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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
Northwest Indiana Bancorp
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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NORTHWEST INDIANA BANCORP
9204 COLUMBIA AVENUE
MUNSTER, INDIANA 46321
(219) 836-9690
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2001
Notice is hereby given that the Annual Meeting of Shareholders of NorthWest
Indiana Bancorp (the "Company"), will be held at the Center for Visual &
Performing Arts, 1040 Ridge Road, Munster, Indiana, on Wednesday, April 25,
2001, at 8:30 A.M., for the following purposes:
(1) To elect three directors;
(2) To ratify the appointment by the Board of Directors of Crowe,
Chizek and Company LLP as auditors for the year ending December 31, 2001;
and
(3) To consider and act upon any other business as may properly come
before the meeting or any adjournment thereof.
All shareholders of record at the close of business on February 28, 2001
will be entitled to vote at the meeting or any adjournment thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WHETHER OR
NOT YOU EXPECT TO BE PRESENT, PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE ACCOMPANYING ADDRESSED, POSTAGE-PREPAID ENVELOPE. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN
MAILING YOUR PROXY CARD PROMPTLY. IF YOU ATTEND AND VOTE AT THE MEETING, YOUR
PROXY WILL BE CANCELED.
JON E. DEGUILIO,
Secretary
Dated: March 23, 2001
NORTHWEST INDIANA BANCORP
9204 Columbia Avenue
Munster, Indiana 46321
(219) 836-9690
----------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 25, 2001
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of NorthWest Indiana Bancorp (the "Company"), of proxies
to be voted at the Annual Meeting of Shareholders (the "Meeting") to be held at
8:30 A.M., on Wednesday, April 25, 2001, at the Center for Visual & Performing
Arts, located in Munster, Indiana, for the purposes set forth in the
accompanying Notice of Annual Meeting. The Board of Directors knows of no
matters, other than those reported below, which are to be brought before the
Meeting. However, if other matters properly come before the Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote such proxy
in accordance with their judgment on such matters.
At the close of business on February 28, 2001, the record date for the
Meeting, there were 2,709,312 shares of the Company's Common Stock outstanding
and entitled to vote at the Meeting. On all matters, including the election of
directors, each shareholder will have one vote for each share held.
If the enclosed form of proxy is executed and returned, it may nevertheless
be revoked at any time prior to the time it is voted. A proxy may be revoked by
written notice to the Company's Secretary or by attendance at the Meeting.
UNLESS REVOKED, A PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH THE
INSTRUCTIONS THEREON, OR, IF NO INSTRUCTIONS ARE GIVEN, FOR THE ELECTION AS
DIRECTORS OF ALL NOMINEES LISTED UNDER PROPOSAL 1 AND FOR ALL OTHER PROPOSALS.
Directors will be elected by a plurality of the votes cast. Each other proposal
is subject to the vote of the holders of a greater number of shares favoring
such proposal than those opposing it. A proxy may indicate that all or a portion
of the shares represented by such proxy are not being voted with respect to a
specific proposal. This could occur, for example, when a broker is not permitted
to vote shares held in street name on certain proposals in the absence of
instructions from the beneficial owner. Shares that are not voted with respect
to a specific proposal will be considered as not present and entitled to vote on
such proposal, even though such shares will be considered present for purposes
of determining a quorum and voting on other proposals. Abstentions on a specific
proposal will be considered as present, but not as voting in favor of such
proposal. Because none of the proposals to be considered at the meeting requires
the affirmative vote of a specified number of outstanding shares (they require
only a plurality or a majority of the shares voted), neither the non-voting of
shares nor abstentions on a specific proposal will affect the determination of
whether such proposal will be approved.
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, the Company's directors, officers and regular employees
may solicit proxies personally or by telephone without additional compensation.
It is expected that this Proxy Statement and the accompanying Notice of Annual
Meeting and form of proxy will first be mailed to shareholders on or about March
23, 2001.
ELECTION OF DIRECTORS
(Proposal No. 1)
NOMINEES
The Board of Directors is comprised of eleven directors divided into three
classes, two of which have four directors each and one of which has three
directors, with the term of one class expiring each year. Each director serves
until the annual meeting of shareholders held in the year that is three years
after such director's election and thereafter until such director's successor is
elected and qualified. There currently is one vacancy on the Board of Directors,
which will not be filled at the Meeting and will remain vacant for the
foreseeable future. Each of the Company's directors also serves on the Board of
Directors of the Company's wholly owned subsidiary, Peoples Bank SB (the
"Bank"), for a term running concurrently with his or her term on the Company's
Board of Directors.
The nominees for election this year are Leroy F. Cataldi, Edward J.
Furticella and Stanley E. Mize. Each has been nominated by the Board of
Directors for election as a director for a term to expire at the 2004 annual
meeting of shareholders and until his successor is elected and has qualified. It
is the intention of the persons named in the accompanying form of proxy, absent
contrary instructions thereon, to vote such proxy for the election to the Board
of Directors of these three individuals. Each nominee has consented to be named
herein and to serve as a director if elected. However, if any nominee becomes
unavailable for election, it is the intention of the persons named in the
accompanying form of proxy to nominate such other person as director as they may
in their discretion determine, in which event the shares will be voted for such
other person.
Unless otherwise indicated in a footnote to the following table, the
principal occupation of each director and nominee has been the same for the last
five years, and each such director or nominee possesses sole voting and
investment power with respect to the shares of Common Stock indicated as
beneficially owned by him or her.
SHARES
BENEFICIALLY
PRESENT OWNED ON PERCENT
PRINCIPAL DIRECTOR FEBRUARY 28, OF
NAME AGE OCCUPATION SINCE 2001 CLASS
------------ -------- ------------------------- -------- -------------- ---------
NOMINEES FOR DIRECTOR
(Term expiring at annual meeting
of shareholders in 2004)
Leroy F. Cataldi 65 Pharmacist, 1977 73,915 (1) 2.73%
Dyer, Indiana
Edward J. Furticella 53 Vice President, Chief Financial 2000 48,724 (2) 1.79%
Officer and Treasurer of
the Company
Stanley E. Mize 59 President, Stan Mize Town & 1997 19,814 (3) 0.73%
Countree Auto Sales, Inc.,
Schererville, Indiana
SHARES
BENEFICIALLY
PRESENT OWNED ON PERCENT
PRINCIPAL DIRECTOR FEBRUARY 28, OF
NAME AGE OCCUPATION SINCE 2001 CLASS
------------ -------- ------------------------- -------- -------------- ---------
DIRECTORS CONTINUING IN OFFICE
(Term expiring at annual meeting
of shareholders in 2002)
Frank J. Bochnowski 62 Retired; Vice President and 1999 47,845(2) 1.75%
Secretary of the Company
until January 2001 (4)
Lourdes M. Dennison 59 Administrative Director, 1983 96,470(5) 3.56%
Kumpol Dennison Surgical
Corp., Merrillville, Indiana
Joel Gorelick 53 Vice President and Chief 2000 48,903(2) 1.80%
Lending Officer of
the Company
Gloria C. Gray 71 Retired 1982 66,432(6) 2.45%
(Term expiring at annual meeting
of shareholders in 2003)
David A. Bochnowski 55 President and Chief 1977 278,667(2) 10.23%
Executive Officer of the
Company (4)
Jerome F. Vrabel 51 Vice President, Grain 1984 147,288(2) 5.44%
Division of ED & F Man
International Inc., Chicago,
Illinois, a commodities
brokerage firm on the
Chicago Board of Trade
James L. Wieser 53 Attorney with Wieser & Sterba, 1999 7,084 0.26%
Schererville, Indiana
- --------------
(1) Includes 3,915 shares owed by Mr. Cataldi's spouse.
(2) For further information regarding the beneficial ownership of these shares,
see "Security Ownership By Certain Beneficial Owners and Management" below.
(3) Includes 1,600 shares owned by Mr. Mize's spouse.
(4) Frank J. Bochnowski and David A. Bochnowski are first cousins.
(5) Includes 79,868 shares owned by Mrs. Dennison's spouse.
(6) Includes 400 shares owned by Mrs. Gray's spouse.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
and its committees. During the year ended December 31, 2000, the Board held
twelve meetings. No director attended fewer than 75% of the total meetings of
the Board of Directors and committees on which such Board member served.
The Board of Directors has appointed an Audit Committee composed of
Directors Dennison, Mize and Vrabel. The Audit Committee functions as the
Company's liaison with its external auditors and reviews audit findings
presented by the Company's internal auditor. The Audit Committee, along with the
external auditors and internal auditor, monitors controls for material
weaknesses and/or improvements in the audit function. The Audit Committee also
monitors or, if necessary, establishes policies designed to promote full
disclosure of the Company's financial condition. All of the members of the Audit
Committee are independent within the meaning of Rule 4200(a)(15) of the listing
standards of the National Association of Securities Dealers, Inc. The Board of
Directors has adopted a written charter for the Audit Committee, a copy of which
is attached to this Proxy Statement as APPENDIX A. During the year ended
December 31, 2000, the Audit Committee held eight meetings.
The Board of Directors has appointed a Compensation Committee composed of
Directors David Bochnowski, Dennison, Gray and Vrabel. The Compensation
Committee is responsible for reviewing, determining and establishing the
compensation of directors and (as the Bank's Compensation Committee) the
salaries, bonuses and other compensation of the executive officers of the Bank.
During the year ended December 31, 2000, the Compensation Committee held one
meeting.
The Board of Directors has not appointed a Nominating Committee. It has,
however, appointed an Executive Committee, composed of Directors David
Bochnowski, Frank Bochnowski, Dennison and Vrabel. The Executive Committee is
authorized to exercise the powers of the Board of Directors between regular
Board meetings, except with respect to the declaration of dividends and other
extraordinary corporate transactions. All actions of the Executive Committee are
reviewed and ratified by the full Board of Directors.
COMPENSATION OF AND TRANSACTIONS WITH OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth, for the years ended December 31, 2000,
1999, and 1998, the cash and non-cash compensation received by each executive
officer who earned in excess of $100,000 from the Bank during 2000. The Company
itself pays no compensation to its employees, and each of the named executive
officers holds a similar position with the Bank. Each of the named executive
officers has been employed by the Company or the Bank for more than five years
except that Frank Bochnowski resigned from the Company and the Bank on December
31, 2000.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND ------------------- ------------ ALL OTHER
PRINCIPAL POSITION PERIOD SALARY BONUS(1) OPTIONS(2) COMPENSATION (3)
------------------ ------ ------ ----- ------- ------------
David A. Bochnowski 2000 $222,552 $95,932 4,920 $42,411
Chairman and Chief 1999 210,033 92,910 6,000 44,811
Executive Officer 1998 200,051 79,880 5,000 39,612
Joel Gorelick 2000 $127,765 $41,125 4,000 $14,054
Vice President and 1999 120,578 40,010 2,500 14,469
Chief Lending Officer 1998 114,815 31,250 2,300 11,481
Edward J. Furticella 2000 $127,413 $41,125 4,000 $14,015
Vice President, 1999 118,634 40,010 3,000 14,236
Chief Financial 1998 112,942 31,250 2,500 11,294
Officer and Treasurer
Frank J. Bochnowski 2000 $119,592 $35,500 3,350 $13,115
Vice President 1999 109,803 34,520 2,500 68,176
and Secretary 1998 99,983 25,550 2,100 9,998
- ----------
(1) "Bonus" amounts represent annual payments under the Bank's incentive
plan, which is open to all employees who meet the eligibility
requirements of the Pension Plan described below. The incentive plan is
based upon the Company's return on assets, return on equity and
earnings per share.
(2) "Options" reflects options granted to acquire the listed number of
shares of Common Stock. The Company does not have a stock appreciation
rights (SAR) plan and has not granted restricted stock awards.
(3) "All Other Compensation" includes contributions by the Bank under its
Pension Plan on behalf of Messrs. David Bochnowski, Gorelick,
Furticella and Frank Bochnowski of $18,700, $14,054, $14,015 and
$13,115, respectively, for 2000; $19,200, $14,469, $14,236 and $13,176,
respectively, for 1999 and $16,000, $11,481, $11,294 and $9,998,
respectively, for 1998. David Bochnowski's other compensation also
includes for each of 2000, 1999 and 1998, (i) premiums in the amount of
$17,930 for 2000 and $19,607 for each of 1999 and 1998 paid by the Bank
for disability insurance and term insurance on Mr. Bochnowski's life
pursuant to his employment agreement described below and (ii) credits
in the amount of $5,781, $6,004 and $4,005, respectively, under the
Bank's Unqualified Deferred Compensation Plan. Frank Bochnowski's other
compensation also includes for 1999 a credit in the amount of $55,000
under the Bank's Supplemental Executive Retirement Plan.
COMPENSATION OF DIRECTORS
All directors who are not also officers of the Company or the Bank receive
an annual director's fee from the Bank of $16,800.
EMPLOYMENT AGREEMENT
The Bank entered into an employment agreement with David A. Bochnowski as
President and Chief Executive Officer, effective March 1, 1988 and amended
January 18, 1992. The agreement has a three-year term and provides for annual
extensions for additional one-year terms, subject to annual review by the Bank's
Board of Directors, unless Mr. Bochnowski gives written notice that the
agreement will not be extended further. The agreement provides for a minimum
annual salary of $150,000 and for annual salary review by the Board of
Directors, as well as inclusion of Mr. Bochnowski in any discretionary bonus
plans, customary fringe benefits, vacation and sick leave. The agreement is
terminable by the Bank for "cause", defined in the agreement as termination for
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule or regulation (other than traffic violations or similar minor
offenses) or final cease-and-desist order or a material breach of the agreement.
If the Bank were to terminate Mr. Bochnowski without cause, or in the event of
his death during the term of the agreement, Mr. Bochnowski or his estate would
be entitled to a continuation of his salary for a period of one year thereafter.
Mr. Bochnowski may terminate his agreement upon three months' notice to the
Bank.
The agreement provides that in the event of the termination of Mr.
Bochnowski's employment after any change in "control" of the Company or a change
in the capacity or circumstances in which he is employed as contemplated by the
agreement, he will be promptly paid a sum equal to 2.99 times the average annual
compensation he received during the five-year period immediately prior to the
date of change of control. "Control" is defined in the agreement by reference to
the control determinations set forth in federal banking regulations, which
generally define "control" as the acquisition by any person or entity of the
ownership or power to vote more than 25% of the stock of a bank or its holding
company, although under certain circumstances control may occur upon the
acquisition of 10% of such stock unless successfully rebutted.
Mr. Bochnowski's agreement provides that in the event he becomes disabled
during the term of the agreement, he shall continue to receive his full
compensation for the first 18 months from the date of such disability, at which
time the Bank may terminate the agreement and Mr. Bochnowski shall receive 60%
of his monthly salary at the time he became disabled until the earlier of his
death or his normal retirement date under the Bank's Pension Plan. The agreement
provides that these amounts shall be offset by any amounts paid to Mr.
Bochnowski under any other disability program maintained by the Bank. The
agreement also requires the Bank to maintain term insurance on Mr. Bochnowski's
life in the amount of $750,000, payable to his designated beneficiaries.
1994 STOCK OPTION AND INCENTIVE PLAN
The Board of Directors adopted the 1994 Stock Option and Incentive Plan
(the "Option Plan"), which was approved by shareholders at the 1994 annual
meeting. Pursuant to the Option Plan, an aggregate of 240,000 shares of the
Company's Common Stock are reserved for issuance in respect of incentive awards
granted to officers and other employees of the Company and the Bank. Awards
granted under the Option Plan may be in the form of incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or non-incentive stock options or restricted stock. The
purposes of the Plan are to attract and retain the best available personnel, to
provide additional incentives for all employees and to encourage their continued
employment by facilitating employees' purchases of an equity interest in the
Company. The Option Plan is administered by a committee composed of Directors
Dennison, Gray and Vrabel, none of whom is eligible to receive awards under the
Plan. The committee has discretion
as to the persons who will receive awards and in what amount. As of December 31,
2000, approximately 101 employees were eligible to be considered for incentive
awards under the Option Plan.
OPTION GRANTS
During the year ended December 31, 2000, a total of 16,270 stock options
were granted under the Option Plan to the executive officers named in the
Summary Compensation Table. In each case, the exercise price per share was equal
to the fair market value of the Common Stock at the time of the grant.
The table below sets forth further information regarding grants of stock
options pursuant to the Option Plan during the year ended December 31, 2000, to
the persons named in the Summary Compensation Table.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION FOR
NUMBER OF OPTIONS GRANTED EXERCISE OPTION TERM (2)
OPTIONS TO EMPLOYEES PRICE EXPIRATION ----------------
NAME GRANTED IN FISCAL YEAR (PER SHARE) DATE (1) 5% 10%
------ --------- ---------------- ------------- ---------- -- ---
David A. Bochnowski 4,920 18.5% $21.13 1/18/2010 $28,733 $63,419
Joel Gorelick 4,000 15.1% 21.13 1/18/2010 23,360 51,560
Edward J. Furticella 4,000 15.1% 21.13 1/18/2010 23,360 51,560
Frank J. Bochnowski 3,350 12.6% 21.13 1/18/2010 19,564 43,182
(1) Options listed in the table first become exercisable on the fifth
anniversary of the date of grant and expire upon the executive's
termination of employment for cause or for any other reason other than
death, disability or retirement. All options become immediately
exercisable upon the commencement of a tender or exchange offer for the
Common Stock, or upon a change in control of the Company. All options for
Frank J. Bochnowski became immediately exercisable upon his retirement on
December 31, 2000.
(2) The dollar amounts under these columns are based on the 5% and 10% rates
set by the Securities and Exchange Commission and are not intended to
forecast possible appreciation of the Company's stock price. The
calculations assume a five-year option term.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The table below sets forth certain information regarding each exercise of
options during the year ended December 31, 2000 by the persons named in the
Summary Compensation Table and the unexercised options held by them at December
31, 2000.
NUMBER NUMBER OF VALUE OF UNEXERCISED
OF SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS HELD AT OPTIONS AT
NAME ON EXERCISE REALIZED DECEMBER 31, 2000 DECEMBER 31, 2000
---- ----------- -------- ----------------- -----------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
David A. Bochnowski --- --- 12,800 21,920 $143,360 $17,940
Joel Gorelick 2000 $22,240 2,000 13,300 $18,740 16,080
Edward J. Furticella --- --- 8,000 11,500 $74,960 730
Frank J. Bochnowski --- --- 15,950 --- $52,395 ---
BENEFITS
Profit Sharing Plan and Trust (Pension). The Bank maintains a Profit
Sharing Plan and Trust (the "Pension Plan") for the benefit of its eligible
employees. All employees are eligible to participate in the Pension Plan if they
have completed one year of employment with more than 1,000 hours of service, and
have reached their 21st birthday. This plan is non-contributory on the part of
the employee. Each plan year the Bank's Board of Directors determines the amount
to be contributed by the Bank. This contribution is discretionary and is based
on the Bank's financial performance. During the year ended December 31, 2000,
the Bank contributed $369,684 to the Pension Plan. The amounts of these
contributions on behalf of the executive officers named in the Summary
Compensation Table are included in that table under the column "All Other
Compensation." Pension benefits vest on the following scale: two years of
service, 40% of benefits accrued through the prior fiscal year; three years of
service, 60% of benefits accrued through the prior fiscal year; four years of
service, 80% of benefits accrued through the prior fiscal year; and five years
of service, 100% of benefits accrued through the prior fiscal year. The normal
retirement age is the first day after reaching age 65, at which time the
employee is entitled to receive 100% of the contributions previously made.
401(k) Plan. The Bank maintains a 401(k) defined contribution retirement
plan for the benefit of its eligible employees. All employees are eligible to
participate in the plan if they have completed one year of employment and 1,000
hours of service and have reached their 21st birthday. This plan is
non-contributory on the part of the Bank. Participating employees may elect to
contribute up to ten percent of their compensation on a pre-tax basis into the
plan through regular payroll deduction. Such funds will be invested as directed
by participants into eight investment options. All participants are always 100%
vested in their contributions and the earnings on their investments.
Distributions of participant account assets can occur upon retirement, for
hardship, upon attainment of age 59-1/2, upon disability, upon the death of the
participant and upon termination of service. The normal retirement age is 65;
participants may request early retirement distribution upon retirement and
reaching age 55. Participants may obtain loans from the plan pursuant to uniform
provisions meeting the requirements of the Code, using their account assets as
collateral.
Unqualified Deferred Compensation Plan. The Bank adopted an Unqualified
Deferred Compensation Plan (the "Deferred Compensation Plan") during 1995. The
purpose of the Deferred Compensation Plan is to provide deferred compensation to
key senior management employees of the Bank in order to recognize their
substantial contributions to the Bank and to provide them with additional
financial security as inducement to remain with the Bank. The Deferred
Compensation Plan is administered by the Bank's
Compensation Committee. In order to be eligible for participation in the
Deferred Compensation Plan, an employee must hold a key management, full-time
position in which he has the opportunity to impact significantly on the annual
operating success of the Bank. Of those eligible employees, the Compensation
Committee selects which persons shall be participants in the Deferred
Compensation Plan. Participants' accounts are credited each year with an amount
based on a formula involving the participant's employer- funded contributions
under all qualified plans and the limitations imposed by Code subsection
401(a)(17) and Code section 415. Following the cessation of the employment of
the participant by the Bank for any reason, including the participant's death,
the participant's account is distributed to the participant (or, in the event of
his death, to his designated beneficiary) in a lump sum cash payment. Currently,
David A. Bochnowski is the only participant in the Deferred Compensation Plan.
For the year ended December 31, 2000, the Bank credited $5,781 to Mr.
Bochnowski's account under the Deferred Compensation Plan. This amount is
included in Mr. Bochnowski's compensation in the Summary Compensation Table
under the column "All Other Compensation."
Supplemental Executive Retirement Plan. In December 1999, the Bank
established a Supplemental Executive Retirement Plan (the "Supplemental
Retirement Plan"), as an unfunded, non-qualified deferred compensation plan. The
purpose of the Supplemental Retirement Plan is to provide a means for the
payment of supplemental retirement benefits to a select group of key senior
management employees, in recognition of their substantial contributions to the
operation of the Bank, and to provide those individuals with additional
financial security. The Board of Directors determines the Plan participants and
contributions. Currently, Frank J. Bochnowski is the only participant in the
Supplemental Retirement Plan. For the year ended December 31, 2000, the Bank
made no credit to Mr. Bochnowski's account under the Supplemental Retirement
Plan.
Bank Loans. From time to time, the Bank makes loans to the Company's
directors and officers and their family members. All of such loans are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with the general public and
do not involve more than the normal risk of repayment or present other
unfavorable features. Loans made to a director or executive officer in excess of
$500,000 must be approved in advance by the disinterested members of the Bank's
Board of Directors.
Health and Insurance Benefits. The Bank provides health and accident
benefits for all full-time employees. Dependent coverage is provided at the
employee's expense through a group insurance plan upon request. Term life
insurance is provided for all employees who have completed one year of
employment with more than 1,000 hours of service and have reached their 21st
birthday.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes the
compensation of the Bank's executive officers. In setting compensation levels,
the Company seeks to create a cost-effective and fair package that will attract,
retain, and motivate the finest employees available to the Company and the Bank.
The Bank compensates each executive officer based primarily on the following
factors:
* The executive's level of job responsibility and performance;
* The Company's performance; and
* Compensation available from comparable companies and rivals for an
executive's services.
The Company structures compensation to motivate executives to achieve the
Company's strategic goals. Accordingly, executive compensation is linked to the
Company's short-term and long-term performance.
Stock options, for example, provide a direct link between executive
compensation and long-term creation of shareholder value. Customarily, options
awarded by the Company do not become exercisable until five years after the
grant (barring a change in control in the Company). Further, the options are
forfeited immediately upon the termination of employment of an executive for
cause or for any reason other than death, disability, or retirement. An Options
Committee, composed of Compensation Committee members Dennison, Gray, and
Vrabel, proposed awards of options for 2000 based upon (1) the Company's
earnings, (2) the Company's performance when compared to its peers, (3) the
Company's achievement of strategic goals, and (4) the executive's performance.
Options were awarded as set forth in the "Option Grants" table above.
Similarly, the Bank's incentive plan provides additional compensation based
upon the Company's performance relative to targets set for return on assets,
return on equity, and earnings per share. The Company's performance satisfied
conditions for payments under the incentive plan.
Finally, the Committee attempted to maintain the Company's compensation
package at a level consistent with compensation paid by comparable firms. The
Committee considered various surveys, including those available from SNL
Securities, Cole Financial, Inc. and America's Community Bankers.
David A. Bochnowski's compensation for 2000 was determined in accordance
with the same procedures and standards as for the other executive officers of
the Company; however, Mr. Bochnowski does not vote upon his own compensation,
his option awards under the Company's Option Plan, or his bonus awards under the
Bank's incentive plan. Further, for 2000, the Committee procured a report on
executive compensation from Cole Financial, Inc. to assist the Committee in
evaluating Mr. Bochnowski's compensation under the comparability standards
described above. Taking into account the Company's asset and net income growth,
return on assets and return on equity results, and operating expenses, the Cole
Report concluded that Mr. Bochnowski's compensation (salary, incentive and
options) was competitive when compared to similarly performing peers. (The Cole
Report also found that the compensation (salary, incentive and options) paid to
Messrs. Gorelick, Furticella and Frank Bochnowski was also competitive.) The
Board of Directors and the Compensation Committee approved Mr. David
Bochnowski's compensation for 2000, as well as the 2000 compensation of Messrs.
Gorelick, Furticella and Frank Bochnowski.
COMPENSATION COMMITTEE
----------------------
David A. Bochnowski
Lourdes M. Dennison
Gloria C. Gray
Jerome F. Vrabel
COMPARATIVE STOCK PERFORMANCE
The performance graph and table below compare the cumulative total
shareholder return for the Company with the cumulative total return for the
Nasdaq Stock Market ("Nasdaq Market Index"), for the S&P 500 Index, and for the
SNL Securities index of Nasdaq bank stocks having $250 million to $500 million
in assets ("SNL $250M-$500M Bank Index"). Among these indices, the Company
believes the SNL $250M-$500M Bank Index is the most relevant for comparing the
Company's performance because it comprises financial institutions most
comparable to the Company's size.
[GRAPH]
TOTAL RETURN PERFORMANCE
PERIOD ENDING
----------------------------------------------------------------------------
INDEX 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- ----------------------------------------------------------------------------------------------------------------
NorthWest Indiana Bancorp 100 115.49 167.76 173.03 184.45 179.73
SNL $250M-$500M Bank Index 100 129.85 224.58 201.12 187.11 180.15
S&P 500 100 122.86 163.86 210.64 254.97 231.74
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the members of the Company's Compensation Committee (Directors David
Bochnowski, Dennison, Gray, and Vrabel), only Mr. Bochnowski serves or has
served as an officer or employee of the Company or its subsidiaries. As stated
above under "Benefits -- Bank Loans," from time to time the Bank makes loans to
the Company's directors, including members of the Compensation Committee, and
their families. No Compensation Committee member has any other relationship
requiring disclosure as an interlocking executive officer or director or
otherwise under the rules of the Securities and Exchange Commission (the "SEC").
RATIFICATION OF APPOINTMENT OF AUDITORS
(PROPOSAL NO. 2)
The Board of Directors has renewed the Company's arrangements with Crowe,
Chizek and Company LLP, independent auditors, to be its auditors for the year
ending December 31, 2001, subject to ratification by shareholders. A
representative of Crowe, Chizek and Company LLP is expected to be present at the
meeting, will have the opportunity to make a statement if he so desires and will
be available to respond to appropriate questions.
During 2000, Crowe, Chizek and Company LLP provided services in connection
with the firm's audit function, which included an examination of the Company's
financial statements, assistance in preparation of reports filed with the SEC,
and meeting with the Company's Board of Directors and Audit Committee relative
to the audit. Non-audit services were primarily related to the preparation and
review of the Company's federal and state tax returns and providing support
services to the internal auditor. Crowe, Chizek and Company LLP performs similar
audit and non-audit services for the Bank. During 2000, the Company paid the
following fees to Crowe, Chizek and Company LLP for audit and non-audit
services:
Audit Fees...................................... $ 31,500
Financial Information Systems
Design and Implementation Fees............. $ 0
Other Fees...................................... $ 10,700
REPORT OF AUDIT COMMITTEE
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 2000. We have
discussed with the Company's auditors, Crowe, Chizek and Company LLP, the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants. We have also received
and reviewed the written disclosures and the letter from Crowe, Chizek and
Company LLP, required by Independence Standard No. 1, Independence Discussions
with Audit Committees, as amended, by the Independence Standards Board, and have
discussed with the auditors the auditors' independence.
Based on the reviews and discussions referred to above, we recommended to
the Board of Directors that the financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000.
We have also considered whether the provision by Crowe, Chizek and Company
LLP of non-audit related services to the Company and the Bank during 2000 is
compatible with maintaining the auditors' independence.
AUDIT COMMITTEE
---------------
Lourdes M. Dennison
Stanley E. Mize
Jerome F. Vrabel
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of February 28, 2001, certain
information as to those persons who were known by management to be beneficial
owners of more than 5% of the Company's Common Stock and as to the shares of the
Common Stock beneficially owned by the persons named in the "Summary
Compensation Table" and by all directors and executive officers as a group.
Persons and groups owning more than 5% of the Common Stock are required to file
certain reports regarding such ownership with the Company and the SEC pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based
on such reports, management knows of no persons, other than as set forth in the
table below, who owned more than 5% of the Common Stock at February 28, 2001.
Individual beneficial ownership of shares by the Company's directors is set
forth in the table above under "Election of Directors." Beneficial ownership by
directors and officers includes shares underlying stock options held by such
persons under the Company's Option Plan that are exercisable within 60 days of
February 28, 2001.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF SHARES
OF INDIVIDUAL OR OF BENEFICIAL OF COMMON STOCK
IDENTITY OF GROUP OWNERSHIP OUTSTANDING
------------------- ----------- ------------
David A. Bochnowski 278,667 (1) 10.23%
10203 Cherrywood Lane
Munster, IN 46321
Jerome F. Vrabel 147,288 (2) 5.44%
506 Wilderness Drive
Schererville, IN 46375
Joel Gorelick 48,903 (3) 1.80%
8589 West 85th Street
Schererville, IN 46375
Edward J. Furticella 48,724 (4) 1.79%
1615 Timberwood Lane
Munster, IN 46321
Frank Bochnowski 47,845 (5) 1.75%
140 Vickroy Drive
Crown Point, IN 46307
All directors and executive 835,227 (6) 30.33%
officers as a group (11 persons)
- -----------------
(1) Includes 39,821 shares as to which Mr. Bochnowski's spouse has voting and
dispositive power and 26,400 shares which are owned by their minor children
for which his spouse is custodian or trustee. Also includes stock options
representing 14,800 shares of Common Stock which were exercisable at
February 28, 2001.
(2) Includes 48,746 shares owned by Mr. Vrabel's spouse.
(3) Includes 882 shares owned by Mr. Gorelick's spouse. Also includes stock
options representing 4,000 shares of Common Stock which were exercisable at
February 28, 2001.
(4) Includes 664 shares owned by Mr. Furticella's spouse. Also includes stock
options representing 8,000 shares of Common Stock which were exercisable at
February 28, 2001.
(5) Includes 7,632 shares owned by Mr. Bochnowski's spouse. Also includes stock
options representing 17,450 shares of Common Stock which were exercisable
at February 28, 2001.
(6) Includes 44,250 shares as stock options which the Company's executive
officers hold under the Option Plan and which were exercisable at February
28, 2001. Such shares have been added to the total shares outstanding in
order to determine the ownership percentage of the Company's directors and
executive officers as a group at February 28, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the Company's Common Stock, to
file reports of ownership with the SEC. Officers, directors and greater than 10%
shareholders are required to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of copies of such forms
received by it, or written representations from certain reporting persons that
no Forms 5 were required for those persons, the Company believes that during the
year ended December 31, 2000, all filing requirements applicable to its
officers, directors, and greater than 10% shareholders were complied with,
except that Lourdes Dennison filed one Form 4 late with respect to one
transaction.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
next year's annual meeting of shareholders, any shareholder proposal to take
action at such meeting must be received at the Company's office at 9204 Columbia
Avenue, Munster, Indiana, no later than November 23, 2001. Any such proposals
shall be subject to the requirements of the proxy rules adopted under the
Exchange Act. In addition, any shareholder proposal received after February 6,
2002 will be considered untimely for consideration at that meeting.
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST, THE COMPANY WILL FURNISH TO SHAREHOLDERS, WITHOUT
CHARGE, A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-K
(INCLUDING FINANCIAL STATEMENTS AND SCHEDULES, BUT EXCLUDING EXHIBITS). SEND
YOUR REQUEST TO: SECRETARY, NORTHWEST INDIANA BANCORP, 9204 COLUMBIA AVENUE,
MUNSTER, INDIANA 46321.
INCORPORATION BY REFERENCE
To the extent this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Exchange Act
or the Securities Act of 1933, as amended, the sections of this Proxy Statement
entitled "Compensation Committee Report on Executive Compensation," "Comparative
Stock Performance" and "Report of Audit Committee" shall not be deemed to be so
incorporated unless specifically otherwise provided in any such filing.
JON E. DEGUILIO,
Secretary
Dated: March 23, 2001
APPENDIX A
AUDIT COMMITTEE CHARTER FOR
NORTHWEST INDIANA BANCORP AND PEOPLES BANK SB
This Charter is written for NorthWest Indiana Bancorp and its wholly owned
subsidiary Peoples Bank SB.
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial information that will be provided to the shareholders and others; the
systems of internal controls established by management and the Board; and the
auditing, accounting and financial reporting processes. To perform this
function, the Audit Committee's general responsibilities consist of the
following:
- To provide open avenues of communication among the internal
auditor, the independent accountant and the Board of Directors.
- To report Committee actions to the full Board of Directors and
make recommendations.
- To conduct or authorize investigations into matters within the
Committee's scope of responsibilities. The Committee is
authorized to retain independent counsel, accountants or others
it needs to assist in an investigation.
- To meet at least four times each year, more frequently if
circumstances make that preferable. The Audit Committee chairman
has the power to call a Committee meeting whenever necessary. An
Audit Committee member may not vote on any matter in which he or
she is not independent. The Committee may ask members of
management or others to attend the meeting and is authorized to
receive all pertinent information from management.
The Audit Committee will fulfill these general responsibilities by performing
the specific responsibilities stated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors
determined by the Board. The Audit Committee members shall be independent
directors, free from any relationship that may interfere with the exercise of
his or her independent judgment as a member such as any recent employment by the
Bancorp and/or family relationship to an executive, management or service
provider of the Bancorp. Each Audit Committee member will have the ability to
read and understand fundamental financial statements, such as a balance sheet,
income statement and cash flow statement. In addition, at least one member of
the Audit Committee shall have past or current employment experience in finance
or accounting, professional certification in accounting or any other comparable
experience or background which results in the individual's financial
sophistication.
The members of the Audit Committee shall be elected by the Board at the
annual meeting of the Board or until their successors shall be duly elected and
qualified. Unless a Chairman is elected by the full Board, the members of the
Audit Committee may designate a Chairman by majority vote of the full Committee
membership.
III. MEETINGS
The Audit Committee will meet at least four times each year. Meetings may
occur more frequently as circumstances arise which require a meeting of the
members. The Audit Committee will meet with the independent accountants at least
annually and with management and the internal auditor at least four times each
year in separate sessions to discuss any matters that the Committee or each of
these groups believe should be discussed privately.
III. SPECIFIC RESPONSIBILITIES
The Audit Committee shall perform the following activities in effort to
fulfill their obligation to the shareholders and others:
Documentation Review
- --------------------
1. Review and approve, with the full Board, this Charter annually and
periodically modify it as necessary.
2. Disclose whether there is a written Charter for the Audit Committee in
the proxy and include the Charter every three years in the proxy
statement.
3. Review the Bancorp's annual financial statements and determine whether
to recommend to the Board that the audited financial statements be
included in the Form 10-K.
4. Review the internal audit reports provided to management and
management's response.
5. Review with financial management and the independent accountants the
interim and annual financial information prior to its filing with the
SEC.
6. Review with financial management the quarterly Bancorp's financial
statements, key performance ratios and operating results.
Independent Accountants
- -----------------------
7. Recommend to the Board of Directors the selection of the independent
accountants who are ultimately accountable to the Board and the Audit
Committee. The Audit Committee should consider the accountant's
independence and effectiveness and approve the fees and other
compensation to be paid to the independent accountants. On an annual
basis, the Audit Committee should review and discuss with the
accountants all significant relationships the accountants have with
the Bancorp to determine the accountant's independence. A written
statement and oral discussion should be obtained from the independent
accountants disclosing all relationships or services that may
interfere with their objectivity to and independence from the Bancorp.
8. Review the performance of the independent accountants and approve any
proposed dismissal of the independent accountants when circumstances
warrant.
9. Discuss with the independent accountants as to the accuracy of the
Bancorp's financial statements and the appropriateness of the
accounting principles, financial disclosures and judgments made by
management.
10. Periodically consult with the independent accountants, without the
presence of management, the internal controls of the Bancorp including
information systems.
Financial Reporting Processes
- -----------------------------
11. Discuss with the independent accountants and the internal auditor as to
the integrity of the Bancorp's financial reporting processes.
12. Consider and approve, if necessary, major changes to the Bancorp's
auditing and accounting principles and practices as suggested by the
independent accountants, management or the internal auditor.
13. Review any significant disagreement or limitation of scope of
information among management and the independent accountants or the
internal auditor in connection with the preparation of the financial
statements.
Appointing an Internal Auditor
- ------------------------------
14. Review activities, organizational structure, and qualifications of the
internal audit department.
15. Review any difficulties the internal auditor encountered while
conducting audits, including any restrictions on the scope of or access
to required information.
16. Review changes to the planned scope of the internal audit plan that the
Committee believes necessary.
17. Review and approve the internal audit department's budget and scheduled
plan for the upcoming year.
18. Review whether the internal auditor has complied with the Institute of
Internal Auditing's Standards for the Professional Practice of Internal
Auditing.
19. Review appointment, replacement, reassignment or dismissal of the
internal auditor.
Ethical and Legal Compliance
- ----------------------------
20. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce and monitor
this Code.
21. Review, with the Bancorp's counsel, legal compliance matters including
corporate securities trading policies.
22. Review, with the Bancorp's counsel, any legal matter that could have a
significant impact on the Bank's financial statements.
23. Perform any other activities consistent with this Charter, the
Bancorp's by-laws and governing laws, as the Audit Committee or Board
deems necessary or appropriate.
24. Discuss with management, the independent accountants and the internal
auditor significant risks or exposures to the Bancorp and steps
management has taken to reduce these risks.
25. Review recommendations made by the regulators and independent auditors
and monitor management's response to any such recommendations.
NORTHWEST INDIANA BANCORP
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
I hereby appoint the official proxy committee of the Board of Directors of
NorthWest Indiana Bancorp (the "Company"), or any member thereof, my proxies,
with power of substitution, to vote all shares of the Company's Common Stock
which I am entitled to vote at the Annual Meeting of Shareholders, to be held at
the Center for Visual & Performing Arts, Munster, Indiana, on Wednesday, April
25, 2001, at 8:30 A.M., and at any adjournment, as follows:
1. ELECTION OF DIRECTORS FOR nominees listed below (except WITHHOLD AUTHORITY to vote for
those stricken below) [ ] all nominees listed below [ ]
Leroy F. Cataldi Edward J. Furticella Stanley E. Mize
(INSTRUCTIONS: To WITHHOLD authority to vote for any individual nominee strike through that nominee's name above.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF CROWE, CHIZEK AND COMPANY LLP, as auditors for the fiscal year ending
December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion on any other matters that may properly come before the meeting or any adjournment thereof.
(Continued and to be signed on the other side)
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED HEREON
AND, IN THE ABSENCE OF SPECIFICATION, WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES FOR DIRECTOR AND FOR ALL OTHER PROPOSALS.
Please sign exactly as name appears below. When shares are held by two or more
persons, all of them should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by a duly authorized officer. If
a partnership, please sign in partnership name by authorized person. Receipt of
Notice of Annual Meeting, Proxy Statement and Annual Report to Shareholders is
hereby acknowledged.
- ---------------------------------- -----------------------------------------
Signature Signature if Held Jointly
Date , 2001
-------------------------------
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.