SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO. ]
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Fidelity Federal Bancorp
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[LOGO OF FIDELITY FEDERAL BANCORP]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held April 30, 2001
Notice is hereby given that the Annual Meeting of Shareholders of Fidelity
Federal Bancorp ("Fidelity") will be held on April 30, 2001, at 10:00 a.m.,
local time, at the Sheraton Keystone Crossing, 8787 Keystone Crossing,
Indianapolis, Indiana.
The purposes of the meeting are:
(1) Election of Directors: To elect six directors to the Board of
Directors to serve for the ensuing term of one year until their
successors are duly elected and qualified;
(2) Selection of Public Accountants: To ratify the selection of Olive LLP,
Certified Public Accountants, as independent public accountants of
Fidelity for the year ending December 31, 2001; and
(3) Other Business: To transact such other business as may properly come
before the meeting or any adjournment thereof.
Other than with respect to procedural matters incident to the conduct of
the meeting, management is not aware of any other matters which may properly
come before the meeting. The Board of Directors of Fidelity has fixed the close
of business on February 28, 2001, as the record date for determination of
shareholders entitled to notice of, and to vote at, the Annual Meeting and at
any adjournment of the Annual Meeting.
By Order of the Board of Directors
JACK CUNNINGHAM
Chairman of the Board of Directors
March 26, 2001
Important--Please mail your proxy promptly.
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You are invited to attend the Annual Meeting. It is important that your shares
be represented, regardless of the number you own. Even if you plan to be
present, you are urged to complete, sign, date and return the enclosed proxy
promptly in the envelope provided. If you attend the meeting, you may vote
either in person or by proxy. Any proxy given may be revoked by you in writing
or in person at any time prior to the exercise thereof.
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The date of this Proxy Statement is March 26, 2001.
TABLE OF CONTENTS
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Page
INTRODUCTORY STATEMENT....................................................1
Proposals Presented..............................................1
Voting Rights....................................................2
Change in Control................................................2
Beneficial Ownership.............................................3
Proxies ........................................................4
Solicitation of Proxies..........................................4
ELECTION OF DIRECTORS.....................................................4
INFORMATION CONCERNING NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS.........5
Certain Transactions and Other Matters Between Management
and Fidelity................................................6
Board Meetings...................................................7
Board Committees.................................................7
EXECUTIVE COMPENSATION AND OTHER INFORMATION..............................8
Five-Year Total Shareholder Return...............................8
Compensation Committee Report....................................8
Compensation Committee Insider Participation....................10
Summary Compensation Table......................................10
1993 Directors' Stock Option Plan...............................11
1995 Key Employees' Stock Option Plan...........................11
Options Grants in Last Fiscal Year..............................12
Aggregate Option Exercises in Last Fiscal Year and Fiscal
Year-end Option Values Table...............................13
Other Employee Benefit Plans....................................13
Compensation of Directors.......................................15
Employment Contracts............................................15
Security Ownership of Management................................16
Section 16(a) Beneficial Ownership Reporting Compliance.........17
RATIFICATION OF THE SELECTION OF AUDITORS OF FIDELITY....................17
REPORT OF THE AUDIT COMMITTEE............................................18
AUDIT FEES...............................................................18
SHAREHOLDERS PROPOSALS...................................................19
ADDITIONAL INFORMATION...................................................19
OTHER MATTERS............................................................19
EXHIBIT A - AUDIT COMMITTEE CHARTER
[LOGO OF FIDELITY FEDERAL BANCORP]
18 NW Fourth Street
Evansville, IN 47708
PROXY STATEMENT
for the
Annual Meeting of Shareholders
to be held on April 30, 2001
INTRODUCTORY STATEMENT
This Proxy Statement is being furnished to the shareholders of Fidelity
Federal Bancorp ("Fidelity") in connection with the solicitation of proxies by
the Board of Directors of Fidelity for use at the Annual Meeting of Shareholders
to be held on April 30, 2001, at 10:00 a.m., local time, at the Sheraton
Keystone Crossing, 8787 Keystone Crossing, Indianapolis, Indiana and any
adjournment thereof (the "Annual Meeting").
Fidelity is a unitary savings and loan holding company based in Evansville,
Indiana which owns all of the issued and outstanding stock of United Fidelity
Bank ("United"), its savings bank subsidiary. United maintains four locations in
Evansville and one location in Warrick County. United's subsidiaries, Village
Housing Corporation, Village Management Corporation and Village Capital
Corporation currently are involved only in the business of owning affordable
housing properties.
Proposals Presented
At the Annual Meeting, shareholders of Fidelity will be asked to consider
and vote upon the following matters:
(1) Election of Directors. Election of six directors to the Board of
Directors of Fidelity to serve until their successors are duly elected
and qualified in accordance with Fidelity's Articles of Incorporation.
(2) Ratification of Public Accountants. To ratify the selection of Olive
LLP, Certified Public Accountants, as independent public accountants
of Fidelity for the year ending December 31, 2001.
If any other matters should properly come before the meeting, the proxies
will be voted, with respect to these matters, in accordance with the
recommendations of the Board of Directors. Except with respect to procedural
matters incident to the conduct of the meeting, management of Fidelity does not
know of any additional matters that may properly come before the Annual Meeting.
The Proxy Statement, the attached Notice and the enclosed proxy card are
being first mailed to shareholders of Fidelity on or about March 29, 2001.
1
Voting Rights
Only holders of shares of common stock of Fidelity of record at the close
of business on February 28, 2001 (the "Record Date") will be entitled to notice
of and to vote at the Annual Meeting. At the close of business on the Record
Date there were 4,607,658 shares of common stock of Fidelity issued and
outstanding. Such shares were held of record by approximately 484 shareholders.
There are no other outstanding securities of Fidelity entitled to vote. The
presence, either in person or by proxy, of the holders of a majority of the
shares of Common Stock issued and outstanding as of the Record Date is necessary
to constitute a quorum at the Annual Meeting. The inspectors of election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as unvoted for purpose of
determining the approval of any matters submitted to the shareholders for a
vote. If a broker indicates on the proxy that it does not have discretionary
authority to vote certain shares on a particular matter, those shares will not
be considered as present and entitled to vote with respect to that matter. The
nominees for election as director of Fidelity named in this Proxy Statement will
be elected by a plurality of the votes cast. Action on the other items or
matters to be presented at the Annual Meeting will be approved if the votes cast
in favor of the action exceed the votes cast opposing the action.
Fidelity shareholders of record on the Record Date are entitled to one vote
per share on any matter that may properly come before the Annual Meeting.
Cumulative voting for the election of directors is no longer provided for in the
Articles of Incorporation of Fidelity.
Ballots will be available at the Annual Meeting for shareholders desiring
to vote in person.
Change in Control
On May 19, 2000, following receipt of regulatory approval on May 4 and
receipt of shareholder approval on May 19th, Fidelity sold 1,460,000 shares of
common stock to Pedcor Holdings, LLC and Pedcor Bancorp. Bruce A. Cordingley,
Gerald K. Pedigo, and Phillip J. Stoffregen were named directors of Fidelity as
a part of the transaction. The regulatory approval from the Office of Thrift
Supervision approved the purchase by Pedcor Holdings, LLC, and Pedcor Bancorp of
up to 75% of Fidelity's common stock over the next year.
In exchange for the 1,460,000 shares, Fidelity received: (1) cash in the
amount of $3,000,000; (2) a five year guarantee to United in an aggregate amount
up to $1,500,000 against any negative cash flow from operations of certain
specified development properties in United's portfolio; and (3) an agreement to
provide management services and certain accounting services to the specified
properties for ten years.
Pedcor Holdings, LLC, Pedcor Bancorp or their permitted assigns also
received as a part of the transaction an option to purchase additional shares
from Fidelity in an aggregate amount of up to $5 million until May 19, 2003. For
shares purchased prior to May 19, 2001, the price for such shares will be $3.00
per share. For shares purchased after May 19, 2001 until May 19, 2003, the price
for such shares will be the fair market value of the shares.
As of February 28, 2001, Pedcor Holdings, LLC and Pedcor Bancorp and their
affiliates, including Messrs. Cordingley, Pedigo, and Stoffregen, beneficially
own or control approximately 54.7% of the outstanding common stock of Fidelity,
which includes shares that they currently own or have a right to acquire within
60 days.
2
Beneficial Ownership
The following table sets forth information regarding the beneficial
ownership of Fidelity's common stock as of February 28, 2001 by the only persons
known by Fidelity to beneficially own 5% or more of the issued and outstanding
shares of common stock of Fidelity.
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Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership (1)
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Bruce A. Cordingley 3,465,733 (2) 54.66%
8888 Keystone Crossing, Suite 900
Indianapolis, IN 46240
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M. Brian Davis 802,486 (3) 17.08%
7731 Newburgh Road
Evansville, IN 47715
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Barry A. Schnakenburg 256,708 (4) 5.69%
8701 Petersburg Road
Evansville, IN 47711
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(1) This information is based on Schedule 13D and 13G Reports filed by the
beneficial owner with the Securities and Exchange Commission ("SEC")
pursuant to applicable provisions of the Securities Exchange Act of 1934
("Exchange Act"), as of February 28, 2001, and any other information
provided to Fidelity by the beneficial owner. It does not reflect any
changes in those shareholdings which may have occurred since that date.
Beneficial ownership is direct except as otherwise indicated by footnote.
(2) Includes 1,426,883 shares held by Pedcor Holdings, LLC, of which Mr.
Cordingley is the President; 230,300 shares held by Pedcor Bancorp, of
which Mr. Cordingley is the President and CEO; 6,835 shares held by Denise
Cordingley, the wife of Mr. Cordingley, and 52,966 shares held by Gerald
Pedigo, who together with Mr. Cordingley, Phillip Stoffregen and others has
filed a Schedule 13D as a "group" under Section 13(d)(3) of the Securities
Exchange Act of 1934. The total also includes 46,516 shares, 4,800 shares,
and 6,600 shares which Mr. Cordingley, Gerald Pedigo, and Phillip
Stoffregen, respectively, have the right to acquire pursuant to the
exercise of stock options granted under Fidelity's 1993 Directors' Stock
Options Plan; 8,587 shares which Mr. Cordingley, Pedcor Investments, and
Denise Cordingley are entitled to purchase upon exercise of 31 warrants
acquired pursuant to the 1994 Rights Offering; and 1,666,666 shares which
Pedcor Holdings, LLC, Pedcor Bancorp or their permitted assigns have the
right to purchase, base upon an option from Fidelity to acquire such
shares. The terms of the option are described above under "Change in
Control."
(3) Includes 3,796 shares owned by the spouse of Mr. Davis, 16,226 shares which
Mr. Davis holds as custodian for his minor daughter (Elizabeth Davis);
15,294 shares which Mr. Davis holds as custodian for his minor son
(Christopher Davis); and 5,580 shares which Mr. Davis holds as custodian
for his minor daughter (Gabrielle Davis). Also includes 39,916 shares which
Mr. Davis has the right to acquire pursuant to the exercise of stock
options granted under the 1993 Directors' Stock Option Plan and 50,000
shares which Mr. Davis has the right to acquire pursuant to the exercise of
stock options granted under Fidelity's 1995 Key Employees' Stock Option
Plan. Also includes 99,018 shares of Fidelity which were owned by Maybelle
R. Davis, the deceased mother of Mr. Davis, as to which shares Mr. Davis
has authority to vote pursuant to a power of attorney.
3
(4) Includes 5,775 shares held by Darby Schnakenburg, the wife of Mr.
Schnakenburg, 24,948 shares held by U.S. Industries Group, Inc., 53,263
shares held by Barry, Inc. and 40,378 shares held by BOAH Associates. The
total also includes 20,097 shares which Mr. Schnakenburg has the right to
acquire through the exercise of stock options granted under Fidelity's 1993
Directors' Stock Option Plan. The total also includes 73,109 shares of
Fidelity pursuant to which Mr. Schnakenburg may exercise voting and
investment power pursuant to a power of attorney.
Proxies
Each properly executed and returned proxy will be voted at the Annual
Meeting in accordance with the instructions thereon. If no instructions are
given, the proxy will be voted by the individuals designated as proxies "FOR"
the matters set forth as Items One and Two in the attached "Notice of Annual
Meeting of Shareholders," and in their discretion with respect to all other
matters.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by (i) attending the Annual Meeting, filing a written notice of
revocation with the Secretary of the Annual Meeting and voting in person; (ii)
executing a written instrument to that effect and delivering it to the Secretary
of Fidelity prior to the Annual Meeting; or (iii) duly executing and delivering
a later dated proxy to the Secretary of Fidelity prior to the Annual Meeting.
Solicitation of Proxies
In addition to use of the mails, proxies may be solicited personally or by
telephone or telegraph by officers, directors and certain employees who will not
be specially compensated for such activity. Fidelity will request brokerage
houses, nominees, fiduciaries and other custodians to forward soliciting
materials to beneficial owners. Fidelity will bear all expenses in connection
with the solicitation of proxies for the Annual Meeting.
ITEM 1. ELECTION OF DIRECTORS
As of the date of this proxy, the Board of Directors of Fidelity is
composed of nine members. The terms of Curt J. Angermeier, William R. Baugh,
Bruce A. Cordingley, M. Brian Davis, Donald R. Neel, Gerald K. Pedigo, Barry A.
Schnakenburg, and Phillip J. Stoffregen expire at the 2001 Annual Meeting of
Shareholders. Jack Cunningham's term will expire at the 2002 Annual Meeting.
Fidelity's Articles of Incorporation, as amended by the shareholders at the
meeting held on May 19, 2000, provide that any director elected in 2001, 2002,
or thereafter shall have a term of office of one year.
The Nominating Committee of the Board of Directors has nominated Messrs.
Baugh, Cordingley, Neel, Pedigo, Schnakenburg, and Stoffregen for re-election to
a one-year term to expire at the 2002 Annual Meeting of Shareholders.
Immediately following the Annual Meeting, the Board of Directors intends to
decrease the size of the Board of Directors to seven individuals.
If for any reason Messrs. Baugh, Cordingley, Neel, Pedigo, Schnakenburg, or
Stoffregen become unable or are unwilling to serve at the time of the Annual
Meeting, the person named in the enclosed proxy card will have discretionary
authority to vote for a substitute nominee or nominees. It is anticipated that
Messrs. Baugh, Cordingley, Neel, Pedigo, Schnakenburg, and Stoffregen will be
available for election.
The Board of Directors recommends that the shareholders vote FOR the
election of Messrs. Baugh, Cordingley, Neel, Pedigo, Schnakenburg, and
Stoffregen.
4
INFORMATION CONCERNING NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth information as to each Director continuing in
office after the Annual Meeting, and each executive officer of Fidelity as of
February 28, 2001, including their ages, present principal occupations, other
business experience during the last five years, directorships in other publicly
held companies, and the year they were first elected or appointed to the Board
of Directors (if applicable). Each individual's service with Fidelity began at
the formation of Fidelity in 1993, unless otherwise noted.
On September 29, 2000 Fidelity announced that M. Brian Davis would cease to
serve as president and CEO. The Executive Committee of the Board is currently
functioning as interim CEO until a permanent replacement is appointed, which we
anticipate will occur by the fourth quarter of 2001. There are no arrangements
or understandings between any of the Directors, executive officers or any other
person pursuant to which any Director or executive officer has been selected for
his or her respective position.
WILLIAM R. BAUGH Age - 80, term expires in 2001.
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Mr. Baugh is a Director of Fidelity and has been Chairman Emeritus of the Board
of Directors since October 1994. Mr. Baugh served as Chairman of the Board of
Directors of Fidelity from its formation in 1993 until October 1994. He served
as a Director of United from 1955 until 2000, was Chairman of the Board of
United from 1979 until October 1994, and was President of United from 1970 until
1981 and from 1983 until 1986.
BRUCE A. CORDINGLEY Age - 54, term expires in 2001.
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Mr. Cordingley is a Director of Fidelity and served as Chairman of the Board of
Directors from October 1994 until April 1998, and served as Chief Executive
Officer of Fidelity from June 1995 to March 1996. He continues to serve as a
Director of Fidelity and as Chairman of the Company's Executive Committee and in
the other positions discussed below.
Mr. Cordingley is a Director of Village Management Corporation and Village
Housing Corporation (the two service corporation subsidiaries of Fidelity
previously involved in the development and currently involved in the business of
owning of affordable housing units) and Village Insurance Corporation. Except
for the period between December 27, 1999 through May 18, 2000, Mr. Cordingley
has been a Director of United since 1992. Mr. Cordingley is an attorney and was
a partner in the law firm of Ice, Miller, Donadio and Ryan in Indianapolis,
Indiana from 1973 to February 1992. Mr. Cordingley is President of Pedcor
Investments, a limited liability company, located in Indianapolis, Indiana, the
principal business of which is real estate-oriented investment and development.
Mr. Cordingley is also a Director of International City Bank, N.A. (Long Beach,
California).
5
JACK CUNNINGHAM Age - 70, term expires in 2002.
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Mr. Cunningham is a Director of Fidelity and has served as Chairman of Fidelity
and United since April 1998. Mr. Cunningham also currently serves as Secretary
of Fidelity and United. He served as President of Fidelity from May 1994 through
October 1994 and as President of United from May 1994 through December 1994 and
from March 1997 through December 1997. Mr. Cunningham has been a Director of
United since 1985 and an officer of United since 1974.
DONALD R. NEEL Age - 37, term expires in 2001.
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Mr. Neel is a Director of Fidelity and has served as Executive Vice-President,
Chief Financial Officer, and Treasurer of Fidelity since 1993, and as President
and Chief Executive Officer of United since July 2000. Prior to joining United
and Fidelity in 1993, Mr. Neel served as Vice-President and Controller of INB
Banking Company, Southwest (successor to Peoples Bank) from May 1987 through
April 1993.
GERALD K. PEDIGO Age - 63, term expires in 2001.
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Mr. Pedigo has been Chairman of Pedcor Investments, a limited liability company,
since 1987. In January 2000 he became Chairman of Pedcor Bancorp, the holding
company of International City Bank, Long Beach, California. In May 2000 he
became a Director of Fidelity Federal Bancorp.
BARRY A. SCHNAKENBURG Age - 53, term expires in 2001.
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Mr. Schnakenburg is a Director of Fidelity, and a member of the Executive
Committee of the Board. He has served as a Director since 1990. Mr. Schnakenburg
has served as the President of U.S. Industries Group, Inc. for the past 10
years. U.S. Industries Group, Inc. is a sheet metal and roofing contractor
located in Evansville, Indiana.
PHILLIP J. STOFFREGEN Age - 42, term expires in 2001.
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From 1984 to 1992 he served as an associate, and as a partner with the law firm
Ice Miller in Indianapolis. Since 1992, Stoffregen has served as Executive Vice
President of Pedcor Investments where he is responsible for development and
financing matters. In May 2000 he became a Director of Fidelity Federal Bancorp
and a member of the Executive Committee. He also is a director of Martin Luther
King Community Development Corporation from 1991-1997 and from 1998 to the
present time.
Certain Transactions and Other Matters Between Management and Fidelity
Directors and executive officers of Fidelity and United and their
associates are customers of, and have had transactions with, Fidelity and United
in the ordinary course of business. Comparable transactions may be expected to
take place in the future. Directors of Fidelity may not obtain extensions of
credit from Fidelity or United. Loans made to non-director officers were made in
the ordinary course of business on substantially the same terms as those
prevailing at the time for comparable transactions with other persons. These
loans did not involve more than the normal risk of collectibility or present
other unfavorable features.
6
The Office of Thrift Supervision ("OTS"), the primary federal banking
regulatory agency of United, by regulation has provided that each director,
officer, or affiliated person of a savings association, such as United, has a
fundamental duty to avoid placing himself in a position which creates, or which
leads to or could lead to, a conflict of interest or appearance of a conflict of
interest having an adverse effect upon, among other things, the interests of the
members of the savings association or the association's soundness. In addition,
the OTS by regulation has stated that the fiduciary relationship owed by a
director or officer of a savings association, such as United, includes the duty
to protect the association and that the OTS would consider this duty to be
breached if such individual would take advantage of a business opportunity for
his own or another person's personal benefit or profit when the opportunity is
within the corporate powers of the savings association (or its service
corporation) and when the opportunity is of a present or potential practical
advantage to the savings association. The members of the Board of Directors of
Fidelity and United are aware of these regulations and requirements of the OTS
and believe they have conducted, and intend to continue to conduct themselves in
compliance with these requirements at all times.
Board Meetings
Fidelity had 7 regularly scheduled Board of Directors meetings and 4
special meetings during the year ended December 31, 2000.
Board Committees
The Board of Directors has a Nominating Committee which consists of Bruce
A. Cordingley (Chairman), Barry Schnakenburg, and Phillip J. Stoffregen. The
Nominating Committee, whose purpose is to nominate directors for election to the
Board of Directors, met once during the year ended December 31, 2000. Under
Fidelity's by-laws, any shareholder desiring to make a nomination for the
election of directors at the annual meeting of the shareholders must submit
written notice thereof to the Secretary of Fidelity not less than sixty (60)
days prior to the date of such meeting. If less than seventy (70) days notice or
prior public disclosure of the date of such meeting is given or made to
shareholders, the notice by the shareholder to Fidelity, to be considered
timely, must be so received not later than the close of business on the 10th day
following on which notice by Fidelity of the date of such meeting was mailed to
shareholders or such public disclosure was made.
The Board of Directors also has an Audit Committee consisting of Curt J.
Angermeier (Chairman), William R. Baugh, and Barry A. Schnakenburg. The Audit
Committee, whose purpose is to review audit reports, loan review reports, and
related matters to ensure effective compliance with regulatory and internal
policies and procedures, met six times during the year ended December 31, 2000.
The members of the Audit Committee also serve as the committee authorized to
direct the grant of options to eligible Directors and Key Employees under the
1993 Directors' Stock Option Plan and the 1995 Key Employees' Stock Option Plan.
The Executive Committee of the Board of Directors serves as the
Compensation Committee. The Executive Committee is currently composed of Bruce
A. Cordingley (Chairman), Barry Schnakenburg, and Phillip J. Stoffregen. The
Executive Committee met ten times during the year ended December 31, 2000.
7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Five-Year Total Shareholder Return
The following indexed graph indicates Fidelity's total return to its
shareholders on its common stock for the past five years, assuming dividend
reinvestment, as compared to total return for the NASDAQ Market Index and the
Peer Group Index (which is a line-of-business index prepared by an independent
third party consisting of savings and loan holding companies or federally
chartered savings institutions with the same SIC number as Fidelity and which
have been publicly traded for at least six years). The comparison of total
return on investment for each of the periods assumes that $100 was invested on
January 1, 1995, in each of Fidelity, the NASDAQ Market Index, and the Peer
Group Index.
Comparative 5-Year Cumulative Total Return
Among Fidelity Federal Bancorp,
NASDAQ Market Index and SIC Code Index
[PERFORMANCE CHART APPEARS HERE]
Assumes $100 Invested on January 1, 1996
Assumes Dividends Reinvested
Year Ended December 31, 2000
1995 1996 1997 1998 1999 2000
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Fidelity Federal 100 72.36 80.03 26.63 9.86 10.85
SIC Code Index 100 127.88 216.77 184.18 156.72 242.85
NASDAQ Market Index 100 124.27 152.00 214.39 378.12 237.66
Compensation Committee Report
Decisions on compensation of Fidelity's executives are made by the
Executive Committee of the Board of Directors of Fidelity, which also serves as
the Compensation Committee. All decisions of the Executive Committee relating to
the compensation of Fidelity's officers are reviewed by the full board.
8
Set forth below is a report submitted by Messrs. Cordingley, Schnakenburg, and
Stoffregen, in their capacity as the Board's Executive Committee, addressing
Fidelity's compensation policies for the year ended December 31, 2000 as they
affected Fidelity's executive officers.
Compensation Policies Toward Executive Officers.
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The Executive Committee's executive compensation policies are designed
to provide competitive levels of compensation to the executive officers and to
reward officers for satisfactory individual performance and for satisfactory
performance of Fidelity as a whole. There are no established goals or standards
relating to performance of Fidelity which have been utilized in setting
compensation of individual employees.
Base Salary.
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Each executive officer is reviewed individually by the Executive
Committee, which includes an analysis of the performance of Fidelity. In
addition, the review includes, among other things, an analysis of the
individual's performance during the past fiscal year, focusing primarily upon
the following aspects of the individual's job or characteristics of the
individual exhibited during the most recent fiscal year: quality and quantity of
work; supervisory skills; dependability; initiative; attendance; overall skill
level; and overall value to Fidelity.
Other Compensation Plans.
------------------------
At various times in the past Fidelity has adopted certain broad based
employee benefit plans in which the senior executives are permitted to
participate on the same terms as non-executive employees who meet applicable
eligibility criteria, subject to any legal limitations on the amount that may be
contributed or the benefits that may be payable under the plans.
Benefits.
--------
Fidelity provides medical, defined benefit, and defined contribution
plans to the senior executives that are generally available to the other
Fidelity employees. The amount of perquisites, as determined in accordance with
the rules of the SEC relating to executive compensation, did not exceed 10% of
salary and bonus for year 2000.
Mr. Davis' 2000 Compensation.
----------------------------
Regulations of the Securities and Exchange Commission require that the
Executive Committee disclose the Committee's basis for compensation reported for
any individual who served as the Chief Executive Officer during the last fiscal
year. Mr. Davis' salary was determined in the same manner as discussed above for
other senior executives. Mr. Davis did not participate in the deliberations of
the Executive Committee with respect to his compensation level. See
"Compensation Committee Insider Participation." Mr. Davis served as president
and CEO of Fidelity through September 2000. Since that time and until a
permanent replacement is appointed, the Executive Committee of the Board has
functioned in a non-compensated capacity as interim CEO.
Current Members of the Executive Committee:
Bruce A. Cordingley (Chairman)
Barry A. Schnakenburg
Phillip J. Stoffregen
9
Compensation Committee Insider Participation
During the past year, Messrs. Davis, Cordingley, Schnakenburg and
Stoffregen served on the Executive Committee. Mr. Davis did not participate in
any discussion or voting with respect to his salary as an executive officer and
was not present in the room during the discussion by the Executive Committee of
his compensation.
The following table sets forth, for the fiscal year ended December 31,
2000, the six month period ended December 31, 1999 and the fiscal years ended
June 30, 1999, and 1998, the cash compensation paid by Fidelity or its
subsidiaries, as well as certain other compensation paid, awarded or accrued
during those years, to the Chief Executive Officer of Fidelity at any time
during the year ended December 31, 2000 and to the executive officers of
Fidelity whose salary and bonus exceeded $100,000 during the year ended December
31, 2000.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
---------------------------- ---------------
Name and Principal Position Other
Annual
Compen- Securities All Other
Year Salary sation Underlying Compensation
(1) (1) Bonus (2)(3) Options/ SARs (4)
- ------------------------------ ----------- --------- -------- ---------- ---------------- ---------------
M. Brian Davis,
President and CEO (5) 12/31/00 $ 154,127 $ 0 $ 2,400 50,000 $ 529,232 (5)
12/31/99 119,256 0 9,600 0 823
6/30/99 233,692 0 19,200 0 2,841
6/30/98 226,646 0 19,200 15,000 2,343
Donald R. Neel,
EVP and CFO
President and CEO of United
12/31/00 $ 131,483 $ 0 $ 1,200 40,000 $ 1,361
12/31/99 59,525 0 7,200 0 893
06/30/99 116,892 0 14,400 5,923 1,888
06/30/98 103,164 0 8,400 7,500 1,547
(1) On December 31, 1999, Fidelity changed its fiscal year-end from June 30 to
December 31. Figures for December 31, 1999 reflect amounts for the six
months ended December 31, 1999.
10
(2) While officers enjoy certain perquisites, such perquisites do not exceed
the lesser of $50,000 or 10% of such officer's salary and bonus and are not
required to be disclosed by applicable rules of the SEC.
(3) Consists of Directors' fees paid to Mr. Davis and to Mr. Neel for the
fiscal years indicated. Effective January 1, 2000, Mr. Neel, as a salaried
employee of Fidelity, no longer receives Directors' fees. Directors fees
paid in January 2000 were earned in December 1999, but paid in January
2000.
(4) Includes contributions by Fidelity under Fidelity's Retirement Savings
401(k) Plan.
(5) Mr. Davis served as the president and CEO of Fidelity through September
2000. In 2000, Fidelity accrued approximately $527,000 in connection with
possible severance payments to Mr. Davis in accordance with his employment
agreement dated May 19, 2000. Fidelity is reviewing the severance issues,
and as of the date of this proxy statement, no severance payments have been
made to Mr. Davis. Such payments would be subject to OTS and FDIC prior
approval.
1993 Directors' Stock Option Plan
The 1993 Directors' Stock Option Plan ("Directors' Plan") provides for the
grant of non-qualified stock options to individuals who are directors of
Fidelity or any of its subsidiaries to acquire shares of common stock of
Fidelity for a price of not less than $2 above the average of the high and low
bid quotations as reported by NASDAQ for the common stock of Fidelity for the
five trading days immediately preceding the date the option is granted.
The number of shares and option exercise prices under the Directors' Plan
have been adjusted to reflect a twenty percent stock dividend distributed in
1994, a 2.1 for 1 stock split in 1995, and a 10% stock dividend in 1996. As of
February 28, 2001 there were options for 152,313 shares outstanding.
1995 Key Employees' Stock Option Plan
The Key Employees' Plan provides for the grant of incentive stock options
and non-qualified stock options to acquire shares of common stock of Fidelity
for a price of not less than the fair market value of the share on the date
which the option is granted. A total of 236,500 shares were reserved for
issuance under the Key Employees Plan. The option price per share for each
incentive stock option granted to an employee must not be less than the fair
market value of the share of common stock on the date the option is granted. The
option price per share for an incentive stock option granted to an employee
owning 10% or more of the common stock of Fidelity must not be less than 110% of
the fair market value of the share on the date that the option is granted. The
option price per share for non-qualified stock options will be determined by the
Administrative Committee of the Key Employees' Plan, but may not be less than
100% of the fair market value of a share of common stock on the date of the
grant of the option.
The Key Employees' Plan will expire on March 15, 2005, except outstanding
options will remain in effect until they have been exercised, terminated,
forfeited, or have expired. As such, options may be outstanding under the Key
Employees' Plan through March 15, 2015. The number of shares and option exercise
prices under the Key Employees' Plan have been adjusted to reflect a 2.1 for 1
stock split in 1995, and a 10% stock dividend in 1996. As of February 28, 2001
there were options for 133,923 shares outstanding.
11
Options Grants in Last Fiscal Year
The following table provides details regarding stock options granted to
Messrs. Davis and Neel in 2000. In addition, in accordance with the rules of the
Securities and Exchange Commission, there are shown the hypothetical gains or
"options spreads" that would exist for respective options. These gains are based
on assumed rates of annual compound stock price appreciation of five percent
(5%) and ten percent (10%) from the date the options were granted over the full
option term. Gains are reported net of the option exercise price, but before any
effect of taxes. In assessing these values, it should be kept in mind that no
matter what value is placed on a stock option on the date of grant, its ultimate
value will be dependent on the market value of Fidelity's stock at a future
date, and that value would depend on the efforts of such executive to foster the
future success of Fidelity for the benefit of all shareholders. The amounts
reflected in the table may not necessarily be achieved.
Individual Grants In Last Fiscal Year
Percent of Potential Realizable
Total Value at Assumed Rates
Number of Options Market of Stock Price
Shares Granted to Exercise Price on Appreciation for
Underlying Employees or Base Date of Option Term
Options in Fiscal Price Grant Expiration -----------------------
Name Granted Year (%) ($/Share) ($/Share) Date 5% ($) 10% ($)
- -------------------- ------------- ------------- ------------ ------------ -------------- ----------- -----------
M. Brian Davis 50,000 44.4% $ 4.00 $ 2.63 05/19/10 $14,200 $141,077
Donald R. Neel 25,000 22.2% $ 4.00 $ 2.63 05/19/10 $ 7,100 $ 70,539
Donald R. Neel 15,000 13.3% $ 1.53 $ 1.53 12/14/10 $14,433 $ 36,576
12
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-end Option Values
Table
The following table shows for the named executive officers the shares
covered by both exercisable and non-exercisable stock options as of December 31,
2000. Neither Mr. Davis nor Mr. Neel exercised any options during the last year.
The exercise price of all options held by Messrs. Davis and Neel exceed the
year-end price of Common Stock.
Number of Unexercised Stock
Options 12/31/00
-----------------------------
Name Exercisable Unexercisable
---------------- ----------- -------------
M. Brian Davis 39,916 (1) 0
50,000 (2) 0
Donald R. Neel 6,000 (3) 1,500 (3)
5,923 (4) 0
25,000 (2) 0
3,000 (5) 12,000 (5)
(1) The bid price of Fidelity's Common Stock at December 31, 2000 ($1.31 per
share) was less than the exercise price ($6.22 per share).
(2) The bid price of Fidelity's Common Stock at December 31, 2000 ($1.31 per
share) was less than the exercise price ($4.00 per share).
(3) The bid price of Fidelity's Common Stock at December 31, 2000 (1.31 per
share) was less than the exercise price ($10.81 per share).
(4) The bid price of Fidelity's Common Stock at December 31, 2000 ($1.31 per
share) was less than the exercise price ($2.88 per share).
(5) The bid price of Fidelity's Common Stock at December 31, 2000 ($1.31 per
share) was less than the exercise price ($1.53 per share).
Other Employee Benefit Plans
Pension Plan
------------
Fidelity currently participates in a defined benefit pension plan sponsored
by the Financial Institutions Retirement Fund, a non-profit, tax qualified,
tax-exempt pension plan and trust in which Federal Home Loan Banks, savings and
loan associations and similar institutions participate ("Pension Plan"). All
employees of Fidelity or its subsidiaries (which excludes non-employee Directors
of Fidelity) (i) who have not attained age sixty (60) prior to being hired, and
(ii) who work a minimum of 1000 hours per year are covered by the Pension Plan
and become participants upon completion of one year of service and attainment of
age 21. Participants are not required or allowed to make contributions to the
Pension Plan.
13
A participant in the Pension Plan is entitled to receive benefits based
upon years of service for Fidelity or its subsidiaries and a percentage of the
individual's average annual salary during the five (5) consecutive years of
service which produce the highest such average without deduction for Social
Security benefits. For purposes of computing benefits, "salary" includes an
employee's regular base salary or wage inclusive of bonuses and overtime but is
exclusive of special payments such as fees, deferred compensation, severance
payments and contributions by Fidelity to the Pension Plan.
Participants become fully vested in their benefits after completion of five
(5) years of service. Upon attaining age sixty-five (65), participants become
one hundred percent (100%) vested in their benefits provided by Fidelity under
the Pension Plan, regardless of the number of their years of service. Benefits
are payable at normal retirement age (age 65). The Pension Plan also contains
provisions for the payment of benefits on the early retirement, late retirement,
death or disability of a participant.
The regular benefit under the Pension Plan to be paid on a participant's
retirement is a monthly pension for the life of a participant with minimum
guaranteed benefit of twelve (12) times the participant's annual retirement
benefit under the Pension Plan. Thus, the regular form of all retirement
benefits includes not only a retirement allowance, but also a lump sum
retirement death benefit which is twelve (12) times the annual retirement
benefit less the sum of such retirement benefits made before death. The Pension
Plan provides that married participants will receive the regular retirement
benefit in the form of an actuarially equivalent joint and survivor annuity.
Optional forms of payments are available to all participants; however, married
participants must obtain written spousal consent to the distribution of benefits
in a form other than a joint and survivor annuity.
According to the Pension Plan sponsor, the actuaries for the Pension Plan
have determined that no contributions were required to be made to the Pension
Plan by Fidelity for the plan year ended June 30, 2000.
The following table shows estimated annual benefits payable at normal
retirement to persons in specified remuneration classifications. The benefit
amounts presented in the totals are annual pension amounts for the life of the
participant, with a minimum guaranteed benefit of twelve (12) times the annual
retirement benefit under the Pension Plan, for a participant at normal
retirement (age 65) with the years of service set forth below with no deduction
for Social Security or other offset amounts. The maximum compensation which may
be taken into account for any purpose under the Pension Plan is limited by the
Internal Revenue Code to $160,000 for 2000. As of December 31, 2000, M. Brian
Davis had five and three fourth years of service (employment terminated
September 30, 2000) and Donald R. Neel had seven and one-half years of service
under the Pension Plan.
Annual Benefit of Normal Retirement Years of Service
Highest Five-Year
Average Annual Salary
10 15 20 25 30 35 40
- --------------------------------------------------------------------------------------------------------------------
$ 50,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
$ 75,000 15,000 22,500 30,000 37,500 45,000 52,500 60,000
$ 100,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
$ 125,000 25,000 37,500 50,000 62,500 75,000 87,500 100,000
$ 150,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000
$ 175,000 35,000 52,500 70,000 87,500 105,000 122,500 140,000
14
Retirement Savings Plan.
-----------------------
In 1994 Fidelity adopted a defined contribution plan under Internal
Revenue Code Section 401(k) in which substantially all employees may
participate. Under this plan, employees may contribute up to 15% of pay, and
contributions up to 6% are supplemented by Fidelity contributions. Fidelity
contributions are made at the rate of 25 cents for each dollar contributed by
the participant. Participants may elect to have all or a portion of their
contributions made on a tax-deferred basis pursuant to provisions in the plan
meeting the requirements of Section 401(k) of the Internal Revenue Code.
Fidelity's expense for the plan was $16,000 for the year ended December 31, 2000
and $8,000 for the six months ended December 31, 1999.
Compensation of Directors
The Directors of Fidelity and United were compensated for their
services in each capacity in the amount of $200 for each company Board served
per month in the amount of $2,400 or $4,800 per year. The six Directors of
United for the twelve months ended December 31, 2000, were also Directors of
Fidelity. Executive Committee members receive an additional $100 per month for
their services. The maximum compensation received by any Director for his or her
service on the Board was $6,700 for the year ended December 31, 2000. Effective
January 1, 2000 Directors who are also salaried employees receive no director
fees.
Employment Contracts
Messrs. Davis and Neel each entered into an Employment Agreement with
Fidelity in May 2000. The term of each Employment Agreement is 3 years, which
may be extended annually for successive 1 year periods. Effective after May 19,
2000 Messrs. Davis and Neel earned an annual base salary equal to $195,000 and
$140,000, respectively, subject to any increases which may be approved by the
Board of Directors. In addition, Messrs. Davis and Neel were granted options to
purchase 50,000 shares and 25,000 shares, respectively, at an option price of
$4.00 per share. After May 19, if during the one year period following a
prospective change in control, as defined in the Employment Agreement, the
executive is terminated for any reason other than cause, disability, retirement
or death, or if the executive resigns due to a material breach of the Employment
Agreement by Fidelity, the executive is entitled to an amount equal to 2.99
times his average annual base salary and bonus for the previous five (5) years.
In addition, Fidelity must maintain for three years following termination for
the benefit of the executive all employee welfare plans and programs in which he
was entitled to participate prior to termination, and reimburse the executive
for the cost of obtaining such benefits for the first 24 months following
termination. If the executive is terminated for any reason other than cause,
disability, retirement or death, or if the executive resigns due to a material
breach of the Employment Agreement by Fidelity, and such termination or
resignation does not follow a change in control, the executive is entitled to an
amount equal to his base salary during the remaining term of the Employment
Agreement. In addition, Fidelity must maintain for the benefit of the executive
for the remainder of the term of the Employment Agreement all employee welfare
plans and programs in which he was entitled to participate prior to termination,
and reimburse the executive for the cost of obtaining such benefits. No payments
may be made pursuant to the agreement if such payments would, among other
things, be considered by a federal or state regulatory authority having
jurisdiction over Fidelity an unsafe or unsound practice. Each Employment
Agreement also provides a 3-year covenant not to compete and covenants regarding
confidentiality.
15
Security Ownership of Management
The following table sets forth certain information as of February 28, 2001, with
respect to the common stock of Fidelity beneficially owned by each Director of
Fidelity and by all executive officers and directors as a group
Number of Shares
Name Beneficially Percent of Class (1)
--------------------------------------------- ---------------- --------------------
Curt J. Angermeier (2) 35,678 .77%
William R. Baugh (3) 28,970 .63
Bruce A. Cordingley (4) 3,465,733 54.66
Gerald K. Pedigo (4)
Phillip J. Stoffregen (4)
Jack Cunningham (5) 52,974 1.14
M. Brian Davis (6) 802,486 17.08
Donald R. Neel (7) 72,250 1.55
Barry A. Schnakenburg (8) 263,308 5.69
All Executive Officers and Directors as a
Group (9 Persons) 4,721,399 72.21
(1) The information contained in this column is based upon information
furnished to Fidelity as of February 28, 2001, by the individuals named
above. The nature of beneficial ownership for shares shown in this column
represent sole or shared voting and investment unless otherwise noted. At
February 28, 2001, Fidelity had 4,607,658 shares of common stock
outstanding.
(2) Includes 19,401 shares held in a Family Trust of Mr. Angermeier. The total
also includes 8,740 shares which Mr. Angermeier has the right to acquire
pursuant to the exercise of stock options granted under the 1993 Directors'
Stock Option Plan.
(3) Includes 27,000 shares beneficially owned by Mr. Baugh. Also includes 1,970
shares which Mr. Baugh has the right to acquire pursuant to the exercise of
stock options granted under the 1993 Directors' Stock Option Plan.
(4) Includes 1,426,883 shares held by Pedcor Holdings, LLC, of which Mr.
Cordingley is the President; 230,300 shares held by Pedcor Bancorp, of
which Mr. Cordingley is the President and CEO; 6,835 shares held by Denise
Cordingley, the wife of Mr. Cordingley, and 52,966 shares held by Gerald
Pedigo, who together with Mr. Cordingley, Phillip Stoffregen and others has
filed a Schedule 13D as a "group" under Section 13(d)(3) of the Securities
Exchange Act of 1934. The total also includes 46,516 shares, 4,800 shares,
and 6,600 shares which Mr. Cordingley, Gerald Pedigo, and Phillip
Stoffregen, respectively, have the right to acquire pursuant to the
exercise of stock options granted under Fidelity's 1993 Directors' Stock
Options Plan; 8,587 shares which Mr. Cordingley, Pedcor Investments, and
Denise Cordingley are entitled to purchase upon exercise of 31 warrants
acquired pursuant to the 1994 Rights Offering and 1,666,666 shares which
Pedcor Holdings, LLC, Pedcor Bancorp or their permitted assigns have the
right to purchase, base upon an option from Fidelity to acquire such
shares. The terms of the option are described under the caption "Change in
Control " on page 2 of this document.
16
(5) Includes 9,744 shares held in the name of Mr. Cunningham's wife and 23,674
shares which Mr. Cunningham has the right to acquire pursuant to the
exercise of stock options granted under Fidelity's 1993 Directors' Stock
Option Plan.
(6) Includes 3,796 shares owned by the spouse of Mr. Davis, 16,226 shares which
Mr. Davis holds as custodian for his minor daughter (Elizabeth Davis);
15,294 shares which Mr. Davis holds as custodian for his minor son
(Christopher Davis); and 5,580 shares which Mr. Davis holds as custodian
for his minor daughter (Gabrielle Davis). Also includes 39,916 shares which
Mr. Davis has the right to acquire pursuant to the exercise of stock
options granted under the 1993 Directors' Stock Option Plan and 50,000
shares which Mr. Davis has the right to acquire pursuant to the exercise of
stock options granted under Fidelity's 1995 Key Employees' Stock Option
Plan. Also includes 99,018 shares of Fidelity, which were owned by Maybelle
R. Davis, the deceased mother of Mr. Davis, as to which shares Mr. Davis
has authority to vote pursuant to a power of attorney.
(7) Includes 17,827 shares owned by Donald R. Neel, Executive Vice President,
Chief Financial Officer and Treasurer of Fidelity and President and Chief
Executive of United and 1,000 shares owned by Jamie Neel, the wife of Mr.
Neel. Also includes 53,423 shares which Mr. Neel has the right to acquire
pursuant to the exercise of the stock options granted under Fidelity's 1995
Key Employees' Stock Option Plan.
(8) Includes 5,775 shares held by Darby Schnakenburg, the wife of Mr.
Schnakenburg, 24,948 shares held by U.S. Industries Group, Inc., 53,263
shares held by Barry, Inc. and 40,378 shares held by BOAH Associates. The
total also includes 20,097 shares which Mr. Schnakenburg has the right to
acquire through the exercise of stock options granted under Fidelity's 1993
Directors' Stock Option Plan. The total also includes 73,109 shares of
Fidelity pursuant to which Mr. Schnakenburg may exercise voting and
investment power pursuant to a Power of Attorney.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Fidelity's directors and
executive officers, and persons who own more than 10% of a registered class of
Fidelity's equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of Fidelity common stock and other equity
securities of Fidelity. Officers, directors and greater than 10% shareholders
are required by SEC regulations to furnish Fidelity with copies of all Section
16(a) forms they file. During the most recent year ended December 31, 2000,
Donald R. Neel failed to file one report covering five transactions on a timely
basis, but did file such report within seven days of its due date. To the best
knowledge of Fidelity, during the most recent year ended December 31, 2000,
there was no other late filing with respect to the Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners.
ITEM 2. RATIFICATION OF INDEPENDENT
AUDITORS OF FIDELITY
The Board of Directors of Fidelity proposes that the shareholders ratify
the selection of the firm of Olive LLP, Certified Public Accountants, as
independent public accounts for Fidelity for the year ending December 31, 2001,
subject to acceptance of the engagement by Olive LLP. Representatives of Olive
LLP are expected to be present at the meeting and available to respond to
appropriate questions. They will be given an opportunity to make a statement if
they desire to do so. Olive LLP has been the independent auditors of Fidelity
since 1982. In the event the selection of Olive LLP is not ratified by the
shareholders, the Board of Directors will consider selection of other
independent public accountants for the year ending December 31, 2001.
17
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has:
1. Reviewed and discussed the audited financial statements with management;
2. Discussed with the independent auditors the matters required to be
discussed by SAS 61;
3. Received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, and has
discussed with the independent auditors the auditors' independence.
4. Based on the review and discussions above, recommended to the Board of
Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the last fiscal year for filing
with the Securities and Exchange Commission.
The Board of Directors has determined that the members of the Audit
Committee are "independent", as defined in the listing standards of the National
Association of Securities Dealers. The Audit Committee has adopted a written
charter. The charter is included as Exhibit A to this proxy statement.
Members of the Audit Committee:
Curt J. Angermeier (Audit Committee Chairman)
William R. Baugh
Barry A. Schnakenburg
AUDIT FEES
The following table sets forth the aggregate fees billed to Fidelity for
the fiscal year ended December 31, 2000 by Fidelity's principal accounting firm,
Olive LLP, Certified Public Accountants:
Audit Fees (1) $ 41,000
All Other Fees (2) $ 93,166
--------
$134,166
========
(1) Consists of fees billed for professional services rendered for the
audit of Fidelity's financial statements for the fiscal year ended
December 31, 2000 and the review of Fidelity's financial statements
included in its Forms 10-Q for 2000.
(2) Consists of fees billed for services rendered for the fiscal year
ended December 31, 2000, other than those included in Audit Fees, but
does not include any financial information systems design and
implementation fees.
The Audit Committee has considered whether the provision of the services
covered for the fees billed under "All Other Fees" is compatible with
maintaining the principal accountant's independence.
18
SHAREHOLDERS PROPOSALS
Any proposal which a shareholder intends to bring before the next Annual
Meeting of Shareholders to be held in 2002 must be received by Fidelity no later
than November 29, 2001 for inclusion in next year's proxy statement. Such
proposals should be addressed to Jack Cunningham, Chairman of Fidelity, at 18 NW
Fourth Street, PO Box 1347, Evansville, Indiana 47706-1347.
If notice of any other shareholder proposal intended to be presented at the
Annual Meeting of Shareholders to be held in 2002 is not received by Fidelity on
or before February 12, 2002, the proxies will have discretionary authority to
vote on the matter. All proposals and notifications should be addressed to the
Chairman of Fidelity.
ADDITIONAL INFORMATION
The 2000 Annual Report to Shareholders, containing financial statements for
the year ended December 31, 2000, and other information concerning the
operations of Fidelity is enclosed herewith, but is not to be regarded as proxy
soliciting material.
Upon written request, Fidelity Federal Bancorp will provide without charge
to each shareholder a copy of Fidelity's annual report on Form 10-K which is
required to be filed with the Securities and Exchange Commission for the year
ended December 31, 2000.
All requests should be addressed to:
Debbie Fritz, Shareholder Relations
Fidelity Federal Bancorp
18 NW Fourth Street
PO Box 1347
Evansville, IN 47706-1347
OTHER MATTERS
The Annual Meeting is called for the purposes set forth in the Notice. The
Board of Directors of Fidelity does not know of any matters for action by
shareholders at the Annual Meeting other than the matters described in the
Notice. However, the enclosed Proxy will confer discretionary authority with
respect to matters which are not known to the Board of Directors at the time of
the printing hereof and which may properly come before the Annual Meeting. It is
the intention of the persons named in the Proxy to vote pursuant to the Proxy
with respect to such matters in accordance with the recommendations of the Board
of Directors.
19
[LOGO OF FIDELITY FEDERAL BANCORP]
Annual Meeting of Shareholders
April 30, 2001
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF FIDELITY FEDERAL BANCORP
The undersigned shareholder of Fidelity Federal Bancorp, an Indiana
corporation ("Fidelity"), hereby appoints Jack Cunningham and Thomas D. Wuerth,
or either of them, with full power to act alone, the true and lawful
attorney-in-fact and proxy of the undersigned, with the full power of
substitution and revocation, and hereby authorizes him to represent and to vote
all shares of Common Stock of Fidelity held of record on February 28, 2001,
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of Fidelity to be held at the Sheraton Keystone Crossing, 8787 Keystone
Crossing, Indianapolis, Indiana on April 30, 2001, at 10:00 a.m., local time,
and at any adjournment thereof, with all powers the undersigned would possess if
personally present as follows:
Please specify choices by clearly marking the appropriate line.
ITEM 1. Election of Directors
---------------------
Nominees: William R. Baugh Donald R. Neel Barry A. Schnakenburg
Bruce A. Cordingley Gerald K. Pedigo Phillip J. Stoffregen
FOR the nominees listed above (except vote withheld from the
---- following nominees, if any).
-----------------------------------------------------------------
WITHHOLD AUTHORITY to vote for the nominees listed above
----
ITEM 2. Ratification of Accountants
---------------------------
Ratify the selection of Olive LLP, as independent public accountants
for Fidelity for the year ending December 31, 2001.
FOR AGAINST ABSTAIN
----- ----- -----
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE MATTERS LISTED
ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears hereon. If signing as a representative,
please include capacity.
- -------------------------------- --------------------------------
Signature of Shareholder Signature of Shareholder
(if jointly held)
Dated: , 2001 Dated: , 2001
-------------------- --------------------
Tax Identification Tax Identification
Number: Number:
------------------------- -------------------------
Exhibit A
[LOGO OF FIDELITY FEDERAL BANCORP]
Audit Committee of the Board of Directors
Charter
1. PURPOSE
The Audit Committee is a committee of the Board of Directors. The primary
function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing:
1. the financial information which will be provided to shareholders,
governmental or regulatory bodies, the public, and others;
2. the Corporation's auditing, accounting, and financial reporting process;
3. the systems of internal controls related to finance, accounting, legal
compliance, regulatory compliance and ethics that management and the Board
of Directors have established, and
4. the audit process.
Consistent with this function, the Audit Committee should encourage continuous
improvement of, and foster adherence to, the corporation's policies, procedures,
and practices at all levels.
The Audit Committee's primary duties and responsibilities are to:
1. Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system
2. Review and appraise the audit efforts of the Corporation's independent
accountants and the internal auditors
3. Provide an open avenue of communication among the independent accountants,
financial and senior management, internal auditors, and the Board of
Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
A-1
II. COMPOSITION
The Audit Committee should be comprised of three or more directors as determined
by the Board. Each member will be independent of the management of the
Corporation and free of any relationship that, in the opinion of the Board of
Directors, would interfere with their exercise of independent judgement as a
Committee member.
All members of the Committee shall have a working familiarity with basic finance
and accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise. Committee members may
enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
The duties and responsibilities of a member of the Audit Committee are in
addition to those duties set out for a member of the Board of Directors.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the internal auditors,
and the independent accountants in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be discussed
separately. The Committee may ask members of management or others to attend
meetings and provide pertinent information as necessary.
In addition, the Committee or at least the Chair of the Committee should meet
with the independent accountants and management, either in person or by phone,
quarterly to review the Corporation's financial statements. This review should
be done prior to the Corporation's 10Q or 10K filing and its public release of
earnings. This discussion should include a discussion of significant
adjustments, management judgements and accounting estimates, significant new
accounting policies, and disagreements with management.
1V. RESPONSIBILITIES AND DUTIES
In meeting its responsibilities, the audit committee is expected to:
1. Provide an open avenue of communication between the internal auditors, the
independent accountant, and the Board of Directors.
2. Confirm and assure the objectivity of the internal auditor.
3. Confirm and assure the independence of the independent accountant,
including a review of management consulting services provided by the
independent accountant and related fees.
4. Review and update the Committee's charter annually.
5. Recommend to the Board of Directors the independent accountants to be
nominated, approve the compensation of the independent accountant, and
review and approve, if applicable, the discharge of the independent
accountants.
6. Review and concur in the appointment, replacement, reassignment, or
dismissal of the internal auditor.
7. Review the qualifications of the Internal Auditor to specific areas within
the audit plan.
8. Review with the independent auditor and internal auditor the coordination
of audit efforts to assure completeness of coverage, reduction of redundant
efforts, and the effective use of audit resources.
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9. Inquire of management, the internal auditor, and the independent accountant
about significant risks or exposures and assess the steps management has
taken to minimize such risk to the Company.
10. Consider, in consultation with the independent accountant and the internal
auditor, the audit scope and plan of the internal auditors and the
independent accountant. Determine if the internal auditor and independent
accountants are utilizing a risk-based approach.
11. Consider and review with the independent accountant and the director of
internal auditing:
(a) the adequacy of the company's internal controls including
computerized information system controls and security.
(b) any related significant findings and recommendations of the
independent accountant and internal auditing together with management
responses thereto; and
(c) the status of previous audit recommendations and management's
follow up on those recommendations.
12. Review with management and the independent accountant at the completion of
the annual audit:
(a) the company's annual financial statements and related footnotes;
(b) the independent accountant's audit of the financial statements and
his or her report thereon;
(c) any significant changes required in the independent accountant's
audit plan;
(d) any serious difficulties or disputes with management encountered
during the course of the audit; and
(e) other matters related to the conduct of the audit which are to be
communicated to the committee under generally accepted auditing
standards.
13. Review with management and the internal auditor:
(a) Regular internal audit reports to management prepared by the
internal auditor, including significant findings and management's
responses to those findings. A summary of findings from completed
internal audits should be reviewed prior to the meeting.
(b) Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or access to
required information.
(c) Any changes required in the planned scope of their audit plan.
(d) The internal audit department budget and staffing.
(e) The internal audit department charter.
(f) Internal auditing's compliance with the IIA's Standards for the
Professional Practice of Internal Auditing (standards).
14. Review filings with the SEC and other published documents containing the
Company's financial statements and consider whether the information
contained in these documents is consistent with the information contained
in the financial statements.
15. Review with management and the independent accountant the interim financial
report before it is filed with the SEC and other regulators.
16. Review with management, and if necessary, with the Corporation's counsel,
any legal matter that could have a
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significant impact on the Corporation's financial statements.
17. Review management's monitoring of the Corporation's compliance with its
ethical code of conduct.
18. Review legal and regulatory matters that may have a material impact on the
financial statements, related company compliance policies, and programs and
reports received from regulators.
19. Meet with the internal auditor, the independent accountant, and management
in separate executive sessions to discuss any matters that the committee or
these groups believe should be discussed privately with the Audit
Committee.
20. Meet with the company's regulatory bodies to discuss the results of their
examinations.
21. Report Committee actions to the Board of Directors with such
recommendations as the committee may deem appropriate.
22. Prepare a letter for inclusion in the annual report that describes the
Committee's composition and responsibilities, and how they were discharged.
23. Conduct or authorize, if necessary, investigations into any matters within
the Committee's scope of responsibilities. The Committee shall be empowered
to retain independent counsel, accountants, or others to assist in the
conduct of any investigation.
24. Perform such other functions as assigned by law, the Company's charter or
bylaws, or the Board of Directors.
25. Advise financial management and the independent auditor that they are
expected to provide a timely analysis of significant current financial
reporting issues and practices.
26. Provide that financial management and the independent auditor discuss with
the audit committee their qualitative judgements about the appropriateness,
not just the acceptability, of accounting principles and financial
disclosure practices used or proposed to be adopted by the Corporation and,
particularly, about the degree of aggressiveness or conservatism of its
accounting principles and underlying estimates.
27. Determine as regards to new transactions or events, the auditor's reasoning
for the appropriateness of the accounting principles and disclosure
practices adopted by the Corporation.
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