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OMB APPROVAL
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OMB Number:
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3235-0059
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Expires:
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February 28, 2006
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Estimated average burden
hours per
response
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12.75
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
o
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Filed by a Party other than the Registrant
o
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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ý
Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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First Oak Brook Bancshares, Inc.
(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):
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ý
No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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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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Fee paid previously with preliminary materials.
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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.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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SEC 1913 (02-02)
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Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number.
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FIRST OAK BROOK BANCSHARES, INC.
1400 Sixteenth Street
Oak Brook, Illinois 60523
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 4, 2004
April 1, 2004
To the Shareholders of First Oak Brook Bancshares, Inc:
You are cordially invited to attend the Annual Meeting of the
Shareholders of First Oak Brook Bancshares, Inc. to be held
in the Conference Center located in the Lower Level of the Oak
Brook Bank Building, 1400 Sixteenth Street, Oak
Brook, Illinois 60523, on Tuesday, May 4, 2004 at
10:00 A.M. (the Annual Meeting) for the purpose
of considering and acting on the following:
(1) Election of three (3) Class II directors;
(2) Proposal to approve the Companys Incentive
Compensation Plan;
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(3)
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Proposal to ratify the appointment of KPMG LLP as independent
auditors for the Company; and
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(4)
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Such other business that may properly come before the Annual
Meeting or any adjournment thereof.
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Only shareholders of record at the close of business on
March 19, 2004 will be entitled to notice of and to vote at
the Annual Meeting.
All persons who find it convenient to do so are invited to
attend the Annual Meeting in person. However, regardless of
whether or not you attend the meeting, it is important that your
shares are represented and voted. Therefore, please sign and
return the enclosed Proxy promptly. If you attend the Annual
Meeting, you may vote in person if you wish, even though you
previously returned your Proxy.
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By Order of the Board of Directors
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Lorenzo Pate
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Acting Secretary
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1
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors (the Board of
Directors or Board) of First Oak Brook
Bancshares, Inc. (the Company) of proxies for
use at the 2004 Annual Meeting of Shareholders to be held
Tuesday, May 4, 2004 (the Annual Meeting) and
at any adjournment thereof.
The Company will bear all costs
in connection with this solicitation. It is intended that
proxies in the accompanying form, when returned properly
executed, will be voted at the Annual Meeting. If a choice on
any matter has been specified by the shareholder, the shares
will be voted accordingly. If no choices are specified, the
shares will be voted
FOR
the item in question. Proxies
may be revoked by notice to the Company in writing or in the
open meeting at any time before they are exercised.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the inspector of election appointed for the Annual
Meeting who 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, such shares, or broker non-votes,
will be considered as present for quorum purposes, but not
entitled to vote with respect to that matter.
Shareholders of record at the close of business on
March 19, 2004 will be entitled to vote. On that date,
there were 9,691,019 outstanding shares of common stock.
Each outstanding share of common stock entitles the holder to
one vote. All common stock and stock option totals listed in
this Proxy Statement have been adjusted to reflect a
three-for-two stock split approved by the Board in July 2003.
This Proxy Statement, Notice of Meeting and accompanying proxy
card are being mailed to shareholders on or about April 1,
2004.
2
INFORMATION CONCERNING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information concerning the
beneficial ownership of the Companys common stock
(Common Stock), as of March 19, 2004, by:
(1) each person known to the Company to be the beneficial
owner of more than 5% of its Common Stock; (2) each Company
director, director nominees and those Company officers that have
been determined to be executive officers under applicable
Securities and Exchange Commission rules; and (3) all
directors and executive officers of the Company as a group. The
address of all such persons unless otherwise stated is
c/o the Company, 1400 Sixteenth Street, Oak
Brook, Illinois 60523.
Security Ownership of Directors and
Management
(1)
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Amount and
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Nature of
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Acquirable
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Percent
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Beneficial
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Within 60
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of
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Title of Class
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Name of Beneficial Owner
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Ownership
(2)
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Days
(3)
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Class
(4)
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Common
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Eugene P. Heytow
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29,505
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(5)
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167,400
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1.9%
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Richard M. Rieser, Jr.
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573,912
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(6)
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81,000
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6.4%
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Frank M. Paris
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558,111
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57,000
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6.0%
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Miriam Lutwak Fitzgerald
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934,869
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(7)
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4,750
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9.2%
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Geoffrey R. Stone
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4,500
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9,250
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*
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Michael L. Stein
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2,250
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7,750
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*
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Stuart I. Greenbaum
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(8)
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7,750
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*
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John W. Ballantine
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3,000
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4,000
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*
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Charles J. Gries
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2,841
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1,000
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*
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George C. Clam
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33,513
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(9)
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28,270
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*
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Rosemarie Bouman
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15,111
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(10)
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40,170
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*
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Brian C. England
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5,515
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27,600
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*
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Jill D. Wachholz
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336
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5,940
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*
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Lorenzo Pate
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337
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2,640
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*
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All Directors and Executive Officers as a group
(14 Persons)
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2,163,800
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444,520
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25.4%
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*
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Denotes less than 1% ownership.
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Security Ownership of Certain Beneficial
Owners
(1)
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Amount and Nature
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Name and Address
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of Beneficial
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Percent of
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Title of Class
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of Beneficial Owner
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Ownership
(2)
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Class
(4)
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Common
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Mitzi Heytow
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1,019,322
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9.9%
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c/o Oak Brook Bank 1400 Sixteenth Street Oak Brook, Illinois 60523
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Common
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Banc Fund IV L.P.,
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596,773
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(11)
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5.8%
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Banc Fund V L.P., and Banc Fund VI L.P. 208 S. LaSalle Street Chicago, Illinois 60604
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3
FOOTNOTES
(1) Shares of stock deemed
beneficially owned at March 19, 2004.
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(2)
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The nature of beneficial ownership for shares shown in an
individuals name is sole voting and investment power
unless otherwise indicated.
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(3)
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Reflects the number of shares that could be purchased by
exercising options available as of March 19, 2004 or within
60 days thereafter under the Companys 2001 Stock
Incentive Plan.
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(4)
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The percentage of Common Stock ownership was calculated with an
outstanding share amount of 10,249,43l which included
558,412 shares which could be acquired within 60 days
under exercisable options.
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(5)
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Excludes 1,019,322 shares of Common Stock held solely by or
in trust for the benefit of Mitzi Heytow, Mr. Heytows
spouse, in and over which he disclaims beneficial interest,
voting and investment power.
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(6)
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Excludes 50,000 shares of Common Stock held solely by
Mr. Riesers spouse in and over which he disclaims
beneficial interest, voting and investment power. Excludes
8,745 shares of Common Stock held by an irrevocable trust
of which Mr. Rieser is the co-trustee for the benefit of
his son in which he disclaims any present beneficial interest
but over which he has shared voting and investment power.
Excludes 13,077 shares of Common Stock held by
Mr. Riesers mothers testamentary trust in and
over which he disclaims any present beneficial interest but over
which he has shared voting and investment power.
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(7)
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Excludes 31,500 shares of Common Stock held by
Dr. Fitzgerald as custodian for the benefit of her minor
children in which she disclaims beneficial interest but over
which she exercises voting and investment power. Includes
924,957 shares of Common Stock of which 461,721 are held by
an irrevocable insurance trust and 463,236 are held by a
revocable trust. Dr. Fitzgerald is the trustee for the
benefit of her minor children for both trusts and retains a
present beneficial interest, voting and investment power with
respect to both trusts.
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(8)
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Excludes 750 shares of Common Stock held solely by
Mr. Greenbaums spouse in and over which he disclaims
beneficial interest, voting and investment power.
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(9)
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Excludes 10,500 shares of Common Stock held in trust solely
for the benefit of Mr. Clams spouse in and over which
he disclaims beneficial interest, voting and investment power.
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(10)
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Excludes 75 shares of Common Stock held by Ms. Bouman
as custodian for the benefit of her minor daughter in which she
disclaims beneficial interest but over which she exercises
voting and investment power.
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(11)
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Beneficial ownership information derived from the most recent
Schedule 13G/ A filed by the beneficial owner with the
Securities and Exchange Commission.
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4
ELECTION OF DIRECTORS
The Board of Directors has currently fixed the number of
directors at nine (9), with three directors to be elected at the
Annual Meeting. The current Board of Directors consists of three
separate classes of three directors. The term of the
Class II directors, which include Stuart I. Greenbaum,
Richard M. Rieser, Jr. and Michael L. Stein, expires
at the Annual Meeting and each has been nominated for election
to a three-year term at the Annual Meeting. All of the nominees
are currently directors of the Company. Class I directors
include John W. Ballantine, Frank M. Paris and Charles J. Gries,
each of whom is serving a term that expires at the 2006 Annual
Meeting of Shareholders. Class III directors include Miriam
Lutwak Fitzgerald, Eugene P. Heytow and Geoffrey R. Stone, each
of whom is serving a term that expires at the 2005 Annual
Meeting of Shareholders.
Unless directed otherwise, the persons named as proxies intend
to vote for the election of Stuart I. Greenbaum, Richard M.
Rieser, Jr. and Michael L. Stein as directors to serve
three-year terms as Class II directors, each to hold office
until the 2007 Annual Meeting of Shareholders and until his
successor is elected and qualified or until his earlier death,
removal or resignation. Each of the nominees have consented to
serve as a director if elected.
Mr. Rieser has served the Company as a director and
executive officer since its inception in 1983;
Mr. Greenbaum and Mr. Stein have each served as
directors since 1998.
An affirmative vote of the holders of a plurality of the shares
of Common Stock, present and eligible to vote at the Annual
Meeting, will be required for a nominee to be elected as a
director. Abstentions and shares for which authority to vote is
not given will have no effect on the election of directors.
Shares cannot be voted for more than three nominees; there is no
right to cumulative voting.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning the
current directors and executive officers of the Company.
Messrs. Heytow, Rieser and Paris have served the Company as
directors and executive officers since its inception in 1983.
All other directors have served in such capacity from the years
indicated in the following table. Messrs. Greenbaum, Rieser
and Stein are standing for re-election. Mr. Clam and
Ms. Bouman have been executive officers with the Company
since its inception in 1983. Mr. England has been an
officer with the bank subsidiary of the Company since 1994 and
was appointed as Vice President and Chief Marketing Officer of
the Company in 2001. Ms. Wachholz has been an officer with
the bank subsidiary of the Company since 1998 and was appointed
as Chief Accounting Officer of the Company in 2003.
Mr. Pate has been an officer with the bank subsidiary of
the Company since 1999 and was appointed Acting General Counsel
and Secretary in 2004. Officer appointments are made annually.
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Name and Age
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Education, Principal Occupation
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Position with Company
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During Last Five Years, Certain Other Directorships
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Directors and Executive Officers
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Eugene P. Heytow, 69
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Harvard College, B.A. and University of Chicago
Law
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Chairman of the Board, Chief Executive Officer
and Chairman of the Executive Committee
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School, J.D.
Oak Brook Bank*:
Chairman of the Executive Committee.
Amalgamated Investments Company, Chicago (holding company of
Amalgamated Bank of Chicago):
Chairman of the Board.
Amalgamated Bank of Chicago:
Chairman of the Board.
AmalgaTrust Company, Inc., Chicago (a wholly owned
subsidiary of Amalgamated Bank of Chicago):
Chairman of the
Board.
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5
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Name and Age
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Education, Principal Occupation
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Position with Company
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During Last Five Years, Certain Other Directorships
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Richard M. Rieser, Jr., 60
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Brown University, B.A. and University of Chicago Law
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President and Director
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School, J.D.
Oak Brook Bank*:
Chairman of the Board, Chief Executive
Officer and President.
Family relationship: Mr. Rieser is married to
Mr. Heytows niece.
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Frank M. Paris, 66
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Northwestern University, B.S.
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Vice Chairman of the Board
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Oak Brook Bank*:
Vice Chairman of the Board.
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Miriam Lutwak Fitzgerald, 46
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Northwestern University, B.A. and Chicago Medical
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Director (1988-Present)
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School, M.D.
Mimi S. Lutwak M.D.S.C.:
President.
Oak Brook Bank*:
Director.
Amalgamated Bank of Chicago:
Director.
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Geoffrey R. Stone, 57
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Wharton School of Finance and Commerce, University
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Director (1992-Present)
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of Pennsylvania, B.S. and University of Chicago Law
School, J.D.
The University of Chicago:
Harry Kalven Distinguished
Professor of Law; formerly Provost, 1993 to 2001.
Oak Brook Bank*:
Director.
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Michael L. Stein, 63
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Brown University, B.A. and University of Chicago
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Director (1998-Present)
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Law School, J.D.
Brownson, Rehmus & Foxworth, Inc., Chicago,
(Financial counseling):
Director and Executive Vice
President.
Oak Brook Bank*:
Director.
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Stuart I. Greenbaum, 67
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New York University, B.S. and The Johns
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Director (1998-Present)
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Hopkins University, Ph.D., Economics
John M. Olin School of Business, Washington University:
Dean.
Reinsurance Group of America:
Director.
Noble International, Ltd.:
Director.
Oak Brook Bank*:
Director.
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John W. Ballantine, 58
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Washington & Lee University, B.A. and
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Director (1999-Present)
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University of Michigan, M.B.A.
Private Investor
Scudder Funds:
Director/Trustee.
American Healthways Corporation:
Director.
Enron Corporation (post bankruptcy):
Director.
Portland General Electric:
Director.
Oak Brook Bank*:
Director.
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Charles J. Gries, 58
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DePaul University, B.S.C., CPA
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Director (2002-Present)
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Charles J. Gries & Company LLP (Certified Public
Accountants):
Partner.
Oak Brook Bank*:
Director.
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6
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Name and Age
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Education, Principal Occupation
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Position with Company
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During Last Five Years, Certain Other Directorships
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Other Executive Officers
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Rosemarie Bouman, 47
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Indiana University, B.S., C.P.A.
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Vice President, Chief Financial Officer, Treasurer and Assistant
Secretary
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Oak Brook Bank*:
Senior Executive Vice President, Chief
Financial Officer and Treasurer.
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George C. Clam, 54
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Ripon College, B.A. and Northwestern University,
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Vice President and Chief Banking Officer
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M.B.A.
Oak Brook Bank*:
Director and Vice Chairman of the Board.
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Brian C. England, 41
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Southern Illinois University, B.S.
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Vice President and Chief Marketing Officer
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Oak Brook Bank*:
Senior Executive Vice President.
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Jill D. Wachholz, 36
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Luther College, B.A., C.P.A.
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Chief Accounting Officer
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Oak Brook Bank*:
Vice President, Chief Accounting Officer
and Controller.
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Lorenzo Pate, 33
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University of Illinois at Champaign-Urbana, B.S.
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Acting General Counsel and Secretary
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and University of Illinois College of Law, J.D.
Gardner, Carton & Douglas:
Attorney (1996 to
1999)
Oak Brook Bank*:
Acting General Counsel and
Secretary
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* Subsidiary of the Company
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BOARD OF DIRECTORS, MEETINGS, COMMITTEES, FUNCTIONS,
MEMBERSHIP AND COMPENSATION
The Board of Directors has a standing Executive
Committee, Independent Directors Committee and Audit
Committee.
Executive Committee
The Executive Committee generally will convene between quarterly
Board meetings when it is inconvenient or impractical to call a
Board meeting. The Executive Committee of the Company has the
power to exercise the full authority of the Board of Directors
in the management of the business and affairs of the Company
other than a power specifically prohibited by Delaware Law.
Independent Directors Committee
The Independent Directors Committee (IDC) is
currently comprised of all of the Companys
independent directors as such term is defined in the
Nasdaq stock market listing standards.
As set forth in its Charter, the IDCs responsibilities
include: establishing and maintaining corporate governance
policies and the Companys Code of Ethics consistent with
applicable Federal and state laws and high ethical standards;
evaluating and nominating Company directors; evaluating and
setting the compensation and benefits, including stock-based,
performance and incentive pay of the Companys chief
executive and other executive and senior officers; and the
compliance by the Company with legal and regulatory requirements
related thereto, including, but not limited to, conducting
executive sessions and the independent review and approval of
related party transactions. As such, the IDC acts as the
Boards corporate governance and nominating committee and
as its compensation committee.
With respect to nominating and corporate governance matters, the
duties of the IDC are as set forth in its Charter. These duties
include: evaluating the independence of each member
of the Board; identifying,
7
evaluating and making recommendations to the Board concerning
potential candidates for nomination as directors, including
candidates recommended by shareholders of the Company; and
reviewing the overall effectiveness of the Board and the manner
in which it conducts its business.
In evaluating director candidates, including potential director
candidates recommended by shareholders, the IDC will consider a
variety of factors including, among other things, the
candidates business experience and expertise, character,
judgment, reputation, willingness and ability to commit
necessary time and effort, and length and quality of service
with regard to recommending candidates for re-election. In
addition, the IDC will consider factors relating to the current
and prospective composition of the Board, including, but not
limited to, independence considerations, diversity of interests
and experience and continuity. If deemed desirable, the IDC is
authorized to retain a third party search firm to assist with
director nominations.
With respect to compensation matters, the duties of the IDC are
as set forth in its charter. These duties include: review and
approval of compensation for executive and senior officers of
the Company; administration of the Companys stock-based
compensation, incentive and employee stock purchase plans and
programs; conducting performance appraisals concerning the chief
executive officer and other executive and senior management;
making recommendations with respect to Board compensation; and
conferring with the chief executive officer and other members of
management regarding succession planning. The Report of the IDC
with respect to Executive Compensation Matters appears elsewhere
in this Proxy Statement.
In carrying out its duties and responsibilities, the IDC is
authorized to engage such consultants and advisors as the
Committee deems necessary and advisable.
A copy of the Independent Directors Committee Charter, including
its sub-charters relating to nominating and corporate governance
matters and to compensation matters, along with the
Companys Corporate Governance Policies and Code of Ethics
can be found on the Companys website at
www.firstoakbrook.com.
Audit Committee
The Audit Committee members are independent
directors as determined under the Nasdaq stock market listing
standards and two of its members have been identified by the
Board as audit committee financial experts under
such standards. The Audit Committees functions are as
described in its Charter. These include assisting the Board in
monitoring the integrity of the financial statements of the
Company, the independent auditors qualifications and
independence, the performance of the Companys internal
audit function and independent auditors, and the compliance by
the Company with legal and regulatory requirements related
thereto, including oversight of the Companys relationship
with the independent auditor and of the Companys internal
controls. All the Companys Audit Committee members also
serve as members on the Companys bank subsidiarys
Audit committee. As a result of each members dual
membership, the Companys Audit Committee members only
receive meeting fees from the Company and not from its
subsidiary bank. The Report of the Audit Committee appears
elsewhere in this Proxy Statement. A copy of the Audit Committee
Charter can be found on the Companys website at
www.firstoakbrook.com.
8
Composition, Meeting Attendance and Compensation
The following table summarizes the membership of the Board and
each of its committees, and the number of times each met during
2003. The Board of Directors has determined that each member of
the Audit Committee and IDC is independent as defined by
applicable Securities and Exchange Commission rules and as
required by applicable Nasdaq stock market listing standards. In
addition, the Board of Directors has determined that each of
Messrs. Gries and Ballantine, Audit Committee Chairman and
Vice Chairman, respectively, is an audit committee
financial expert as defined in such rules and required by
such listing standards.
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|
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|
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Independent
|
Members
|
|
Board
|
|
Executive
|
|
Audit
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Ballantine
|
|
Member
|
|
|
|
Vice Chair
Financial Expert
|
|
|
Member
|
|
|
|
|
|
Miriam Lutwak Fitzgerald
|
|
Member
|
|
|
|
|
|
|
Vice Chair
|
|
|
|
|
|
Stuart I. Greenbaum
|
|
Member
|
|
|
|
Member
|
|
|
Member
|
|
|
|
|
|
Charles J. Gries
|
|
Member
|
|
Member
|
|
Chair
Financial Expert
|
|
|
Member
|
|
|
|
|
|
Eugene P. Heytow
|
|
Chair
|
|
Chair
|
|
|
|
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|
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Frank M. Paris
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|
Vice Chair
|
|
Vice Chair
|
|
|
|
|
|
|
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Richard M. Rieser, Jr.
|
|
Member
|
|
Member
|
|
|
|
|
|
|
|
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Michael L. Stein
|
|
Member
|
|
Member
|
|
|
|
|
Chair
|
|
|
|
|
|
Geoffrey R. Stone
|
|
Member
|
|
|
|
Member
|
|
|
Member
|
|
|
|
|
|
Number of Meetings in 2003:
|
|
5
|
|
1
(1)
|
|
5
|
|
|
4
|
|
|
|
|
(1)
|
|
Directors Gries and Stein did not attend this meeting as their
appointment by the Board to the Executive Committee occurred
after the meeting date in 2003.
|
During 2003, each director attended in person or telephonically
75% or more of the total meetings of the Board and the
committees on which he or she served. The Companys
Corporate Governance Policies, as revised by the Board in
January 2004, encourage personal attendance at Board meetings
and the Annual Meeting. Six of the nine directors attended the
Companys 2003 annual shareholders meeting.
Each director was paid an annual retainer of $10,000 plus a per
meeting fee of $2,500 and expenses for each Board meeting
attended during 2003. With respect to committee service, the
Company paid an annual retainer to the Chair of the Audit
Committee and Chair of the IDC of $5,000 and $2,500,
respectively. In addition to the retainers paid, the Company
paid a per meeting fee of $1,000 to each committee member for
each committee meeting attended.
In 2004, the annual retainer paid to the Chair of the Audit
Committee was increased to $8,000. In addition, the Board
appointed Vice Chair positions for both the Audit Committee and
the IDC. The Company will pay an annual retainer to the Vice
Chair of the Audit Committee and IDC of $2,500 and $1,250,
respectively.
All Company directors are also directors of the Companys
bank subsidiary, Oak Brook Bank (OBB). As OBB
directors, each Company director also received $1,000 for each
quarterly OBB Board of Directors meeting attended and $500 for
each Audit, Investment Management and Trust, and Directors Loan
Committee meeting attended. With respect to the Companys
Executive Committee and Oak Brook Banks committees, no
committee fees were paid to committee members who were also
employees of either the Company or Oak Brook Bank.
9
Pursuant to the Companys Directors Stock Plan, up to
37,500 shares of Common Stock may be issued to the
Companys non-employee directors who elect to receive their
fees in shares of Common Stock. Unless the director has elected
to defer receipt, shares are issued quarterly based on the
amount of retainer and fees earned during the quarter and the
closing price for the Common Stock as reported on the Nasdaq
Market System as of the last day of the preceding quarter.
Deferred shares, together with dividend equivalents, are paid at
the date specified by the director or upon cessation of service
as a director.
In 2003, any newly-elected, non-employee director received an
option to purchase 2,000 shares of Common Stock at the time
initially elected as director under the formula option
provisions of the Companys 2001 Stock Incentive Plan.
Furthermore, at the 2003 Annual Meeting of Shareholders, each
non-employee director who continued as a non-employee director
received an option to purchase 1,000 shares of Common Stock
under the formula option provisions. As a result of a 3-for-2
stock split approved by the Board in July 2003, on
January 27, 2004, in keeping with the provisions of the
2001 Stock Incentive Plan, the Board of Directors adjusted the
number of shares underlying the options granted to a
newly-elected, non-employee director to 3,000 and the number of
shares underlying the annual option grant to each non-employee
director who continues as such at each Annual Meeting of
Shareholders to 1,500 shares of Common Stock.
TRANSACTIONS WITH RELATED PERSONS
Directors and executive officers of the Company and their
associates were customers of and had transactions with the
Companys subsidiary bank. OBB has made loans to certain of
the directors and executive officers of the Company. These loans
were made in the ordinary course of business and on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable
features.
INDEPENDENT COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
All decisions regarding the compensation of the executive
officers were made by the Independent Directors Committee, or
its predecessor committees, the Compensation Committee and Stock
Option Advisory Committee. Although Mr. Heytow was a member of
the Compensation Committee and he and Mr. Rieser made
recommendations to the committees with regard to compensation of
the other executive and senior officers, neither of them
participated in the deliberations with respect to their own
compensation.
REPORT OF INDEPENDENT DIRECTORS COMMITTEE
ON EXECUTIVE COMPENSATION AND OTHER COMPENSATION MATTERS
The following Report of the Independent Directors Committee
on Executive Compensation Matters and the Performance Graph
included elsewhere in this Proxy Statement do not constitute
soliciting material and should not be deemed filed or
incorporated by reference into any other Company filings under
the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates this Report or the Performance
Graph by reference therein.
During 2003, the IDCs predecessor committees administered
the following: (1) the Stock Option Advisory Committee
which approved awards under the 2001 Stock Incentive Plan, and
(2) the Compensation Committee which approved compensation
and benefits matters, and where applicable, references in the
following report to the IDC shall be a reference to the
predecessor committee. The IDC administered and approved bonuses
under the Annual Performance Bonus Plan (the Performance
Plan) to executive and senior officers of the Company and
its subsidiary, including Messrs. Heytow and Rieser. In
2004, the IDC will administer all compensation, options,
benefits and bonus matters for the executive and senior officers
of the Company and its subsidiary.
10
The IDC has furnished the following report on compensation (in
which the predecessor committees join):
SALARIES:
In determining salaries, the IDC reviewed information provided
by the Companys management and considered a wide variety
of factors. With respect to overall compensation and benefits,
these included cost of living changes, competitive pay scales
and Company performance. With respect to individual salaries,
the factors included the level and complexity of the position,
education and special training necessary or helpful to the
position, promotions and growth in responsibility and effort,
relative pay within the Company, competitive pay (as determined
by independent compensation surveys targeting national and local
peer groups of financial institutions), cost of living changes,
and individual, departmental and Company performance.
With regard to the Companys Chief Executive Officer,
Mr. Heytows salary and benefits were determined by
the IDC based upon the aforementioned considerations. In
addition, his compensation was also in keeping with the
Companys policy of compensating senior executive officers
based on the safety and soundness of the Company and subsidiary
bank and medium- and long-term growth and profitability. The IDC
approved salary and benefits for Mr. Heytow for 2003 and
approved bonuses for 2003 as set forth in the Summary
Compensation Table.
With regard to the Companys President,
Mr. Riesers salary and benefits were also set by the
IDC based upon the aforementioned considerations. His
compensation was also based upon the IDCs determination of
the importance of Mr. Riesers involvement in the
day-to-day management and leadership of the Company, as
evidenced by the Companys overall safety and soundness and
its medium- and long-term growth and profitability. The IDC
approved salary and benefits for Mr. Rieser for 2003 and
approved bonuses for 2003 as set forth in the Summary
Compensation Table.
BONUSES:
Senior Executive Group:
Annual incentive compensation is provided to Messrs. Heytow
and Rieser through the Performance Plan. The Performance Plan
provided for determination of a maximum bonus amount for each
participating executive officer pursuant to a predetermined
objective formula. Under the formula, the maximum bonus payment
for the year was the executive officers pro rata portion
of a bonus pool, expressed as a product equal to the
Companys net income for the year multiplied by a factor
(the multiplier) set by the IDC for such year (the
Bonus Pool). For purposes of the formula:
(a) net income was defined as net income before
income taxes, as adjusted by objective criteria selected by the
IDC, including but not limited to any acquisition-related
charges, litigation, claims, judgments, or settlements; changes
in accounting principles or other such laws or provisions, and
extraordinary non-recurring items; and (b) the
individuals pro rata portion was determined based on the
individuals annual base salary as of March 1 of the
year as compared to the March 1 annual base salaries of all
individuals participating in the Performance Plan for that year.
Pursuant to the Performance Plan, the maximum bonus that could
be earned by a participating executive officer was the lesser of
his pro rata portion of the Bonus Pool (as determined above) or
three times such individuals annual base salary as of
March 1.
Under the Performance Plan, the IDC certifies the amount of any
bonuses earned promptly after the close of the calendar year
based on the formula described above. The Performance Plan
provides the IDC with discretion to reduce (but not increase) an
individuals actual bonus from the pro rata portion of the
Bonus Pool that would otherwise be payable under the above
formula. The Performance Plan currently does not prescribe
specific factors for the IDC to consider in determining whether
to exercise such negative discretion.
For the year ending December 31, 2003, the Performance Plan
provided for a Bonus Pool totalling $2,415,000 based on the
multiplier and the Companys net income, or a maximum bonus
for 2003 for Messrs. Heytow and Rieser under the
Performance Plan of $900,000 and $1,515,000; respectively. The
IDC approved bonuses of $306,471 for Mr. Heytow and
$515,893 for Mr. Rieser (collectively, the 2003
11
Bonuses). In determining the 2003 Bonuses, the IDC
considered each executive officers individual performance
and reviewed a number of performance measures including earnings
per share growth, return on assets (ROA), return on equity
(ROE), non-performing assets, market price growth and market
price of the Companys stock relative to its book value.
Based on each individual executive officers performance
and the Companys performance in 2003, the IDC approved
2003 bonuses for Messrs. Heytow and Rieser in an amount
equal to approximately 102% of their annual base salary.
Executive Group:
The Executive Group consisted of executive officers Rosemarie
Bouman, George C. Clam, Brian C. England and Frank M.
Paris. These executive officers may earn discretionary bonuses
based on a modified version of the factors applicable to the
senior executive officer bonus determination. The executive
officers could have received a maximum bonus of one times the
executive officers annual salary. The bonuses approved for
Messrs. Clam and England and Ms. Bouman for 2003 are
set forth in the Summary Compensation Table.
In addition to the objective formula described above, the IDC
may award a subjective, discretionary bonus to both the Senior
Executive Group and Executive Group that relates most closely to
extra performance or results as compared to established goals,
departmental business plans and budgets, short- and medium-term
Company growth and profitability and successful business
development efforts. No subjective, discretionary bonuses were
awarded for 2003.
STOCK OPTIONS:
In addition to cash compensation in the form of base salaries
and annual bonuses, executive officers and other employees may
be awarded stock options under the Companys 2001 Stock
Incentive Plan. The IDC believes that the awarding of stock
options further aligns the interests of the option recipient
with those of the stockholders and provides additional
incentives for strong individual and Company performance.
During 2003, the IDC also reviewed and approved stock options
for certain officers, including Messrs. Heytow and Rieser
who received grants of 9,000 and 18,000 stock options
respectively in January 2003.
12
SECTION 162(m):
Section 162(m) of the Internal Revenue Code limits to
$1 million the Companys allowable Federal income tax
deduction for compensation paid for a calendar year to each of
its Chief Executive Officer and four other most highly
compensated executive officers. The allowable deduction for
certain performance-based and other compensation is
not, however, subject to the $1 million limitation. Based
upon regulations, compensation attributable to the
Companys current stock option plan and Performance Plan
should be exempt from the deduction limitation as
performance-based. In 2003, the IDC did not make any
changes in its policies relating to the other cash compensation
paid to the executive officers in response to the
$1 million deduction limitations because salary and
discretionary bonuses which have been or can be expected to be
paid to the Companys executive officers do not approach
such level. Notwithstanding the above, in the future, the IDC
may determine after consideration of applicable circumstances
that it would be in the best interests of the Company to pay
compensation in an amount or manner that does not satisfy such
rules governing deductibility.
INDEPENDENT DIRECTORS COMMITTEE
Michael L. Stein, Chairman
Dr. Miriam Lutwak Fitzgerald, Vice Chairman
John W. Ballantine, Member
Stuart I. Greenbaum, Member
Charles J. Gries, Member
Geoffrey R. Stone, Member
COMPENSATION COMMITTEE
Eugene P. Hewtow, Chairman
Dr. Miriam Lutwak Fitzgerald, Member
Stuart I. Greenbaum, Member
Michael L. Stein, Member
STOCK OPTION ADVISORY COMMITTEE
Dr. Miriam Lutwak Fitzgerald, Chairman
Geoffrey R. Stone, Member
Stuart I. Greenbaum, Member
Michael L. Stein, Member
13
SUMMARY COMPENSATION TABLE
The following table sets forth the indicated compensation with
respect to each of the last three fiscal years for the
Companys Chief Executive Officer and its four other most
highly compensated executive officers during 2003:
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|
|
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|
|
|
|
|
|
|
|
|
|
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Long Term
|
|
|
|
|
Annual Compensation
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
Salary
|
|
Bonus
|
|
Other Annual
|
|
Option
|
|
Compensation
|
Name and Principal Position
|
|
Year
|
|
($)(1)(2)
|
|
($)(2)
|
|
Compensation(3)
|
|
Awards (#)
|
|
($)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eugene P. Heytow
|
|
|
2003
|
|
|
|
325,000
|
|
|
|
306,471
|
|
|
|
|
|
|
|
9,000
|
|
|
|
112,933
|
|
|
Chief Executive Officer
|
|
|
2002
|
|
|
|
318,867
|
|
|
|
176,600
|
|
|
|
|
|
|
|
22,500
|
|
|
|
105,141
|
|
|
|
|
2001
|
|
|
|
312,000
|
|
|
|
438,000
|
|
|
|
|
|
|
|
18,000
|
|
|
|
95,414
|
|
|
|
|
|
Richard M. Rieser, Jr.
|
|
|
2003
|
|
|
|
521,000
|
|
|
|
515,893
|
|
|
|
|
|
|
|
18,000
|
|
|
|
145,884
|
|
|
President
|
|
|
2002
|
|
|
|
463,333
|
|
|
|
258,400
|
|
|
|
|
|
|
|
22,500
|
|
|
|
118,769
|
|
|
|
|
2001
|
|
|
|
425,600
|
|
|
|
621,000
|
|
|
|
|
|
|
|
18,000
|
|
|
|
103,981
|
|
|
|
|
|
George C. Clam
|
|
|
2003
|
|
|
|
194,000
|
|
|
|
97,048
|
(5)
|
|
|
|
|
|
|
|
|
|
|
20,252
|
|
|
Vice President
|
|
|
2002
|
|
|
|
191,500
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
18,201
|
|
|
|
|
|
|
& Chief Banking Officer
|
|
|
2001
|
|
|
|
176,166
|
|
|
|
131,250
|
(5)
|
|
|
|
|
|
|
|
|
|
|
20,142
|
|
|
|
|
|
Rosemarie Bouman
|
|
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2003
|
|
|
|
181,666
|
|
|
|
93,473
|
(5)
|
|
|
|
|
|
|
7,500
|
|
|
|
19,765
|
|
|
Vice President,
|
|
|
2002
|
|
|
|
172,746
|
|
|
|
51,500
|
(5)
|
|
|
|
|
|
|
7,500
|
|
|
|
15,504
|
|
|
Chief Financial Officer
|
|
|
2001
|
|
|
|
159,128
|
|
|
|
121,100
|
(5)
|
|
|
|
|
|
|
|
|
|
|
17,046
|
|
|
& Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Brian C. England
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|
|
2003
|
|
|
|
173,333
|
|
|
|
74,387
|
(5)
|
|
|
|
|
|
|
7,500
|
|
|
|
17,842
|
|
|
Vice President &
|
|
|
2002
|
|
|
|
162,663
|
|
|
|
48,600
|
(5)
|
|
|
|
|
|
|
12,910
|
|
|
|
12,813
|
|
|
|
|
|
|
Chief Marketing Officer
|
|
|
2001
|
|
|
|
146,937
|
|
|
|
112,500
|
(5)
|
|
|
|
|
|
|
9,000
|
|
|
|
13,152
|
|
SUMMARY COMPENSATION TABLE FOOTNOTES
|
|
|
(1)
|
|
This column includes annual base salary, directors fees
and committee fees of the Company and its bank subsidiary.
|
|
(2)
|
|
These columns include amounts elected to be deferred under the
Companys qualified and nonqualified deferred compensation
plans.
|
|
(3)
|
|
Each named executive officer received perquisites and personal
benefits in annual amounts below the applicable reporting
threshold of the lesser of $50,000 or 10% of the base salary and
bonus reported for such year.
|
|
(4)
|
|
This column includes: (i) the Companys contributions
under its 401(k) Savings Plan, Stock Bonus Plan and related
nonqualified deferred compensation plan; (ii) taxable
income for life insurance benefits paid by the Company with
respect to insurance policies covering the life of each named
executive officer; and (iii) amounts paid to the named
executive officer with respect to certain life insurance
agreements, as set forth in the table below for 2003:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
|
(ii)
|
|
(iii)
|
|
|
|
|
|
|
|
Mr. Heytow
|
|
|
56,114
|
|
|
|
11,979
|
|
|
|
44,840
|
|
|
|
|
|
Mr. Rieser
|
|
|
90,762
|
|
|
|
10,282
|
|
|
|
44,840
|
|
|
|
|
|
Mr. Clam
|
|
|
18,688
|
|
|
|
1,564
|
|
|
|
|
|
|
|
|
|
Ms. Bouman
|
|
|
19,011
|
|
|
|
754
|
|
|
|
|
|
|
|
|
|
Mr. England
|
|
|
17,378
|
|
|
|
464
|
|
|
|
|
|
|
|
|
(5)
|
|
Includes award of annual discretionary bonus to the named
executive officer; however, at the election of the Company,
payment of two-thirds of the bonus is deferred and is payable in
equal increments in the following two years. The deferred
amounts are subject to forfeiture upon the executive officer
leaving the Company prior to payment.
|
14
TRANSITIONAL EMPLOYMENT & OTHER AGREEMENTS WITH
EXECUTIVE OFFICERS
The Company has entered into Transitional Employment Agreements
with certain of its named executive officers. In the event of a
change in control of the Company, the Agreements provide for an
employment term of three years from the date of the change in
control with compensation and benefits at the same level as in
effect immediately preceding the change in control. If the
executive officers employment is involuntarily terminated
by the Company or its successor (other than for cause) during
the three-year employment term or within six months prior to and
in connection with the change in control, or in the event of the
executive officers resignation under circumstances which
constitute a constructive discharge, the executive officer is
entitled to continue to receive salary, directors fees and
bonus payments, and to continue to receive the value of other
benefits, for a period of 36 months from the date of such
termination of employment. For Messrs. Heytow, Rieser and
Paris (the Senior Executive Officers), the amount of
such continuing salary, directors fees and bonus payments
will be based upon the level in effect at the time of the change
in control, or if greater, termination of employment; but in
either event no less than the average of such amounts received
during the five-year period prior to the change in control.
Salary and bonus continuation payments for the other executive
officers will be based on the average of the annual salary and
bonus payments received during the five-year period prior to the
year in which the change in control occurs. The Agreements also
provide for payment of any accrued but unpaid bonuses,
continuing access to the Companys group and executive
medical plans after expiration of the 36-month compensation
continuation period and continuing indemnification rights. In
the event of an executive officers death during the
36-month continuation period, the Agreements provide for a lump
sum payment equal to the present value of the remaining salary
and directors fees, and continuation of bonus payments and
certain other benefits to the executive officers
designated beneficiary.
Cause is generally defined in the Agreements as a
felony conviction involving an act or acts of dishonesty or
breach of trust or the continued and willful failure of the
executive officer to substantially perform the officers
duties under the Agreement. Constructive discharge
is defined generally to include a breach of the Companys
obligations under the Agreement, a material diminution of the
executive officers duties and responsibilities, a change
of the executive officers primary employment location by
more than 35 miles from the primary location in effect at
the time of the change in control or a significant change in the
executive officers regularly-scheduled work hours from
those in effect at the time of the change in control. In the
case of Senior Executive Officers voluntary resignations
at any time during the first year of the employment term, or in
the case of the other executive officers, voluntary
resignation at any time during the first year of the employment
term but after the termination or the announcement of the
termination of Mr. Riesers employment will also
constitute resignation under circumstances which constitute a
constructive discharge. Salary and bonus continuation payments
to those executive officers who are not Senior Executive
Officers are subject to reduction to the extent necessary so
that no portion of those amounts will be subject to the excise
tax imposed under the Internal Revenue Code on payments which
may be deemed to be excess parachute payments. The
compensation and benefits payable to the Senior Executive
Officers under the Transitional Employment Agreements will be
increased to the extent necessary to gross-up such compensation
and benefits, or the compensation and benefits payable under any
other plan or program of the Company, to the extent the Senior
Executive Officer would be subject to the excise tax upon the
receipt thereof.
The Company has also entered into Supplemental Pension
Agreements with Messrs. Heytow and Rieser. Under these
Agreements, the Company is obligated to provide at a prescribed
retirement date, a supplemental pension in the form of a life
and 15-year certain annuity based upon a percentage of the
executive officers final base salary.
Mr. Heytows retirement date is January 1, 2007
and the percentage of final base salary to be used in
determining his benefit is 25%; Mr. Riesers
retirement date is January 1, 2015 and the percentage of
final base salary is 50%. In the event of termination of
employment prior to the applicable retirement date, the
supplemental pension payable at the retirement date will be
prorated based on years of service from October 1994 to the date
of his termination of employment. No proration of the amount of
the supplemental pension payable is required, however, if the
termination of the executive officers employment was
involuntary (other
15
than for cause) or voluntary following an event that would
constitute a constructive discharge as defined in the
Transitional Employment Agreements (without regard to whether or
not a change in control has occurred). An actuarially reduced
supplemental pension may be paid prior to the applicable
retirement date to the executive officer in the event of
termination of employment prior to such date.
The Company has entered into Agreements Regarding
Post-Employment Restrictive Covenants with Messrs. Heytow,
Rieser and Paris, under which the executive officers agree that
following termination of employment for any reason other than
death, the executive officer will not, for a period of
twenty-four months, directly or indirectly solicit any customer
of the Company or its affiliates not to do business with the
Company or such affiliates or to solicit or encourage any
employee of the Company or its affiliates to terminate his or
her employment. In addition, the Agreements impose
confidentiality obligations on the executive officer. As
consideration for the restrictive covenants, the Company is
obligated to pay 12 annual payments of $80,000 each to
Messrs. Heytow and Rieser and of $25,000 to Mr. Paris.
OPTION GRANTS TABLE
The following table sets forth certain information concerning
grants of stock options during the year ended December 31,
2003 to each of the executive officers named in the Summary
Compensation Table.
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Individual Grants
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Percent of
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Number of
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Total Options
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Securities
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Granted to
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Underlying
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Directors and
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Exercise
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Options
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Employees in
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Price
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Expiration
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Grant Date
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Name
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Granted(1)
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Fiscal Year(2)
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($/Sh)(3)
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Date
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Value($)(4)
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Eugene P. Heytow
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9,000
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9.92
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%
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20.327
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1/21/2013
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46,440
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Richard M. Rieser, Jr.
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18,000
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19.83
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%
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20.327
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1/21/2013
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92,880
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George C. Clam
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Rosemarie Bouman
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7,500
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8.26
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%
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20.327
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1/21/2013
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38,700
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Brian C. England
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7,500
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8.26
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%
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20.327
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1/21/2013
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38,700
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(1)
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Represents stock options granted under the Companys 2001
Stock Incentive Plan. The options were granted for a term of
10 years subject to earlier termination because of death or
permanent disability. The options become 33.3% vested for
Messrs. Heytow and Rieser and 20% for all other executive
officers on the first anniversary date of grant, and an
additional 33.3% and 20%, respectively, on each subsequent
anniversary; however, in the event of a change in control, the
options immediately become 100% vested.
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(2)
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The percentages shown in the table are based on total options
granted to directors and employees in 2003 of 90,750 shares
of the Companys Common Stock.
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(3)
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The exercise price of each stock option was the closing market
price of Common Stock on the day preceding the date of grant.
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(4)
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The fair value for these options was estimated at the date of
grant (January 21, 2003) using a Black-Scholes option
pricing model with the following weighted-average assumptions
for 2003: risk-free interest rate of 3.38%; dividend yield of
3.0%; volatility factor of the expected market price of the
Companys Common Stock of 28.5%, and a weighted-average
expected life of the option of 6.48 years. The
Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no
vesting restrictions and are fully transferable.
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16
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND
YEAR-END OPTION VALUES
The following table sets forth the indicated year-end 2003 value
and number of unexercised options for each of the executive
officers named in the Summary Compensation Table.
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Value of
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Number of
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Unexercised
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Unexercised
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In-the-Money
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Options at
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Options at
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December 31, 2003
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December 31, 2003(1)
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Shares Acquired
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Value
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Exercisable/
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Exercisable/
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on Exercise
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Realized
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Unexercisable
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Unexercisable
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Name
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(#)
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($)
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(#)
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($)
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Eugene P. Heytow
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11,250
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289,575
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150,900/30,000
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3,100,851/374,859
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Richard M. Rieser, Jr.
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79,575
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1,219,274
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61,500/39,000
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1,032,609/462,006
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George C. Clam
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6,500
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104,236
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25,990/8,160
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514,600/104,962
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Rosemarie Bouman
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3,000
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46,041
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36,690/14,460
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777,941/163,172
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Brian C. England
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9,000
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117,608
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21,600/20,400
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416,220/269,103
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(1)
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Based on Companys Common Stock price on December 31,
2003 of $30.01 per share.
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17
FIVE YEAR PERFORMANCE COMPARISON
The graph below provides an indicator of total return
performance for the Companys stock for the past five years
as compared with the Center for Research in Security Prices
(CRSP) Index for the Nasdaq Stock Market®
(U.S. Companies) and a Peer Group, the CRSP Index for
NASDAQ Bank Stocks.
18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and
regulations thereunder require directors and certain officers of
the Company and persons who beneficially own more than 10% of
the Companys stock to file initial reports of ownership
and reports of changes in ownership of the Companys stock
with the Securities and Exchange Commission and to furnish the
Company with copies of such reports. Based solely upon the
review of copies of such reports furnished to the Company and
representations of reporting persons, all reports were timely
filed in 2003.
19
PROPOSAL TO APPROVE THE
FIRST OAK BROOK BANCSHARES, INC.
INCENTIVE COMPENSATION PLAN
DESCRIPTION OF THE INCENTIVE COMPENSATION PLAN
On January 27, 2004, subject to shareholder approval, the
Companys Board of Directors approved the First Oak Brook
Bancshares, Inc. Incentive Compensation Plan (the
Plan), based on recommendation of the Plan by its
Independent Directors Committee.
The following description sets forth the material terms of the
Plan. It does not purport to be complete and is qualified in its
entirety by reference to the provisions of the Plan attached as
Appendix A to this Proxy Statement. All capitalized terms
which are not defined herein are defined in the Plan.
Purpose
The Plan is intended to promote the success of the Company and
its subsidiaries by providing incentives to employees,
non-employee directors and consultants of the Company and
subsidiaries to put forth maximum efforts to contribute to the
growth, profitability and success of the Company and its
subsidiaries. The Plan is designed to provide flexibility to the
Company and its subsidiaries in their ability to attract and
retain the services of highly qualified employees, directors and
consultants and to assist in aligning their interests with those
of the Companys shareholders.
Administration
The Independent Directors Committee is the Committee of the
Board appointed to administer the Plan (the IDC).
The IDC has broad discretion and authority to, among other
things, select the officers, employees, directors and
consultants to whom awards may be granted, to determine the
terms, conditions, form and amount of the awards, to establish,
where deemed applicable, performance goals with respect to
awards and to measure and certify the achievement thereof, and
to establish guidelines and procedures relating to awards. The
IDC will have full power to administer and interpret the Plan,
to adopt or establish, and to modify or waive, rules,
regulations, agreements, guidelines, procedures and instruments,
and to retain counsel and consultants which it deems necessary
or advisable for the administration and operation of the Plan.
The IDC may delegate its authority to the Chief Executive
Officer or to other officers, provided that such delegation will
not extend to action with respect to awards made to
covered employees, as defined in Code
Section 162(m), or to officers for purposes of
Rule 16b-3 under the Exchange Act.
Eligibility
Any officer, employee, non-employee director or consultant of
the Company or any of its subsidiaries or affiliates is eligible
to receive an award under the Plan. As of March 19, 2004
there were approximately 331 full-time officers and
employees, 31 part-time employees and six
(6) non-employee directors of the Company and its
subsidiaries. The selection of participants and the nature and
size of the awards is subject to the discretion of the IDC.
Shares Available for Issuance
The Plan provides that the total number of shares of Common
Stock which may be issued pursuant to awards under the Plan may
not exceed 250,000, plus any shares that have already been
authorized and previously approved by the Companys
shareholders and are available for issuance under the
Companys 2001 Stock Incentive Plan as of the date the Plan
is approved by the shareholders, plus any shares underlying
awards made under the predecessor plan which are subsequently
forfeited or otherwise become available for issuance under the
terms of the predecessor plan. As of March 19, 2004, a
total of 166,094 shares remained
20
available for grant under the predecessor plan. Therefore, if
the Plan is approved, a total of approximately
416,094 shares will be available for grant under the Plan,
representing approximately 4.3% of the Companys
outstanding Stock as of March 19, 2004. In addition, a
total of 772,062 previously granted options are outstanding and
unexercised under the predecessor plans. If the Plan is approved
by the Companys shareholders, no further grants will be
made under the 2001 Stock Incentive Plan and all shares which
may be issued under the Directors Stock Plan with respect to
deferred shares will be issued through the Plan.
To the extent that shares of Common Stock subject to an
outstanding award under the Plan or the 2001 Stock Incentive
Plan are not issued by reason of expiration, forfeiture or
cancellation of such award, by reason of the tendering or
withholding of shares to pay all or a portion of the exercise
price or to satisfy all or a portion of the tax withholding
obligations relating to the award, by reason of being settled in
cash in lieu of shares or settled in a manner that some or all
of the shares covered by the award are not issued to the
participant, or being exchanged for a grant under the Plan that
does not involve Common Stock, then such shares shall
immediately again be available for issuance under the Plan.
Shares of Common Stock issued in connection with awards that are
assumed, converted or substituted pursuant to a merger,
acquisition or similar transaction entered into by the Company
or any of its subsidiaries shall not reduce the number of shares
available to be issued under the Plan.
Of the shares authorized for issuance under the Plan, not more
than 25% may be issued with respect to awards which are not
stock options, SARs or performance-based awards, and up to
250,000 may be issued pursuant to options which are incentive
stock options under the Code. In addition, to comply with Code
Section 162(m), the Plan limits to 100,000 the maximum
number of shares that may be subject to awards made to any one
individual in any one calendar year.
Common Stock issued with respect to awards may be authorized but
unissued shares or treasury shares. In the event there is a
change in the capital structure of the Company as a result of
any stock dividend or split, recapitalization, merger,
consolidation or spin-off or other corporate change affecting
the Common Stock, the number of shares of Common Stock
authorized for issuance, available for issuance or covered by
any outstanding award and the price per share of any such award,
and the various limitations described above, will be
proportionately adjusted. Fractional shares will not be issued
under the Plan.
Awards
A participant in the plan is permitted to receive multiple
grants of awards. The terms and provisions of a type of award
with respect to any recipient need not be the same with respect
to any other recipient of such award.
The following is a summary of certain types of awards which may
be granted under the Plan:
Stock Options.
Stock Options may be nonqualified stock
options or incentive stock options that comply with Code
Section 422. The exercise period for any stock option will
be determined by the IDC at the time of grant. The exercise
price per share for all shares of Common Stock issued pursuant
to stock options under the Plan may not be less than 100% of the
Fair Market Value (as defined in the Plan) of a share of Common
Stock on the grant date. Each stock option may be exercised in
whole or in part, from time to time, after the grant becomes
exercisable. The Plan limits the term of any stock option to
10 years and prohibits repricing of options without
shareholder approval.
Stock Appreciation Rights (SARs).
SARs
entitle a participant to receive an amount equal to the excess
of the Fair Market Value of a share of Common Stock on the date
the SAR is exercised over the Fair Market Value of a share of
Common Stock on the date the SAR is granted. The payment may be
made in shares of Common Stock having a Fair Market Value on the
date of exercise equal to the amount due upon the exercise of
the SAR, may be paid in cash, or a combination thereof.
21
Restricted Stock and Restricted Stock Units.
An award of
Restricted Stock is an award of shares of Common Stock that may
not be sold or otherwise disposed of during a restricted period
determined by the IDC. An award of Restricted Stock Units is an
award of the right to receive a share of Common Stock after the
expiration of a restricted period determined by the IDC, and any
other terms or conditions as the IDC may prescribe.
Performance Shares and Performance Units.
Performance
Shares and Performance Units are awards of a fixed or variable
number of shares or of dollar-denominated units that are earned
by achievement of performance goals established by the IDC.
Amounts earned under Performance Share and Performance Unit
Awards may be paid in Common Stock, cash or a combination
thereof.
Awards under Deferred Compensation or Similar Plans.
Participants may receive the right to receive Common Stock
or a fixed or variable share denominated unit granted under the
Plan or any deferred compensation or similar plan established
from time to time by the Company. If the Plan is approved by
shareholders, it is anticipated that the Directors Stock Plan
will be amended to provide that shares issuable thereunder shall
be deemed issued pursuant to this Plan.
Cash and Other Awards.
The IDC may grant other types of
awards of which may be payable in cash, Common Stock or a
combination thereof, based in whole or in part by reference to
Common Stock or upon the achievement of performance goals or
such other terms and conditions as the IDC may prescribe. In
addition the IDC may award dividends or dividend equivalent
rights as part of or independently of other awards. To comply
with Code Section 162(m), the Plan limits to $2,000,000 the
annual amount a single participant may earn under any cash-based
award. For purposes of this limitation, any award earned over a
period greater than one year is deemed to have been earned
ratably over the full and partial calendar years in such period.
Performance Goals
Section 162(m) of the Code disallows federal income tax
deductions for certain compensation in excess of
$1,000,000 per year paid to each of the Companys
Chief Executive Officer and its other four most highly
compensated executive officers (collectively, the Covered
Employees). Compensation that qualifies as other
performance-based compensation is not subject to the
$1,000,000 deduction limit. In addition to the annual
limitations on awards described above, another condition
necessary to qualify certain incentive awards (other than stock
options and SARs, which are treated as other
performance-based compensation) as other
performance-based compensation is that the material
criteria relating to the performance goals under which the award
is made must be disclosed to, and approved by, the shareholders
of the Company before the incentive compensation is paid.
For those types of awards under the Plan intended to meet the
definition of other performance-based compensation
the IDC will establish performance goals with respect to an
award based upon one or more of the following performance
criteria: total shareholder return, earnings, earnings per
share, net income, revenues, expenses, market share,
charge-offs, loan loss reserves, non-performing assets, return
on assets, return on equity, assets, deposits, loans, asset
quality levels, interest-sensitivity gap levels, Fair Market
Value of the Stock, value of assets, investments, regulatory
compliance, satisfactory internal or external audits,
improvement of financial ratings, achievement of balance sheet
or income statement objectives, or other financial, accounting
or quantitative objective established by the IDC. These
performance goals may be measured for achievement or
satisfaction during the period the IDC permits the participant
to satisfy or achieve the performance goals and may be in
absolute terms or measured against, or in relationship to, other
companies comparably, similarly or otherwise situated or other
external or internal measure and may be based on, or adjusted
for, other objective goals, events, or occurrences established
by the IDC for a performance period. Performance goals may be
particular to a line of business, subsidiary or other unit or
the Company generally, and may, but need not be, based upon a
change or an increase or positive result. Performance goals may
include or exclude extraordinary charges, losses from
discontinued operations, restatements and
22
accounting changes and other unplanned special charges such as
restructuring expenses, acquisitions, acquisition expenses,
including expenses related to goodwill and other intangible
assets, stock offerings, stock repurchases and loan loss
provisions.
At the end of each performance period for an award to covered
employees, the IDC will determine and certify the extent to
which the performance goal established for the performance
period has been achieved and determine the amount to be paid,
vested or delivered as a result thereof, provided the IDC may,
in its sole discretion, reduce or eliminate such amount to the
extent permitted under the Plan and applicable law.
If this Plan is approved by the shareholders, beginning in 2005
the IDC may determine to make annual performance bonus awards
under the Plan in lieu of awards under the Companys Annual
Performance Bonus Plan.
Termination of Employment or Services
The disposition of each award held by a participant at
termination of employment or service as a director or consultant
will be as determined by the IDC and set forth in the agreement
applicable to such award or in any amendment or modification
thereof.
Change in Control
Unless otherwise provided by the IDC in the agreement applicable
to an award (including any amendment or modification thereof),
upon a Change in Control of the Company, all Common Stock based
awards shall immediately vest 100% and all performance-based
awards shall be immediately payable based upon the extent, as
determined by the IDC, to which the performance goals for the
performance period then in progress have been met up through the
date of the Change in Control or based on 100% of the value on
the date of grant of the performance based award, if such amount
is higher.
Other Provisions
In general, except to the extent provided by the IDC in the
specific terms of an award, no award will be assignable or
transferable except by will, the laws of descent and
distribution.
The IDC may impose such restrictions and limitations on any
awards granted under the Plan as it may deem advisable,
including, but not limited to limitations under applicable
securities laws, share ownership or holding period requirements,
and requirements to enter into or to comply with
confidentiality, non-competition and other restrictive or
similar covenants.
The IDC may provide that the receipt of payment of cash or the
delivery of shares that would otherwise be due to a participant
under an award may be deferred at the election of the
participant pursuant to an applicable deferral plan established
by the Company or a subsidiary.
The IDC may make awards on terms and conditions other than those
described above or in the Plan to comply with the laws and
regulations of any foreign jurisdiction or to make the award
more effective under such laws or regulations.
Effective Date, Amendment and Termination
If approved by the shareholders, the Plan will become effective
as of the date of such approval and will remain in effect until
all shares subject to the Plan have been purchased and/or
acquired according to the provisions of the Plan, provided,
however, that no awards may be granted on or after the tenth
anniversary of such date. The Board of Directors may terminate
the Plan at any time and may amend or modify the Plan from time
to time provided that no such action will materially adversely
alter or impair any outstanding award without the consent of the
participant affected thereby. In addition, unless approved by
the Companys shareholders, no material amendment or
modification under the rules and regulations of the Nasdaq Stock
23
Market or another national exchange on which the Common Stock is
then listed, or other applicable law, rules or regulations, may
be made.
The IDC may amend or modify any outstanding awards in any manner
to the extent that the IDC would have had the authority under
the Plan initially to make such award as so amended or modified,
provided that no amendment or modification shall materially
adversely alter or impair an outstanding award without the
consent of the participant affected thereby.
Federal Income Tax Considerations
The following discussion is a summary of certain federal income
tax consequences to participants who may receive grants of
awards under the Plan. This discussion does not purport to be
complete, and does not cover, among other things, foreign, state
and local tax treatment.
Nonqualified Stock Options.
For federal income tax
purposes, no income is recognized by a participant upon the
grant of a nonqualified stock option. Upon exercise, the
participant will realize ordinary income in an amount equal to
the excess of the fair market value of a share of Common Stock
on the date of exercise over the exercise price multiplied by
the number of shares received pursuant to the exercise of such
options. A subsequent sale or exchange of such shares will
result in gain or loss measured by the difference between
(a) the exercise price, increased by any compensation
reported upon the participants exercise of the option and
(b) the amount realized on such sale or exchange. Any gain
or loss will be capital in nature if the shares were held as a
capital asset and will be long-term if such shares were held for
more than one year.
The Company is entitled to a deduction for compensation paid to
a participant at the same time and in the same amount as the
participant realizes compensation upon exercise of the option.
Incentive Stock Options.
No taxable income is realized by
the participant upon exercise of an incentive stock option
granted under the plan, and if no disposition of those shares is
made by such participant within two years after the date of
grant or within one year after the transfer of those shares to
the participant, then (a) upon the sale of the shares, any
amount realized in excess of the exercise price will be taxed as
a long-term capital gain and any loss sustained will be taxed as
a long-term capital loss, and (b) no deduction will be
allowed to the Company for federal income tax purposes. Upon
exercise of an incentive stock option, the participant may be
subject to alternative minimum tax on certain items of tax
preference.
If the shares of Common Stock acquired upon the exercise of an
incentive stock option are disposed of prior to the expiration
of the two-years-from-grant/one-year-from-transfer holding
period, generally (a) the participant will realize ordinary
income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of the shares at
exercise (or, if less, the amount realized upon disposition of
the shares) over the exercise price, and (b) the Company
will be entitled to deduct such amount. Any additional gain or
loss realized will be taxed as short-term or long-term capital
gain or loss, as the case may be, and may not be deducted by the
Company.
If an incentive stock option is exercised at a time when it no
longer qualifies as an incentive stock option, the option will
be treated as a nonqualified stock option.
Stock Appreciation Rights.
No taxable income is
recognized by a participant upon the grant of a SAR under the
Plan. Upon the exercise of a SAR, the participant will realize
ordinary income in an amount equal to the fair market value of
the shares of Common Stock received and the amount of cash
received. Shares of Common Stock received upon the exercise of a
SAR will, upon subsequent sale, be eligible for capital gain
treatment, with the capital gain holding period commencing on
the date of exercise of the SAR.
The Company is entitled to a deduction for compensation paid to
a participant at the same time and in the same amount as the
participant realizes ordinary income upon exercise of the SAR.
Stock Awards.
A recipient of Restricted Stock,
Performance Shares or any other awards of shares of Common Stock
generally will be subject to tax at ordinary income rates on the
Fair Market Value of the
24
Common Stock at the time the shares have been delivered and are
no longer subject to forfeiture. A participant may elect under
Section 83(b) of the Code within 30 days of the date
of the grant of shares of Common Stock to recognize ordinary
taxable income on the date of the grant equal to the Fair Market
Value of the shares. Upon sale of the Restricted Stock or
Performance Shares after the forfeiture period has expired, the
holding period to determine whether the recipient has long-term
or short-term capital gain or loss begins when the restriction
period expires, or if the recipient timely elects to be taxed as
of the date of the grant, the holding period commences on the
date of the grant. The tax basis will be equal to the Fair
Market Value recognized by the participant as ordinary income.
The Company is entitled to a deduction for compensation paid to
a participant in the amount of ordinary income recognized by the
participant.
Restricted Stock Units and Performance Units.
A recipient
of units will generally be subject to tax at ordinary income
rates on the Fair Market Value of any Common Stock issued or
cash paid pursuant to such an award, and the Company will
generally be entitled to a deduction equal to the amount of the
ordinary income realized by the recipient. The capital gain or
loss holding period for any common stock distributed under an
award will begin when the recipient recognizes ordinary income
in respect of that distribution.
Cash and Other Incentive Awards.
A participant will
recognize ordinary income upon receipt of cash pursuant to a
cash award and the Company will generally be entitled to a
deduction equal to the amount of the ordinary income realized by
the recipient.
New Plan Benefits
Except as set forth in the table below, no determination has yet
been made as to the amount or terms of any stock-based
incentives or any future cash awards under the Plan. If
shareholders approve the proposed Plan, future grants of
stock-based incentives or any future cash awards under the Plan
to the Named Executive Officers and the groups shown on the
following table will be determined by the IDC. The following
table reflects the annual award of stock options anticipated to
be granted to the non-employee (independent) directors pursuant
to the Companys current program for compensation of
directors.
|
|
|
|
|
|
|
|
Number of
|
Name and Principal Position
|
|
Units
|
|
|
|
Eugene P. Heytow
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
Richard M. Rieser, Jr.
|
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
George C. Clam
|
|
|
|
|
|
Vice President & Chief Banking Officer
|
|
|
|
|
|
|
|
|
Rosemarie Bouman
|
|
|
|
|
|
Vice President, Chief Financial
Officer & Treasurer
|
|
|
|
|
|
|
|
|
Brian C. England
|
|
|
|
|
|
Vice President & Chief Marketing Officer
|
|
|
|
|
|
|
|
|
Executive Group
|
|
|
|
|
|
|
|
|
Non-Executive Director Group
|
|
|
9,000
|
(1)
|
|
|
|
|
Non-Executive Officer Employee Group
|
|
|
|
|
|
|
|
(1)
|
|
The Units represent stock options to be granted to the
Companys non-employee directors as part of their annual
compensation for 2004.
|
For additional information concerning the Companys
compensation of its directors and executive officers, please see
Summary Compensation Table.
25
Vote Required
The affirmative vote of a majority of the votes entitled to be
cast by the holders of the Companys Common Stock present
or represented at the Annual Meeting and entitled to vote
thereon is required to approve the Plan. Abstentions, and shares
not voted by shareholders of record present or represented at
the Annual Meeting and entitled to vote, will have the same
effect as a vote cast against the proposal. Shares not voted by
brokers and other entities holding shares on behalf of
beneficial owners, and shares for which authority to vote is
withheld, will have no effect on the outcome. Proxies received
by the Company and not revoked prior to or at the Annual Meeting
will be voted for this proposal and the adoption of the Plan
unless otherwise instructed by the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE
INCENTIVE COMPENSATION PLAN
EQUITY COMPENSATION PLAN TABLE
The following table summarizes information as of
December 31, 2003 relating to equity compensation plans of
the Company pursuant to which Common Stock is authorized for
issuance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
Number of securities
|
|
Weighted-average
|
|
remaining available for
|
|
|
to be issued upon
|
|
exercise price of
|
|
future issuance under
|
|
|
exercise of
|
|
outstanding
|
|
equity compensation plans
|
|
|
outstanding options,
|
|
options, warrants
|
|
(excluding securities
|
|
|
warrants and rights
|
|
and rights
|
|
reflected in column(a))
|
Plan Category
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
|
|
|
|
|
Equity compensation plans approved by security
holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option plan
|
|
|
719,262
|
|
|
$
|
12.64
|
|
|
|
229,202
|
|
|
|
|
|
|
Employee stock purchase plan
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
134,040
|
|
|
|
|
|
Equity compensation plans not approved by
security holders(1)
|
|
|
27,382
|
|
|
$
|
16.34
|
|
|
|
8,662
|
|
|
|
|
(1)
|
|
The number of securities represent shares of Common Stock
underlying deferred stock units, payable on a one-for-one basis,
under the Companys Directors Stock Plan. Under the Plan,
non-employee directors may elect to receive directors fees that
would otherwise be paid in cash, in shares of Common Stock
currently, or if the director so elects, on a deferred basis, in
which case the director is credited under the Plan with deferred
stock units. The number of shares or units is determined based
on the fair market value of the Common stock at the time the
cash fee would have been paid.
|
REPORT OF AUDIT COMMITTEE
The following Report of the Audit Committee does not
constitute solicitous material and should not be deemed filed or
incorporated by reference into any other Company filings under
the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates this Report by reference
therein.
The role of the Audit Committee is to assist the Board of
Directors in its oversight of the Companys financial
reporting process as set forth in its Charter. The Audit
Committees primary duties and responsibilities are to
assist the Board in monitoring: (1) the integrity of the
financial statements of the Company, (2) the independent
auditors qualifications and independence, (3) the
performance of the Companys internal audit function and
independent auditors, and (4) the compliance by the Company
with legal and regulatory requirements related thereto. The
independent external auditors are responsible for auditing the
Companys
26
financial statements and expressing an opinion as to their
conformity with accounting principles generally accepted in the
United States of America.
In the performance of its oversight function, the Audit
Committee has reviewed and discussed the Companys audited
financial statements and the quality and adequacy of the
Companys internal controls with management and the
Companys internal auditors and the independent auditors.
The Chairman of the Audit Committee met with management, the
internal auditors and independent auditors to discuss interim
financial and other information contained in each quarterly
earnings announcement and the Companys quarterly public
filings. In addition, beginning with the third quarter public
filing, the full Audit Committee met with these same parties in
connection with the Companys quarterly public filings
prior to public release. The Audit Committee has also discussed
with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees. The Audit Committee has
received a disclosure letter from the independent auditors
required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees.
Finally, the Audit Committee has considered whether other
non-audit services provided by the independent auditors to the
Company are compatible with maintaining the auditors
independence and has discussed with the independent auditors its
independence.
Based upon the reports and discussions described in this report,
and subject to the limitations on the role and responsibilities
of the Audit Committee referred to above and in the Charter, the
Audit Committee has recommended to the Board that the audited
consolidated financial statements be included in the
Companys Annual Report on Form 10-K for the year
ended December 31, 2003 to be filed with the Securities and
Exchange Commission.
Submitted by the Audit Committee of the Companys Board of
Directors on March 8, 2004.
Charles J. Gries, Chairman
John W. Ballantine, Vice Chairman
Stuart I. Greenbaum, Member
Geoffrey R. Stone, Member
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees billed to the
Company for the fiscal years ended December 31, 2003 and
December 31, 2002 by the Companys independent
auditor, KPMG LLP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
2003
|
|
2002
|
|
|
|
|
|
Audit Fees
|
|
$
|
67,800
|
|
|
$
|
62,100
|
|
|
|
|
|
Audit-Related Fees
(a)
|
|
|
15,500
|
|
|
|
16,575
|
|
|
|
|
|
Tax Return Fees
|
|
|
12,650
|
|
|
|
9,700
|
|
|
|
|
|
All Other Fees
(b)
|
|
|
100,000
|
|
|
|
51,039
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
195,950
|
|
|
$
|
139,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Includes fees for services related to benefit plan audits,
registration statements filed with the Securities and Exchange
Commission, and other reports required by bank regulating
authorities.
|
|
(b)
|
|
Includes loan review of OBBs construction loan portfolio
in 2002 and tax consultations in 2003.
|
All of the services provided by the independent auditor in 2003
were pre-approved by the Audit Committee or the Board.
27
The Audit Committee has established general guidelines for the
permissible scope and nature of any permitted non-audit
services. Pre-approval of all auditing services and permitted
non-audit services may be granted by action of the full Audit
Committee or, in the absence of such Audit Committee action, by
the Audit Committee Chair whose action shall be considered to be
that of the entire Committee.
SELECTION OF INDEPENDENT AUDITORS
The Audit Committee has selected KPMG LLP (KPMG) as
independent auditor for the Company for the year ending December
31, 2004. The Company will seek ratification of this action at
the Annual Meeting. An affirmative vote of the holders of a
plurality of the shares of Common Stock, present and eligible to
vote at the Annual Meeting, will be required for ratification of
KPMG as independent auditor for the Company. Representatives of
KPMG will be present at the Annual Meeting and will be given the
opportunity to make a statement if they desire to do so. KPMG
will be available to respond to appropriate questions from
shareholders at the Annual Meeting.
The Board of Directors recommends ratification of the Audit
Committees selection of KPMG LLP as the Companys
independent auditor.
28
SHAREHOLDER PROPOSALS, DIRECTOR NOMINATIONS
AND STOCKHOLDER COMMUNICATIONS
For Inclusion in Proxy Statement
To be considered for inclusion in the Companys proxy and
form of proxy relating to the 2005 Annual Meeting of
Shareholders, a shareholder proposal must be received prior to
December 2, 2004, by the Secretary of the Company at the
address set forth on the first page of this Proxy Statement. Any
such proposal will be subject to 17 C.F.R.
Section 240.14a-8 of the Rules and Regulations under the
Securities Exchange Act of 1934.
Notice of Business to Be Conducted at an Annual Meeting
Pursuant to the By-laws, only business brought by or at the
direction of the Board of Directors may be conducted at an
annual meeting. The By-laws of the Company provide for an
advance notice procedure for a shareholder to properly bring
business before an annual meeting. For the 2005 Annual Meeting,
the shareholder must give written advance notice to the
Secretary of the Company not later than January 2, 2005;
provided, however,
that in the event that the date of the
2005 Annual Meeting is held before April 2, 2005 or after
July 2, 2005, notice by the shareholder will be timely if
it is received not later than the close of business on later of
(a) 120 days prior to the date of the meeting or
(b) the tenth (10th) day following the date on which
notice of the annual meeting date was publicly announced. The
advance notice by a shareholder must include the
shareholders name and address, as they appear on the
Companys record of shareholders, a brief description of
the proposed business, the reason for conducting such business
at the annual meeting, the class, the number of shares of the
Companys capital stock that are beneficially owned by such
shareholder, any material interest of such shareholder in the
proposed business and whether the shareholder intends to solicit
proxies or participate in the solicitation of proxies in support
of such proposal. In the case of nominations to the Board of
Directors, certain information regarding the nominee must be
provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement or the proxy
relating to any annual meeting any shareholder proposal which
does not meet all of the requirements for inclusion established
by the United States Securities and Exchange Commission in
effect at the time such proposal is received.
Stockholder Communications
The Company encourages communication between its shareholders
and management and between shareholders and the Board of
Directors, including recommendations relating to potential
director nominees. Such communication should be addressed in
care of the Secretary of the Company.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be
presented for consideration at the Annual Meeting other than as
stated in the Notice of Annual Meeting of Shareholders. If,
however, other matters are properly brought before the Annual
Meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on
such matters in accordance with their best judgment.
29
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING THE SAME
ADDRESS
The Company is delivering a single annual report, proxy
statement and Form 10-K to any household at which two or
more shareholders of the Company reside, unless the Company has
received contrary instructions from one or more of the
shareholders.
A shareholder may receive separate copies or, if currently
receiving multiple copies, request only a single copy of the
documents listed above by calling or writing Ms. Diane
Hirshberg in our Shareholder Services department. You may
contact her by calling toll-free at 800-536-3000 ext. 255,
writing to her at First Oak Brook Bancshares, Inc.
Shareholder Services, 1400 Sixteenth Street, Oak
Brook, Illinois 60523 or e-mail her at dhirshberg@obb.com.
|
|
|
By Order of the Board of Directors
|
|
|
Lorenzo Pate
|
|
Acting Secretary
|
Oak Brook, Illinois
April 1, 2004
30
APPENDIX A
FIRST OAK BROOK BANCSHARES, INC.
INCENTIVE COMPENSATION PLAN
|
|
|
|
|
|
|
|
|
|
|
1
|
|
PURPOSE OF PLAN
|
|
|
A-1
|
|
|
|
|
|
2
|
|
TERM OF PLAN
|
|
|
A-1
|
|
|
|
|
|
3
|
|
SHAREHOLDER APPROVAL
|
|
|
A-1
|
|
|
|
|
|
4
|
|
ADMINISTRATION
|
|
|
A-1
|
|
|
|
|
|
5
|
|
ELIGIBILITY AND PARTICIPATION
|
|
|
A-3
|
|
|
|
|
|
6
|
|
SHARES SUBJECT TO PLAN
|
|
|
A-3
|
|
|
|
|
|
7
|
|
MAXIMUM INDIVIDUAL AWARDS
|
|
|
A-4
|
|
|
|
|
|
8
|
|
AWARDS
|
|
|
A-5
|
|
|
|
|
|
9
|
|
CHANGE IN CONTROL
|
|
|
A-6
|
|
|
|
|
|
10
|
|
AMENDMENT AND TERMINATION
|
|
|
A-6
|
|
|
|
|
|
11
|
|
MISCELLANEOUS
|
|
|
A-7
|
|
|
|
|
|
12
|
|
DEFINITIONS
|
|
|
A-8
|
|
i
FIRST OAK BROOK BANCSHARES, INC.
INCENTIVE COMPENSATION PLAN
|
|
|
|
1.1
|
Purpose.
The purpose of the Plan is to motivate certain
Employees, Nonemployee Directors and Consultants to put forth
maximum efforts toward the growth, profitability, and success of
the Company and Subsidiaries by providing incentives to such
Employees, Nonemployee Directors and Consultants either through
cash payments and/or through the ownership and performance of
the Common Stock. In addition, the Plan is intended to provide
incentives that will attract and retain highly qualified
individuals as Employees, Nonemployee Directors and Consultants,
and to assist in aligning the interests of such Employees,
Nonemployee Directors and Consultants with the interests of the
shareholders of the Company.
|
|
|
|
|
2.1
|
Term.
The Plan shall be effective as of the Effective
Date and, unless sooner terminated by the Board under
Section 10 below, shall terminate when all shares of Common
Stock subject to the Plan have been issued according to the
provisions herein; provided, however, in no event may an Award
be granted under the Plan after the tenth (10th) anniversary of
the Effective Date.
|
|
|
|
|
3.1
|
Initial Shareholder Approval.
The Plan shall be approved
by the shareholders of the Company at an annual meeting or any
special meeting of the shareholders of the Company within
12 months before or after the Effective Date, and such
approval by the shareholders of the Company shall be a condition
to the right of each Participant to receive Awards hereunder.
Any Award granted under the Plan prior to the approval by the
shareholders of the Company shall be effective as of the date of
grant (unless the Committee specifies otherwise at the time of
grant), but no such Award may Vest, be paid out, or otherwise be
disposed of prior to such shareholder approval. If the
shareholders of the Company fail to approve the Plan in
accordance with this Section 3.1, any Award granted under
the Plan shall be cancelled.
|
|
|
3.2
|
Plan Amendment.
Any amendment to the Plan that is
determined to be a material amendment or a
material revision or a material
modification (or word(s) of similar effect) under the
rules of the Nasdaq Stock Market or the exchange or system on
which the Companys Common Stock is then listed shall be
approved by shareholders before such amendment shall be
effective.
|
|
|
3.3
|
Repricings Subject to Shareholder Approval.
Any
amendment, revision or other change to an outstanding Award that
is determined to be a repricing (or word(s) of
similar effect) under the rules of the Nasdaq Stock Market or
the exchange or system on which the Companys Common Stock
is then listed shall be approved by shareholders before such
amendment, revision or other change shall be effective.
|
|
|
3.4
|
Shareholder Reapproval.
If required by applicable
Treasury Regulations or any successor regulation or rule, the
material terms of performance goals as described in
Section 8.3 below shall be disclosed to and reapproved by
the Companys shareholders no later than the first
shareholder meeting that occurs in the 5th year following the
year in which the Companys shareholders previously
approved such performance goals.
|
|
|
|
|
4.1
|
Responsibility.
The Committee shall have the
responsibility, in its sole discretion, to control, operate,
manage and administer the Plan in accordance with its terms.
|
A-1
|
|
|
|
4.2
|
Award Agreement.
Each Award granted under the Plan shall
be evidenced by an Award Agreement.
|
|
|
4.3
|
Authority of the Committee.
The Committee shall have all
the discretionary authority that may be necessary or helpful to
enable it to discharge its responsibilities with respect to the
Plan, including but not limited to the following:
|
|
|
|
|
(a)
|
to determine eligibility for participation in the Plan;
|
|
|
(b)
|
to determine eligibility for and the type and size of an Award
granted under the Plan;
|
|
|
(c)
|
to grant Awards and to determine the terms of each Award
Agreement, and any amendments or modification thereof;
|
|
|
(d)
|
to establish objectives and conditions for earning amounts under
an Award and to determine whether and to what extent such
objectives and conditions have been met;
|
|
|
(e)
|
to supply any omission, correct any defect, or reconcile any
inconsistency in the Plan in such manner and to such extent as
it shall deem appropriate in its sole discretion to carry the
same into effect;
|
|
|
(f)
|
to issue administrative guidelines as an aid to administer the
Plan and make changes in such guidelines as it from time to time
deems proper;
|
|
|
(g)
|
to make rules for carrying out and administering the Plan and
make changes in such rules as it from time to time deems proper;
|
|
|
(h)
|
to the extent permitted under the Plan, grant waivers of Plan
terms, conditions, restrictions, and limitations;
|
|
|
(i)
|
to accelerate the Vesting of any Award when such action or
actions would be in the best interest of the Company;
|
|
|
(j)
|
to grant Awards in replacement of Awards previously granted
under this Plan or any other executive compensation plan of the
Company; and
|
|
|
(k)
|
to take any and all other actions it deems necessary or
advisable for the proper operation or administration of the Plan.
|
|
|
|
|
4.4
|
Action by the Committee.
The Committee may act only by a
majority of its members. Any determination of the Committee may
be made, without a meeting, by a writing or writings signed by
all of the members of the Committee. In addition, the Committee
may authorize any one or more of its members to execute and
deliver documents on behalf of the Committee.
|
|
|
4.5
|
Delegation of Authority.
The Committee may delegate to
one or more of its members, or to one or more agents, such
administrative duties as it may deem advisable; provided,
however, that any such delegation shall be in writing. In
addition, the committee may delegate to the Companys Chief
Executive Officer or to other Company officers its authority
under this Section 4, provided that such delegation shall
not extend to the grant of Awards or the exercise of discretion
with respect to Awards to employees who are covered employees
under Code Section 162(m) or officers under Section 16
of the Exchange Act. The Committee, or any person to whom it has
delegated duties under this Section 4.5, may employ one or
more persons to render advice with respect to any responsibility
the Committee or such person may have under the Plan. The
Committee may employ such legal or other counsel, consultants
and agents as it may deem desirable for the administration of
the Plan and may rely upon any opinion or computation received
from any such counsel, consultant or agent. Expenses incurred by
the Committee in the engagement of such counsel, consultant or
agent shall be paid by the Company, or the Subsidiary whose
employees have benefited from the Plan, as determined by the
Committee.
|
A-2
|
|
|
|
4.6
|
Determinations and Interpretations by the Committee.
All
determinations and interpretations made by the Committee shall
be binding and conclusive on all Participants and their heirs,
successors, and legal representatives.
|
|
|
4.7
|
Liability.
No member of the Board, no member of the
Committee and no employee of the Company shall be liable for any
act or failure to act hereunder, except in circumstances
involving his or her bad faith, gross negligence or willful
misconduct, or for any act or failure to act hereunder by any
other member or employee or by any agent to whom duties in
connection with the administration of the Plan have been
delegated.
|
|
|
4.8
|
Indemnification.
The Company shall indemnify members of
the Committee and any agent of the Committee who is an employee
of the Company, against any and all liabilities or expenses to
which they may be subjected by reason of any act or failure to
act with respect to their duties on behalf of the Plan, except
in circumstances involving such persons bad faith, gross
negligence or willful misconduct.
|
|
|
5
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ELIGIBILITY AND PARTICIPATION
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5.1
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Eligibility.
All Employees, all Nonemployee Directors and
all Consultants shall be eligible to participate in the Plan and
to receive Awards.
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5.2
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Participation.
Participants shall consist of such
Employees, Nonemployee Directors and Consultants as the
Committee in its sole discretion designates to receive Awards
under the Plan. Designation of a Participant in any year shall
not require the Committee to designate such person or entity to
receive an Award in any other year or, once designated, to
receive the same type or amount of Award as granted to the
Participant in any other year. The Committee shall consider such
factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards.
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(a)
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Subject to adjustment as provided in Section 6.2 below, the
aggregate number of shares of Common Stock which shall be
available for issuance or payments of Awards under the Plan
during its term shall be 250,000 shares, plus the number of
shares of Common Stock that remain available for issuance under
the Predecessor Plan as of the Effective Date (increased by any
shares of Common Stock subject to any option (or portion
thereof) outstanding under the Predecessor Plan on the Effective
Date which lapses, expires, is exercised or otherwise settled
such that not all of the shares covered thereby are issued).
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Such shares of Common Stock available for issuance under the
Plan may be either authorized but unissued shares, shares of
issued stock held in the Companys treasury, or both, at
the discretion of the Company, and subject to any adjustments
made in accordance with Section 6.2 below. To the extent
shares of Common Stock underlying Awards or are not issued by
reason of the expiration, forfeiture lapse or cancellation, of
such Awards, by reason of the tendering or withholding of shares
in payment of exercise price or payment of withholding tax
obligations relating to an Award, or otherwise without the
issuance or delivery of all of the shares covered by such Award,
then such shares shall again be available for issuance or
payments of Awards under the Plan. Awards that are payable only
in cash are not subject to this Section 6.1.
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(b)
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Shares of Common Stock issued in connection with Awards that are
assumed, converted or substituted pursuant to a merger,
acquisition or similar transaction entered into by the
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Company or any of its Subsidiaries shall not reduce the number
of shares available for issuance under this Plan.
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(c)
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Subject to adjustment as provided in Section 6.2 below, the
following limitations shall apply to Awards under the Plan:
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(i)
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Except as provided in clauses (ii) and (iii), all of the
shares that may be issued under this Plan may be issued pursuant
to any type of Award granted under this Plan.
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(ii)
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The number of shares of that may be issued under this Plan
pursuant to Stock Options which are Incentive Stock Options
shall be limited to 250,000.
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(iii)
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Not more than 25% of the total number of shares that may be
issued under this Plan may be issued pursuant to Awards which
are not Stock Options, SARs or performance-based Stock Awards.
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6.2
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Adjustment to Shares.
If there is any change in the
Common Stock of the Company, through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split,
reverse stock split, split-up, split-off, spin-off, combination
of shares, exchange of shares, dividend in kind or other like
change in capital structure or distribution (other than normal
cash dividends) to shareholders of the Company, an adjustment
shall be made to each outstanding Award so that each such Award
shall thereafter be with respect to or exercisable for such
securities, cash and/or other property as would have been
received in respect of the Common Stock subject to such Award
had such Award been paid, distributed or exercised in full
immediately prior to such change or distribution. Such
adjustment shall be made successively each time any such change
shall occur. In addition, in the event of any such change or
distribution, in order to prevent dilution or enlargement of
Participants rights under the Plan, the Committee shall
have the authority to adjust, in an equitable manner, the number
and kind of shares that may be issued under the Plan, in
accordance with the limitations set forth in Sections 6.1
and 7.1, the number and kind of shares subject to outstanding
Awards, the exercise price applicable to outstanding Stock
Options, and the Fair Market Value of a Share of the Common
Stock and other value determinations applicable to outstanding
Awards. Appropriate adjustments may also be made by the
Committee in the terms of any Awards granted under the Plan to
reflect such changes or distributions and to modify any other
terms of outstanding Awards on an equitable basis, including
modifications of performance goals and changes in the length of
performance periods; provided, however, that with respect to
Performance-Based Awards, such modifications and/or changes do
not disqualify compensation attributable to such Awards as
performance-based compensation under Code
Section 162(m). In addition, the Committee is authorized to
make adjustments to the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or
nonrecurring events affecting the Company or the financial
statements of the Company, or in response to changes in
applicable laws, regulations, or accounting principles.
Notwithstanding anything contained in the Plan, any adjustment
with respect to an ISO due to a change or distribution described
in this Section 6.2 shall comply with the rules of Code
Section 424(a), and in no event shall any adjustment be
made which would render any ISO granted hereunder other than an
incentive stock option for purposes of Code Section 422.
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7
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MAXIMUM INDIVIDUAL AWARDS
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7.1
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Maximum Aggregate Number of Shares Underlying Stock-Based
Awards Granted Under the Plan to Any Single Participant.
The
maximum aggregate number of shares of Common Stock underlying
all Awards measured in shares of Common Stock (whether payable
in Common Stock, cash or a combination of both) that may be
granted to any single Participant during any one calendar year
shall be 100,000 shares, subject to adjustment as provided
in Section 6.2 above. For purposes of the preceding
sentence, such Awards that are cancelled or repriced shall
continue to be
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counted in determining such maximum aggregate number of shares
of Common Stock that may be granted to any single Participant
during the life of the Plan.
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7.2
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Maximum Dollar Amount Underlying Cash-Based Awards Granted
Under the Plan to Any Single Participant.
The maximum dollar
amount that may be earned by any single Participant with respect
to all Awards measured in cash (whether payable in Common Stock,
cash or a combination of both) during any one calendar year
shall be $2,000,000. Any amount earned with respect to which
performance is measured over a period greater than one year
shall be deemed to have been earned ratably over the full and
partial calendar years in such period.
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8.1
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Type of Awards.
The Committee may, in its sole
discretion, grant the following Awards to Employees, Nonemployee
Directors and Consultants:
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(a)
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Stock Options;
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(b)
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Stock Appreciation Rights (SARs);
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(c)
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Stock Awards;
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(d)
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Stock Units;
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(e)
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DERs;
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(f)
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Cash Award; or
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(g)
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any other type of Award that is not inconsistent with the Plan.
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8.2
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Award Terms and Conditions.
The Committee, in its sole
discretion, shall determine all of the terms and conditions of
each Award, including but not limited to the following:
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(a)
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exercise price or purchase price, provided that the exercise
price or purchase price with respect to Stock Options and SARs
shall not be less than 100% of the Fair Market Value of a Share
of the Common Stock on the date of grant;
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(b)
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method of exercise;
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(c)
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vesting;
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(d)
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term and or expiration of the Award;
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(e)
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effects of termination of Participants employment or
service;
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(f)
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change-in-control Vesting and other effects of a change in
control;
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(g)
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qualification of a Stock Option as an ISO;
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(h)
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restrictive covenants;
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(i)
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transferability;
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(j)
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deferral arrangements; or
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(k)
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any other term or condition that is not inconsistent with the
Plan.
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8.3
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Performance Measures.
The Committee may use the following
performance measures (either individually or in any combination)
to set performance goals with respect to the grant or Vesting of
an Award: The performance for an Award shall be determined by
the Committee in writing, shall be measured for achievement or
satisfaction during the performance period or period of
restriction in which the Committee established to satisfy or
achieve the prescribed performance and may be absolute in their
terms or measured against or in relationship to other companies
comparably,
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similarly or otherwise situated or other external or internal
measure and may be based on or adjusted for any other objective
goals, events, or occurrences established by the Committee,
provided that such criteria and objectives relate to one or more
of the following: total shareholder return, earnings, earnings
per share, net income, revenues, expenses, market share,
charge-offs, loan loss reserves, non-performing assets, return
on assets, return on equity, assets, deposits, loans, asset
quality levels, interest-sensitivity gap levels, Fair Market
Value of the Stock, value of assets, investments, regulatory
compliance, satisfactory internal or external audits,
improvement of financial ratings, achievement of balance sheet
or income statement objectives, or other financial, accounting
or quantitative objective established by the Committee.
Performance criteria and objectives may include or exclude
extraordinary charges, losses from discontinued operations,
restatements and accounting changes and other unplanned special
charges such as restructuring expenses, acquisitions,
acquisition expenses, including expenses related to goodwill and
other intangible assets, stock offerings, stock repurchases and
loan loss provisions. Such performance measures may be
particular to a line of business, Subsidiary or other unit or
the Company generally, and may, but need not be, based upon a
change or an increase or positive result. In interpreting Plan
provisions applicable to performance measures and to
performance-based Awards to Participants who are covered
employees, it is the intent of the Plan to conform with the
standards of Code Section 162(m) and the Treasury
Regulations thereunder. The Committee in establishing
performance measures applicable to such performance-based
Awards, and in interpreting the Plan, shall be guided by such
standards, including, but not limited to providing that the
performance-based Award shall be paid, Vested or otherwise
delivered solely as a function of attainment of objective
performance criteria and objectives based on one or more of the
specific criteria and objectives set forth in this
Section 8.3 established by the Committee not later than
90 days after the performance period or period of
restriction applicable to the Award has commenced (or, if such
period of service is less than one year, not later than the date
on which 25% of such period has elapsed). Prior to the payment
of any compensation based on achievement of performance measures
to any such covered employee, the Committee must certify in
writing the extent to which the applicable performance criteria
and objectives were, in fact, achieved and the amounts to be
paid, Vested or delivered as a result thereof, provided the
Committee may reduce, but not increase, such amount.
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9.1
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Stock-Based Awards.
Notwithstanding any other provisions
of the Plan, and except as otherwise provided in the Award
Agreement, in the event of a Change in Control, all Stock-based
Awards granted under this Plan shall immediately Vest 100% in
each Participant, including Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights,
restricted stock and restricted stock units.
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9.2
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Performance-Based Awards.
Notwithstanding any other
provisions of the Plan, and except as otherwise provided in the
Award Agreement, in the event of a Change in Control all Awards
granted under this Plan which are subject to performance goals
shall be immediately paid out, including performance units and
performance shares. The amount of the payout shall be based on
the higher of: (i) the extent, as determined by the
Committee, to which performance goals, established for the
performance period then in progress have been met up through and
including the effective date of the Change in Control, or
(ii) 100% of the value on the date of grant of the
performance units or number of performance shares.
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10
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AMENDMENT AND TERMINATION
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10.1
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Termination of Plan.
The Board may suspend or terminate
the Plan at any time with or without prior notice.
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10.2
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Amendment of Plan.
Subject to shareholder approval, if
any, required by Section 3.2, the Board may amend the Plan
at any time with or without prior notice.
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10.3
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Amendment or Cancellation of Award Agreements.
The
Committee may amend or modify any Award Agreement at any time in
any manner to the extent that the Committee would have had the
authority under the Plan initially to make such Award as so
amended or modified. In addition, and subject to shareholder
approval in accordance with Sections 3.2 and 3.3 above,
Awards may be granted to an Employee, Nonemployee Director or
Consultant in substitution and exchange for, and in cancellation
of, any Awards previously granted to such Employee, Nonemployee
Director or Consultant under the Plan, or any award previously
granted to such Employee, Nonemployee Director or Consultant
under any other present or future plan of the Company or any
present or future plan of an entity which (i) is purchased
by the Company, (ii) purchases the Company, or
(iii) merges into or with the Company.
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10.4
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Effect on Outstanding Awards.
No termination or amendment
of the Plan pursuant to Section 10.1 or 10.2 above, or
amendment or modification of an Award Agreement pursuant to
Section 10.3 above, shall materially adversely alter or
impair any outstanding Award without the consent of the
Participant affected thereby.
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11.1
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Other Provisions.
Awards granted under the Plan may also
be subject to such other provisions (whether or not applicable
to the Award granted to any other Participant) as the Committee
determines on the date of grant to be appropriate, including,
without limitation, provisions requiring entry into or
compliance with confidentiality, non-competition or other
restrictive covenants, assistance in financing the acquisition
of shares pursuant to an Award, for the forfeiture of, or
restrictions on resale or other disposition of, Common Stock
acquired hereunder, for deferral of receipt of shares of Common
Stock or of cash payments under any applicable Company plan, or
to comply with federal and state securities laws, or
understandings or conditions as to the Participants
employment in addition to those specifically provided for under
the Plan.
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11.2
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Transferability.
Each Award granted under the Plan to a
Participant shall not be transferable otherwise than by will or
the laws of descent and distribution, and Stock Options and SARs
shall be exercisable, during the Participants lifetime,
only by the Participant. In the event of the death of a
Participant, each Stock Option or SAR theretofore granted to him
or her shall be exercisable during such period after his or her
death as the Committee shall, in its sole discretion, set forth
in the Award Agreement on the date of grant and then only by the
executor or administrator of the estate of the deceased
Participant or the person or persons to whom the deceased
Participants rights under the Stock Option or SAR shall
pass by will or the laws of descent and distribution.
Notwithstanding the foregoing, the Committee, in its sole
discretion, may permit the transferability of a Stock Option
(other than an ISO) by a Participant, including, or limited to,
transfers, solely to members of the Participants immediate
family or trusts or family partnerships or other similar
entities for the benefit of such persons, and subject to such
terms, conditions, restrictions and/or limitations, if any, as
the Committee may establish and include in the Award Agreement.
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11.3
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Stock Ownership Requirement.
The Committee may in its
sole discretion require that Participants own or hold a certain
number of shares of Common Stock or percentage of outstanding
shares of Common Stock throughout their employment or service
and may condition receipt of Awards or the receipt or
transferability of shares of Common Stock under this Plan on
compliance with such provisions.
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11.4
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Listing of Shares and Related Matters.
If at any time the
Committee shall determine that the listing, registration or
qualification of the shares of Common Stock subject to any Award
on any securities exchange or under any applicable law, or the
consent or approval of any governmental
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regulatory authority, is necessary or desirable as a condition
of, or in connection with, the granting of an Award or the
issuance of shares of Common Stock thereunder, such Award may
not be exercised, distributed or paid out, as the case may be,
in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
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11.5
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No Right, Title, or Interest in Company Assets.
Participants shall have no right, title, or interest whatsoever
in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the
Plan, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant,
beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from
the Company under the Plan, such right shall be no greater than
the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general
funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the
Plan. The Plan is not intended to be subject to the Employee
Retirement Income Security Act of 1974, as amended.
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11.6
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No Right to Continued Employment or Service or to Grants.
The Participants rights, if any, to continue to serve the
Company as a director, officer, employee, independent contractor
or otherwise, shall not be enlarged or otherwise affected by his
or her designation as a Participant under the Plan, and the
Company or the applicable Subsidiary reserves the right to
terminate the employment of any Employee or the services of any
Independent Contractor at any time. The adoption of the Plan
shall not be deemed to give any Employee, Nonemployee Director,
Consultant or any other individual any right to be selected as a
Participant or to be granted an Award.
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11.7
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Governing Law.
The Plan, all Awards granted hereunder,
and all actions taken in connection herewith shall be governed
by and construed in accordance with the laws of the State of
Delaware without reference to principles of conflict of laws,
except as superseded by applicable federal law.
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11.8
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Other Benefits.
No Award granted under the Plan shall be
considered compensation for purposes of computing benefits under
any retirement plan of the Company or any Subsidiary nor affect
any benefits or compensation under any other benefit or
compensation plan of the Company or any Subsidiary now or
subsequently in effect, unless such retirement or other plan
expressly provides otherwise.
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11.9
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No Fractional Shares.
No fractional shares of Common
Stock shall be issued or delivered pursuant to the Plan or any
Award. The Committee shall determine whether cash, Common Stock
or other property shall be issued or paid in lieu of fractional
shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
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The following terms shall have the following meanings unless the
context indicates otherwise:
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12.1
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Award
shall mean an incentive compensation
award granted by the Committee under the Plan in accordance with
Section 8 hereof.
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12.2
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Award Agreement
shall mean the agreement or
other writing (which may be framed as a plan or program) that
establishes the terms, conditions, restrictions and/or
limitations applicable to an Award in addition to those
established by the Plan and by the Committees exercise of
its administrative powers.
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12.3
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Board
shall mean the Board of Directors of
the Company.
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12.4
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Cash Award
shall mean the grant by the
Committee to a Participant of an Award of cash in accordance
with Section 8 hereof.
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12.5
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Change in Control
shall be deemed to have
occurred in the event that any person, entity or group shall
become the beneficial owner of such number of shares of Common
Stock, and/or any other class of stock of the Company then
outstanding that is entitled to vote in the election of
directors (or is convertible into shares so entitled to vote) as
together possess more than 50% of the voting power of all of the
then outstanding shares of all such classes of stock of the
Company so entitled to vote. For purposes of the preceding
sentence, person, entity or group shall not include
(i) any employee benefit plan of the Company, or
(ii) any person, entity or group which, as of
January 27, 2004, was the beneficial owner of such number
of shares of Common Stock and/or such other class of stock of
the Company as together possess 50% of such voting power; and
for purposes of this Section 12.5, group shall
mean persons who act in concert as described in
Section 14(d)(2) of the 1934 Act.
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12.6
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Code
shall mean the Internal Revenue Code of
1986, as amended from time to time.
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12.7
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Committee
shall mean (i) the Board or
(ii) a committee, or a subcommittee of a committee, of the
Board appointed by the Board from among its members. The
Committee may be the Boards Independent Directors
Committee, a sub-committee thereof, or such committee that
performs the functions generally associated with those functions
performed by the compensation committees of publicly traded
corporations. Unless the Board determines otherwise, and such
determination is reduced to a writing articulating the reasons
for such determination, the Committee shall be comprised solely
of not less than two (2) members, each of whom shall
qualify as:
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(a)
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a non-employee director within the meaning of
Rule 16b-3(b)(3) (or any successor rule) under the Exchange
Act, and
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(b)
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an outside director within the meaning of Code
Section 162(m) and the Treasury Regulations
thereunder, and
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(c)
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an independent director as such term is defined or
used by the rules of the Nasdaq Stock Market or such other
exchange or system on which the Companys Common Stock is
listed.
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12.8
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Common Stock
shall mean the common stock,
$2.00 par value per share, of the Company.
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12.9
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Company
shall mean First Oak Brook
Bancshares, Inc., a Delaware corporation.
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12.10
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Consultant
shall mean a person (other than a
person who is an Employee or a Nonemployee Director) or an
entity that renders services to the Company.
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12.11
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DER
shall mean a dividend equivalent right
where the Participant may receive an amount, payable in cash or
Common Stock or a combination of both, equal to the dividend
actually paid with respect to one (1) share of Common Stock.
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12.12
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Effective Date
shall mean the date on which
the Plan is approved by the stockholders of the Company.
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12.13
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Employee
shall mean an employee of the
Company or any Subsidiary.
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12.14
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Exchange Act
shall mean the Securities
Exchange Act of 1934, as amended from time to time, including
applicable regulations thereunder.
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12.15
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Fair Market Value of a Share of the Common Stock
shall mean the fair market value as determined as follows:
(i) at such time as the shares are traded through the
Nasdaq Stock Market (the Nasdaq Market System) or a
national stock exchange (an Exchange), Fair Market
Value shall, except
as otherwise determined by the
Committee
, be equal to the closing
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price on the day immediately preceding such date for sales made
and reported through the Nasdaq Market System or such Exchange
on which the shares are then listed and which constitutes the
principal market for the shares or, if no sales of shares shall
have been so reported with respect to that day, on the next
preceding day with respect to which sales were reported; or
(ii) at such time as the shares are not so traded through
the Nasdaq Market System or on an Exchange, Fair Market Value
shall be equal to such amount as the Committee, in its sole
discretion, shall determine.
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12.16
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ISO
shall mean an incentive stock
option as such term is used in Code Section 422.
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12.17
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Nonemployee Director
shall mean a member of
the Board or of the board of directors who is not an Employee.
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12.18
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Nonqualified Stock Option
shall mean a Stock
Option that does not qualify as an ISO.
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12.19
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Participant
shall mean any Employee,
Nonemployee Director or Consultant to whom an Award has been
granted by the Committee under the Plan.
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12.20
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Plan
shall mean the First Oak Brook
Bancshares, Inc. Incentive Compensation Plan.
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12.21
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Predecessor Plan
shall mean the
Companys 2001 Stock Incentive Plan.
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12.22
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SAR
shall mean the grant by the Committee to
a Participant of a stock appreciation right as described in
Section 8 hereof, payable in cash or Common Stock or a
combination of both, where the measure of compensation is based
on the difference (if any) between the Fair Market Value of a
Share of the Common Stock on the date of exercise and the
exercise price of such SAR.
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12.23
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Stock Award
shall mean the grant by the
Committee to a Participant of an Award of Common Stock in
accordance with Section 8 hereof.
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12.24
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Stock Option
shall mean the grant by the
Committee to a Participant of an option to purchase Common Stock
in accordance with Section 8 hereof.
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12.25
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Stock Unit
shall mean the grant by the
Committee to a Participant of a right to receive a share of
Common Stock in accordance with Section 9 below.
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12.26
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Subsidiary
shall mean a corporation of which
the Company directly or indirectly owns more than
50 percent of the Voting Stock or any other business entity
in which the Company directly or indirectly has an ownership
interest of more than 50 percent.
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12.27
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Treasury Regulation
shall mean the
regulations promulgated under the Code by the United States
Department of the Treasury, as amended from time to time.
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12.28
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Unvested
shall mean an Award (or portion of
an Award) that has not yet Vested.
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12.29
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Vest
shall mean:
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(a)
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with respect to Stock Options and SARs, when the Stock Option or
SAR (or a portion of such Stock Option or SAR) first becomes
exercisable and remains exercisable subject to the terms and
conditions of such Stock Option or SAR, and when the Participant
has an unrestricted right, title and interest to receive the
compensation (if any) attributable to such Stock Option or SAR
(or a portion of such Stock Option or SAR) or to otherwise enjoy
the benefits underlying such Stock Option or SAR; or
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(b)
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with respect to Awards other than Stock Options and SARs, when
the Participant has:
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(i)
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an unrestricted right, title and interest to receive the
compensation (whether payable in cash or Common Stock or a
combination of both) attributable to an Award (or a
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A-10
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portion of such Award) or to otherwise enjoy the benefits
underlying such Award; and
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(ii)
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a right to transfer an Award subject to no Company-imposed
restrictions or limitations.
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12.30
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Vesting Date
shall mean the date or dates on
which an Award Vests.
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12.31
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Voting Stock
shall mean the capital stock of
any class or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect the
directors of a corporation.
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A-11
PROXY
FIRST OAK BROOK
BANCSHARES, INC.
1400 Sixteenth Street, Oak
Brook, Illinois 60523
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS
The undersigned stockholder(s) of First Oak Brook
Bancshares, Inc., a Delaware corporation (the
Company), does (do) hereby constitute and appoint
Eugene P. Heytow, Frank M. Paris and Richard M.
Rieser, Jr., or any one or more of them, each with full
power of substitution, to appear and act as the proxy or proxies
of the undersigned at the Annual Meeting of Shareholders of the
Company to be held in the Conference Center of the Oak Brook
Bank Building, 1400 Sixteenth Street, Oak Brook, Illinois,
60523, on Tuesday, May 4, 2004 at 10:00 a.m. and at
any adjournment thereof, and to vote all the shares of Common
Stock of the Company standing in the name of the undersigned, or
which the undersigned may be entitled to vote, as fully as the
undersigned might or could do if personally present, as set
forth below.
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1.
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The election of three (3) Class II
directors of the Companys Board of Directors.
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o
For
All
o
Withheld
For
All
o
For
All Except
Nominees: Stuart I. Greenbaum, Richard M. Rieser,
Jr. and Michael L. Stein
Instructions: To withhold authority to vote
for any individual nominee, write that nominees name in
the space provided below.
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2.
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Approval of the Companys Incentive
Compensation Plan.
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o
FOR
o
AGAINST
o
ABSTAIN
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3.
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Ratification of the appointment of KPMG as
independent auditors of the Company.
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o
FOR
o
AGAINST
o
ABSTAIN
In their discretion, the Proxies are authorized
to vote upon such other business as may properly come before the
meeting.
(Continued and to be signed on reverse
side)
(Continued from other side)
This Proxy, when properly executed, will be voted
in the manner directed herein by the undersigned stockholder(s).
If no direction is made, this Proxy will be voted FOR
ALL of the three nominees for director, FOR
the approval of the Companys Incentive Compensation Plan
and FOR the ratification of the appointment of KMPG
LLP as independent auditors of the Company.
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Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign
the full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
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Signature
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(Signature if held jointly)
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Dated
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY
USING THE ENCLOSED, PREPAID
ENVELOPE.