SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. _____________]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
GERMAN AMERICAN BANCORP
(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:
[ ] 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:
GERMAN AMERICAN BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 2001
The Annual Meeting of Shareholders of German American Bancorp (the
"Corporation") will be held at the Holiday Inn, U.S. 231 South, Jasper, Indiana,
on Thursday, April 26, 2001, at 10:00 a.m., Jasper time, for the following
purposes:
1. To elect five Directors to hold office until the Annual Meeting of
Shareholders in the year 2003 and until their successors are elected and
have qualified.
2. To elect four Directors to hold office until the Annual Meeting of
Shareholders in the year 2004 and until their successors are elected and
have qualified.
3. To transact such other business as may properly come before the meeting.
Holders of record of Common Shares of the Corporation at the close of
business on March 1, 2001, are entitled to notice of and to vote at the Annual
Meeting.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ALL SHAREHOLDERS,
EVEN IF THEY PLAN TO ATTEND THE MEETING, ARE REQUESTED TO COMPLETE, SIGN AND
DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/s/ Kenneth L. Sendelweck
KENNETH L. SENDELWECK
Secretary
April 2, 2001
Jasper, Indiana
(ANNUAL REPORT ON FORM 10-K ENCLOSED)
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
GERMAN AMERICAN BANCORP
April 26, 2001
This Proxy Statement is being furnished to shareholders on or about April
2, 2001, in connection with the solicitation by the Board of Directors of German
American Bancorp (the "Corporation"), 711 Main Street, Jasper, Indiana 47546, of
proxies to be voted at the Annual Meeting of Shareholders to be held at 10:00
a.m., Jasper time, on Thursday, April 26, 2001, at the Holiday Inn, U.S. 231
South, Jasper, Indiana.
At the close of business on March 1, 2001, the record date for the Annual
Meeting, there were 10,494,677 Common Shares outstanding and entitled to vote at
the Annual Meeting. On all matters, including the election of Directors, each
shareholder will have one vote for each share held.
If the enclosed form of proxy is executed and returned, it may nevertheless
be revoked at any time insofar as it has not been exercised. The proxy may be
revoked by either (a) filing with the Secretary (or other officer or agent of
the Corporation authorized to tabulate votes) (i) a written instrument revoking
the proxy or (ii) a subsequently dated proxy, or (b) attending the Annual
Meeting and voting in person. Unless revoked, the proxy will be voted at the
Annual Meeting in accordance with the instructions of the shareholder as
indicated on the proxy. If no instructions are given, the shares will be voted
as recommended by the Directors.
PROPOSALS 1 AND 2
ELECTION OF DIRECTORS
The Board of Directors is presently divided into two classes, with the
terms of the members of one class expiring each year. Effective immediately
following the election of Directors at this year's Annual Meeting, the Board of
Directors will be divided into three classes of equal size (or as nearly equal
size as possible) with the terms of the members of one class expiring each year.
In order to change the terms of Directors to conform to the three-class
structure, two classes of Directors will be elected at this year's Annual
Meeting: one class of five directors for a term expiring at the Annual Meeting
of Shareholders in the year 2003 (Proposal 1) and another class of four
directors for a term expiring at the Annual Meeting of Shareholders in the year
2004 (Proposal 2). Each Director elected at the Annual Meeting will serve until
such Director's successor is elected and has qualified or until the earlier of
the Director's resignation, disqualification, removal or death. Directors
Steurer, Thompson and Voyles (whose terms of office otherwise would have
continued until the 2002 Annual Meeting without action at this year's Annual
Meeting) have agreed to relinquish the remainder of the two-year terms for which
they were elected at the 2000 Annual Meeting and stand for re-election as
indicated below.
Each Director will be elected by a plurality of the votes cast in the
election. Shares present but not voted for any nominee do not affect the
determination of whether a nominee has received a plurality of the votes cast.
NOMINEES
It is the intention of the persons named in the accompanying form of proxy
to vote such proxy for the election to the Board of Directors of the following
nominees:
PROPOSAL 1 (two-year terms expiring at the Annual Meeting of Shareholders
in the year 2003): David G. Buehler, David B. Graham, C. James McCormick, Joseph
F. Steurer and Michael J. Voyles.
PROPOSAL 2 (three-year terms expiring at the Annual Meeting of Shareholders
in the year 2004): George W. Astrike, William R. Hoffman, J. David Lett and Chet
L. Thompson.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR ALL OF THESE
NOMINEES (ITEMS 1 AND 2 ON THE PROXY).
- 1 -
Each nominee has indicated that he will accept nomination and election as a
Director. If, however, any such person is unable or unwilling to accept
nomination or election, it is the intention of the Board of Directors to
nominate such other person as a Director as it may in its discretion determine,
in which event the shares subject to the proxy will be voted for that person.
The following table presents certain information as of March 1, 2001,
regarding the current Directors of the Corporation, including the nine nominees
proposed by the Board of Directors for election at this year's Annual Meeting,
and those executive officers of the Corporation who are named in the Executive
Compensation section of this Proxy Statement. Unless otherwise indicated in a
footnote, the principal occupation of each such person has been the same for the
last five years and such person possesses sole voting and investment powers with
respect to the shares indicated as beneficially owned him. Unless specified
otherwise, each Director and executive officer is deemed to share voting and
investment powers over shares indicated as held by a spouse, children or other
family members residing with him. Each Director's shares (except Mr. Lett's)
include 2,152 shares that he has the right to acquire upon exercise of stock
options granted under the Corporation's director compensation program. None of
the persons named below beneficially owns more than one percent of the Common
Shares, except for Mr. Buehler (3.7%); Mr. Lett (2.3%); and Mr. Ruckriegel
(2.9%). The Directors and executive officers as a group beneficially owned 14.2%
of the Corporation's Common Shares as of March 1, 2001.
Shares
Name, Present Principal Director Beneficially
Occupation and Age Since(1) Owned
----------------------- -------- ------------
Directors:
Mark A. Schroeder 1991 30,305(2)
President and Chief Executive Officer
of the Corporation(3)
Age 47
George W. Astrike* 1982 101,672(4)
Chairman of the Board of the Corporation(5)
Age 65
David G. Buehler* 1984 390,840(6)
CEO of Buehler Foods, Inc.
Age 61
David B. Graham* 1997 97,182(7)
Past Chairman of the Board, Graham Farms, Inc.
and Graham Cheese Corporation
Age 74
William R. Hoffman* 1986 104,692(8)
Farmer; Director of Patoka Valley Feeds, Inc.
Age 63
J. David Lett* 2000 242,253(9)
Attorney, Lett & Jones(10)
Age 48
C. James McCormick* 1999 28,951(11)
Chairman, McCormick, Inc., and President,
JAMAC Corp. (trucking)
Age 75
- 2 -
Gene C. Mehne 1979 11,417(12)
President and Manager, Mehne Farms, Inc.
Age 56
Robert L. Ruckriegel 1983 305,414(13)
President, B. R. Associates, Inc. (restaurants)
Age 65
Larry J. Seger 1990 66,704(14)
Sales Manager and Secretary/Treasurer,
Wabash Valley Produce, Inc.
(egg and turkey production)
Age 50
Joseph F. Steurer* 1983 38,200(15)
Chairman of the Board, JOFCO, Inc.
(office furniture)
Age 64
Chet L. Thompson* 1997 19,927(16)
President, Thompson Insurance, Inc.
Age 64
Michael J. Voyles* 1998 47,343(17)
President, Voyles Supermarket, Inc.,
and M.J.V. Inc.
Age 52
Named Executive Officers Who Are Not Directors:
Clay W. Ewing ---- 3,910(18)
Executive Vice President, Retail Banking,
of the Corporation
Age 45
Stan J. Ruhe ---- 13,305(19)
Executive Vice President, Credit Administration,
of the Corporation
Age 49
Kenneth L. Sendelweck(20) ---- 7,002(20)
Secretary/Treasurer of the Corporation;
President/CEO of the German American Bank
Age 46
All Directors of the Corporation
and Executive Officers as a Group 1,509,116(22)
(16 persons)
*Nominee
- 3 -
(1) Includes service on the Board of German American Bank prior to the
organization of the Corporation. Does not include prior service on the
Board of Directors of any other bank subsidiary acquired by the
Corporation.
(2) Includes 1,466 shares held jointly by Mr. Schroeder and his wife; and
12,159 shares Mr. Schroeder has the right to purchase upon the
exercise of stock options.
(3) Mr. Schroeder was named Chief Executive Officer of the Corporation
effective January 1, 1999, after having served as its President and
Chief Operating Officer since July 1, 1995.
(4) Includes 81,358 shares that Mr. Astrike has the right to purchase upon
the exercise of stock options.
(5) Mr. Astrike served as Chief Executive Officer of the Corporation
through December 31, 1998.
(6) Includes 8,302 shares held jointly by Mr. Buehler and his wife; 43,757
shares held by the David G. Buehler Charitable Trust; and 334,757
shares held by Buehler Foods, Inc., of which Mr. Buehler is Chief
Executive Officer and majority shareholder and with respect to which
Mr. Buehler shares voting and investment powers.
(7) Includes 17,777 shares owned by Mr. Graham's wife.
(8) Includes 30,356 shares owned by Mr. Hoffman's wife.
(9) Includes 721 shares held jointly by Mr. Lett and his wife; 251 shares
held by Mr. Lett's wife; and 236,191 shares held by Mr. Lett's mother.
(10) Mr. Lett was elected to the Board of Directors by the Board of
Directors in November, 2000 to serve until the 2001 Annual Meeting to
fill the vacancy created by the resignation of his brother, Michael B.
Lett. Lett & Jones represents the Union Banking Division of Peoples
National Bank, a subsidiary of the Corporation, as legal counsel.
(11) Includes 110 shares owned by Mr. McCormick's wife.
(12) Includes 2,419 shares owned by Mr. Mehne's wife; and 1,478 shares held
by German American as trustee for the Mehne Farms, Inc. Qualified
Plan.
(13) Includes 90 shares held jointly by Mr. Ruckriegel and his wife; 26,846
shares owned by Mr. Ruckriegel's wife; and 241,905 shares held by
Ruckriegel Associates #1 LP, of which Mr. Ruckriegel and his wife are
partners.
(14) Includes 7,439 shares held jointly by Mr. Seger and his wife; and
29,534 shares owned by certain corporations of which Mr. Seger is an
executive officer and a shareholder.
(15) Includes 5,020 shares owned in trust by Mr. Steurer's wife; and 27,868
held in trust by Mr. Steurer.
(16) Includes 2,491 shares owned by Mr. Thompson's wife; 6,319 shares held
jointly by Mr. Thompson and his wife; and 6,515 shares held in Mr.
Thompson's wife's IRA Account.
(17) Includes 2,172 shares held jointly by Mr. Voyles and his wife; and
30,634 shares held by a generation skipping trust of which Mr. Voyles
is trustee.
(18) Includes 313 shares held jointly by Mr. Ewing and his wife; and 3,597
shares held in an IRA Account.
(19) Includes 767 shares owned jointly by Mr. Ruhe and his wife; and 4,899
shares Mr. Ruhe has the right to purchase upon the exercise of stock
options.
(20) Mr. Sendelweck has served as Secretary/Treasurer of the Corporation
since May, 2000. He has served as President, Chief Executive Officer
and Director of German American Bank since May, 1999. Prior to May,
1999, Mr. Sendelweck served as the Vice President and Assistant
Treasurer of Kimball International, Inc.
(21) Includes 2,389 shares held jointly by Mr. Sendelweck and his wife.
(22) Includes 148,792 shares that Directors and Executive Officers had the
right to acquire upon the exercise of stock options and 351,440 shares
as to which voting and investment powers were shared by members of the
group with spouses or others.
- 4 -
SUBSIDIARY BOARD MEMBERSHIPS
Certain members of the Corporation's Board of Directors also serve on the
Board of Directors of one or more of the subsidiaries of the Corporation as
follows: Mr. Schroeder, all subsidiary boards; Mr. Astrike, German American Bank
and Peoples National Bank; Messrs. Buehler, Hoffman, Mehne, Ruckriegel, Seger
and Steurer, German American Bank; Mr. Voyles, Citizens State Bank; Mr.
McCormick, First American Bank; and Messrs. Lett and Thompson, Peoples National
Bank.
COMMITTEES AND ATTENDANCE
The Board of Directors of the Corporation held seven meetings during 2000.
The Corporation has standing audit and compensation committees but does not have
a nominating committee. The Audit Committee, consisting of Directors Hoffman
(Chairman), Lett, Graham, McCormick and Seger, met three times in 2000. The
Audit Committee monitors and oversees the Corporation's internal controls and
its financial reporting process, and the performance by independent accountants
of an independent audit of the Corporation's consolidated financial statements.
The Corporation's Human Resources Committee (previously named the Compensation
Committee), consisting of Directors Steurer (Chairman), Astrike, Buehler,
Graham, Ruckriegel and Schroeder, met four times during 2000. The Human
Resources Committee makes salary and bonus recommendations to the Board of
Directors and administers the grant of options and other awards under the
Corporation's stock option and equity incentive plans. Each of the Directors,
except Mr. McCormick, attended at least 75 percent of the aggregate number of
meetings of the Board of Directors of the Corporation and the committee on which
he served during 2000.
COMPENSATION OF DIRECTORS
On June 1, 2000, as compensation for the annual terms that commenced on the
dates of the respective annual meetings of the Corporation and of each of its
subsidiary banks that were held in 2000 and which will expire at their
respective annual meetings in 2001, the Corporation compensated its Directors
for their service to it and its subsidiary banks through annual retainers which
are earned regardless of the number of meetings held or attended, and regardless
of committee membership or attendance. Under this annual retainer program, the
Corporation on June 1, 2000 (a) awarded each of its Directors, including Mr.
Schroeder, (i) shares of common stock with a value on the date of award of
$2,000, and (ii) an option to purchase 1,050 shares of the Corporation's common
stock exercisable for ten years (five years in the case of Messrs. Graham and
McCormick) at an exercise price of $14.46 per share, which was not less than the
market value of the stock at the date of grant, and (b) granted each Director
additional shares of the Corporation's common stock with a value of $5,200, or
in lieu thereof and at the Director's election, a cash payment.
Except for Mr. Graham, all of the members of the Corporation's Board of
Directors served on the Board of one of the subsidiary banks during 2000, as
disclosed above under the table of "Nominees." Each of such Directors (other
than Mr. Schroeder, who as a salaried employee of the Corporation was
ineligible) received additional compensation for his service to such
subsidiaries during 2000. Under the Corporation's annual retainer program
described above, the members of the Board of Directors of each subsidiary
(including members who are also are Directors of the Corporation, except Mr.
Schroeder) were awarded the same package of stock of the Corporation offered by
the Corporation to the Corporation's Directors, except that members of the
subsidiary boards of directors were not granted stock options for their service
on those boards.
In addition to his Director compensation described above, Mr. Astrike
receives payments under a consulting agreement and certain other benefits
pursuant to a comprehensive retirement package that was fixed in 1998 (and
modified in 2000) by the Board of Directors in recognition of his past service
to the Corporation and expected future contributions. This compensation is not
for services rendered as a director. In August 2000, the Board of Directors
amended Mr. Astrike's consulting agreement to provide for the payment to him
during 2000 of the present value of the remaining payments due to him under that
agreement, and extended by approximately 16 months the period during which Mr.
Astrike's deferred compensation retirement balance could continue to remain on
account with German American Bank and accrue interest under his 1993 executive
deferred compensation agreement. Payments to Mr. Astrike under his consulting
agreement during 2000 were $209,215.
- 5 -
INDEPENDENT ACCOUNTANT FEES
AUDIT FEES
Crowe, Chizek and Company LLP has audited the Corporation's financial
statements for the calendar year 2000 that are included in the Corporation's
annual report on Form 10-K, which report has been filed with the Securities and
Exchange Commission ("SEC") and is being delivered to shareholders concurrently
with this Proxy Statement. The Corporation has paid (or expects to pay) fees to
Crowe, Chizek and Company LLP (including cost reimbursements) of $86,380 for its
services in connection with the calendar year 2000 audit and in connection with
its review of the Corporation's unaudited financial statements that were
included in its quarterly reports on Form 10-Q, which reports were filed with
the SEC during the year 2000.
ALL OTHER FEES
The Corporation has paid (or expects to pay) fees to Crowe, Chizek and
Company LLP (including cost reimbursements) of $263,400 for all other services
rendered during the year 2000. These services included tax return preparation,
tax consulting, employee benefit plan audits, permitted internal audit
outsourcing, registration statement and merger and acquisition services,
assistance with branch profitability analysis, marketing customer information
file (MCIF) software maintenance agreement, and other non-audit services.
REPORT OF THE AUDIT COMMITTEE
The Corporation is providing this disclosure statement to inform
shareholders of the oversight of its Audit Committee with respect to the
Corporation's financial reporting. The Audit Committee's charter, which was
adopted by the Audit Committee on May 26, 2000, is attached to this Proxy
Statement as Appendix I.
INDEPENDENCE OF AUDIT COMMITTEE MEMBERS
The Audit Committee is comprised of five members of the Board of Directors
of the Corporation. All of the members of the Audit Committee are independent,
as that term is defined by the requirements of the National Association of
Securities Dealers for quotation of the Corporation's stock on the Nasdaq Stock
Market.
REVIEW WITH MANAGEMENT AND INDEPENDENT ACCOUNTANTS
Management is responsible for the Corporation's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Corporation's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The Audit Committee's responsibility is to monitor and oversee
these processes.
In this context, the Audit Committee has met and held discussions with
management and with Crowe, Chizek and Company LLP, the independent accountants
for the Corporation with respect to the Corporation's consolidated financial
statements for the calendar year 2000. Management represented to the Audit
Committee that the Corporation's consolidated financial statements as of and for
the year ended December 31, 2000 were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed these consolidated financial statements with management. The Audit
Committee discussed with the independent accountants matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees).
The independent accountants also provided to the Audit Committee the
written disclosures required by Independence Standards Board No. 1 (Independence
Discussions with Audit Committees), and the Audit Committee discussed with the
independent accountants that firm's independence. The Audit Committee also
considered whether the independent accountants' provision of non-audit services
to the Corporation is compatible with maintaining that firm's independence.
- 6 -
Based upon the discussions and reviews referred to above, the Audit
Committee has recommended to the Board of Directors that the financial
statements referred to above be included in the Corporation's Annual Report on
Form 10-K for the year ended December 31, 2000.
SUBMITTED BY THE MEMBERS OF THE AUDIT COMMITTEE:
William R. Hoffman, Chairman
J. David Lett C. James McCormick
David B. Graham Larry J. Seger
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid for
the fiscal years indicated to the Corporation's Chief Executive Officer and each
of the Corporation's other executive officers whose salary and bonus earned
during fiscal 2000 exceeded $100,000.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
------------------- -------------------
Name and Principal Securities Underlying All Other
Position Year Salary Bonus Options/SARs(1) Compensation
- ------------------ ---- ------ ----- --------------------- ------------
Mark A. Schroeder, 2000 $160,000 $37,760 1,050 $ 26,833(2)
President and C.E.O.(3) 1999 $160,000 $35,866 3,064 $ 30,591
1998 $135,000 $35,284 0 $ 30,505
Stan J. Ruhe, 2000 $100,000 $19,062 8,925 $ 11,912(4)
Executive Vice President, 1999 $100,000 $17,942 633 $ 11,794
Credit Administration 1998 $ 99,500 $21,622 354 $ 12,112
Clay W. Ewing, 2000 $ 92,500 $17,487 8,925 $ 11,020(5)
Executive Vice President, 1999 $ 81,640 $23,891 --- $ 10,570
Retail Banking (6) 1998 $ 72,000 $10,927 --- $ 8,378
Kenneth L. Sendelweck, 2000 $105,000 $54,214 8,925 $ 13,137(7)
President and CEO of
German American Bank (8)
<FN>
(1) The numbers of shares underlying options have been retroactively adjusted to reflect
subsequent stock splits and stock dividends and are rounded to the nearest whole share.
(2) Represents contributions of $8,500 under the Profit Sharing Plan, matching contributions of
$8,500 under the 401(k) Plan, Director compensation in the form of common shares of the
Corporation valued at $7,200, and $2,633 in above-market interest credited on deferred
Director fees.
(3) Mr. Schroeder became Chief Executive Officer of the Corporation effective January 1, 1999.
(4) Represents contributions of $5,956 under the Profit Sharing Plan and matching contributions
of $5,956 under the 401(k) Plan.
(5) Represents contributions of $5,510 under the Profit Sharing Plan and matching contributions
of $5,510 under the 401(k) Plan.
(6) Mr. Ewing also served as President and Chief Executive Officer of First State Bank during
all periods presented.
(7) Represents contributions of $8,229 under the Profit Sharing Plan and matching contributions
of $4,907 under the 401(k) Plan.
(8) Mr. Sendelweck became Secretary/Treasurer of the Corporation in May, 2000.
</FN>
- 7 -
Option/SAR Grants In Last Fiscal Year
The following table presents information on the stock option grants that
were made during 2000 pursuant to the German American Bancorp 1992 Stock Option
Plan and 1999 Long-Term Equity Incentive Plan (the "Option Plans"). The numbers
of options and per share exercise prices have been retroactively adjusted to
reflect subsequent stock splits and dividends and fractional shares have been
ignored. The potential realizable values set forth in the table are presented in
accordance with SEC requirements and are not intended to forecast possible
future appreciation of the Corporation's Common Shares.
Individual Grants Potential Realizable
----------------- Value at Assumed
Number of % of Total Annual Rates of
Securities Options/SARs Market Stock Price
Underlying Granted to Price at Appreciation for
Options/SARs Employees in Exercise Time of Expiration Option Term
Name Granted(1) Fiscal Year Price Issuance Date 5% 10%
- ---- ------- ------------- -------- -------- ---------- ------ ------
Mark A. Schroeder 1,050(2) 1.23% $14.46 $14.46 June 1, 2010 $ 8,277.03 $20,477.35
Stan J. Ruhe 8,925(3) 10.44% $13.81 $13.81 July 1, 2005 $26,562.06 $57,202.30
Clay W. Ewing 8,925(3) 10.44% $13.81 $13.81 July 1, 2005 $26,562.06 $57,202.30
Kenneth L.
Sendelweck 8,925(3) 10.44% $13.81 $13.81 July 1, 2005 $26,562.06 $57,202.30
<FN>
(1) The Option Plans provide that if an optionee tenders Common Shares of the Corporation already owned by the
optionee as payment, in whole or in part, of the exercise price for the shares the optionee has elected to
purchase under the option, then the Corporation is obligated to use its best efforts to issue a replacement
option of the same type (incentive or non-qualified option), with the same expiration date as the option that
was exercised, and covering a number of Common Shares equal to the number of Common Shares tendered. The per
share exercise price of the replacement option equals the fair market value of a Common Share of the
Corporation on the date of exercise of the original option. Replacement options are not exercisable for a
period of twelve months following their date of grant and are subject to cancellation if during such
twelve-month period the optionee sells any Common Shares of the Corporation other than in payment of the
exercise price of another option under the Option Plans. The Option Plans also provide that if a corporate
reorganization would result in the termination of the Plan and unexercised options, then all unexercised
options will become immediately exercisable regardless of any vesting requirements. None of the stock options
granted in 2000 were replacement options.
(2) Mr. Schroeder's options were exercisable immediately upon granting.
(3) The options granted to Messrs. Ruhe, Ewing and Sendelweck were not exercisable on the date of grant but become
exercisable in accordance with a vesting schedule that permits the holders to exercise 20% of the options
granted following the first anniversary of the grant date, with an additional 20% vesting on each of the next
four anniversaries.
</FN>
- 8 -
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth information with respect to options
exercised during 2000 pursuant to the Option Plans and the December 31, 2000
values of the holdings of "in-the-money" options. An option is considered to be
"in-the-money" if and to the extent that the December 31, 2000 market value of
the Corporation's Common Shares exceeded the applicable option exercise price.
(Numbers of options and per share exercise prices have been retroactively
adjusted to reflect subsequent stock splits and dividends.) As of December 31,
2000, none of the options listed below were "in-the-money" options.
Value of
Unexercised
In-the-money
Options/
Number of Unexercised SARs at Fiscal
Shares Options/SARs at Fiscal Year-End ($)
Acquired on Value Year-End (#) Exercisable/
Name Exercise (#) Realized ($) Exercisable/Unexercisable Unexercisable
- ---- ------------ ------------ ------------------------- -------------
Mark A. Schroeder 0 0 12,159 / 0 ---
Stan J. Ruhe 0 0 4,899 / 8,925 ---
Clay W. Ewing 0 0 0 / 8,925 ---
Kenneth L. Sendelweck 0 0 0 / 8,925 ---
COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
OVERALL COMPENSATION POLICY
The Human Resources Committee (the "Committee") of the Board of Directors
of the Corporation (formerly called the Compensation Committee) has the
responsibility for establishing all compensation for the Corporation's executive
officers. An independent compensation consulting firm, Hay Group, Inc., has been
retained by the Corporation to advise the Compensation Committee on all
compensation matters.
The Committee is currently composed of six members, consisting of four
non-employee directors who are not executive officers and are not eligible to
participate in any management compensation programs; one non-employee director
(Mr. Astrike) who is Chairman of the Board; and Mr. Schroeder, the Corporation's
Chief Executive Officer. Mr. Schroeder absents himself from, and does not
participate in, any Committee proceedings relating to the determination of his
own compensation. Mr. Astrike's compensation for future years was fixed in 1998
(and modified in 2000) by the entire Board of Directors as part of a
comprehensive retirement package in recognition of his past service to the
Corporation and expected future contributions, and not as part of the annual
compensation program.
The primary goals of the Committee in determining compensation policy are
to provide a level of compensation that will attract, motivate and help retain
well-qualified executive officers and to further enhance shareholder return by
more closely aligning the interests of executive officers with the interests of
the Corporation's shareholders. The Committee attempts to attain these goals by
setting total compensation at competitive levels considering an executive
officer's individual performance while also providing effective incentives tied
to the Corporation's overall financial performance. The executive compensation
program consists of three basic elements: (1) base salary, (2) incentive awards,
and (3) stock option awards.
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BASE SALARY
The Corporation attempts to provide the executive officers with a base
salary that is competitive with the salaries offered by the other bank holding
companies of comparable size in Indiana and the surrounding states. The
Committee establishes the salary of the President and CEO ("CEO") independently
without the participation of the CEO. The base salaries of the Corporation's
other executive officers are determined by the Committee with recommendations
from the CEO. The same compensation principles are applied in setting the
salaries of all employees, including the CEO, to ensure that salaries are fairly
and competitively established. Salary ranges are determined for each executive
position based upon survey data that is obtained from a relevant peer group and
from the Hay Group, Inc., a trade association, and the Corporation's accounting
firm. From survey data, salary ranges are established each year for the CEO and
all other executive positions within the organization. These ranges are designed
so that the mid-point of the salary range is approximately the 50th percentile
of estimated base salaries paid to comparable positions across a peer group of
regional banking companies. Within these established ranges, actual base salary
adjustments are made periodically in accordance with the guidelines of the
Corporation's salary administration program and performance review system. In
2000, the base salaries for the executive officers as a group and the CEO were
within the established salary ranges. Increases in base compensation are not
automatically based on increased compensation at comparable institutions,
however, but also reflect the performance of the individual executive officer
and of the Corporation. Based on these criteria, no adjustment was made in the
CEO's base salary in 2000.
INCENTIVE AWARDS
During 2000, the Corporation implemented an Executive Management Incentive
Plan for certain key officers, not including the CEO. This Plan provides for the
payment of additional compensation in the form of annual cash incentive payments
and option grants contingent upon the achievement of certain corporate goals and
the achievement of certain business performance goals. The Plan assigns each
officer a scorecard based on specific corporate and shareholder-related
performance goals balanced by their area of responsibility, their business unit,
and their expected individual level of contribution to the Corporation's
achievement of its corporate goals.
Also during 2000, cash bonuses were awarded to executive officers,
including the CEO, based on the extent that the Committee believes that they
were merited based on the attainment of certain goals relating to the
Corporation's retail banking earnings. Based on these criteria, the bonus
awarded for 2000 to Mr. Schroeder exceeded the bonus that he received in 1999.
STOCK OPTION AWARDS
In 1992 the Corporation adopted a Stock Option Plan that provides for the
award of incentive stock options and non-qualified stock options, and in 1999
the Corporation adopted the 1999 Long Term Equity Incentive Plan which also
provides for the award of incentive and non-qualified stock options and other
equity-based awards (the "Option Plans"). The purpose of granting options is to
provide long-term incentive compensation to complement the short-term focus of
annual cash incentive awards. The size of stock option awards depends upon the
executive officer's level of responsibility and individual performance. Stock
options are granted at or above the estimated fair market value of a Common
Share of the Corporation on the date of grant. The four non-officer directors on
the Committee also serve as the Stock Option Committee of the Corporation, which
administers the Option Plans.
SUBMITTED BY THE MEMBERS OF THE COMMITTEE:
George W. Astrike Robert L. Ruckriegel
David Buehler Joseph F. Steurer
David B. Graham Mark A. Schroeder
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Two of the persons who served during 2000 on the Human Resources Committee
of the Corporation's Board of Directors, Messrs. Astrike and Schroeder, were
executive officers of the Corporation. Mr. Astrike's compensation for future
years was determined by the entire Board of Directors of the Corporation in 1998
(and modified in 2000) as part of his long-term retirement program and was not
determined by the Committee. Mr. Schroeder was not present for, and did not
participate in, any Committee proceedings relating to the determination of his
own compensation. None of the other four members of the Committee is, or
previously was, an officer or employee of the Corporation. Mr. Buehler, a member
of the Committee, is a principal shareholder, officer and director of Buehler
Foods, Inc., which subleases space for three branch banking facilities to two of
the bank subsidiaries of the Corporation. Mr. Ruckriegel, a member of the
Committee, is a principal shareholder, officer and director of B.R. Associates,
Inc. During 2000, the Corporation entered into a five-year lease agreement (with
options to renew) under which the Corporation agreed to pay rent to B.R.
Associates, Inc., of approximately $2,400 per month (an aggregate of
approximately $144,000 over the initial term of the lease) with respect to
office space in Jasper, Indiana.
CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS
During 2000, the bank subsidiaries of the Corporation had (and expect to
continue to have in the future) banking transactions in the ordinary course of
business with Directors, officers and principal shareholders of the Corporation
and their associates. These transactions have been made on substantially the
same terms, including interest rates, collateral and repayment terms on
extensions of credit, as those prevailing at the same time for comparable
transactions with others and did not involve more than the normal risk of
collectibility or present other unfavorable features.
STOCK PERFORMANCE GRAPH
The SEC requires the Corporation to include in this proxy statement a
line-graph presentation comparing the Corporation's five-year cumulative total
returns with market and industry returns. The following graph compares the
Corporation's five-year cumulative total returns with those of the Russell 2000
Stock Index and the Indiana Bank Peer Group. The Indiana Bank Peer Group
includes all Indiana-based bank holding companies that have been in existence
for the five-year period ended December 2000, the stocks of which has been
traded on an established securities market (NYSE, AMEX, NASDAQ) throughout that
five-year period. The returns of each company in the Indiana Bank Peer Group
have been weighted to reflect the company's market capitalization.
[GRAPHIC OMITTED]
German Russell
American 2000 Indiana Bank
Bancorp Index Peer Group
------- ----- ----------
12/31/1995 $ 100.0 $ 100.0 $ 100.0
12/31/1996 $ 130.8 $ 116.5 $ 120.5
12/31/1997 $ 236.8 $ 142.6 $ 181.1
12/31/1998 $ 180.6 $ 138.9 $ 201.9
12/31/1999 $ 148.4 $ 168.5 $ 172.3
12/29/2000 $ 113.7 $ 163.4 $ 164.7
<FN>
Return based on $100 invested on December 29, 1995 and the reinvestment of
dividends.
</FN>
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APPOINTMENT OF AUDITORS
Crowe, Chizek and Company LLP ("Crowe Chizek") served as auditors for the
Corporation in 2000. Although it is anticipated that Crowe Chizek will be
selected, the Audit Committee has not yet considered the appointment of auditors
for 2001. The Audit Committee expects to make a recommendation to the Board
following the Audit Committee's April 2001 meeting. Representatives of Crowe
Chizek will be present at the Annual Meeting, will have the opportunity to make
a statement if they desire to do so and will be available to respond to
appropriate questions.
PRINCIPAL OWNERS OF COMMON SHARES
As of March 1, 2001, the Corporation had no knowledge of any shareholder or
group of shareholders who beneficially owned more than five percent of the
Corporation's outstanding Common Shares.
SECTION 16(a): BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Directors and executive officers and persons who beneficially own
more than ten percent of the Corporation's Common Shares to file with the
Securities and Exchange Commission reports showing ownership of and changes in
ownership of the Corporation's Common Shares and other equity securities. On the
basis of information submitted by the Corporation's Directors, executive
officers, and greater-than-ten-percent owners, the Corporation believes that all
required Section 16(a) filings for fiscal 2000 were timely made except for the
following inadvertent failures: (a) each of the Corporation's directors named in
this proxy statement (except J. David Lett but including his predecessor Michael
B. Lett) failed to include his receipt of a grant of stock options under the
1999 director retainer program on their Form 5 statements filed in February
2000, which Form 5 statements were (or will be) amended in 2001; (b) Mr. Voyles
filed during 2000 a late report of his acquisition of beneficial ownership of
shares contributed to a trust for his children of which he is trustee; (c) Mr.
Ruhe filed during January 2001 a late report of a transaction effected during
December 2000 for the accounts of his children; and (d) Mr. McCormick filed
during 2000 an amended Form 3 (and amendments to each subsequently filed report)
to increase the number of shares that were held by him as of the date he first
became a director of the Corporation.
OTHER MATTERS
The Board of Directors knows of no matters, other than those reported
above, that are to be brought before the Annual Meeting. However, if other
matters properly come before the Annual Meeting, it is the intention of the
persons named in the enclosed form of proxy to vote such proxy in accordance
with their judgment on such matters.
EXPENSES
The Corporation will pay all expenses in connection with this solicitation
of proxies.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
A shareholder desiring to submit a proposal for inclusion in the
Corporation's proxy statement for the Annual Meeting of Shareholders to be held
in the year 2002 must deliver the proposal so that it is received by the
Corporation no later than November 27, 2001. Proposals should be mailed to the
Shareholder Information and Corporate Office, attention: Terri A. Eckerle,
German American Bancorp, 711 Main Street, Jasper, Indiana 47547-0810, by
certified mail, return-receipt requested.
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APPENDIX I
GERMAN AMERICAN BANCORP
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities with respect to the
financial reports and other financial information provided by the Corporation to
the stockholders and others, the Corporation's system of internal controls, and
the Corporation's audit, accounting, and financial reporting processes
generally.
In carrying out this function, the Audit Committee shall serve as an
independent and objective monitor of the performance of the Corporation's
financial reporting process and system of internal control; review and appraise
the audit efforts of the Corporation's independent accountants and internal
audit department, and provide for open, ongoing, communication among the
independent accountants, financial and senior management, internal audit
department, and the Board of Directors concerning the Corporation's financial
position and affairs.
COMPOSITION
Effective June 14, 2001, the Audit Committee shall be comprised of three or
more directors, as determined by the Board of Directors, each of whom shall be
an independent director as determined in accordance with NASDAQ rules. Effective
June 14, 2001, in accordance with NASDAQ rules, all members of the Audit
Committee shall be "financially literate", i.e. able to read and understand
fundamental financial statements, and at least one member of the Committee shall
have accounting or related financial management expertise.
MEETINGS
The Committee shall meet at least semi-annually, or more frequently as
circumstances dictate. The Committee shall meet at least annually, and more
often as warranted, with the Internal Auditor and the independent accountants in
separate executive sessions to discuss any matters that the Committee or each of
these groups believes should be discussed privately. The Committee shall have
access as requested to members of Corporation and subsidiary management.
RESPONSIBILITIES AND DUTIES
The Committee's responsibility is oversight, and it recognizes that the
Corporation's management is responsible for preparing the Corporation's
financial statements. Additionally, the Committee recognizes that financial
management (including the internal audit staff), as well as the independent
accountants, have more knowledge and more detailed information about the
Corporation than do the members of the Committee; consequently, in carrying out
its oversight responsibilities the Committee is not providing any expert or
special assurance as to the Corporation's financial statements or any
professional certification as to the independent accountant's work.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight responsibility. These functions are set
forth as a guide with the understanding that the Committee may diverge from this
guide as appropriate given the circumstances.
o Review with a representative of the independent accountants the results of
the independent accountants' review of Interim Financial Information
pursuant to SAS 71. The Chair may represent the entire Audit Committee,
either in person or by telephone conference call, for purposes of this
review.
- 13 -
o Review with management and the independent accountants at the completion of
the annual audit of the Corporation's consolidated financial statements
included in the Annual Report on Form 10-K for the last fiscal year and
prior to it's filing:
(1) the Corporation's annual consolidated financial statements and related
footnotes;
(2) the independent accountants' audit of the consolidated financial
statements and their report;
(3) any serious difficulties or disputes with management encountered
during the course of the audit; and
(4) other matters related to the conduct of the audit which are to be
communicated to the Audit Committee under generally accepted auditing
standards including, discussions relating to the independent
accountants' judgments about such matters as the quality, not just the
acceptability, of the Corporation's accounting practices and other
items set forth in SAS 61 (Communication with Audit Committees) or
other such auditing standards that may in time modify, supplement or
replace SAS 61.
o On an annual basis, the audit Committee should ensure receipt of, and
review with the independent accountants, a written statement required by
Independence Standards Board (ISB) Standard No. 1, as may be modified or
supplemented, and discuss with the accountants their independence.
o The Committee will have prepared and reviewed the Audit Committee Report
for inclusion in the annual stockholders' meeting proxy statement. The
Audit Committee Report must state whether the Audit Committee:
(1) has reviewed and discussed the audited consolidated financial
statements with management;
(2) has discussed with the independent accountants the matters required to
be discussed by SAS 61, as may be modified, supplemented or replaced;
(3) has received the written disclosures from the independent accountants
required by ISB Standard No. 1, as may be modified or supplemented,
and has discussed with the accountants their independence; and
(4) has recommended to the Board of Directors, based on the review and
discussion referred to in above items (1) through (3), that the
Corporation's consolidated financial statements be included in the
Annual Report on Form 10-K for the last fiscal year for filing with
the Commission.
o The Audit Committee and Board of Directors are responsible for the
selection, evaluation and, where appropriate, replacement of the
independent accountants. Consistent with these responsibilities, it is
recognized that the independent accountants are ultimately accountable to
the Board of Directors and Audit Committee.
o Review and reassess the adequacy of the audit committee charter on an
annual basis. The charter will be included as an appendix to the annual
stockholders' meeting proxy statement triennially or in the next annual
stockholders' meeting proxy statement after any significant amendment to
the charter.
o Review and discuss reports submitted to the Audit Committee by the Internal
Auditor and independent accountants.
o Review and concur in the appointment, replacement, reassignment or
dismissal of the Internal Auditor.
o Review the performance of the internal audit department, including its
reporting, the proposed audit plans for the coming year, and the
coordination of such plans with the independent accountants.
o Review as needed, the Corporation's audit policy.
- 14 -
In addition to the activities described above, the Audit Committee will
perform such other functions, as necessary or appropriate under law, the
Corporation's charter or By-laws, and the resolutions and other directives of
the Board of Directors.
The Audit Committee shall have the power to conduct or authorize
investigations into any matters within its scope of responsibilities and shall
be empowered to retain independent counsel, accountants, or others to assist it
in the conduct of any investigation.
The Audit Committee will report its actions to the Board of Directors with
such recommendations as the Audit Committee may deem appropriate.
- 15 -
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2001 ANNUAL MEETING OF SHAREHOLDERS OF
GERMAN AMERICAN BANCORP
I hereby appoint Gene C. Mehne and Larry J. Seger, and each of them, my
proxies, with power of substitution, to vote all Common Shares of German
American Bancorp that I am entitled to vote at the Annual Meeting of
Shareholders to be held at The Holiday Inn located at US 231 South in Jasper,
Indiana, on April 26, 2001 at 10:00 a.m., Jasper time, and any adjournments
thereof, as provided herein.
THIS PROXY WILL BE VOTED AS SPECIFIED. IN THE ABSENCE OF SPECIFICATIONS,
THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ITEMS 1 AND 2.
This proxy may be revoked at any time prior to its exercise upon compliance
with the procedures set forth in the Corporation's Proxy Statement dated April
2, 2001.
SHAREHOLDERS SHOULD MARK, SIGN, AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED POST-PAID ENVELOPE.
1. ELECTION OF DIRECTORS IN CLASS I
(To withhold authority to vote for any individual nominee, strike a line
through the nominees' name.)
[ ] FOR all nominees in Class I (except otherwise indicated)
[ ] WITHHOLD AUTHORITY on all nominees below
David G. Buehler, David B. Graham, C. James McCormick,
Joseph F. Steurer, Michael J. Voyles
2. ELECTION OF DIRECTORS IN CLASS II
(To withhold authority to vote for any individual nominee, strike a line
through the nominees' name.)
[ ] FOR all nominees in Class II (except otherwise indicated)
[ ] WITHHOLD AUTHORITY on all nominees below
George W. Astrike, William R. Hoffman, J. David Lett,
Chet L. Thompson
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated:
----------------------------------------
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Signature or Signatures
(Please sign exactly as your name appears on
this proxy. If shares are issued in the name of
two or more persons, all such persons should
sign. Trustees, executors and others signing in
a representative capacity should indicate the
capacity in which they are signing.)