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 Section 240.14a-11(c) or Section 240.14a-12
FIRST MIDWEST BANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[LOGO APPEARS HERE] [ADDRESS APPEARS HERE]
March 7, 1997
Dear Shareholder:
The 1997 Annual Meeting of Shareholders of First Midwest Bancorp, Inc., will be
held on Wednesday, April 16, 1997 at 9:00 a.m. at the Holiday Inn, 1801 Naper
Boulevard, Naperville, Illinois.
The purpose of the Annual Meeting will be to elect three directors, namely,
Bruce S. Chelberg, Joseph W. England and Robert P. O'Meara. We currently know
of no other business to be considered at the meeting.
It is with regret that we inform you that Directors Alan M. Hallene and Robert
E. Joyce, whose terms of office expire with the 1997 Annual Meeting, have
decided for personal reasons not to stand for re-election. Directors Hallene
and Joyce have served with distinction since the Company's founding in 1982 and
their many significant contributions are acknowledged.
Whether you plan to attend the Annual Meeting or not, please date and sign the
enclosed proxy card and return it in the accompanying envelope. Your vote is
very important regardless of how many shares you own. If you attend the Annual
Meeting and wish to vote in person, you may do so even though you have
previously sent in a proxy.
Yours very truly,
/s/ Robert P. O'Meara
Robert P. O'Meara
President and Chief Executive Officer
[LOGO APPEARS HERE] [ADDRESS APPEARS HERE]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1997
To the Shareholders of
FIRST MIDWEST BANCORP, INC.:
The Annual Meeting of Shareholders of First Midwest Bancorp, Inc. will be
held at the Holiday Inn, 1801 Naper Boulevard, Naperville, Illinois, on
Wednesday, April 16, 1997 at 9:00 a.m. for the purpose of electing three
directors and transacting such other business as may be properly brought before
the Annual Meeting or any adjournment thereof. (Management at present knows of
no other business to be brought before the Annual Meeting.)
The Board of Directors has fixed the close of business on February 20, 1997
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting.
Whether you plan to attend the Annual Meeting or not your prompt execution
and return of the enclosed proxy will be appreciated.
By Order of the Board of Directors:
/s/ Alan R. Milasius
Alan R. Milasius
Senior Vice President & Corporate Secretary
March 7, 1997
[LOGO APPEARS HERE] [ADDRESS APPEARS HERE]
PROXY STATEMENT
FOR ANNUAL MEETING TO BE HELD APRIL 16, 1997
VOTING PROCEDURES
Introduction
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of First Midwest Bancorp, Inc. (the "Company"), a
Delaware corporation, of proxies for use at the Annual Meeting of Shareholders
to be held April 16, 1997 at 9:00 a.m. and at any adjournments of that meeting
(the "Annual Meeting"). The Board of Directors has fixed the close of business
on February 20, 1997 as the record date for determining shareholders entitled to
notice of, and to vote at, the Annual Meeting. On the record date, the Company
had outstanding 16,791,230 shares of $0.01 per share par value Common Stock
("Common Stock"). Each outstanding share of Common Stock entitles the holder to
one vote.
Shares of Common Stock represented by properly executed proxies received by
the Company will be voted at the Annual Meeting in accordance with the
instructions thereon. If there are no such instructions, the shares will be
voted in favor of the election of the nominees for director and in the
discretion of the named proxies on any other matters which may properly come
before the Annual Meeting. A shareholder may revoke his proxy by: executing a
later-dated proxy; giving written notice of such revocation to the Corporate
Secretary; or voting in person at the Annual Meeting. Attendance at the Annual
Meeting will not, in and of itself, constitute the revocation of a proxy.
The Inspector of Election appointed by the Board of Directors for the
Annual Meeting will tabulate votes cast by proxy or in person at the Annual
Meeting and will determine whether or not a quorum is present. The Inspector of
Election will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum but as unvoted for purposes
of determining the approval of any matter submitted to the shareholders for a
vote. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered as present and entitled to vote with respect to that matter.
The date of this Proxy Statement is March 7, 1997. The approximate date on
which this Proxy Statement, form of proxy and the Company's 1996 Annual Report
are first being sent to the Company's shareholders is March 7, 1997. Where
applicable, data included within this Proxy Statement has been adjusted to
reflect the five-for-four stock split paid December 16, 1996 to shareholders of
record on December 1, 1996.
1
Voting of Shares in the First Midwest Bancorp, Inc. Dividend Reinvestment Plan
The Company's Stock Transfer Agent, American Stock Transfer & Trust
Company, is the record owner of all shares of Common Stock held for participants
in the Dividend Reinvestment & Stock Purchase Plan ("DR Plan"). Each DR Plan
participant will receive a single proxy card covering those shares of Common
Stock credited to the participant's DR Plan account and those shares owned
outside the DR Plan.
Direction Cards for Participants in the First Midwest Bancorp Employee Stock
Ownership Plan and the First Midwest Bancorp Savings and Profit Sharing Plan
First Midwest Trust Company, N.A., as Trustee under the First Midwest
Bancorp Employee Stock Ownership Plan (the "ESOP") and the First Midwest Bancorp
Savings and Profit Sharing Plan (the "Profit Sharing Plan"), is the record owner
of all shares of the Common Stock held for participants in the ESOP and the
Profit Sharing Plan. The Trustee will vote the shares held for the account of
each ESOP and Profit Sharing Plan participant in accordance with the directions
received from participants. In order to obtain such voting directions, the
Trustee will forward this Proxy Statement and a buff-colored and a blue-colored
direction card to each ESOP and each Profit Sharing Plan participant,
respectively. The direction card(s) must be executed and returned if the shares
held pursuant to the ESOP and Profit Sharing Plan are to be voted, provided that
shares held in the Profit Sharing Plan for which no directions are received will
be voted by the Trustee proportionally in the same manner as it votes shares for
which directions were received. All direction cards returned will be kept
confidential by the Trustee or its tabulating agent and will not be disclosed to
the Company or any of its employees. Because ESOP and Profit Sharing Plan
participants are not the record owners of the related shares, such shares may
not be voted in person by ESOP or Profit Sharing Plan participants at the Annual
Meeting.
Cost of Solicitation
The cost of solicitation of proxies will be paid by the Company. Directors,
officers, employees and agents of the Company may solicit proxies by mail,
telephone, personal interview and other means. Directors, officers and employees
will receive no additional compensation for solicitation services. Brokerage
houses, nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares of record held by them
and will be reimbursed for their reasonable expenses.
ELECTION OF DIRECTORS
At its regular meeting of February 19, 1997, the Board of Directors was
formally advised by Directors Alan M. Hallene and Robert E. Joyce that, for
personal reasons, such Directors would not stand for re-election when their
terms of office expire at the 1997 Annual Meeting. Directors Hallene and Joyce
have each served with distinction since the Company's founding in 1982 and the
Company thanks them for their advice, counsel and many contributions.
As a result of the foregoing, on February 19, 1997 the Board of Directors
reduced the number of Directors comprising the Board from twelve to ten. To
make the three classes of Directors approximately equal in number, the Board
nominated Director Bruce S. Chelberg for election to the class of Directors
serving until the year 2000 (Director Chelberg was previously in the class of
Directors serving until the year 1998). The Board contemplates increasing the
number of Directors from the current ten to approximately twelve once suitable
candidates have been identified, and accordingly, the Nominating Committee has
commenced a director search.
Each year the shareholders elect the members of a class of Directors for a
term of three years. The Director Nominees named below have been nominated for
election for a term to end at the Annual Meeting in the year 2000 or until their
successors are elected. The Board of Directors has no reason to believe that
any of the Director Nominees will not be available for election. However, if
any of the Director Nominees is not available for election, proxies may be voted
for the election of other persons selected by the Board of Directors. Proxies
cannot, however, be voted for a greater number of persons than the number of
Director Nominees
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named. To be elected as a Director, each Director Nominee must receive the
favorable vote of a plurality of the shares represented and entitled to vote at
the Annual Meeting. Certain biographical information (including principal
occupation or employment for the past five years) concerning each Director
Nominee and Continuing Director, as of the date of the Annual Meeting, is set
forth below:
Director Nominees To Serve Until The Year 2000
Bruce S. Chelberg, 62 (Director since 1989)
Mr. Chelberg is Chairman and Chief Executive Officer of Whitman
Corporation (diversified, multinational holding company), Rolling
Meadows, Illinois. He is a director of Whitman Corporation, Snap-On
Tools Corporation and Northfield Laboratories, Inc.
Mr. Chelberg is Chairman of the Company's Nominating Committee and is
a member of the Company's Executive Committee.
Joseph W. England, 56 (Director since 1986)
Mr. England is Senior Vice President of Deere & Company (mobile power
equipment manufacturer), Moline, Illinois.
Mr. England is Chairman of the Company's Audit Committee.
Robert P. O'Meara, 59 (Director since 1982)
Mr. O'Meara is President and Chief Executive Officer of First Midwest
Bancorp, Inc. He is a member of the Company's Executive Committee and
is the brother of John M. O'Meara.
Continuing Directors Serving Until The Year 1998
C.D. Oberwortmann, 87 (Director since 1982)
Mr. Oberwortmann is Chairman of the Board of First Midwest Bancorp,
Inc. and is Chairman of the Company's Executive Committee.
John M. O'Meara, 51 (Director since 1982)
Mr. O'Meara is Executive Vice President and Chief Operating Officer of
First Midwest Bancorp, Inc. He is a member of the Company's Executive
Committee and is the brother of Robert P. O'Meara.
J. Stephen Vanderwoude, 53 (Director since 1991)
Mr. Vanderwoude is Chairman and Chief Executive Officer of Madison
River Telephone Company (telephone system acquiror and operator),
Chapel Hill, North Carolina. From 1993 to 1995, he was President and
Chief Executive Officer (retired, 1995) of Video Lottery Technologies,
Inc. From 1989 to 1993, he was President of Centel Corporation; Centel
Corporation was acquired by Sprint Corporation in 1993, at which time
he became President of Sprint's Local Telecomm Division. He is a
director of V-Band Corporation.
Mr. Vanderwoude is a member of the Company's Audit Committee.
3
Continuing Directors Serving Until The Year 1999
Andrew B. Barber, 88 (Director since 1982)
Mr. Barber is Vice Chairman of the Board of First Midwest Bancorp,
Inc. and is a member of the Company's Executive Committee.
O. Ralph Edwards, 62 (Director since 1988)
Mr. Edwards is Corporate Vice President-Human Resources (retired,
1992) of Abbott Laboratories (health care products manufacturer),
Abbott Park, Illinois.
Mr. Edwards is Chairman of the Company's Compensation Committee and is
a member of the Company's Nominating Committee.
Thomas M. Garvin, 61 (Director since 1989)
Mr. Garvin is Chairman and Chief Executive Officer of G.G. Products
Company (food business acquiror), Oak Brook, Illinois. Prior to 1993,
he was the President and Chief Executive Officer of the Keebler
Company. He is a director of Corporate Renaissance Group, Inc.
Mr. Garvin is a member of the Company's Executive and Audit
Committees.
Sister Norma Janssen, O.S.F, 49 (Director since 1993)
Sister Norma is Chairperson and Chief Executive Officer of Franciscan
Sisters Health Care Corporation (health care provider), Mokena,
Illinois.
Sister Norma is a member of the Company's Compensation Committee.
BOARD OF DIRECTORS' OPERATIONS
Board of Directors and Committee Meetings
The Board of Directors has established Executive, Audit, Compensation and
Nominating Committees, and may periodically establish other Committees as deemed
advisable.
The members of the Executive Committee are: C.D. Oberwortmann, Chairman;
Andrew B. Barber; Bruce S. Chelberg; Thomas M. Garvin; John M. O'Meara; and
Robert P. O'Meara. The function of this Committee is to exercise certain powers
of the Board of Directors, as defined by the Company's By-Laws, between Board
meetings. The Executive Committee met four times during 1996.
Audit Committee members during 1996 were: Joseph W. England, Chairman;
Bruce S. Chelberg; Thomas M. Garvin; and J. Stephen Vanderwoude. The functions
of this Committee are to: select and recommend to the Board of Directors the
independent auditors; review the plans for, and the findings from, the
independent and internal audits; and review the results of the regulatory agency
examinations of the Company. The Audit Committee met five times in 1996. As of
February 19, 1997, the members of the Audit Committee were: Joseph W. England,
Chairman; Thomas M. Garvin; and J. Stephen Vanderwoude.
The members of the Compensation Committee during 1996 were: O. Ralph
Edwards, Chairman; Alan M. Hallene; and Sister Norma Janssen. The functions of
this Committee are to determine and recommend to the Board of Directors the
compensation of the Company's directors and to review the propriety of the
Company's compensation and benefits programs. The Compensation Committee met
four times in 1996. As of February 19, 1997, the members of the Compensation
Committee were: O. Ralph Edwards, Chairman, and Sister Norma Janssen.
4
The members of the Nominating Committee during 1996 were Alan M. Hallene,
Chairman, and Bruce S. Chelberg. The functions of this Committee are to
establish criteria for the nomination of directors and identify and recommend to
the Board of Directors candidates for director nomination. The Nominating
Committee did not meet during 1996. As of February 19, 1997, the members of the
Nominating Committee were Bruce S. Chelberg, Chairman, and O. Ralph Edwards.
The Company's Board of Directors held four meetings during 1996. Except for
Directors Hallene and Joyce, each Director attended at least 75% of the
aggregate of the total number of meetings held by the Board of Directors and the
various Committees of the Board of Directors on which he/she served.
Board of Directors' Compensation
Non-employee members of the Board of Directors are compensated by the
Company through an annual $11,000 retainer, payable quarterly, and a $750 fee
for each Board meeting attended. Non-employee chairpersons of Board committees
receive an additional $1,500 annual retainer, payable quarterly. Non-employee
committee members, including the chairperson, also receive a $750 fee for each
Committee meeting attended. The median total compensation paid in 1996 to non-
employee directors was $17,750. Employee members of the Board (i.e., C. D.
Oberwortmann, John M. O'Meara and Robert P. O'Meara) receive no Board
compensation.
Deferred Compensation Plan for Non-employee Directors
The "Deferred Compensation Plan for Non-employee Directors" allows non-
employee directors to defer receipt of either 50% or 100% of any director fees
and retainers due such directors. The deferred director fees and retainers are
payable at the director's election either as a lump sum or in installments over
a period not to exceed ten years. Payments under this plan begin at the date
specified by the director or upon cessation of service as a director.
Board of Directors' Retirement Policy
The Company's Board of Directors Retirement Policy requires a director to
resign upon attainment of age seventy or upon the occurrence of certain defined
events. Directors Barber and Oberwortmann have been deemed by the Board of
Directors to be "founding directors" of the Company not subject to the
retirement provisions until January 1, 1998, which date may be extended as the
Board of Directors deems appropriate.
Retired directors may be considered for appointment as nonvoting "Emeritus
Directors" upon recommendation of the Nominating Committee. Emeritus Directors
will be available for advice and counsel to the Company and will receive an
annual $1,000 retainer, payable quarterly. It is with deep regret that we
inform you that the Company's only Emeritus Director, Robert K. Anderson, died
during 1996. Director Joyce will be considered for appointment as an Emeritus
Director at the May 1997 meeting of the Board.
EXECUTIVE OFFICERS OF THE COMPANY
The Company's Executive Officers are elected annually by the Company's
Board of Directors. Certain information regarding the Company's Executive
Officers is set forth below.
Executive
Officer
Name (Age as of April 16, 1997) Position or Employment for Past Five Years Since
- --------------------------------- -------------------------------------------------- ---------
Clarence D. Oberwortmann (87) Chairman of the Board 1982
Andrew B. Barber (88) Vice Chairman of the Board 1982
Robert P. O'Meara (59) President & Chief Executive Officer 1982
John M. O'Meara (51) Executive Vice President & Chief Operating Officer 1987
Donald J. Swistowicz (45) Executive Vice President & Chief Financial Officer 1982
5
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information with respect to annual
and other compensation paid to the Company's Chief Executive Officer and the
other highest paid Executive Officers of the Company whose annual base salary
and bonus for the last fiscal year exceeded $100,000:
Long-Term
Compensation
------------
Awards
------------
Annual Compensation Securities All Other
Name and Principal Fiscal ----------------------- Underlying Compen-
Position Year Salary ($) Bonus ($) Options(#) sation ($)
- -------------------------- ------ ---------- --------- ---------- ----------
Robert P. O'Meara, 1996 $416,000 $100,825 12,773 $58,313
President & Chief 1995 400,000 91,071 13,861 55,907
Executive Officer. 1994 375,000 86,149 12,743 57,148
John M. O'Meara, 1996 338,000 106,921 10,378 53,130
Executive Vice 1995 325,000 123,996 11,263 45,433
President & Chief 1994 305,000 70,069 10,364 46,490
Operating Officer.
Donald J. Swistowicz, 1996 165,000 34,079 4,343 22,852
Executive Vice President 1995 152,000 33,717 4,515 20,600
& Chief Financial and 1994 142,500 27,134 4,150 21,051
Accounting Officer.
Note
"All Other Compensation" represents contributions by the Company to the
Company's qualified and non-qualified defined contribution retirement
plans.
Stock Option Grants in 1996
Individual Grants
- ----------------------------------------------------------------------------------------------
% of
No. of Total
Securities Options
Underlying Granted to Per Share Grant Date
Options Employees Exercise Present
Name Granted (#) in 1996 Price ($) Expiration Date Value ($)
- ---------------------- ----------- ---------- --------- --------------- ----------
Robert P. O'Meara 12,773 7.9% $22.80 Feb. 21, 2006 $61,694
John M. O'Meara 10,378 6.4% $22.80 Feb. 21, 2006 50,126
Donald J. Swistowicz 4,343 2.7% $22.80 Feb. 21, 2006 20,977
Notes
The "Grant Date Present Value", above, was determined using the so-called
"Black-Scholes" option pricing model. The significant factors or
assumptions incorporated into the Black-Scholes model in estimating the
Grant Date Present Value were as follows:
. An exercise price of each option of $22.80, which is equal to the fair
market value of the Company's Common Stock on the date of grant, and an
option term of ten years.
. An interest rate of 5.00% that represents the interest rate on a U.S.
Treasury security on the date of grant with a maturity date
corresponding to that of the option term.
6
. Volatility of 16.7% calculated using daily stock prices for a four-year
period.
. Dividends at the rate of $0.67 per share, representing the annualized
dividends paid with respect to a share of the Company's Common Stock at
the date of grant.
. Reductions of approximately 18% to reflect the probability of a
shortened option term due to termination of employment prior to the
option expiration date.
The ultimate value of the options will depend on the future market price of
the Company's Common Stock, which cannot be forecast with reasonable
accuracy. The actual value, if any, an executive may realize upon the
exercise of an option will depend on the excess of the market value of the
Company's Common Stock, on the date the option is exercised, over the
exercise price of the option.
Aggregated Option Exercises in 1996 and Option Value Table as of December 31,
1996
Number of Securities Value of
Shares Underlying Unexercised Unexercised In-the-Money
Acquired Options at Dec. 31, 1996 Options at Dec. 31, 1996
on Value --------------------------- ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------- -------- -------- ----------- ------------- ----------- -------------
Robert P. O'Meara N/A N/A 102,069 33,005 $1,767,435 $374,330
John M. O'Meara N/A N/A 78,646 26,822 1,357,294 304,208
Donald J. Swistowicz N/A N/A 31,228 10,933 539,337 123,716
Notes
"N/A" denotes that, since the inception of the First Midwest Bancorp, Inc.
1989 Omnibus Stock and Incentive Plan, no stock option exercises by the
named executives have occurred. Additionally, options are considered "in-
the-money" if the fair market value of the underlying Common Stock exceeds
the exercise price of the related stock option. For "in-the-money" options,
the "Value of Unexercised In-the-Money Options at December 31, 1996"
represents the difference between the closing price ($32.625) of the Common
Stock on December 31, 1996 and the exercise price of the underlying
options, multiplied by the number of applicable options. Since the
inception of such Plan, no stock options have been repriced.
Defined Benefit or Actuarial Pension and Retirement Plans
Consolidated Pension Plan
Average Years of Service
Final ----------------------------------------------------
Earnings 10 15 20 25 30 35
-------- ------- ------- ------- ------- ------- -------
$125,000 $10,265 $15,397 $20,529 $25,661 $30,794 $35,926
150,000 12,715 19,072 25,429 31,786 38,144 44,501
175,000 15,165 22,747 30,329 37,911 45,494 53,076
200,000 17,615 26,422 35,229 44,036 52,844 61,651
225,000 20,065 30,097 40,129 50,161 60,194 70,226
The table above illustrates the amount of annual retirement income,
computed on an actuarial basis using the "straight-life annuity method",
provided by the Company's consolidated defined benefit pension plan at normal
retirement age (65) in specified average earnings and service classifications.
(Benefits are payable for life, or if spousal benefits are elected, a reduced
amount is payable for the life of the employee and of the surviving spouse.)
"Average Final Earnings" are determined substantially on the basis of the
"annual compensation" included in the Summary Compensation Table, subject to the
provisions of the Internal Revenue Code of 1986, as amended (the "Code")
limiting the amount of annual compensation which may be taken into account. (The
limitation for 1996 was $150,000. For the five years prior to 1996, the
limitations were as follows: 1995 -$150,000; 1994 - $150,000; 1993 - $235,840;
1992 - $228,860; and, 1991 - $222,200.) The amounts shown in the pension table,
above, are not offset by any Social Security benefits available. At December 31,
1996,
7
the years of credited service for the Company's consolidated defined benefit
pension plan for the individuals named in the Summary Compensation table were as
follows: Robert P. O'Meara - 17; John M. O'Meara - 17; and Donald J. Swistowicz
- - 15.
Nonqualified Pension Plan
Because benefits from the Company's consolidated pension plan are subject
to limitations under the Code, during 1989 the Company's Board of Directors
authorized the establishment of a nonqualified pension plan (the "nonqualified
plan"). The nonqualified plan provides for additional pension payments from the
general assets of the Company of amounts which would have been paid to
participants under the actuarially-based pension formula of the Company's
consolidated pension plan absent the compensation limitations of the Code. In
order to reduce the administrative burden associated with the maintenance of a
nonqualified plan, the Board of Directors approved the crediting as deferred
compensation, to all employees participating in the nonqualified plan, of the
present value of the nonqualified vested pension benefits accrued during the
year. Amounts credited in 1996 as deferred compensation for 1996 service to the
executives listed in the Summary Compensation Table were as follows: Robert P.
O'Meara -$48,868; John M. O'Meara - $30,410; and Donald J. Swistowicz - $5,623.
Executive Employment Agreements
In order to advance the interests of the Company by enabling the Company to
attract and retain the services of key executives upon which the successful
operations of the Company are largely dependent, during 1990 the Board of
Directors authorized the Compensation Committee to tender Employment/Change in
Control Agreements to such key executives. The Compensation Committee has
determined that the following executives are eligible for such Agreements: Class
I Agreements -- Robert P. O'Meara and John M. O'Meara; Class II Agreements --
Donald J. Swistowicz and 5 other senior executives of the Company's
subsidiaries; and Class III Agreements -- 31 other senior executives of the
Company or its subsidiaries.
The Agreements are for a base term of two years for Classes I and II and
one year for Class III and automatically renew unless 90 days notice of non-
renewal is provided to the other party. If an executive's employment is
terminated prior to the expiration of the Agreement or by the providing of
notice of non-renewal, or if the executive is constructively discharged (for
example, as a result of a material reduction in responsibilities or
compensation, or other material breach of the Agreement by the Company), the
executive is entitled to a severance benefit of: twelve months base pay for
Class I executives and six months base pay for Class II and III executives; a
prorata short-term bonus award; and a limited amount of health care and
outplacement counseling benefits. If the executive remains unemployed at the end
of such time periods, an additional amount of limited benefits may be provided
at the discretion of the Company.
Upon a change in control, as defined, the term of the Agreement is extended
three, two and one year(s) for Class I, II and III executives, respectively,
from the date of the change in control. An executive who is terminated or
constructively discharged after a change in control is entitled to a lump sum
payment of the aggregate value [three, two and one time(s) such value for
Classes I, II and III, respectively] of the following benefits: severance pay
(base salary and short-term bonus awards); perquisites to which the executive
was entitled on the date of the change in control; a limited amount of group
health care benefits; contributions for benefits expected to be made to the
Company's tax-qualified and nonqualified retirement plans; and a limited amount
of outplacement counseling.
Supplemental compensation will also be provided to mitigate the effects of
any excise taxes applicable to executive employment payments. Each executive is
subject to a confidentiality agreement, and if the executive voluntarily
terminates employment prior to a change in control, the executive will be
subject to noncompetition and nonsolicitation agreements.
8
Compensation Committee Report on Executive Compensation
The Compensation Committee (the "Committee") believes that the Company's
compensation strategy reflects the following: compensation should focus
executives on achieving performance objectives that enhance shareholder value;
compensation should motivate executives to both individually and collectively
take actions that support the attainment of the Company's mission and long and
short-term objectives; and compensation should enable the Company to attract and
retain individuals who are in a position to contribute materially to the
Company's growth, development and financial success.
Executive compensation consists of three primary, variable elements: a base
salary; a potential cash bonus award under the Company's Short-Term Incentive
Plan; and a potential stock option or other award under the Company's 1989
Omnibus Stock and Incentive Plan. In determining the appropriate mix among
these elements, the Committee considers the results of compensation comparisons
performed by the Company itself, the Company's independent compensation
consultant, Hewitt Associates, and various industry associations. Additionally,
the specific factors considered by the Committee in establishing executive
compensation under each of these elements are discussed below.
Base Salary
Executive base salaries are reviewed annually by the Committee and
presented to the full Board for approval; executives who are members of the
Board of Directors do not participate in the approval process. Executive base
salaries are typically targeted at the competitive median for services performed
in similar capacities in similarly-sized financial institutions, adjusted
primarily for individual performance and also for other factors, such as
experience, responsibility and internal equity. Based upon the foregoing, the
annual base salaries of Robert P. O'Meara, John M. O'Meara and Donald J.
Swistowicz were fixed for 1996 as disclosed in the Summary Compensation Table.
First Midwest Bancorp, Inc. Short-Term Incentive Plan
The First Midwest Bancorp, Inc. Short-Term Incentive Plan ("Incentive
Plan"), established in 1989, is an integral element of the compensation mix
because the Incentive Plan specifically aligns the short-term performance goals
of the Company and its subsidiaries with the goals of the individual employees
responsible for achieving such goals. Approximately 280 employees were
designated Incentive Plan participants during 1996. Such employees are placed
into one of eight participant categories based upon salary grade. Target awards
are expressed as a percentage of base salary and range from 5% to 25%, depending
upon participant category. (The 1996 target award for Robert P. O'Meara and John
M. O'Meara was 25% each, while the target award for Donald J. Swistowicz was
20%.) Based upon the level of attainment of predetermined annual corporate
performance goals as well as predetermined individual performance goals, an
award ranging between 0% to 150% of the target can be earned. Based upon the
foregoing criteria, Robert P. O'Meara, John M. O'Meara and Donald J. Swistowicz
earned the Incentive Plan cash bonus awards for 1996 as disclosed in the Summary
Compensation Table.
First Midwest Bancorp, Inc. 1989 Omnibus Stock and Incentive Plan
The First Midwest Bancorp, Inc. 1989 Omnibus Stock and Incentive Plan
("Omnibus Plan") allows the granting of both incentive and nonstatutory stock
options, stock appreciation rights, restricted stock, performance units and
performance shares. To date, only nonstatutory stock options have been awarded.
The Omnibus Plan is administered by the Committee with participants being
selected from those employees who are in a position to contribute materially to
the Company's long-term growth, development and financial success. Approximately
70 employees were Omnibus Plan participants during 1996. The exercise price of
each stock option reflects the fair market value of the Company's Common Stock
on the date of grant. By featuring a long-term vesting schedule, the Committee
seeks to motivate Omnibus Plan participants to enhance the long-term performance
of the Company.
The number of options awarded a participant is determined by taking a
Committee-established percentage of that participant's base salary and dividing
that amount by the fair market value of the Company's Common Stock on the date
of grant. (The percentage of base salary utilized in 1996 for Robert P. O'Meara
and John M. O'Meara was 70% while that for Donald J. Swistowicz was 60%.) Such
number of options, however, may be reduced through application of a multiplier
of 0% or 50% to reflect the Committee's assessment of a
9
participant's individual performance. Based upon the foregoing criteria, Robert
P. O'Meara, John M. O'Meara and Donald J. Swistowicz earned the Omnibus Plan
stock option awards as disclosed in the Summary Compensation Table.
Chief Executive Officer Compensation
Each element of Robert P. O'Meara's compensation is determined on the same
basis, as previously described in this report, as the compensation of the other
two named executives. Accordingly: his base salary was fixed for 1996 as
disclosed in the Summary Compensation Table; his Short Term Incentive Plan cash
bonus award for 1996 reflected the Company's substantial attainment of the
predetermined annual performance goals previously described; and, his 1996 stock
option award under the Omnibus Plan reflected utilization of the Committee-
established percentage of his base salary with no reduction based upon his
performance.
Deductibility of Executive Compensation
The Committee does not believe that the limitations on the deductibility of
executive compensation imposed by Internal Revenue Code Section 162(m) will
affect the deductibility of compensation expected to be paid under the Company's
existing plans and programs during 1997. The Committee will continue to
evaluate any impact which Section 162(m) may have and take such actions as it
deems appropriate.
Responsibility for Report on Executive Compensation
This Compensation Committee Report on Executive Compensation was prepared
by the Committee, whose members during 1996 were: O. Ralph Edwards, Chairman;
Alan M. Hallene; and Sister Norma Janssen.
The Committee's Report on Executive Compensation and the following Stock
Performance Graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed "filed" under such Acts.
Stock Performance Graph
The graph below compares, over a five-year period, the cumulative total
return (defined as stock price appreciation and dividends) to shareholders for
the Company's Common Stock against a broad-market total return equity index and
a commonly-published industry total return equity index. The broad-market total
return equity index utilized in this comparison is the "Standard & Poor's 500
Stock Index" ("the S & P 500"), which is a composite index of the equity
performance of 500 representative companies within those industry groups deemed
significant by Standard & Poor's. The published industry index utilized in the
comparison is the Keefe, Bruyette & Woods, Inc. "KBW 50 Total Return Index" (the
"KBW 50 TR"), which is a composite index of the equity performance of 50 banking
companies located throughout the United States which range in asset size from
$11 billion to $323 billion and are of a median asset size of $36 billion.
Comparison of Five Year Cumulative Total Return Among
the Company, the S & P 500 Index & KBW 50 TR Index *
[PERFORMANCE GRAPH APPEARS HERE]
First Midwest S&P 500 KBW 50 TR
------------- ------- ---------
1991.......... $100 $100 $100
1992.......... $124 $108 $127
1993.......... $164 $118 $134
1994.......... $160 $120 $128
1995.......... $198 $165 $204
1996.......... $288 $203 $289
* Assumes $100 invested on December 31, 1991 in the Company's Common
Stock, the S & P 500 and the KBW 50 TR and the reinvestment of all related
dividends.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT
Directors, Director Nominees and Executive Officers
The following table sets forth, as of the Annual Meeting record date,
information with respect to the beneficial ownership of the outstanding shares
of Common Stock (16,791,230 shares) and vested-but-not-exercised nonstatutory
stock options (719,239 shares) by each Director, Director Nominee and Executive
Officer named in the Summary Compensation Table, and all Directors, Director
Nominees and Executive Officers as a group. To the knowledge of the Company, no
shareholder beneficially owns 5% or more of the outstanding Common Stock.
Number of Vested,
Unexercised Stock
Number Percent Options Included in
Beneficial Owner of Shares Ownership Shares Listed to Left
--------------------------- --------- --------- ---------------------
Andrew B. Barber 429,139 2.45% 0
Bruce S. Chelberg 8,750 0.05% 0
O. Ralph Edwards 1,411 0.01% 0
Joseph W. England 5,448 0.03% 0
Thomas M. Garvin 5,854 0.03% 0
Alan M. Hallene 10,721 0.06% 0
Sister Norma Janssen, O.S.F. 0 0.00% 0
Robert E. Joyce 406,238 2.32% 0
C.D. Oberwortmann 431,273 2.46% 0
John M. O'Meara 451,559 2.58% 89,459
Robert P. O'Meara 495,886 2.83% 115,371
J. Stephen Vanderwoude 1,250 0.01% 0
Donald J. Swistowicz 85,410 0.49% 35,560
As a group (13 persons), all Directors, Director Nominees and Executive
Officers own 2,332,939 shares (13.32%).
The share amount shown for John M. O'Meara includes 55,172 shares of Common
Stock which are owned by trusts over which Mr. O'Meara exercises voting and
investment rights. Beneficial ownership of such shares is disclaimed by Mr.
O'Meara.
The Profit Sharing Plan and the ESOP own 868,530 (or 5.17%) and 83,519 (or
0.50%), respectively, of the shares of Common Stock. Pursuant to the Profit
Sharing Plan and the ESOP, participants exercise voting rights with respect to
the portion of the shares of Common Stock allocated to their accounts, and also
direct the Trustee with respect to the investment of their accounts among the
investment funds maintained under the Profit Sharing Plan. Accordingly, only
those shares of Common Stock attributable to the Profit Sharing Plan and ESOP
accounts of the persons and groups listed are included in the above table.
Right of First Refusal Agreements
On June 22, 1994, the Company entered into "Right of First Refusal
Agreements" with certain shareholders who directly own approximately 12% of the
Company's outstanding Common Stock. The Agreements provide that if a shareholder
dies and the shareholder's representative desires to sell any of the
shareholder's shares of the Company's Common Stock, the representative must
first offer such shares to the Company. The Agreements impose no obligation on
the Company to purchase any such shares. If the Company elects to purchase such
shares, the price to be paid would be equal to the fair market value of such
shares as determined by reference to transactions reported for the Company's
Common Stock on The NASDAQ Stock Market. The Directors who are parties to, or
are affected by, these Agreements are: Andrew B. Barber; Robert E. Joyce; C.D.
Oberwortmann; John M. O'Meara; and, Robert P. O'Meara. (Former Director Frank J.
Turk died in November, 1995 beneficially owning 202,960 shares, or 1.3%, of the
Company's Common Stock. Pursuant to the related Agreement with former Director
Turk, 68,460 shares of such stock were purchased at fair market
11
value by the Company from Director Turk's estate.)
Ownership Reports
Section 16 of the Securities Exchange Act of 1934 requires directors,
certain officers and certain other owners to periodically file notices of
changes in beneficial ownership of Common Stock with the Securities and Exchange
Commission. To the best of the Company's knowledge, during 1996 all required
filings were timely submitted.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, through certain of its subsidiaries, has made loans and had
transactions with certain of its Executive Officers and Directors. However, all
such loans and transactions were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than the normal risk of collectibility or present other
unfavorable features.
INDEPENDENT AUDITORS
On August 21, 1996, upon the unanimous recommendation of the Audit
Committee, the Board of Directors engaged the accounting firm of Ernst & Young
LLP as the Company's independent auditors for 1996, replacing KPMG Peat Marwick
LLP. During the Company's two fiscal years prior to 1996 and any interim period
subsequent to December 31, 1995 through August 21, 1996, there were no
disagreements with KPMG Peat Marwick LLP on any matter of accounting principles
or practices, financial statement disclosure, auditing scope or procedure, or
any reportable events. KPMG Peat Marwick LLP's report on the Company's financial
statements for each of the past two fiscal years contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles.
A representative of Ernst & Young LLP will be present at the Annual
Meeting, will have an opportunity to make a statement, if desired, and will be
available to respond to appropriate questions. The Audit Committee currently
intends to recommend the selection of independent auditors for 1997 at the May
1997 Board of Directors meeting.
OTHER BUSINESS
So far as is presently known, there is no business to be transacted at the
Annual Meeting other than that referred to in the Notice of Annual Meeting of
Shareholders and it is not anticipated that other matters will be brought before
the Annual Meeting. If, however, other matters should be brought before the
Annual Meeting, proxy holders would vote or act in accordance with their
judgment on such matters.
SHAREHOLDER PROPOSALS
Shareholders desiring to submit proposals to be voted upon by shareholders
at the 1998 Annual Meeting must submit their proposals to the Corporate
Secretary, at the Company's executive offices in Itasca, Illinois, no later than
November 8, 1997. Any such proposals shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act of 1934 and to the
provisions of the Company's Restated Certificate of Incorporation.
By Order of the Board of Directors:
/s/ Alan R. Milasius
Alan R. Milasius, Senior Vice President & Corporate Secretary
12
PROXY
FIRST MIDWEST BANCORP, INC.
Proxy Solicited on Behalf of the Board of Directors
Annual Meeting of Shareholders to be Held April 16, 1997
I, the undersigned shareholder of First Midwest Bancorp, Inc. (the "Company"),
hereby appoint Donald J. Swistowicz, James M. Roolf and Barbara E. Briick, or
any of them, the true and lawful attorney of the undersigned, with full power of
substitution, to appear and act as proxies of the undersigned, and to vote, as
designated below, all the shares of Common Stock of the Company held on record
by the undersigned on February 20, 1997 at the Annual Meeting of Shareholders of
the Company to be held on April 16, 1997 or any adjournment(s) thereof as fully
as the undersigned might or could do if personally present.
(Continued and to be signed on the reverse side.)
Please mark, sign and date this proxy card and return it promptly using the
enclosed envelope.
1. ELECTION OF DIRECTORS: Bruce S. Chelberg; Joseph W. England; Robert P.
O'Meara.
FOR WITHHELD FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
2. In their discretion on any other item of business as may properly come
before the Annual Meeting or any adjournment(s) thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR the election of all Nominees for Director, and as to any other item of
business as may properly come before the Annual Meeting or any adjournment(s)
thereof, it will be voted in the discretion of the named Proxies.
SIGNATURE(S) & DATE
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
DIRECTION CARD (Profit Sharing Plan)
FIRST MIDWEST BANCORP, INC.
First Midwest Bancorp Savings and Profit Sharing Plan and Trust
Direction for Voting Shares of the Company Held in the Trust
Annual Meeting of Shareholders to be Held April 16, 1997
I hereby direct the Trustee, First Midwest Trust Company, N.A. or any successor
Trustee, to vote, as designated below, all the shares of Common Stock of First
Midwest Bancorp, Inc. (the"Company") subject to voting direction by the
undersigned at the Annual Meeting of Shareholders of the Company to be held on
April 16, 1997 or any adjournment(s) thereof.
(Continued and to be signed on the reverse side.)
Please mark, sign and date this Direction Card and return it promptly using the
enclosed envelope.
1. ELECTION OF DIRECTORS: Bruce S. Chelberg; Joseph W. England; Robert P.
O'Meara.
FOR WITHHELD FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
2. In their discretion on any other item of business as may properly come
before the Annual Meeting or any adjournment(s) thereof.
These directions are requested by the Trustee with regard to the voting of a
Proxy solicited by the Company's Board of Directors from the Trustee as the
record owner of shares held pursuant to the First Midwest Bancorp Savings and
Profit Sharing Plan and Trust. If no instruction is made on this Direction
Card, the shares represented hereby will be voted FOR the election of all
Nominees for Director, and as to any other item of business as may properly come
before the Annual Meeting or any adjournment(s) thereof, it will be voted in the
discretion of the Trustee.
SIGNATURE & DATE
NOTE: Please sign exactly as name appears hereon.
DIRECTION CARD (ESOP)
FIRST MIDWEST BANCORP, INC.
First Midwest Bancorp Employee Stock Ownership Plan and Trust
Direction for Voting Shares of the Company Held in the Trust
Annual Meeting of Shareholders to be Held April 16, 1997
I hereby direct the Trustee, First Midwest Trust Company, N.A. or any successor
Trustee, to vote, as designated below, all the shares of Common Stock of First
Midwest Bancorp, Inc. (the "Company") subject to voting direction by the
undersigned at the Annual Meeting of Shareholders of the Company to be held on
April 16, 1997 or any adjournment(s) thereof.
1. ELECTION OF DIRECTORS: Bruce S. Chelberg; Joseph W. England; Robert P.
O'Meara.
FOR WITHHELD FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
2. In their discretion on any other item of business as may properly come
before the Annual Meeting or any adjournment(s) thereof.
(Continued and to be signed on the reverse side.)
Please mark, sign and date this Direction Card and return it promptly using the
enclosed envelope.
These directions are requested by the Trustee with regard to the voting of a
Proxy solicited by the Company's Board of Directors from the Trustee as the
record owner of shares held pursuant to the First Midwest Bancorp Employee Stock
Ownership Plan and Trust. If no instruction is made on this Direction Card, the
shares represented hereby will be voted FOR the election of all Nominees for
Director, and as to any other item of business as may properly come before the
Annual Meeting or any adjournment(s) thereof, it will be voted in the discretion
of the Trustee.
SIGNATURE & DATE
NOTE: Please sign exactly as name appears hereon.