FOR in each instance.
By order of the Board of Directors
/s/ Lynn B. Fuller
-----------------------------------
Lynn B. Fuller
Chairman of the Board
Dubuque, Iowa
April 4, 2001
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
EXHIBIT A
HEARTLAND FINANCIAL USA, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to
assist the Board in fulfilling its oversight responsibilities.
The Audit Committee's primary duties and responsibilities are to:
- - Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance,
accounting, and legal compliance.
- - Monitor the independence and performance of the Company's
independent auditors and internal auditing department.
- - Provide an avenue of communication among the independent
auditors, management, the internal auditing department, and
the Board of Directors.
- - Encourage adherence to, and continuous improvement of, the
Company's policies, procedures, and practices at all levels.
- - Review areas of potential significant financial risk to the
Company.
- - Monitor compliance with legal and regulatory requirements.
The Audit Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities, and
it has direct access to the independent auditors as well as
anyone in the organization. The Audit Committee has the ability
to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the
performance of its duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the
American Stock Exchange. The Audit Committee shall be comprised
of three or more directors as determined by the Board, each of
whom shall be independent non-executive directors, free from any
relationship that would interfere with the exercise of his or her
independent judgment. All members of the Committee shall have a
basic understanding of finance and accounting and be able to read
and understand fundamental financial statements, and at least one
member of the Committee shall have accounting or related
financial management expertise.
Audit Committee members shall be appointed by the Board on
recommendation of the Nominating Committee. If an audit committee
Chair is not designated or present, the members of the Committee
may designate a Chair by majority vote of the Committee
membership.
The Committee shall meet at least two times annually, or more
frequently as circumstances dictate. The Audit Committee Chair
shall approve an agenda in advance of each meeting. The
Committee should meet privately in executive session at least
annually with management, the director of the internal auditing
department, the independent auditors, and as a committee to
discuss any matters that the Committee or each of these groups
believe should be discussed. In
addition, the Committee, or at least its Chair, should
communicate with management and the independent auditors to
review the Company's financial statements and significant
findings based upon the auditor's limited review procedures
during the year as deemed necessary by any of these parties.
III. Audit Committee Responsibilities and Duties
REVIEW PROCEDURES
1. Review and reassess the adequacy of this Charter at
least annually. Submit the charter to the Board of
Directors for approval and have the document published at
least every three years in accordance with SEC regulations.
2. Review the Company's annual audited financial
statements prior to filing or distribution. Review should
include discussion with management and independent auditors
of significant issues regarding accounting principles,
practices, and judgments.
3. In consultation with management, the independent
auditors, and the internal auditors, consider the integrity
of the Company's financial reporting processes and controls.
Discuss significant financial risk exposures and the steps
management has taken to monitor, control, and report such
exposures. Review significant findings prepared by the
independent auditors and the internal auditing department
together with management's responses, including the status
of previous recommendations.
4. Review with financial management and the independent
auditors the Company's quarterly financial results prior to
the release of earnings and/or the Company's quarterly
financial statements prior to filing or distribution.
Discuss any significant changes to the Company's accounting
principles and any items required to be communicated by the
independent auditors in accordance with SAS 61 (see item 9).
The Chair of the Committee may represent the entire Audit
Committee for purposes of this review.
INDEPENDENT AUDITORS
5. The independent auditors are ultimately accountable to
the Audit Committee and the Board of Directors. The Audit
Committee shall review the independence and performance of
the auditors and annually recommend to the Board of
Directors the appointment of the independent auditors or
approve any discharge of auditors when circumstances
warrant.
6. Approve the fees and other significant compensation to
be paid to the independent auditors.
7. On an annual basis, the Committee should review and
discuss with the independent auditors all significant
relationships they have with the Company that could impair
the auditors' independence.
8. Review the independent auditors audit plan - discuss
scope, staffing, locations, reliance upon management, and
internal audit and general audit approach.
9. Prior to releasing the year-end earnings, discuss the
results of the audit with the independent auditors. Discuss
certain matters required to be communicated to audit
committees in accordance with AICPA SAS 61.
10. Consider the independent auditors' judgments about the
quality and appropriateness of the Company's accounting
principles as applied in its financial reporting.
INTERNAL AUDIT DEPARTMENT AND LEGAL COMPLIANCE
11. Review the budget, plan, changes in plan, activities,
organizational structure, and qualifications of the internal
audit department, as needed. The internal audit department
shall be responsible to senior management, but have a direct
reporting responsibility to the Board of Directors through
the Committee. Changes in the senior internal audit
executive shall be subject to Committee approval.
12. Review the appointment, performance, and replacement of
the senior internal audit executive.
13. Review significant reports prepared by the internal
audit department together with management's response and
follow-up to these reports.
14. On at least an annual basis, review with the Company's
counsel any legal matters that could have a significant
impact on the organization's financial statements, the
Company's compliance with applicable laws and regulations,
and inquiries received from regulators or governmental
agencies. Review all reports concerning any significant
fraud or regulatory noncompliance that occurs at the
Company. This review should include consideration of the
internal controls that should be strengthened to reduce the
risk of a similar event in the future.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
15. Annually prepare a report to shareholders as required
by the Securities and Exchange Commission. The report
should be included in the Company's annual proxy statement.
16. Perform any other activities consistent with this
Charter, the Company's by-laws, and governing law, as the
Committee or the Board deems necessary or appropriate.
17. Maintain minutes of meetings and periodically report to
the Board of Directors on significant results of the
foregoing activities.
[LOGO]
Heartland Financial USA, Inc.
Proxy Card
PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
HEARTLAND FINANCIAL USA, INC. TO BE HELD ON MAY 16, 2001
The undersigned hereby appoints Lynn B. Fuller and John K.
Schmidt, or either one of them acting in the absence of the
other, with power of substitution, attorneys and proxies, for and
in the name and place of the undersigned, to vote the number of
common shares that the undersigned would be entitled to vote if
then personally present at the annual meeting of stockholders of
Heartland Financial USA, Inc., to be held at the corporate
headquarters located at 1398 Central Avenue, Dubuque, Iowa, on
the 16th day of May, 2001, at 1:30 p.m., local time, or any
adjournments or postponements thereof, upon the matters set forth
in the Notice of Annual Meeting and Proxy Statement, receipt of
which is hereby acknowledged, as follows:
1. ELECTION OF DIRECTORS:
[ ] FOR all [ ] WITHHOLD AUTHORITY
nominees listed to vote for all nominees
below (except as listed below
marked to the
contrary below)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST
BELOW.)
Class II (Term Expires 2004): Mark C. Falb, John K. Schmidt and
Robert Woodward
2. AMEND ARTICLE IV OF THE COMPANY'S CERTIFICATE OF
INCORPORATION to increase the number of authorized shares of
common stock, $1.00 par value per share, from 12,000,000 to
16,000,000 shares:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVE THE APPOINTMENT OF KPMG LLP as Heartland Financial
USA, Inc.'s independent public accountants for the year
ending December 31, 2001:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In accordance with their discretion, upon all other matters
that may properly come before said meeting and any
adjournments or postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED UNDER
PROPOSAL 1 AND FOR PROPOSALS 2 and 3.
Dated: , 2001
------------------
Signature(s)
------------------
------------------------------
NOTE: PLEASE DATE PROXY AND SIGN IT EXACTLY AS NAME OR NAMES
APPEAR ABOVE. ALL JOINT OWNERS OF SHARES SHOULD SIGN. STATE
FULL TITLE WHEN SIGNING AS EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN, ETC. PLEASE RETURN SIGNED PROXY IN THE ENCLOSED
ENVELOPE.