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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to 14a-11(c) or Rule 14a-12
BAYLAKE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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April 30, 2001
Dear Baylake Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Baylake Corp.
scheduled to be held at 7:00 p.m. on Monday, June 4, 2001 at the Baylake Bank
Conference Center, 222 North Third Avenue, Sturgeon Bay, Wisconsin.
The matters expected to be acted upon at the meeting are described in detail in
the Notice of Annual Meeting and Proxy Statement which are enclosed. These
matters include the election of four (4) directors in Class I who are nominated
by the Board of Directors for a term of three years and the approval of an
increase in the authorized shares of the company. In addition, we will take up
consideration of any other matters which may properly come before the meeting.
Please complete and return the accompanying Proxy Card promptly in the enclosed
envelope to assure that your shares are represented in voting on these very
important matters, whether or not you plan to attend the Annual Meeting.
Instructions about your Proxy are included with the Proxy Card. If you do attend
the meeting, you may still vote your shares in person at the Annual Meeting by
revoking your proxy when you arrive, even if you have already submitted your
Proxy to us as requested in the enclosed information.
YOU SHOULD COMPLETE THE ATTACHED REQUEST FORM ONLY IF YOU PLAN TO
ATTEND THE MEETING. Upon receipt of the attached form, we will send you an
Entrance Card to be presented when you attend the meeting. Please return the
form by May 15th to allow us to make proper accommodations for those attending
the meeting.
If you have any questions or require assistance, please contact Stephen
A. Kase at Baylake Bank at either 920-743-5551 or 800-267-3610.
______________________________________________________________________________
REQUEST FOR ENTRANCE CARD
If you plan to attend the Annual Meeting, please complete and return in the
enclosed Proxy envelope.
NAME: ____________________________________________________
ADDRESS: _________________________________________________
_________________________________________________
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BAYLAKE CORP.
217 North Fourth Avenue
Sturgeon Bay, Wisconsin 54235
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 4, 2001
APRIL 30, 2001
TO SHAREHOLDERS OF BAYLAKE CORP.
NOTICE IS HEREBY GIVEN that the ANNUAL MEETING of the shareholders of Baylake
Corp. ("Baylake"), a Wisconsin corporation and registered bank holding company,
will be held at BAYLAKE BANK CONFERENCE CENTER, 222 NORTH THIRD AVENUE, STURGEON
BAY, WISCONSIN on Monday, June 4, 2001, at 7:00 p.m., for the purpose of
considering and voting upon the following matters:
1. THE ELECTION OF FOUR (4) DIRECTORS OF CLASS I WHOSE TERMS WILL EXPIRE
IN 2004. THE BOARD OF DIRECTORS' NOMINEES ARE NAMED IN THE
ACCOMPANYING PROXY STATEMENT.
2. THE APPROVAL OF AN AMENDMENT TO BAYLAKE'S ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OF BAYLAKE,
PAR VALUE $5.00 PER SHARE ("BAYLAKE COMMON") FROM 10,000,000 TO
50,000,000 SHARES.
3. SUCH OTHER BUSINESS RELATING TO THE FOREGOING AS MAY PROPERLY BE
BROUGHT BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
The Baylake Corp. Board of Directors has fixed the close of business on April
20, 2001 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting, and only holders of Common
Stock of Baylake of record at the close of business on such date will be
entitled to notice of and to vote at such meeting and all adjournments thereof.
WE URGE YOU TO MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE SO THAT YOUR SHARES CAN BE VOTED IN ACCORDANCE WITH YOUR
WISHES. RETURN THE ENCLOSED PROXY PROMPTLY REGARDLESS OF THE NUMBER OF SHARES
YOU HOLD. IF FOR ANY REASON YOU SHOULD DESIRE TO REVOKE YOUR PROXY, YOU MAY DO
SO AT ANY TIME BEFORE IT IS VOTED.
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BAYLAKE CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - JUNE 4, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Thomas L. Herlache and/or William C. Parsons as
Proxies, each with the power to appoint his substitute, and hereby authorizes
either of them to represent and to vote, as designated below, all the shares of
common stock of Baylake Corp. held on record by the undersigned on April 20,
2001 at the ANNUAL MEETING OF SHAREHOLDERS to be held on June 4, 2001, or any
adjournment thereof.
PROPOSAL 1: ELECTION OF DIRECTORS - NOMINEES FOR CLASS I OF THE BOARD OF
DIRECTORS :
JOHN W. BUNDA ROGER G. FERRIS THOMAS L. HERLACHE PAUL JAY STURM
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NAME OF THE NOMINEE IN THE LIST STATED ABOVE.
VOTE FOR ALL NOMINEES NAMED ABOVE ________
WITHHOLD VOTE FOR ALL NOMINEES NAMED ABOVE ________
VOTE FOR ALL NOMINEES NAMED, EXCEPT THOSE CROSSED OUT ________
PROPOSAL 2: AMENDMENT OF ARTICLES - TO APPROVE THE AMENDMENT OF THE ARTICLES TO
INCREASE THE AUTHORIZED SHARES OF BAYLAKE FROM 10,000,000 SHARES TO 50,000,000
SHARES:
VOTE FOR THE AMENDMENT ________
VOTE AGAINST THE AMENDMENT ________
ABSTAIN FROM ANY VOTE ________
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING:
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ABOVE
BY THE UNDERSIGNED SHAREHOLDER(S). IF PROPERLY SIGNED, BUT NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED IN FAVOR OF PROPOSALS NUMBER ONE AND TWO.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY. When shares are held by
joint tenants, both should sign. When signing as attorney, personal
representative, administrator, trustee, or guardian, please give full title as
such. If a corporation or partnership, please sign in full corporate name, by
the President, other authorized officer, or by an authorized person.
DATED: ____________________, 2001.
_____________________________________ _____________________________________
SIGNATURE SIGNATURE, IF JOINTLY HELD
PLEASE MARK YOUR ELECTIONS FOR ELECTION OF DIRECTORS AND OTHER BUSINESS, THEN
SIGN AND DATE THIS FORM. PLEASE RETURN THIS PROXY FORM PROMPTLY, USING THE
ENCLOSED ENVELOPE FOR YOUR CONVENIENCE.
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
OF
BAYLAKE CORP.
-------------------
GENERAL
This Proxy Statement is being furnished to the shareholders of Baylake
Corp. ("Baylake") in connection with the solicitation of proxies on behalf of
Baylake's Board of Directors to be voted at the Annual Meeting of Shareholders
to be held at 7:00 p.m., local time, on Monday, June 4, 2001, at the Baylake
Bank Conference Center, 222 North Third Avenue, Sturgeon Bay, Wisconsin, and at
any adjournment or postponement thereof (the "Annual Meeting"). Proxies are
solicited to give all shareholders of record at the close of business on April
20, 2001 (the "Record Date"), an opportunity to vote on matters that come before
the Annual Meeting. This Proxy Statement and the enclosed proxy card are being
mailed to the shareholders on or about April 30, 2001.
At the Annual Meeting, Baylake shareholders will be asked to (i) elect
four (4) directors to serve as Class I directors, whose terms as directors will
expire in 2004, and (ii) approve an amendment to Baylake's Articles of
Incorporation to increase the number of authorized shares of common stock of
Baylake, par value $5.00 per share ("Baylake Common") from 10,000,000 to
50,000,000 shares. Each of these matters is described in detail herein. Baylake
does not know of any matters, other than as described in the Notice of Annual
Meeting and this Proxy Statement that are to come before the Annual Meeting.
THE BOARD OF DIRECTORS OF BAYLAKE UNANIMOUSLY RECOMMENDS:
o A VOTE FOR EACH OF THE FOUR NOMINEES FOR CLASS I DIRECTOR,
o A VOTE FOR THE AMENDMENT TO THE ARTICLES OF INCORPORATION
AS THE BOARD OF DIRECTORS BELIEVES SUCH ACTIONS TO BE IN THE BEST INTERESTS OF
BAYLAKE AND ITS SHAREHOLDERS
QUORUM
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Baylake Common entitled to vote shall constitute a
quorum for all matters to be considered at the Annual Meeting. Abstentions and
withholding of votes as to any proposal will not be counted as votes cast in
favor of or against the proposal. In addition, shares held in street name which
have been designated by brokers on proxy cards as not voted as to any proposal
(so-called broker non-votes) will not be counted as votes cast with respect to
the proposal. Proxies marked as abstentions, withhold or as broker non-votes,
however, will be treated as shares present for purposes of determining the
presence or absence of a quorum. The inspector of Election appointed by the
Board of Directors will determine the shares represented at the Annual Meeting
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and the validity of proxies and ballots, and will count all votes and ballots.
VOTING
The Baylake Common is the only class of voting security of Baylake. AS
of the Record Date, 7,471,574 shares of Baylake Common were issued and
outstanding. Each share of Baylake Common outstanding on the Record Date is
entitled to one vote with respect to each matter properly brought before the
Annual Meeting.
The voting requirements and procedures described below are based upon
the provisions of the Wisconsin Business Corporation Law, Baylake's charter
documents and other requirements applicable to the matters to be voted upon at
the Annual Meeting. All shares of Baylake Common represented at the Annual
Meeting by properly executed proxies received prior to or at the Annual Meeting,
and not revoked in the manner described below, will be voted in accordance with
the instructions made on the proxy card. If no instructions are indicated,
properly executed proxies will be voted FOR the election of the four director
nominees named herein and FOR the amendment to Baylake's Articles of
Incorporation as described herein. If any of the nominees would decline or be
unable to act, which management does not anticipate, proxies will be voted with
discretionary authority for a substitute nominee selected by the Board of
Directors. In addition, if any other matters are properly presented at the
Annual Meeting for action, the persons named in the enclosed proxy card will
have the discretion to vote on such matters in accordance with their best
judgment.
Directors will be elected by a plurality of the votes of the shares of
Baylake Common present in person or represented by proxy at the Annual Meeting.
The four nominees receiving the most votes will be elected as Directors of
Baylake, each to serve a three-year term. Only shares that are voted in favor of
a particular nominee will be counted toward that nominees achievement of a
plurality. Shares present at the Annual Meeting that are not voted for a
particular nominee or shares present by proxy as to which the shareholder
properly withheld authority to vote for the nominee (including broker non-votes)
will not be counted toward the nominee's achievement of a plurality.
The affirmative vote of a majority of the outstanding shares of Baylake
Common is necessary to approve the amendment to Baylake's Articles of
Incorporation. Abstentions and broker non-votes will have the same effect as
votes against the proposal. Dissenting votes give rise to no rights on the part
of dissenters.
REVOCABILITY OF PROXIES AND PROXY INFORMATION
Any shareholder submitting a proxy has the right to revoke the proxy at
any time before it is voted at the Annual Meeting by (i) giving written notice
of revocation (bearing a date later than the proxy) to the Secretary of Baylake,
(ii) giving oral notice to the presiding officer during the Annual Meeting that
the shareholder intends to vote in person, or (iii) submitting a later dated
proxy. Attendance by a shareholder at the Annual Meeting will not in and of
itself constitute revocation of a proxy. Any written notice revoking a proxy
should be delivered to Daniel F. Maggle, Secretary, Baylake Corp., 217 N. Fourth
Avenue, P.O. Box 9, Sturgeon Bay, WI 54235.
The expense of preparing, printing and mailing this Proxy Statement and
the solicitation of proxies at the Annual Meeting will be borne by Baylake.
Baylake will reimburse brokers and others who are record
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holders of Baylake Common for the reasonable expenses incurred in obtaining
voting instructions from beneficial owners of such shares. In addition to
solicitation by mail, directors, officers and employees of Baylake may solicit
proxies by telephone, facsimile transmission or personal contact, but will
receive no compensation for such services other than their regular compensation.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL 1: ELECTION OF DIRECTORS
The first item to be acted upon at the Annual Meeting is the election
of four directors to serve until the 2004 Annual Meeting of Shareholders. The
Bylaws of Baylake provide for classification of the Board of Directors into
three classes as nearly equal in number as practicable, each to serve staggered
three-year terms, with the term of one class expiring each year. The Bylaws also
provide that the Board may consist of not less than five (5) nor more than
seventeen (17) directors as shall be determined from year to year by the
shareholders. The Board of Directors currently consists of twelve (12)
directors, including four (4) Class I directors, whose terms expire in 2001,
four (4) Class II directors whose terms expire in 2002, and four (4) Class III
directors whose terms expire in 2003. The Board of Directors has nominated four
(4) individuals named below for election as directors of Class I, to serve for
terms expiring at the 2004 Annual Meeting of Shareholders and upon the election
of their successors. Three of the nominees are currently directors of Baylake,
and one of the nominees, Roger G. Ferris, is presently designated as a Green Bay
Area Regional Director. There are no arrangements or understandings between any
director or nominee and any other person pursuant to which such director or
nominee was selected, and no director, nominee or executive officer is related
to any other director, nominee or executive officer by blood, marriage or
adoption, except that Mr. Herlache and Ms. Nelson are siblings.
Unless otherwise directed, proxies will be voted FOR the election of
the four Class I director nominees. If any of the nominees would decline or be
unable to act, which management does not anticipate, proxies will be voted with
discretionary authority for a substitute nominee to be designated by the Board
of Directors.
The following also sets forth information as to current directors of
Baylake who will serve as directors for the indicated terms. Except as otherwise
indicated, each of the directors has been employed in such director's current
occupation for at least five years. All of the directors of Baylake, except
Roger G. Ferris, also serve as directors of Baylake Bank, Baylake's principal
operating subsidiary.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS FOR TERM EXPIRING IN 2004:
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE SINCE
- ------------ ------------------------ --------
John W. Bunda (66) Retired Retailer 1977
(3)
Roger G. Ferris (58) Managing Director;
Aon Risk Services Of Wisconsin
(insurance brokerage operation)
Thomas L. Herlache (58) President, Chief Executive Officer and 1977
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PRINCIPAL OCCUPATION AND DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE SINCE
- ------------ ------------------------ --------
(1)(2)(4) Chairman of Baylake; President, Chief
Ex officio:(5) Executive Officer, Chairman and Trust
Officer of Baylake Bank; Director,
Alpine, Inc.
Paul Jay Sturm (50) Partner in Omholt & Forsythe, SC. 1998
(4)(5) (attorney at law)
CONTINUING CLASS II DIRECTORS WHOSE TERM EXPIRES IN 2002:
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE SINCE
- ------------ ------------------------ --------
John D. Collins (70) Owner of C&S Manufacturing 1979
(2) (metal production)
George Delveaux, Jr. (58) Dairy Farmer 1981
(5)
Glenn Miller (70) Retired; formerly Vice President of 1983
(2) Sturgeon Bay Yacht Harbor and Co-Owner
of Ephraim Yacht Harbor
Joseph Morgan (58) President of Mary Morgan, Inc. (printing) 1995
(4)(5)
CONTINUING CLASS III DIRECTORS WHOSE TERM EXPIRES IN 2003:
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE SINCE
- ------------ ------------------------ --------
Ronald D. Berg (66) Retired; formerly, Senior Vice President 1979
(1)(3) of Baylake Bank
Richard A. Braun (58) Executive Vice President and 1994
(1)(2)(4)(5) Vice Chairman of Baylake;
Ruth Nelson (66) General Manager of Ephraim Shores 1983
(1)(5) (motel and restaurant)
William C. Parsons (64) President of Palmer Johnson Enterprises 1979
(1)(3)(4) (shipbuilding and marine components)
(1) Member of the EXECUTIVE COMMITTEE, which reviews the financial,
administrative and regulatory, activities of Baylake and Baylake Bank. This
committee is authorized by the Board of Directors to act on its behalf on
any matter permitted by law. This committee generally meets on a weekly
basis (except for the third Tuesday of each month) and held 27 meetings
during 2000. Mr. Herlache serves as the Chairman of this Committee.
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(2) Member of the DIRECTOR LOAN COMMITTEE, which reviews certain loan
transactions of Baylake Bank. This committee meets on a weekly basis and
held 52 meetings during 2000. Mr. Collins serves as the Chairman of this
Committee.
(3) Member of the AUDIT AND LEGAL COMMITTEE, which reviews financial and legal
matters of Baylake. This committee held 12 meetings in 2000. Mr. Berg
serves as the Chairman of this Committee.
(4) Member of the PERSONNEL AND COMPENSATION COMMITTEE, which reviews the
personnel policies and annual compensation levels of Baylake Bank. This
committee held 2 meetings during 2000.
(5) Member of the ASSET MANAGEMENT COMMITTEE, which reviews the function and
administration of the trust and financial services departments of Baylake
Bank and Baylake's non-bank subsidiaries. This committee meets on a monthly
basis and held 11 meetings during 2000. Ms. Nelson serves as the Chairman
of this Committee.
Each member of the Board of Directors attended at least 75% of the
meetings of the Board of Directors and of all committees on which such directors
served during 2000, except that Glenn Miller attended 58% of the Director Loan
Committee meetings.
PROPOSAL 2: AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE NUMBER OF
AUTHORIZED SHARES
The Second Item to be Acted Upon At the Annual Meeting is a Proposal to
Amend Article 4 of Baylake's Articles of Incorporation to Increase the Number of
Authorized Shares of Common Stock, $5.00 Par Value Per Share, From 10,000,000
Shares to 50,000,000 Shares.
Baylake's Articles of Incorporation currently authorize the issuance of
up to 10,000,000 shares of Baylake Common. On May 15, 1998, Baylake paid a
3-for-2 stock dividend and on November 15, 1999, Baylake paid a 2-for-1 stock
dividend. These two recent stock dividends significantly reduced the number of
authorized but unissued shares of Baylake Common available to Baylake for future
use. As of April 20, 2001, there were 7,471,574 shares of Baylake Common issued
and outstanding and 555,094 shares of Baylake Common were reserved for future
issuance under various plans. This leaves only 1,973,332 shares of authorized
and unissued shares of Baylake Common available for future use.
The Board of Directors has adopted, subject to shareholder approval,
the amendment described above. If the proposed amendment is approved by the
shareholders, 50,000,000 shares of Baylake Common will be authorized for
issuance. Under Wisconsin statutes, the filing fee for any change in a
corporation's articles of incorporation to increase the number of authorized
shares by one million or more is $10,000, irrespective of the number of
additional shares authorized.
The holders of any of the additional shares of Baylake Common issued in
the future would have the same rights and privileges as the holders of the
shares of Baylake Common currently authorized and outstanding. The additional
authorized Baylake Common may be issued by Baylake without further action by the
shareholders, unless required by applicable law or regulatory agencies or by the
rules of any stock exchange on which Baylake's securities may then be listed.
Shareholders do not have preemptive rights and will not have a right of first
refusal to purchase any of the additional authorized shares of Baylake Common.
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The purpose of the proposed amendment is to provide additional
authorized shares of Baylake Common for possible use in connection with future
financings, investment opportunities, acquisitions, employee benefit or dividend
reinvestment plan distributions, other distributions, such as stock dividends or
stock splits, or for other corporate purposes. The Board of Directors believes
that it is beneficial to baylake to have the additional shares available for
such purposes without delay or the necessity of a special shareholders' meeting.
Baylake has no immediate plans, arrangements, commitments or understandings for
the issuance of the additional shares of Baylake Common which would be
authorized by the proposed amendment, but wants to put itself in a position to
do so when needs arise and market conditions warrant.
Although this amendment to the Articles of Incorporation is being
proposed by the Board of Directors for business and financial considerations,
and not as an "anti-takeover" device, the additional authorized shares, if
issued, could prevent or make it more difficult for a person to acquire the
requisite amount of stock needed to control Baylake and/or to remove incumbent
management. For example, without further shareholder approval, the Board of
Directors could strategically sell shares of authorized and unissued Baylake
Common in a private transaction to purchasers who would oppose an unwanted
takeover or favor current management of Baylake. Any such issuance of additional
stock could have the effect of diluting the earnings per share and book value
per share of outstanding shares of Baylake Common, and such additional shares
could be used to dilute the stock ownership or voting rights of persons seeking
to obtain control of Baylake.
The Board of Directors believes this action will be in the best
interests of the shareholders and unanimously recommends a vote FOR amending the
Articles of Incorporation to increase the number of authorized shares of Common
Stock.
OWNERSHIP OF BAYLAKE COMMON
The table below sets forth information regarding the beneficial
ownership of Baylake Common as of March 31, 2001 by (a) each director and
nominee for director (including the named executive officers in the Summary
Compensation Table below), (b) each of the named executive officers not listed
as a director, (c) all executive officers and directors of Baylake and its
subsidiaries as a group, and (d) all shareholders, including addresses, who are
known to Baylake to beneficially own more than 5% of the outstanding shares of
Baylake Common as of such date.
Name(1) Number of Shares Percent
------- ---------------- -------
(A)
Thomas L. Herlache 126,993(2) 1.70%
Ronald D. Berg 12,919 *
Richard A. Braun 98,900(3) 1.32%
John W. Bunda 4,838 *
John D. Collins 70,793 *
George Delveaux, Jr. 1,568 *
L. George Evenson 5,068 *
Roger G. Ferris 1,960 *
Glenn Miller 11,635 *
Joseph Morgan 14,580 *
Ruth Nelson 113,319 1.52%
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Name(1) Number of Shares Percent
------- ---------------- -------
William C. Parsons 83,064 1.11%
Paul Jay Sturm 15,500 *
(b)
Michael J. Gilson 80,252(4) 1.06%
(c)
All executive officers and directors 1,086,297(5) 13.66%
as a group (22 persons)
(d)
Ellsworth L. Peterson 583,463 7.81%
55 Utopia Circle
Sturgeon Bay, WI 54235
Oliver Ulvilden 408,731 5.47%
P.O. Box 189
Ephraim, WI 54211
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* Constitutes less than 1% of the outstanding shares
(1) For all listed persons, the number includes shares held by, jointly with,
or in trust for the benefit of, spouse and dependent children. Shares are
reported in such cases on the presumption that the individual may share
voting and/or investment power because of the family relationship.
(2) Includes beneficial ownership of 18,000 shares which may be acquired upon
the exercise of stock options (of which 10,800 are in the money)
exercisable currently or within 60 days of the date hereof.
(3) Includes beneficial ownership of 15,900 shares which may be acquired upon
the exercise of stock options (of which 12,300 are in the money)
exercisable currently or within 60 days of the date hereof.
(4) Includes beneficial ownership of 64,500 shares which may be acquired upon
the exercise of stock options (of which 58,500 are in the money)
exercisable currently or within 60 days of the date hereof.
(5) Includes beneficial ownership of 478,900 shares which may be acquired upon
the exercise of stock options (of which 414,100 are in the money)
exercisable currently or within 60 days of the date hereof.
DIRECTORS' FEES AND BENEFITS
Directors of Baylake or Baylake Bank are paid $450 for each general
board meeting attended, and $200 for each board meeting which is not attended.
Members of any of the identified committees also receive $250 for each committee
meeting attended.
Baylake also has deferred compensation agreements with certain of its
directors, including John W. Bunda, George Delveaux, Jr., L. George Evenson, and
Ruth Nelson. Under these agreements, participating
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directors may elect to defer their annual directors' fees until retirement,
termination, death or disability, at which time the deferred amount, including
any income or gains thereon, are payable in a lump sum or in annual
installments. At death, all sums held in the account of a participating director
are payable to designated beneficiaries. Although Baylake maintains policies of
insurance to support payments under these agreements, participating directors
have no interest in such policies or any benefits accruing under such policies.
DIRECTOR NOMINATIONS BY SHAREHOLDERS
Baylake's Bylaws require that notice of shareholder nominations for
directors must be made by notice in writing, delivered or mailed by first class
United States mail, postage prepaid, to the Secretary of Baylake not less than
14 days nor more than 70 days prior to the Annual Meeting in order to be
considered. Each notice of nomination must contain the name and address, the
principal occupation or employment, and number of shares of Baylake Common
beneficially owned by each nominee and the class for which nominated. The
Chairman of the Annual Meeting shall determine whether any nomination was not
made in accordance with the Bylaws and, if so determined, he shall indicate such
at the Annual Meeting and the defective nomination will be disregarded.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information with respect to the principal
occupations during the last five years for the executive officers of Baylake and
Baylake Bank who do not serve as directors of Baylake. All executive officers
are elected annually by the Board of Directors and serve until their successors
are elected and qualified. As of the date hereof, no executive officer set forth
below is related to any director or other executive officer of Baylake or
Baylake Bank by blood, marriage or adoption, and there are no arrangements or
understandings between a director of Baylake and any other person pursuant to
which such person was elected an executive officer.
Susan F. Anschutz. Age 37. Ms. Anschutz currently serves as Senior Vice
President of Marketing of Baylake Bank and has held that position since 1996.
Ms. Anschutz joined Baylake Bank in 1992.
Michael J. Gilson. Age 53. Mr. Gilson currently serves as Senior Vice
President -- Commercial Division of Baylake Bank and has held this position
since 1985. Mr. Gilson joined Baylake Bank in 1971.
Sharon A. Haines. Age 53. Ms. Haines currently serves as Senior Vice
President of Human Resources of Baylake Bank and has held that position since
1998. Ms. Haines joined Baylake Bank in 1989.
Daniel M. Hanson. Age 44. Mr. Hanson currently serves as Senior Vice
President -- Operations Division and has held that position since 1991. Mr.
Hanson joined Baylake Bank in 1980.
John A. Hauser. Age 42. Mr. Hauser currently serves as Chief Investment
Officer of Baylake Bank and has held that position since 1992. Mr. Hauser joined
Baylake Bank in 1984.
Judith A. Heidner. Age 59. Ms. Heidner currently serves as Senior Vice
President -- Compliance and New Products Development of Baylake Bank and has
held that position since 2000. Ms. Heidner joined Baylake Bank in 1996 and has
previously served as Compliance Officer since 1996.
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Steven D. Jennerjohn. Age 47. Mr. Jennerjohn currently serves as
Treasurer and Chief Financial Officer of Baylake and Senior Vice President --
Accounting Division of Baylake Bank and has held those positions since 1992. Mr.
Jennerjohn joined Baylake Bank in 1977.
Daniel F. Maggle. Age 46. Mr. Maggle currently serves as Secretary of
Baylake and Senior Vice President -- Administration Division of Baylake Bank and
has held those positions since 1992. Mr. Maggle joined Baylake Bank in 1972.
Paul C. Wickmann. Age 49. Mr. Wickmann currently serves as Vice
President of Baylake and Senior Vice President -- Asset Management Division of
Baylake Bank and has held those positions since 1981. Mr. Wickmann joined
Baylake Bank in 1972.
Robert M. Zubella. Age 48. Mr. Zubella currently serves as Vice
President of Baylake and Senior Vice President -- Retail Division of Baylake
Bank and has held that position since 1992. Mr. Zubella joined Baylake Bank in
1986.
EXECUTIVE COMPENSATION
Compensation Summary. The following table summarizes certain
information for each of the last three years concerning all compensation awarded
or paid to or earned by the Chief Executive Officer of Baylake and other highly
compensated officers of Baylake Bank whose salary and bonus exceeded $100,000
during 2000.
SUMMARY COMPENSATION TABLE
Annual Compensation(6)
--------------------------------- All other
Name and Principal Salary Bonus Options Compensation
Position Year ($)(1) ($)(2) (#)(3) ($)(4)
- ---------------------- ---- -------- ------ ------- ------------
Thomas L. Herlache 2000 370,212 75,000 6,000 19,000
President and Chief 1999 298,533(5) 98,000 12,000 18,000
Executive Officer 1998 283,413(5) 80,800 12,000 14,000
Michael J. Gilson 2000 111,023 -- 6,000 11,000
Senior Vice President 1999 104,658 4,349 12,000 10,330
Commercial Division 1998 99,075 4,027 12,000 9,750
(1) The salary amount set forth include base salaries, directors' fees and
employee contributions made to the account of the named executive officer
pursuant to the Baylake Bank's 401(k) Plan.
(2) Consists of bonuses earned during the year indicated pursuant to Baylake
Bank's Pay-for-Performance Program and prior bonus plans, which amounts
were paid as soon as practicable in the following year. See "Personnel and
Compensation Committee Report on Management Compensation - Year-end
Bonuses" below for more detailed information.
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(3) Consists solely of non-qualified stock options granted to the named
executive officer under Baylake's 1993 Stock Option Plan, as amended. These
have been adjusted for the 3 for 2 stock dividend paid on May 15, 1998 and
the 2 for 1 stock dividend paid on November 15, 1999.
(4) Consists of employer matching and other contributions made to the account
of the named executive officer under Baylake Bank's 401(k) Plan.
(5) Includes annual compensation deferred at Mr. Herlache's election pursuant
to the Thomas L. Herlache Deferred Compensation Plan, under which Mr.
Herlache may defer a portion of his annual compensation in an amount equal
to the greater of $20,500 or 15.6% of his base salary. Amounts deferred are
held in a rabbi trust for the benefit of Mr. Herlache.
(6) Although the named individuals received perquisites or other personal
benefits in the years shown, in accordance with SEC regulations the value
of these benefits is not shown because they did not in the aggregate exceed
10% of the individual's salary and bonus in any year.
Mr. Herlache has a Preferred Compensation Agreement with Baylake Bank
under which Mr. Herlache is entitled to receive a minimum cash benefit of
$20,000 per year (payable in monthly installments) upon his death, disability or
retirement at age 65. Such payment will be made for a period of at least ten
years. If Mr. Herlache decides to retire before age 65, he will be entitled to
reduced annual benefits (with the reduction equal to 6.5% multiplied by the
difference between his age at early retirement and age 65); however, Mr.
Herlache will not be entitled to any such benefits upon retirement prior to age
60. Mr. Herlache also has an "Executive Employee Salary Continuation Agreement"
with Baylake Bank under which Mr. Herlache is entitled to receive a maximum cash
benefit of $67,500 per year (payable in monthly installments) upon his death,
disability, or retirement at age 65. Such payment will be made for a period of
at least fifteen years.
Stock Options. The following tables set forth certain information
concerning grants of options to purchase Baylake Common made to the named
executive officers during 2000 and the number and value of options outstanding
at the end of 2000 for the named executive officers.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants (1)
Potential Realizable
Value at Assumed
Total Options/ Annual Rates of Stock
Options/ SARs Granted Exercise Market Price Price Appreciation
SARs to Employees or Base at Date Expiration for Option Term(2)
Name Granted(#) in Fiscal Year Price($/sh) of Grant Date 5%($) 10%($)
---- ---------- -------------- ----------- ------------ ---------- ---------------------
Thomas L. Herlache 6,000 10.0% $25.00 $25.00 1/4/11 94,334 239,061
Michael J. Gilson 6,000 10.0% $25.00 $25.00 1/4/11 94,334 239,061
(1) Consists entirely of non-qualified stock options granted pursuant to
Baylake's 1993 Stock Option Plan. All options granted after April 30, 1993
have and will have exercise prices equal to 100% of Baylake Common fair
market value on the date of grant. The options granted to date become
exercisable 20% per year, commencing one year from date of grant.
(2) Pre-tax gain. The dollar amounts under these columns result from
calculations at the 5% and 10% rates set by the Securities and Exchange
Commission in the proxy disclosure rules and, therefore, are not intended
to
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forecast possible future appreciation, if any, in Baylake's stock price.
The per share price of Baylake Common would be $40.72 and $64.84 if the
increase was 5% and 10%, respectively, compounded annually over the option
term.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES (1)
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs
Year-End (#) At Fiscal Year-End ($)(3)
Shares Acquired Value ---------------------------- ----------------------------
Name on Exercise(#) Realized($)(2) Exercisable Unexercisable Exercisable Unexercisable
---- ------------- -------------- ----------- ------------- ----------- -------------
Thomas L. Herlache 9,600 14,400 $ 47,712 $ 77,820
Michael J. Gilson 1,300 $ 13,436 51,300 14,400 $281,225 $ 77,820
(1) Consists entirely of non-qualified stock options; no SARs have been granted
or exercised.
(2) Pre-tax gain. Market price at date of exercise of options, less option
exercise price, times number of shares, equals value realized.
(3) Pre-tax gain. Calculated assuming market price of Baylake Common at fiscal
year-end of $14.75 per share.
PERSONNEL AND COMPENSATION COMMITTEE REPORT ON MANAGEMENT COMPENSATION
The Board of Directors determines the compensation of Baylake Bank's
executive officers, based on the recommendations of the Personnel and
Compensation Committee (the "Committee"). However, with respect to the
compensation of Thomas L. Herlache, Baylake Bank's President and Chief Executive
Officer, the Board of Directors determines his compensation based upon various
factors, including: (i) the financial performance of Baylake Bank; (ii) his
length of service and an evaluation of his overall job performance; (iii) the
compensation levels of executive officers in similar positions with similar
companies; and (iv) other information and subjective factors which the Committee
deems appropriate. The Committee subjectively analyzes these factors, and
certain factors may weigh more heavily than others. Directors and committee
members who are also executive officers of Baylake Bank do not participate in
discussions concerning his compensation. The Board of Directors unanimously
adopted the recommendations of the Committee without modifications.
The Committee is comprised of seven persons, including four outside
directors, Thomas L. Herlache, Richard A. Braun, and Sharon Haines, Director of
Human Resources. Ms. Haines is substantially responsible for initially
formulating the recommended compensation levels of the salaried employees and
executive officers. The Committee generally meets one time during the year to
consider compensation levels and make recommendations to the Board. It works
with the human resources department which gathers and provides useful
information for the Committee's review.
The general philosophy of the Committee is to offer employees fair and
competitive compensation, based on the employee's individual contribution,
experience and performance and on Baylake Bank's overall growth and performance.
Baylake Bank's executive compensation policies are intended to attract and
retain competent management with a balance of short- and long-term
considerations and to provide incentives to individuals based upon the Bank's
growth and earnings and the attainment of certain goals. The Board of
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Directors believes that this policy is critical to the long-term success and
competitiveness of Baylake.
In making its executive compensation recommendations for 2000, the
Committee considered various factors, including the following: (i) the financial
performance of Baylake Bank as a whole on both a short-term and long-term basis
(including net income, an increase in deposits and loans, return on average
shareholder equity, and return on average assets); (ii) with respect to each
individual executive officer, the financial performance of that area of Baylake
Bank, if any, for which such executive is responsible, including whether or not
that area of the Bank achieved its goals for 2000; (iii) the length of service
of the executive and an evaluation of the executive's overall job performance;
(iv) the compensation levels of executive officers in similar positions with
similar companies; and (v) other information (such as cost of living increases)
and subjective factors which the Committee deems appropriate for a particular
executive. The Committee subjectively analyzes these factors, and certain
factors may weigh more heavily than others with regard to any individual
executive officer.
The main components of Baylake Bank's executive compensation program
consist of base salary, a year-end bonus, and stock options, in addition to
standard medical, life and disability benefits and a 401(k) profit sharing plan
made available to all employees.
Base Salary. The principal component of executive compensation is base
salary. The Committee believes that base salary is most important in retaining
highly qualified officers. Accordingly, it reviews compensation surveys and
comparisons collected by the human resources department and seeks to recommend
salaries at levels above those applicable to other financial institutions and
businesses similarly situated on the basis of type, size and community, although
the Committee and human resources department do not perform any mathematical
calculations or statistical analyses to arrive at any percentile comparison.
Salary surveys include both informal surveys conducted by the human resources
department with the cooperation of nearby community financial institutions and
businesses, and formal financial surveys conducted by independent banking
consultants and banking associations.
In recommending base salary levels for 2000, the Committee (and the
Board, as to the salary of Mr. Herlache) considered such factors as growth in
net income and earnings per share and return on average assets and average
stockholders' equity. With respect to Mr. Herlache's salary in particular, the
Board took into account the sustained top performance of Baylake under his
leadership as well as Baylake's most recent annual performance. In view of these
considerations, the Board and Committee determined that a salary increase for
the executive officers ranging from 2.60% to 37.42% including a salary increase
for Mr. Herlache of 23.83% would be appropriate.
Year-End Bonuses. The Board of Directors, in conjunction with the
Committee, implemented a year-end bonus program, called the "Pay-for-Performance
Program," which commenced in 1993. The Pay-for-Performance Program offers
incentives to executive officers and other eligible employees to earn bonuses
directly dependent on the Bank's performance in numerous select areas and in
various divisions. The bonus plans reflect the philosophy of the Board that a
significant portion of executive compensation should be related to the financial
performance of the Bank.
The Pay-for-Performance Program is intended to motivate and reward
management and other employees by linking bonuses to critical financial
performance components of the Bank. Under the Program, key indicators have been
identified which are considered by the Board to have an impact on the earnings
of Baylake Bank. These indicators include the following: growth in net income.
Certain quantitative goals
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were assigned to each of these indicators (ranging from goal 1 to goal 10), and
each indicator was assigned a weighted value based on its perceived influence on
earnings. The Board determined that achievement of the maximum goals (goal 10)
across all indicators in 2000 should generate at least $2,200,000 in additional
pre-tax income, and that the bonus pool should constitute 40% of additional net
income attributable to the performance indicators (resulting in a maximum
potential bonus pool of approximately $878,000 for 2000). However, it was agreed
that no bonuses would be awarded unless Baylake's return on average
stockholders' equity for 2000 was at least 15.5%.
After determining the bonus pool, a calculation is made as to the size
of the bonus pool set forth as a percentage of total salary expense, and each
employee is eligible to receive a bonus equal to such percentage multiplied by
their base salary. Based on actual results for 2000 among the various indicators
which achieved prescribed goals, no bonus pool was established. The bonus pool
amounted to 0.00% of total salaries. Executive officers of Baylake Bank received
no bonuses. Mr. Herlache did not receive any pay for performance bonus. However,
the payment of $75,000 or 28.30% of his base salary was based on the
recommendation for salary adjustment resulting from the study.
Stock Options. In April 1993, the Board of Directors approved Baylake's
1993 Stock Option Plan (the "Option Plan"), which was later approved by the
shareholders in June 1993. The Option Plan was established to provide a
long-term incentive to the Bank's executive officers and other key employees, to
increase the overall value of Baylake in future years. The Board seeks to
further motivate management by granting them options to purchase shares of
Baylake Common and thus offering them a greater stake in Baylake's future. The
Board also views the Option Plan as a significant component of the Bank's
overall compensation package and is a complement to base salary and bonus. The
Option Plan also enables the Bank to compensate its officers without having to
make any cash payments.
A total of 400,000 shares of Baylake Common has been reserved for
issuance upon exercise of options granted and to be granted under the Option
Plan. Under an Amendment to the Plan dated and filed with the Securities and
Exchange Commission, the number of shares reserved has been increased to
600,000. As a result of the stock dividend of November 15, 1999, shares reserved
total 1,200,000. Options to purchase an additional 30,450 shares were granted in
January 2001 at an exercise price of $14.75 per share, which approximate the
then current market value of the Baylake Common. To date, options to purchase up
to 888,450 shares in aggregate have been granted to a total of twelve executive
officers of the Bank. All options granted will have an exercise price equal to
the market value of the Baylake Common at the date of grant. Option grants have
been and will be made at or near the current market value so that any value is
dependent upon an increase in the market value of the Baylake Common. The
options vest over five years (20% per year), commencing one year after date of
grant, and expire after 10 years if not exercised.
The total number of options earned by Baylake Bank's executive officers
in 2000 was generally based on the Bank's continued performance in 2000 as
compared to 1999, and the number of options granted on an individual basis took
into account the executive officer's relative cash compensation, experience,
responsibilities and attribution to the Bank's past and future performance. In
2001, Mr. Herlache was granted options to purchase 2,900 shares of Baylake
Common, while other divisional vice presidents were granted options to purchase
2,900 shares, except that Judith Heidner was granted options to purchase 1,450
shares.
Submitted by the Personnel and Compensation Committee:
Richard A. Braun
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L. George Evenson
Sharon Haines (non-director)
Thomas L. Herlache
Joseph Morgan
William C. Parsons
Paul Jay Sturm
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated above, Thomas L. Herlache, President and Chief Executive
Officer of Baylake and Baylake Bank, and Sharon Haines, Director of Human
Resources, serve as members of the Personnel and Compensation Committee. Mr.
Herlache is a member of the Baylake Board of Directors, although he does not
participate on decisions affecting his own compensation. During 2000, no
executive officer of Baylake (a) served as a member of the compensation
committee of another entity, one of whose executive officers served on the
Personnel and Compensation Committee of Baylake, (b) served as a director of
another entity, one of whose executive officers served on the Personnel and
Compensation Committee of Baylake, or (c) was a member of the compensation
committee of another entity, one of whose executive officers served as a
Director of Baylake.
CERTAIN TRANSACTIONS WITH MANAGEMENT
Baylake Bank has, and expects to continue to have, regular dealings
with officers and directors of Baylake as well as their associates. Since
January 1, 2000, several such persons have been indebted to Baylake Bank for
loans made in the ordinary course of business. Loans to all such persons remain
on substantially the same terms, including interest rates and collateral, on
those prevailing at the time for comparable transactions with unaffiliated
persons, are current with respect to payments, and do not involve more than the
normal risk of collectability or present other unfavorable features.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under Section 16(a) of the Exchange Act, Baylake's directors and
executive officers, and any persons holding more than 10% of the outstanding
Baylake Common, are required to report their initial ownership of the Baylake
Common and any subsequent changes to such ownership to the Securities and
Exchange Commission and to furnish Baylake with copies of all such reports they
file. Baylake knows of no person who owns 10% or more of the Baylake Common.
Specific due dates for these reports have been established, and Baylake
is required to disclose in this Proxy Statement any failure to file such reports
by these dates during 2000. Based solely on review of the copies of these
reports furnished to Baylake and written representations that no other reports
were required to be filed, Baylake believes that all reporting requirements
under Section 16(a) for the fiscal year ended December 31, 2000 were met in a
timely manner by its directors and officers.
PERFORMANCE GRAPH
The following graph shows the cumulative stockholder return on the
Baylake Common over the last five fiscal years compared to the returns of
Standard & Poors 500 Stock Index and the Nasdaq Bank Index, prepared for Nasdaq
by the Center for Research in Securities Prices at the University of Chicago.
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PERIOD BAYLAKE NASDAQ S&P 500
-------- -------- ------ -------
12/31/95 100.00 100.00 100.00
12/31/96 104.87 129.00 122.70
12/31/97 111.35 214.00 163.30
12/31/98 181.43 192.30 209.60
12/31/99 328.35 180.60 253.30
12/31/00 203.72 211.70 230.50
(1) Assumes $100 invested on December 31, 1995 in each of Baylake Corp. common
stock, the Standard & Poors 500 Stock Index and the Nasdaq Bank Index.
Dividends are assumed to be reinvested.
AUDIT & LEGAL COMMITTEE REPORT ON AUDIT ACTIVITIES
The Board of Directors evaluates the requirements for audit activities
by independent auditors on a regular basis. The Audit & Legal Committee, which
reviews Baylake's financial reporting process on behalf of the Board of
Directors, includes in its membership at least three qualified independent
directors, including one member who has substantial independent experience in
finance and accounting. The Board of Directors has adopted a written Audit
Committee Charter, a copy of which is attached as an appendix to this proxy
statement, effective December 19, 2000. Additional responsibilities of the Audit
& Legal Committee are set forth in the Audit Committee Charter. In addition, it
has reported its activities and findings under the Report of the Audit & Legal
Committee dated March 20, 2001 which is also attached to this Statement.
Management has the primary responsibility for the financial statements
and the reporting process, including the systems of internal controls. In this
context, and in accordance with its Charter, the Audit & Legal Committee has
reviewed and discussed Baylake's audited financial statements for fiscal 2000
with management of Baylake. During these discussions, management represented to
the Audit & Legal Committee that Baylake's consolidated financial statements
were prepared in accordance with generally accepted accounting principles. In
addition, the Audit & Legal Committee has discussed with Smith & Gesteland, LLP,
Baylake's independent accountants, the matters required to be discussed by
Statement on Auditing Standards No. 61. (Communication with Audit Committees).
The Audit Committee also has received the written disclosures and the letter
from Smith & Gesteland, LLP required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), and has discussed with
Smith & Gesteland, LLP its independence from Baylake and its management. The
Audit & Legal Committee has, on a continuing basis, considered the possibility
of a conflict of interest arising as a result of Smith & Gesteland, LLP
performing independent audit services and other non-audit services. In each
case, it was determined that no conflict resulted and that the independence of
the auditor was not compromised. Prior authorization was granted by the
Committee in each case before any services were performed. The Board is
satisfied that the audit services have been provided in compliance with adequate
standards for independence.
Based on its review and discussions with management and the auditors,
the Audit & Legal Committee has recommended to the Board of Directors, and the
Board of Directors subsequently approved the recommendation, that the audited
financial statements of the Company be included in the Annual Report on Form
10-K for the fiscal year ended December 31, 2000 for filing with the Securities
and Exchange Commission.
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Submitted by the Audit & Legal Committee:
Ronald D. Berg (Chairman)
John W. Bunda
William C. Parsons
FEES OF INDEPENDENT PUBLIC ACCOUNTANTS
For services rendered in 2000 by Smith & Gesteland, LLP, Baylake's
independent auditors, the following fees were incurred:
Audit Fees. The aggregate professional fees and expenses billed by
Smith & Gesteland, LLP in connection with the audit of Baylake's annual
financial statements as of and for the year ended December 31, 2000 and for the
required review of Baylake's financial statements included in its Form 10-Q
filings for the year 2000 was $49,873.
Financial Information Systems Design and Implementation Fees. There
were no fees billed by Smith & Gesteland, LLP for the fiscal year ended December
31, 2000, for the design and implementation of financial information systems.
All Other Fees. The aggregate fees and expenses billed by Smith &
Gesteland, LLP for all other services rendered in connection with other matters
requested by Baylake and unrelated to the categories identified above for the
year ended December 31, 2000 was $38,184.
The Board of Directors intends to continue to use the accounting firm
of Smith & Gesteland, LLP as independent auditors to audit the financial
statements of Baylake for 2001. Representatives of Smith & Gesteland, LLP are
expected to be present at the Baylake Annual Meeting to respond to appropriate
questions and to make a statement if they desire to do so.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be
presented at the Annual Meeting. If any other matter proper for action at the
Annual Meeting should be presented, the persons named as proxies will vote the
shares represented by the proxy on such matter in accordance with their best
judgment pursuant to discretionary authority granted in the proxy. If any matter
not proper for action at the Annual Meeting should be presented, the named
proxies will vote against consideration thereof or action thereon.
SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals intended for inclusion in the proxy statement for next year's
annual meeting of shareholders must be in writing and must be received by the
Secretary of the Company at 217 N. Fourth Avenue, Sturgeon Bay, WI 54235 not
later than January 5, 2002. To be considered for inclusion in the Company's
proxy statement and proxy card for an annual meeting, the shareholder proposal
must be submitted on a timely basis and the proposal and proponent thereof must
meet the requirements established by the Securities and Exchange Commission for
shareholder proposals.
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OTHER INFORMATION
Consolidated financial statements of Baylake and its subsidiaries are
included in the Annual Report to Shareholders for the year ended December 31,
2000, which accompanies this Proxy Statement. Additional copies of the Annual
Report to Shareholders and Baylake's Annual Report on Form 10-K (without
exhibits) as filed with the Securities and Exchange Commission may be obtained,
without charge, upon written request to Steven Jennerjohn, Chief Financial
Officer, Baylake Corp., 217 N. Fourth Avenue, P.O. Box 9, Sturgeon Bay, WI
54235.
By Order of the Board of Directors
DANIEL F. MAGGLE
Secretary
STURGEON BAY, WISCONSIN
APRIL 30, 2001
APPENDIX A
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APPENDIX A
BAYLAKE CORP.
AUDIT & LEGAL COMMITTEE CHARTER
Adopted by Resolution of the Board of Directors
December 19, 2000
GENERAL
There shall be a committee of the Board of Directors of Baylake Corp. (the
"Company") to be known as the Audit & Legal Committee (the "Committee").
The role of the Committee is to provide assistance to the Company's Board of
Directors in fulfilling its responsibilities to the Company's shareholders and
the investment community relating to corporate accounting, reporting practices
of the Company and the quality and integrity of the financial reports of the
Company. The Committee will provide such assistance by:
o Serving as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
o Reviewing and appraising the audit efforts of the Company's internal
auditors and independent accountants.
o Providing an open avenue of communication among the internal auditors,
independent accountants, financial and senior management and the
Company's Board of Directors.
COMPOSITION AND ORGANIZATION
The Committee shall consist of three or more directors as determined by the
Board of Directors, each of whom shall be independent of the management of the
Company, and free from any relationship that, in the opinion of the Board of
Directors, would interfere with the exercise of his or her independent judgment
as a member of the Committee.
In determining whether any director is independent, the Board of Directors shall
take into consideration the requirements of the principal exchange or system on
which any class of the Company's stock is traded. By way of example, and not
limitation, Directors who are affiliates of the Company, or officers or
employees of the Company and/or any of its subsidiaries, will not be considered
independent.
All members of the Committee must be able to read and understand fundamental
financial statements, including a company's balance sheet, income statement and
cash flow statement or become able to do so within a reasonable period of time
after his or her appointment to the Committee, and at least one member of the
Committee is to have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the member's financial sophistication,
including being or having been a chief executive officer, chief financial
officer or other senior officer with financial oversight responsibilities.
The members of the Committee are to be elected by the Board of Directors and
shall serve until their successors are duly elected and qualified. Unless a
Chairman is elected by the full Board of Directors, the members of the Committee
may designate a Chairman by majority vote of the full Committee membership. A
Vice Chairman shall also be appointed to act in the absence of the Chairman.
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MEETINGS
The Committee shall hold regular meetings as may be necessary and special
meetings as may be called by the Chairman of the Committee.
As part of its job to foster open communication, the Committee should meet at
least annually with management and the independent accountants in separate
executive sessions to discuss any matter that the Committee or either of these
groups believe should be discussed privately.
In addition, the Committee or its Chairman should meet, either in person or via
conference call, with the independent accountants and management on a quarterly
basis to review the Company's financial statements.
RELATIONSHIP WITH INTERNAL AUDITORS AND INDEPENDENT ACCOUNTANTS
The Company's internal auditors and independent accountants are to be ultimately
accountable to the Board of Directors and the Committee, and the Committee and
the Board of Directors shall have the ultimate authority and responsibility to
select, evaluate and, where appropriate, replace the internal auditors or
independent accountants (or nominate the outside auditor to be proposed for
shareholder approval in any proxy statement).
RESPONSIBILITIES AND DUTIES
In carrying out its responsibilities as described below, the Committee believes
its policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the Board of Directors and the Company's
shareholders that the corporate accounting and reporting practices of the
Company are in accordance with all requirements and are of the highest quality.
To fulfill its responsibilities and duties, the Committee shall:
DOCUMENT/REPORTS REVIEW
o Review and assess the adequacy of this Charter at least annually, and
otherwise as conditions may dictate.
o Review the Company's annual financial statement and any reports or other
financial information submitted to the Securities and Exchange Commission
or the public, including any certification, report, opinion, or review
rendered by the independent accountants.
o Review, in person or via conference call, with financial management and the
independent accountants the Company's filings with the Securities and
Exchange Commission on Forms 10-K and 10-Q prior to their filing or prior
to the release of earnings to the public. The Chairman of the Committee, or
the Vice Chairman in the Chairman's absence, may represent the entire
Committee for purposes of this review.
INTERNAL AUDITORS
o Review with the Company's internal auditors, the independent accountants
and the financial and accounting personnel, the adequacy and effectiveness
of the accounting and financial controls of the Company, and elicit any
recommendations for the improvement of such internal control procedures or
particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper.
o Review the internal audit function of the Company including the
independence and authority of its reporting obligations, the proposed audit
schedule for the coming year, and the coordination of such schedule with
independent accountants.
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INDEPENDENT ACCOUNTANTS
o Review and recommend to the Board of Directors the selection of the
independent accountants to audit the consolidated financial statements of
the Company, considering independence and effectiveness, and approve the
fees and other compensation to be paid to the independent accountants.
o On an annual basis, obtain from the independent accountants, and review and
discuss with the independent accountants, a formal written statement
delineating all relationships the independent accountants have with the
Company, consistent with Independence Standards Board Standard 1, and
actively engage in a dialogue with the independent accountants with respect
to any disclosed relationships or services that may impact the objectivity
and independence of the independent accountants.
o Recommend to the Board of Directors any appropriate action to oversee the
independence of the independent accountants.
o Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
o Periodically consult with the independent accountants out of the presence
of management about internal controls and the completeness and accuracy of
the Company's financial statements.
FINANCIAL REPORTING PROCESSES
o In consultation with the independent accountants, review the integrity of
the organization's financial reporting processes, both internal and
external.
o Consider the independent accountant's judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
o Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent accountants or management.
o Establish regular and separate reporting to the Committee by each of
management and the independent accountants regarding any significant
judgments made in management's preparation of the financial statements and
the view of each as to the appropriateness of such judgments.
o Following completion of the annual audit, review separately with each of
management and the independent accountants any significant difficulties
encountered during the course of the audit, including any restrictions on
the scope of work or access to required information.
o Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial statements.
o Review with the independent accountants and management the extent to which
changes or improvements in financial or accounting practices, as approved
by the Committee, have been implemented.
ETHICAL AND LEGAL COMPLIANCE
o Review, with the Company's counsel, any legal matter that could have a
significant impact on the Company's financial statements.
o Perform any other activities consistent with this Charter, the Company's
bylaws and governing law, as the Committee or the Company Board's of
Directors deems necessary or appropriate.
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REPORT OF THE AUDIT & LEGAL COMMITTEE OF
THE BOARD OF DIRECTORS
The Audit & Legal Committee of the Board of Directors of Baylake Corp. serves as
the representative of the board for general oversight of Baylake Corp's
financial accounting and reporting process, system of internal control, audit
process and process for monitoring compliance with laws and regulations and
Baylake Corp's Standards for Business Conduct. Baylake Bank's management has
primary responsibility for preparing Baylake Corp's financial statements and
financial reporting process. Baylake Corp's independent accountants, Smith &
Gesteland, LLP, are responsible for expressing an opinion on the conformity of
Baylake Corp's audited financial statements to generally accepted accounting
principles.
In this context, the Audit & Legal Committee hereby reports as follows:
1. The Audit & Legal Committee has reviewed and discussed the audited
financial statements with Baylake Bank's management.
2. The Audit & Legal Committee has discussed with the independent accountants
the matters required to be discussed by SAS 61 (Codification of Statements
on Auditing Standard, AU380).
3. The Audit & Legal Committee has received the written disclosures and the
letter from the independent accountants required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standards No. 1,
Independence Discussions with Audit Committees) and has discussed with the
independent accountants the independent accountants' independence.
4. Based on the review and discussions referred to in paragraphs (1) through
(3) above, the Audit Committee recommended to the Board of Directors of
Baylake Corp, and the Board has approved, that the audited financial
statements be included in Baylake Corp's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000, for filing with the Securities and
Exchange Commission.
Each of the members of the Audit Committee is independent as defined under the
listing standards of the American Stock Exchange.
The undersigned members of the Audit & Legal Committee have submitted this
report to the Board of Directors:
/s/ Ronald D. Berg , Chair
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/s/ William C. Parsons
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/s/ John W. Bunda
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By order of the Board of Directors,
Dated: March 20, 2001 Thomas L. Herlache
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Name