UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment
No. )
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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þ Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to Section 240.14a-12
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NorthWest Indiana Bancorp
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
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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NorthWest Indiana Bancorp
9204 Columbia Avenue
Munster, Indiana 46321
(219) 836-4400
Notice of Annual Meeting of Shareholders
To Be Held On April 24, 2009
The Annual Meeting of Shareholders of NorthWest Indiana Bancorp will be held at the Corporate
Center of Peoples Bank SB, 9204 Columbia Avenue, Munster, Indiana on Friday, April 24, 2009, at
9:00 a.m., local time.
The Annual Meeting will be held for the following purposes:
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Election of Directors. Election of four directors of the Bancorp to serve
three-year terms expiring in 2012; |
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Ratification of Auditors. Ratification of the appointment of Plante & Moran as
independent registered public accountants for the Bancorp for the year ending December
31, 2009; and |
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Other Business. Other matters as may properly come before the meeting or at any
adjournment. |
You can vote at the meeting or any adjournment of the meeting if you are a shareholder of
record at the close of business on February 23, 2009.
We urge you to read the enclosed proxy statement carefully so you will have information about
the business to come before the meeting or any adjournment. At your earliest convenience, please
sign and return the accompanying proxy in the postage-paid envelope furnished for that purpose.
A copy of our Annual Report for the fiscal year ended December 31, 2008, is enclosed. The
Annual Report is not a part of the proxy soliciting material enclosed with this letter.
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By Order of the Board of Directors
Jon E. DeGuilio
Executive Vice President and Secretary
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Munster, Indiana
March 23, 2009
It is important that you return your proxy promptly. Therefore, whether or not you plan to be
present in person at the Annual Meeting, please sign, date and complete the enclosed proxy and
return it in the enclosed envelope, which requires no postage if mailed in the United States.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE
HELD ON APRIL 24, 2009.
The Proxy Statement and Annual Report are available at:
www.ibankpeoples.com/investor
NorthWest Indiana Bancorp
9204 Columbia Avenue
Munster, Indiana 46321
(219) 836-4400
Proxy Statement
for
Annual Meeting of Shareholders
April 24, 2009
The Board of Directors of NorthWest Indiana Bancorp, an Indiana corporation, is soliciting
proxies to be voted at the Annual Meeting of Shareholders to be held at 9:00 a.m., local time, on
April 24, 2009, at the Corporate Center of Peoples Bank SB, 9204 Columbia Avenue, Munster, Indiana,
and at any adjournment of the meeting. The Bancorps principal asset consists of 100% of the issued
and outstanding shares of Common Stock of Peoples Bank SB. We expect to mail this proxy statement
to our shareholders on or about March 23, 2009.
Items of Business
At the Annual Meeting, shareholders will:
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vote on the election of four directors to serve three-year terms expiring in 2012; |
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ratify the selection of Plante & Moran as auditors for the Bancorp for 2009; and |
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transact any other matters of business that properly come before the meeting. |
We do not expect any other items of business, because the deadline for shareholder nominations
and proposals has already passed. If other matters do properly come before the meeting, the
accompanying proxy gives discretionary authority to the persons named in the proxy to vote on any
other matters brought before the meeting. Those persons intend to vote the proxies in accordance
with their best judgment.
Voting Information
Who is entitled to vote?
Shareholders of record at the close of business on February 23, 2009, the record date, may
vote at the Annual Meeting. On the record date, there were 2,809,285 shares of the Common Stock
issued and outstanding, and the Bancorp had no other class of equity securities outstanding. Each
share of Common Stock is entitled to one vote at the Annual Meeting on all matters properly
presented.
How many votes are required to elect directors?
The four nominees for director receiving the most votes will be elected. Abstentions and
instructions to withhold authority to vote for a nominee will result in the nominee receiving fewer
votes but will not count as votes against the nominee.
How do I vote my shares?
If you are a shareholder of record, you can vote by mailing the enclosed proxy card. The
proxy, if properly signed and returned to the Bancorp and not revoked prior to its use, will be
voted in accordance with the instructions contained in the proxy. If you return your signed proxy
card but do not indicate your voting preferences, the proxies named in the proxy card will vote on
your behalf for the four nominees for director listed below. If you do not give contrary
instructions, the proxies will vote for each matter described below and, upon the transaction of
other business as may properly come before the meeting, in accordance with their best judgment.
If you have shares held by a broker or other nominee, you may instruct the broker or other
nominee to vote your shares by following the instructions the broker or other nominee provides to
you.
Proxies solicited by this proxy statement may be exercised only at the Annual Meeting and any
adjournment and will not be used for any other meeting.
Can I change my vote after I have mailed my proxy card?
You have the right to revoke your proxy at any time before it is exercised by (1) notifying
the Bancorps Secretary (Jon E. DeGuilio, 9204 Columbia Avenue, Munster, Indiana 46321) in writing,
(2) delivering a later-dated proxy, or (3) voting in person at the Annual Meeting.
Can I vote my shares in person at the meeting?
If you are a shareholder of record, you may vote your shares in person at the meeting.
However, we encourage you to vote by proxy card even if you plan to attend the meeting.
If your shares are held by a broker or other nominee, you must obtain a proxy from the broker
or other nominee giving you the right to vote the shares at the meeting.
What constitutes a quorum?
The holders of over 50% of the outstanding shares of Common Stock as of the record date must
be present in person or by proxy at the Annual Meeting to constitute a quorum. In determining
whether a quorum is present, shareholders who abstain, cast broker non-votes, or withhold authority
to vote on one or more director nominees will be deemed present at the Annual Meeting.
Security Ownership by Certain Beneficial Owners and Management
The following table sets forth, as of February 23, 2009, certain information as to those
persons who were known by management to be beneficial owners of more than 5% of the Bancorps
Common Stock and as to the shares of the Common Stock beneficially owned by the persons named in
the Summary Compensation Table (referred to in this proxy statement as Named Executive Officers)
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 Bancorp and
the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
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 23, 2009. Individual beneficial ownership
of shares by the Bancorps directors is set forth in the table above under Election of Directors.
2
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Amount and Nature |
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Percent of Shares |
Name and Address of Individual |
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of Beneficial |
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of Common Stock |
or Identity of Group |
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Ownership |
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Outstanding |
David A. Bochnowski
10203 Cherrywood Lane
Munster, IN 46321 |
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351,105 |
(1) |
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12.4 |
% |
Joel Gorelick
8589 West 85th Street
Schererville, IN 46375 |
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72,849 |
(2) |
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2.6 |
% |
Robert T. Lowry
730 Clover Lane
Crown Point, IN 46307 |
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21,023 |
(3) |
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Jon E. DeGuilio
8944 Liable Road
Highland, IN 46322 |
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10,790 |
(4) |
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Banc Fund VI L.P.
Banc Fund VII L.P.
208 S. LaSalle Street
Chicago, IL 60604 |
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198,292 |
(5) |
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7.1 |
% |
All current directors and executive
officers as a group (13 persons) |
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643,933 |
(6) |
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22.5 |
% |
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Under 1% of outstanding shares. |
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Includes 214,499 shares held jointly with Mr. Bochnowskis spouse, 24,990 shares as to which
Mr. Bochnowskis spouse has voting and dispositive power, and 26,400 shares which are owned by
his children for which his spouse is custodian or trustee. Also includes stock options
representing 13,022 shares of Common Stock which were exercisable at, or within 60 days after,
the record date, 9,089 shares held as co-trustee of trusts for the benefit of Mr. Bochnowskis
children, 53,500 shares purchased by Mr. Bochnowski under the Profit Sharing Plan and 9,605
shares purchased by Mr. Bochnowski under his Individual Retirement Account as to which Mr.
Bochnowski has dispositive and voting power. |
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Includes 882 shares owned by Mr. Gorelicks spouse in her Individual Retirement Account and
4,911 shares held by her as Trustee of a trust for her benefit. Also includes 5,811 shares
held by Mr. Gorelick as Trustee of a trust for his benefit and 32,649 shares held in his
Individual Retirement Account. Also includes stock options representing 14,000 shares of
Common Stock which were exercisable at, or within 60 days after, the record date, 1,087 shares
owned as custodian for his children, and 1,600 shares held jointly with Mr. Gorelicks mother.
Also includes 11,909 shares purchased by Mr. Gorelick under the Profit Sharing Plan as to
which Mr. Gorelick has dispositive and voting power. |
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Includes 2,209 shares held jointly with Mr. Lowrys spouse, 1,907 shares held in his
Individual Retirement Account, and 582 shares owned by Mr. Lowrys spouse in an Individual
Retirement Account. Also includes stock options representing 5,000 shares of Common Stock
that were exercisable at, or within 60 days after, the record date, 546 shares of restricted
stock over which Mr. Lowry has voting but not dispositive power and 10,778 shares purchased by
Mr. Lowry under the Profit Sharing Plan as to which Mr. Lowry has dispositive and voting
power. Excludes options for 250 shares which are not exercisable within 60 days of the record
date. |
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Includes 82 shares owned jointly with Mr. DeGuilios spouse. Also includes stock options
representing 5,800 shares of Common Stock which were exercisable at, or within 60 days after,
the record date, and 3,908 shares purchased by Mr. DeGuilio under the Profit Sharing Plan as
to which Mr. DeGuilio has dispositive and voting power. Also includes 500 shares held in his
Individual Retirement Account and 500 shares of restricted stock over which Mr. DeGuilio has
voting but not dispositive power. |
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Banc Fund VI L.P. and Banc Fund VII L.P. are each an Illinois limited partnership. Charles J.
Moore, who is the manager of these funds, has voting and dispositive power over these shares
and controls these entities through The Banc Funds Company, L.L.C., an Illinois corporation,
which serves as general partner of MidBanc VI L.P. and MidBanc VII L.P., the general partners,
respectively, of Banc Fund VI L.P. and Banc Fund VII L.P. |
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Includes 52,172 shares as stock options which the Bancorps executive officers hold under the
1994 Option Plan and which were exercisable at, or within 60 days after, the record date. Such
shares have been added to the total shares outstanding in order to determine the ownership
percentage of the Bancorps directors and executive officers as a group at the record date.
Also includes 95,467 shares held under the Profit Sharing Plan and 1,046 shares of restricted
stock granted under the 2004 Option Plan. Excludes options for 250 shares which are not
exercisable within 60 days of the record date. |
3
Proposal 1 Election of Directors
The Board of Directors currently consists of eleven members. The By-Laws provide that the
Board of Directors is to be divided into three classes as nearly equal in number as possible. The
members of each class are elected for a term of three years (unless a shorter period is specified)
and until their successors are elected and qualified. One class of directors is elected annually.
The nominees for director this year are David A. Bochnowski, James L. Wieser, Kenneth V.
Krupinski, and Anthony Puntillo, D.D.S., M.S.D., each of whom is a current director of the Bancorp.
If the shareholders elect these nominees at the Annual Meeting, the terms of Messrs. David A.
Bochnowski, Wieser, Krupinski, and Puntillo will expire in 2012. No director or nominee for
director is related to any other director or executive officer of the Bancorp or nominee for
director by blood, marriage, or adoption, except that Frank J. Bochnowski and David A. Bochnowski
are cousins and James L. Wieser is the brother-in-law of Jon E. DeGuilio, an executive officer of
the Bancorp. There are no arrangements or understandings between any nominee and any other person
pursuant to which the nominee was selected.
The following table provides information on the nominees for the position of director of the
Bancorp and for each director continuing in office after the Annual Meeting, including the number
and percent of shares of Common Stock beneficially owned as of the record date.
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Shares Beneficially |
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Percent |
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Director |
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Owned on February |
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of |
Name |
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Age |
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Present Principal Occupation |
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Since |
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23, 2009 |
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Class |
Nominees for Director |
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(Term expiring at annual meeting of shareholders in 2012) |
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David A. Bochnowski |
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63 |
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Chairman and Chief Executive Officer of the Bancorp |
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1977 |
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351,105 |
(1) |
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12.4 |
% |
James L. Wieser |
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61 |
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Attorney with Wieser & Wyllie, LLP, Schererville, Indiana |
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1999 |
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6,814 |
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Kenneth V. Krupinski |
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61 |
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Certified Public Accountant and Principal with Swartz |
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2003 |
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5,823 |
(2) |
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* |
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Retson & Co., P.C., Merrillville, Indiana |
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Anthony Puntillo, |
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42 |
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Orthodontist, Chief Executive Officer of Puntillo |
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2004 |
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3,378 |
(3) |
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D.D.S., M.S.D. |
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Orthodontics, P.C. |
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(Term expiring at annual meeting of shareholders in 2010) |
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Edward J. Furticella |
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62 |
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Former Executive Vice President and CFO of the Bancorp. |
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2000 |
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71,702 |
(4) |
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2.5 |
% |
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Currently part-time employee of the Bancorp and |
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Continuous Lecturer at Purdue University, Calumet Campus |
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Stanley E. Mize |
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67 |
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Retired; formerly President of Stan Mize Towne & |
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1997 |
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39,826 |
(5) |
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1.4 |
% |
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Countree Auto Sales, Inc., Schererville, Indiana |
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Amy W. Han, Ph.D. |
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45 |
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Executive Director, Northwest Indiana Medical Research |
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2008 |
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2,175 |
(6) |
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* |
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Consortium and Asst. Professor of Psychiatry, Indiana |
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University School of Medicine-Northwest |
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Directors Continuing in Office |
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(Term expiring at annual meeting of shareholders in 2011) |
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Frank J. Bochnowski |
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70 |
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Retired; formerly Executive Vice President and Secretary |
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1999 |
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27,833 |
(7) |
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* |
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of the Bancorp |
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Lourdes M. Dennison |
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67 |
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Executive Coordinator Asian American Medical |
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1983 |
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30,039 |
(8) |
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1.1 |
% |
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Association; Managing Partner D&T LLC, a real estate |
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investment partnership |
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Joel Gorelick |
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61 |
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President and Chief Administrative Officer of the Bancorp |
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2000 |
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72,849 |
(1) |
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2.6 |
% |
Don Fesko |
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36 |
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Administrator of Community Hospital in Munster, Indiana |
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2005 |
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576 |
(9) |
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Under 1% of outstanding shares. |
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For further information regarding the beneficial ownership of these shares, see Security
Ownership By Certain Beneficial Owners and Management above. |
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Of these shares, 4,323 are held jointly with Mr. Krupinskis spouse and 1,500 are held in a
401(k) plan for his benefit. |
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These shares are held in a trust for Dr. Puntillos benefit of which Dr. Puntillo serves as
trustee. |
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Includes 36,512 shares held jointly with Mr. Furticellas spouse and 664 shares held by his
spouse in her Individual Retirement Account. Also includes stock options for 9,500 shares of
Common Stock which were exercisable at, or within 60 days after, the record date, 16,158
shares allocated to Mr. Furticella under the Profit Sharing Plan, and 8,868 shares held in Mr.
Furticellas Individual Retirement Account. |
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Includes 3,510 shares held by his spouses Individual Retirement Account, 27,168 shares owned
jointly with his spouse, 3,149 shares held in his Individual Retirement Account and 1,097 held
by Mr. Mize as custodian for his granddaughter. |
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These shares are held jointly with Ms. Hans spouse. |
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Includes 5,313 shares held jointly with Mr. Bochnowskis spouse. Also includes stock options
representing 4,850 shares of Common Stock which were exercisable at, or within 60 days of, the
record date and 10,038 shares held in his Individual Retirement Account. |
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Includes 12,576 shares owned by Mrs. Dennisons spouse in an Individual Retirement Account
and 16,720 shares held by Mrs. Dennison in her Individual Retirement Account. Also includes
465 shares held in a trust for the benefit of Ms. Dennisons grandson. |
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These shares are held jointly with Mr. Feskos spouse. |
Corporate Governance
Director Independence
All of the directors except David A. Bochnowski, Joel Gorelick and James L. Wieser meet the
standards for independence of Board members set forth in the Listing Standards for the Nasdaq Stock
Exchange. Director Wieser is not considered to be independent because he is the brother-in-law of
Jon E. DeGuilio, an executive officer of the Bancorp. Directors Bochnowski and Gorelick are not
independent because they are employees of the Bancorp. Moreover, all members of the Bancorps Risk
Management Committee, Compensation & Benefits Committee, and Nominating and Corporate Governance
Committee meet those independence standards, except Mr. Wieser for the reasons set forth above. The
Board of Directors of the Bancorp considers the independence of each of the directors under the
Listing Standards of the Nasdaq Stock Exchange, which for purposes of determining the independence
of the Risk Management Committee members also incorporate the standards of the Securities and
Exchange Commission included in Reg. § 240.10A-3(b)(1). Among other things, the Board considers
current or previous employment relationships as well as material transactions or relationships
between the Bancorp or its subsidiaries and the directors, members of their immediate family, or
entities in which the directors have a significant interest. The purpose of this review is to
determine whether any relationships or transactions exist or have occurred that are inconsistent
with a determination that the director is independent.
Meetings of the Board of Directors
During the fiscal year ended December 31, 2008, the Board of Directors of the Bancorp met or
acted by written consent 12 times. No director attended fewer than 75% of the aggregate total
number of meetings during the last fiscal year of the Board of Directors of the Bancorp held while
he served as director and of meetings of committees on which he served during that fiscal year.
Board Committees
The Board of Directors has appointed an Executive Committee, composed of Directors David
Bochnowski (Chairman), Frank Bochnowski, Dennison, Mize and Wieser. 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.
The Board of Directors has a Nominating and Corporate Governance Committee which currently
consists of Directors Dennison (Chairman), Frank Bochnowski, Fesko, Han, Krupinski, Mize and
Puntillo. The Board of Directors has adopted a written Charter of the Nominating and Corporate
Governance Committee, a copy of which is available on the Bancorps website at
www.ibankpeoples.com. The primary functions of the Nominating and Corporate Governance Committee
are to retain and terminate any search firm to be used to identify director candidates; to assess
the need for new directors and report annually to the Board with an assessment of the Boards
performance; to review and reassess the adequacy of the Bancorps Corporate Governance Guidelines
and recommend any proposed changes to the Board for approval; to lead the Board in its annual
review of the Boards
5
performance; to recommend to the Board director nominees for each committee of the Bancorp; to
review and reassess the adequacy of its written charter; and to annually review its own
performance. The Nominating and Corporate Governance Committee identifies potential nominees for
director based on specified objectives in terms of the composition of the Board, taking into
account such factors as areas of expertise and geographic, occupational, gender, race and age
diversity. Nominees will be evaluated on the basis of their experience, judgment, integrity,
ability to make independent inquiries, understanding of the Bancorp and willingness to devote
adequate time to Board duties. During the year ended December 31, 2008, the Nominating and
Corporate Governance Committee held five meetings.
The Nominating and Corporate Governance Committee also will consider director candidates
recommended by the Bancorps shareholders. A shareholder who wishes to nominate an individual as a
director candidate at next years annual meeting of shareholders, rather than recommend the
individual to the Board as a potential nominee, must comply with the advance notice requirements
described under Shareholder Proposals.
The Board of Directors has appointed a Risk Management Committee, formerly the Audit
Committee, established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of
1934, which is composed of Directors Krupinski (Chairman), Mize and Wieser. The Board of Directors
has determined that Director Krupinski is an audit committee financial expert, as that term is
defined in the Securities Exchange Act of 1934.
The Risk Management Committee functions as the Bancorps liaison with its external auditors
and reviews audit findings presented by the Bancorps internal auditor. The Risk Management
Committee, along with the external auditors and internal auditor, monitors controls for material
weaknesses and/or improvements in the audit function. The Risk Management Committee also monitors
or, if necessary, establishes policies designed to promote full disclosure of the Bancorps
financial condition. The Board of Directors has adopted a written Charter for the Risk Management
Committee, a copy of which is available on the Bancorps website at www.ibankpeoples.com. During
the year ended December 31, 2008, the Risk Management Committee held eight meetings.
The Board of Directors has appointed a Compensation & Benefits Committee composed of Directors
Wieser (Chairman), Dennison, Krupinski and Mize. The Compensation & Benefits Committee is
responsible for reviewing, determining and establishing the compensation of directors and (as the
Banks Compensation & Benefits Committee) the salaries, bonuses and other compensation of the
executive officers of the Bank. The Board of Directors has adopted a written charter for the
Compensation & Benefits Committee, a copy of which is available on the Bancorps website at
www.ibankpeoples.com. During the year ended December 31, 2008, the Compensation & Benefits
Committee held five meetings.
Communications with Directors
The Board of Directors of the Bancorp has implemented a process whereby shareholders may send
communications to the Boards attention. Any shareholder desiring to communicate with the Board, or
one or more specific members thereof, should communicate in a writing addressed to the NorthWest
Indiana Bancorp, Board of Directors, c/o Secretary, 9204 Columbia Avenue, Munster, Indiana 46321.
The Secretary of the Bancorp has been instructed by the Board to promptly forward all such
communications to the specified addressees thereof.
6
Executive Compensation
The following table presents information for compensation awarded to, earned by, or paid to
the Named Executive Officers for 2007 and 2008.
Summary Compensation Table
|
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|
|
|
Non-Equity |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensa- |
|
|
Name and |
|
|
|
|
|
Salary |
|
Awards |
|
Awards |
|
Compensation |
|
tion |
|
Total |
Principal Position |
|
Year |
|
($)(1) |
|
($)(2) |
|
($)(2) |
|
($)(3) |
|
($)(4) |
|
($) |
David A. Bochnowski |
|
|
2008 |
|
|
$ |
357,446 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
28,132 |
|
|
$ |
32,166 |
|
|
$ |
417,744 |
|
Chairman and Chief Executive Officer |
|
|
2007 |
|
|
|
347,039 |
|
|
|
9,930 |
|
|
|
3,124 |
|
|
|
0 |
|
|
|
40,244 |
|
|
|
400,337 |
|
Joel Gorelick |
|
|
2008 |
|
|
$ |
215,535 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
14,021 |
|
|
$ |
12,273 |
|
|
$ |
241,829 |
|
President and Chief Administrative Officer |
|
|
2007 |
|
|
|
209,259 |
|
|
|
4,965 |
|
|
|
2,420 |
|
|
|
0 |
|
|
|
13,215 |
|
|
|
229,859 |
|
Jon E. DeGuilio |
|
|
2008 |
|
|
$ |
145,360 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
4,143 |
|
|
$ |
8,234 |
|
|
$ |
157,737 |
|
Executive Vice President, General
Counsel, and
Secretary |
|
|
2007 |
|
|
|
141,169 |
|
|
|
204 |
|
|
|
989 |
|
|
|
0 |
|
|
|
7,658 |
|
|
|
150,020 |
|
Robert T. Lowry |
|
|
2008 |
|
|
$ |
134,215 |
|
|
$ |
0 |
|
|
$ |
250 |
|
|
$ |
3,825 |
|
|
$ |
7,571 |
|
|
$ |
145,861 |
|
Senior Vice President, Chief Financial
Officer and Treasurer |
|
|
2007 |
|
|
|
126,565 |
|
|
|
3,665 |
|
|
|
826 |
|
|
|
0 |
|
|
|
7,395 |
|
|
|
138,451 |
|
|
|
|
(1) |
|
Includes any amounts earned but deferred, including amounts deferred under the Banks 401(k)
Plan. Executive officers of the Bancorp who serve as directors do not receive director fees. |
|
(2) |
|
The amounts in the Stock Awards and Option Awards columns reflect the dollar amount the
Bancorp recognized, before forfeitures, for financial statement purposes for the fiscal years
ended December 31, 2007 and 2008, in accordance with FAS 123(R) and includes amounts from
awards granted prior to 2006. Assumptions used in the calculation of these amounts are
included in footnote 11 to the Bancorps audited financial statements for the 2008 fiscal
year, included in the Bancorps Annual Report on Form 10-K for 2008. |
|
(3) |
|
This column includes the dollar value of all amounts earned during the fiscal year because
specified performance criteria have been satisfied pursuant to the Bancorps cash incentive
plan, whether or not paid to the Named Executive Officer. The Banks cash incentive plan is
open to all employees who have been employed by September 30th of each plan year. The
incentive plan is based upon the Bancorps return on assets, return on equity and earnings per
share. |
|
(4) |
|
All Other Compensation includes contributions of the Bank made under its Profit Sharing
Plan on behalf of Messrs. Bochnowski, Gorelick, DeGuilio and Lowry of $11,250, $10,463, $7,058
and $6,328 for 2007, and $11,500, $10,777, $7,268, and $6,711 for 2008, respectively. Such
amount also includes for the personal benefit to the officers of premiums paid for Split
Dollar Plan Life Insurance on their lives in the amounts of $2,388, $1,465 $600 and $209 for
2007, and $1,224, $740, $246, and $104 for 2008, respectively. Such amount also includes
dividends paid on restricted stock awards to Messrs. Bochnowski, Gorelick, DeGuilio and Lowry
in the amounts of $2,574, $1,287, $180 and $858 for 2007, and $1,512, $756, $720, and $756
for 2008, respectively. Mr. Bochnowskis other compensation also includes (i) premiums of
$17,930 for 2007 and $17,930 for 2008, paid by the Bank for disability insurance and term
insurance on Mr. Bochnowskis life pursuant to his employment agreement described below and
(ii) a credit in the amount of $6,120 for 2007, and $6,372 for 2008, under the Banks
Unqualified Deferred Compensation Plan. Messrs. Bochnowski, Gorelick, DeGuilio, and Lowry
received certain perquisites during 2007 and 2008, but the incremental cost of providing those
perquisites did not exceed $10,000. |
1994 Stock Option and Incentive Plan
Until its expiration in February 2004, the Bancorp had a 1994 Stock Option and Incentive Plan.
Pursuant to the 1994 Option Plan, an aggregate of 240,000 shares of the Bancorps Common Stock were
reserved for issuance in respect of incentive awards granted to officers and other employees of the
Bancorp and the Bank. Awards granted under the 1994 Option Plan were in the form of incentive stock
options within the meaning of Section 422 of the Code, or non incentive stock options or restricted
stock. As of February 23, 2009, there were options for 69,397 shares of the Bancorps Common Stock
7
outstanding under the 1994 Option Plan at an average exercise price per share of $23.56. An
aggregate of 4,600 restricted shares have been awarded under the 1994 Option Plan.
The option price of each share of stock is to be paid in full at the time of exercise in cash,
by delivering shares of the Bancorp common stock owned for at least six months with a market value
of the exercise price, or by a combination of cash and such shares. In the event an option
recipient terminates his or her employment or service as an employee or director, the options will
terminate during specified periods. In the event of a change in control of the Bancorp all options
not previously exercisable shall become fully exercisable. For this purpose, as well as for
purposes of the 2004 Stock Option and Incentive Plan described below, change in control includes an
acquisition by a third party of 25% or more of the Bancorps outstanding shares, a change in a
majority of the Bancorps directors as a result of a tender offer, merger, sale of assets or
similar transaction, or shareholder approval of a sale or disposition of all or substantially all
of the Bancorps assets or another transaction following which the Bancorp would no longer be an
independent publicly-owned entity; provided that such events will not be deemed a change in control
if a majority of the Board of Directors of the Bancorp adopts a resolution to provide that such
events will not be deemed a change in control.
2004 Stock Option and Incentive Plan
The Board of Directors adopted the Amended and Restated 2004 Stock Option and Incentive Plan,
which was approved by shareholders at the 2004 annual meeting, and amended and restated at the 2005
annual meeting of shareholders. The 2004 Option Plan provides for the grant of any or all of the
following types of awards: (1) stock options, including incentive stock options and non-qualified
stock options; (2) stock appreciation rights; (3) restricted stock; (4) unrestricted stock; and (5)
performance shares or performance units. Directors, employees and consultants of the Bancorp and
its subsidiaries are eligible for awards under the Plan. Pursuant to the 2004 Option Plan, the
maximum number of shares with respect to which awards may be made under the 2004 Option Plan is
250,000 shares. The shares with respect to which awards may be made under the 2004 Option Plan may
either be authorized and unissued shares or treasury shares. As of February 23, 2009, 5,750 shares
of restricted stock and 1,000 incentive stock options had been awarded under the 2004 Option Plan.
The purpose of the 2004 Option Plan is to promote the long term interests of the Bancorp and
its shareholders by providing a means for attracting and retaining officers and employees of the
Bancorp and its subsidiaries. The 2004 Option Plan is administered by the Compensation & Benefits
Committee consisting of Directors Wieser, Dennison, Krupinski and Mize each of whom is a
non-employee director as provided under Rule 16b-3 of the Exchange Act, and an outside director
under Section 162(m) of the Code. Options are generally awarded for terms of five years, and at an
option price per share equal to the fair market value of the shares on the date of grant of the
stock options. Options generally become exercisable in full five years after the date of grant.
Options granted are adjusted for capital changes such as stock splits and stock dividends. The
Committee has full and complete authority and discretion, except as expressly limited by the Plan,
to grant awards and to provide for their terms and conditions.
The option price of each share of stock is to be paid in full at the time of exercise in cash
or by delivering shares of the Bancorp common stock owned for at least six months with a market
value of the exercise price, or by a combination of cash and such shares. In the event an option
recipient terminates his or her employment or service as an employee or director, the options will
terminate during specified periods. In the event of a change in control of the Bancorp (as defined
above), all options not previously exercisable shall become fully exercisable.
Awards of restricted shares are generally subject to transfer restrictions for five years and
fully vest at the end of the five-year period. If the service of an option holder terminates
involuntarily within eighteen
8
months after a change in control of the Bancorp (as defined above), any restricted transfer
period to which the restricted shares are then subject will terminate and the shares will fully
vest.
Employees Savings and Profit Sharing Plan. The Bank maintains an Employees Savings and
Profit Sharing Plan and Trust for all employees who meet the plan qualifications. The Profit
Sharing Plan is a defined contribution plan and employees are eligible to participate in the Profit
Sharing Plan on the first day of the month coincident with or next following the completion of one
year of employment, age 18, and completion of 1,000 hours of employment. The Plan is administered
by a third party and employees direct their individual investments into any of several investment
options including certificates of deposit at the Bank and the Bancorps shares purchased on the
open market. Employees eligible for the Profit Sharing Plan may redirect their investments at any
time.
Contributions to the Profit Sharing Plan are discretionary, made by the Bank and are
non-contributory on the part of the employees. All contributions are also subject to review by the
Compensation & Benefits Committee and approval by the Board of Directors. Profit sharing
contributions made by the Bank and earnings credited to the employees account vest on the
following schedule: two years of service, 40% of contributions and earnings; three years of
service, 60% of contributions and earnings; four years of service, 80% of contributions and
earnings; and five years of service, 100% of contributions and earnings. Participants become 100%
vested in the employer contributions and accrued earnings in their account upon their death,
approved disability, or attainment of age 65 while employed at the Bank.
The Profit Sharing Plan is open to all eligible employees and the Bank contributes a
percentage of each employees base salary. Consistent with the objectives of the executive
compensation program, contributions to the plan may increase or decrease based upon the return on
assets of the Bancorp. The Board of Directors has approved and the Compensation & Benefits
Committee monitors the formula for plan contributions. For the fiscal year ending December 31,
2008, the plan contributed 5% of each eligible employees base salary as a result of the Bancorps
2008 performance. This compares to a 6% contribution for the fiscal year ended December 31, 2006
and a 5% contribution for the fiscal year ended December 31, 2007.
The Employees Savings Plan feature allows employees to make pre-tax contributions to the
Plan, subject to the limitations imposed by Section 401(k) of the Internal Revenue Code.
Participants electing pre-tax contributions are always 100% vested in their contributions and the
earnings on their investments. Participants can also borrow from their pre-tax contributions
pursuant to meeting the requirements of the Internal Revenue Code, using their account as
collateral.
Based upon the Banks return on assets for the respective years, $315,286 (including
forfeitures of $1,671) was contributed to the Profit Sharing Plan for the year ended December 31,
2008, $266,615 (including forfeitures of $12,928) was contributed to the Profit Sharing Plan for
the year ended December 31, 2007, and $309,814 (including forfeitures of $10,710) was contributed
to the Profit Sharing Plan for the year ended December 31, 2006. For 2008, Mr. Bochnowskis Profit
Sharing Plan account was credited with $11,500, compared to $11,250 for 2007 and $13,200 for 2006;
Mr. Gorelicks Profit Sharing Plan account was credited with $10,777, $10,463, and $11,338 for such
years; Mr. Lowrys account was credited with $6,711, $6,328 and $7,155 for such years; and Mr.
DeGuilios account was credited with $7,268, $7,058 and $8,219 for such years. The contributions
made on behalf of executive officers named in the Summary Compensation Table are included in that
table under the column All Other Compensation.
Group Medical and Insurance Coverage
Group medical and insurance coverage is a customary and competitive employment practice in the
community banking industry. The Bank provides a selection of group medical insurance benefits for
all full-time employees with employees selecting the type of coverage. The Bank pays 72% for single
employee coverage and 59% for employee plus dependent coverage. The Bank also provides two separate
9
life insurance and accidental death and dismemberment insurance benefits. All full-time
employees receive a life insurance and accidental death and dismemberment insurance benefit equal
to one-half of their annual salary and, if they have completed one year of employment, 1,000 hours
of service, and reached their 18th birthday, another life insurance and accidental death and
dismemberment insurance benefit is provided that is equal to three times an employees salary to a
maximum of $500,000.
Post-Retirement Health Benefits
The Bank also sponsors a defined benefit post retirement plan that provides comprehensive
major medical benefits to all eligible retirees. Eligible retirees are those who have attained the
age of 65, have completed at least 18 years of service and are covered under the group medical plan
as of the date of their retirement. Currently, the Bank pays 28% of the retiree medical premium and
retirees pay 100% of premiums for dependent coverage.
BOLI Insurance
The Bank has invested in Bank Owned Life Insurance (BOLI) that insures executive officers,
senior vice-presidents, and vice-presidents. A feature of this type of insurance provides a split
dollar benefit to each insured that is reviewed by the Compensation & Benefits Committee and
approved by the Board. The personal benefit portion of premiums paid for executive officers is
indicated in the Summary Compensation Table under the column All Other Compensation.
Unqualified Deferred Compensation Plan
The Bank adopted an Unqualified Deferred Compensation Plan in 1995 due to the Internal Revenue
Codes limitation on the amount of contributions a corporation can make on behalf of an employee to
a qualified retirement plan. The Deferred Compensation Plan is designed to provide deferred
compensation to key senior management employees of the Bank in order to recognize their substantial
contributions to building shareholder value and to provide them with additional financial security
as inducement to remain with the Bank. The Compensation & Benefits Committee administers the plan.
To be eligible an employee must hold a key management, full time position which significantly
impacts the Banks operating success.
The Compensation & Benefits Committee selects which persons shall be participants and
authorizes the crediting each year of an amount based upon a formula involving the participants
employer funded contributions under all qualified retirement plans and the limitations imposed by
the Internal Revenue Code subsection 401(a)(17) and Code section 415. In 2008 the maximum
compensation level subject to qualified plan limitations was $230,000. The Deferred Compensation
Plan provides that following the cessation of employment for any reason, the participants account
is distributed to the participant or in the event of death, to the designated beneficiary in equal
monthly installments over a five-year period unless the Banks Board of Directors approves an
alternative form of payment at the request of the participant or beneficiary.
Currently, Mr. Bochnowski is the only participant in the Deferred Compensation Plan. For the
year ended December 31, 2008 the Bank credited $6,372 to his Deferred Compensation Account, a match
of 5% of his base compensation that exceeded the limitation of the Internal Revenue Code. These
amounts are included in Mr. Bochnowskis compensation in the Summary Compensation Table under All
Other Compensation.
10
Outstanding Equity Awards at December 31, 2008
The following table presents information on stock options and restricted stock held by the
Named Executive Officers on December 31, 2008.
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|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
|
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|
Securities |
|
Securities |
|
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|
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Underlying |
|
Underlying |
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Date of |
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Market Value of |
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Unexercised Options |
|
Unexercised Options |
|
Option |
|
Full Vesting of |
|
Option |
|
Number of Shares of |
|
Shares or Units of |
|
Date of Full |
|
|
(#) |
|
(#) |
|
Exercise |
|
Unexercisable |
|
Expiration |
|
Units of Stock That |
|
Stock That Have Not |
|
Vesting of stock |
Name |
|
Exercisable |
|
Unexercisable (1) |
|
Price ($) |
|
Options |
|
Date |
|
Have Not Vested (#) |
|
Vested ($)(2) |
|
Awards |
David A. Bochnowski |
|
|
797 |
|
|
|
|
|
|
$ |
19.50 |
|
|
|
|
|
|
15-Jan-11 |
|
|
|
|
|
|
|
|
|
|
|
|
David A. Bochnowski |
|
|
5,000 |
|
|
|
|
|
|
$ |
22.15 |
|
|
|
|
|
|
04-Feb-12 |
|
|
800 |
|
|
$ |
17,600 |
|
|
21-Jan-09 |
David A. Bochnowski |
|
|
4,000 |
|
|
|
|
|
|
$ |
25.25 |
|
|
|
|
|
|
19-Feb-13 |
|
|
|
|
|
|
|
|
|
|
|
|
David A. Bochnowski |
|
|
|
|
|
|
3,225 |
|
|
$ |
30.00 |
|
|
21-Jan-09 |
|
21-Jan-14 |
|
|
|
|
|
|
|
|
|
|
|
|
Joel Gorelick |
|
|
4,000 |
|
|
|
|
|
|
$ |
21.13 |
|
|
|
|
|
|
18-Jan-10 |
|
|
|
|
|
|
|
|
|
|
|
|
Joel Gorelick |
|
|
3,000 |
|
|
|
|
|
|
$ |
19.50 |
|
|
|
|
|
|
15-Jan-11 |
|
|
|
|
|
|
|
|
|
|
|
|
Joel Gorelick |
|
|
3,000 |
|
|
|
|
|
|
$ |
22.15 |
|
|
|
|
|
|
04-Feb-12 |
|
|
400 |
|
|
$ |
8,800 |
|
|
21-Jan-09 |
Joel Gorelick |
|
|
2,500 |
|
|
|
|
|
|
$ |
25.25 |
|
|
|
|
|
|
19-Feb-13 |
|
|
|
|
|
|
|
|
|
|
|
|
Joel Gorelick |
|
|
|
|
|
|
1,500 |
|
|
$ |
30.00 |
|
|
21-Jan-09 |
|
21-Jan-14 |
|
|
|
|
|
|
|
|
|
|
|
|
Jon E. DeGuilio |
|
|
1,000 |
|
|
|
|
|
|
$ |
20.88 |
|
|
|
|
|
|
10-Dec-09 |
|
|
|
|
|
|
|
|
|
|
|
|
Jon E. DeGuilio |
|
|
1,000 |
|
|
|
|
|
|
$ |
19.50 |
|
|
|
|
|
|
15-Jan-11 |
|
|
500 |
|
|
$ |
11,000 |
|
|
14-Dec-12 |
Jon E. DeGuilio |
|
|
1,250 |
|
|
|
|
|
|
$ |
22.15 |
|
|
|
|
|
|
04-Feb-12 |
|
|
|
|
|
|
|
|
|
|
|
|
Jon E. DeGuilio |
|
|
1,750 |
|
|
|
|
|
|
$ |
25.25 |
|
|
|
|
|
|
19-Feb-13 |
|
|
|
|
|
|
|
|
|
|
|
|
Jon E. DeGuilio |
|
|
|
|
|
|
800 |
|
|
$ |
30.00 |
|
|
21-Jan-09 |
|
21-Jan-14 |
|
|
|
|
|
|
|
|
|
|
|
|
Robert T. Lowry |
|
|
1,500 |
|
|
|
|
|
|
$ |
20.50 |
|
|
|
|
|
|
14-Jan-09 |
|
|
|
|
|
|
|
|
|
|
|
|
Robert T. Lowry |
|
|
2,000 |
|
|
|
|
|
|
$ |
21.13 |
|
|
|
|
|
|
18-Jan-10 |
|
|
500 |
|
|
$ |
11,000 |
|
|
15-Dec-11 |
Robert T. Lowry |
|
|
750 |
|
|
|
|
|
|
$ |
19.50 |
|
|
|
|
|
|
15-Jan-11 |
|
|
|
|
|
|
|
|
|
|
|
|
Robert T. Lowry |
|
|
675 |
|
|
|
|
|
|
$ |
22.15 |
|
|
|
|
|
|
04-Feb-12 |
|
|
|
|
|
|
|
|
|
|
|
|
Robert T. Lowry |
|
|
1,150 |
|
|
|
|
|
|
$ |
25.25 |
|
|
|
|
|
|
19-Feb-13 |
|
|
|
|
|
|
|
|
|
|
|
|
Robert T. Lowry |
|
|
|
|
|
|
425 |
|
|
$ |
30.00 |
|
|
21-Jan-09 |
|
21-Jan-14 |
|
|
|
|
|
|
|
|
|
|
|
|
Robert T. Lowry |
|
|
|
|
|
|
250 |
|
|
$ |
28.50 |
|
|
22-Feb-13 |
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22-Feb-18 |
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(1) |
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The shares represented could not be acquired by the Named Executive Officers as of December
31, 2008. |
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(2) |
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The market value of these awards is determined by multiplying the number of shares by the
closing market price of the Bancorps Common Stock on January 2, 2009, which was $22.00 per
share. |
Potential Payments upon Termination or Change in Control
The Bancorp has entered into agreements and maintains plans that will require the payment of
compensation to the Named Executive Officers in the event of their termination of employment,
change in their responsibilities, or a change-in-control of the Bancorp. These agreements are
discussed under the heading Employment Agreements.
In addition, the Named Executive Officers hold certain options at December 31, 2008, that
become exercisable in full upon a change in control of the Bancorp. These options are set forth in
the table under Outstanding Equity Awards at December 31, 2008, under the column entitled Number
of Securities Underlying Unexercised Options.
Employment Agreements
On December 29, 2008, the Bancorp and Bank entered into an employment agreement with David A.
Bochnowski, their Chief Executive Officer, which superseded and replaced his existing employment
11
agreement. The amendments made were designed to comply with the requirements and final
regulations of Section 409A of the Internal Revenue Code of 1986, which regulates agreements with
elements of deferred compensation. The employment agreement has a three-year term and provides for
daily extensions to maintain its three-year term unless the Bank or the employee gives written
notice not to continue such extensions. The employment agreement provides for a base salary equal
to the amount Mr. Bochnowski is currently being paid, subject to increases awarded by the Board of
Directors and possible decreases based on operating results before a change of control of the Bank.
The employee is also entitled to discretionary bonuses, customary fringe benefits and vacation
leave. The Bank will continue to pay the premiums on life insurance policies insuring the employee
providing for current benefits of approximately $1.9 million.
The employment agreement is terminable by the Bank for cause, defined as (i) the employees
commission of an act materially and demonstrably detrimental to the Bank or its subsidiaries
constituting gross negligence or willful misconduct of the employee in the performance of his
material duties to the Bank or (ii) the employees conviction of a felony involving moral
turpitude.
If the employment agreement terminates because of the employees death or disability, because
he is discharged for cause, or because of the employees resignation without Good Reason (as
defined below), the Bank is to pay the employee any amounts owed to him under the employment
agreement through his date of termination. In addition, if the agreement terminates because of the
employees death, within 30 days of employees death the Bank is to pay the employees estate or
heirs a cash lump sum equal to his then-current annual base salary and the amount of his most
recent annual bonus. In addition, if the employees employment terminates because of his
disability, he will be entitled to a cash bonus equal to his most recent annual bonus, compensation
until the earlier of his death or attainment of age 70 equal to 66% of his current base salary and
annual bonus, and continuation of welfare benefits and senior executive perquisites that would have
been provided to the employee had he remained employed during such period, reduced by any payments
made to the employee under the Banks disability policies or programs.
If the employee is discharged without cause or resigns for Good Reason (defined as the failure
to re-elect him as Chairman and Chief Executive Officer or as a director of the Board of Directors
of the Bank, a substantial diminution in the employees responsibilities or duties, a material
breach by the Bank of the agreement, or the Banks decision to terminate the daily extension of the
agreement), in addition to the benefits described in the preceding paragraph, as applicable, the
employee will be entitled to (1) a cash bonus equal to the most recent annual bonus received by the
employee, (2) a lump sum amount equal to three times his then-current salary and recent annual
bonus, (3) continuation for three years of welfare benefits and senior executive perquisites at
least equal to those that would have been provided if he remained employed during that period, (4)
a payment required to prefund future premiums on the life insurance policies described above likely
to become due prior to the employee attaining age 66, and (5) outplacement services at the expense
of the Bank.
The employment agreement provides that if the employees employment terminates for any reason
after a change of control of the Bank, the employee shall receive the benefits as provided above,
except that unless his benefits would thereby be reduced, the computations will be made by using
the Employees most recent annual bonus before the change of control and welfare benefits and
senior executive benefits to be continued during the specified period will be provided based on
those benefits in effect immediately prior to the change of control of the Bank. For this purpose,
a change of control generally occurs upon the following events: (i) acquisition of ownership of
stock of the Bank or the Bancorp constituting more than 50% of the total fair market value or total
voting power of the stock; (ii) change in the effective control of the Bank or the Bancorp by
acquisition of 30% or more of the total voting power of the stock or replacement of a majority of
the members of the Bancorps Board of Directors in certain circumstances; or (iii) change in
ownership of a substantial portion of the Banks assets.
12
If Section 280G of the Code (which generally applies to certain severance payments triggered
by a change in control) would cause the payments to be made to the employee to be subject to an
excise tax as imposed by Internal Revenue Code Section 4999, the employees compensation will be
grossed up to make him whole with respect to such taxes.
If Mr. Bochnowskis employment had been terminated on December 31, 2008 following a change in
control of the Bancorp, he would have been entitled to a lump sum cash payment of $1,588,316 and
the continuation of welfare insurance benefits and perquisites over a three-year period, to age 66,
with an estimated value of $109,384. These amounts do not include the cost or value of outplacement
services to be provided under the agreement.
During a period of one year following his termination of employment, the employee may not
solicit or induce any employees or customers of the Bank to leave the Bank.
On December 29, 2008, the Bank entered into an amended and restated employment agreement with
Joel Gorelick, its President and Chief Administrative Officer. The amendments made were designed to
comply with the requirements and final regulations of Section 409A of the Internal Revenue Code of
1986, which regulates agreements with elements of deferred compensation. The employment agreement
has a three-year term and provides for annual extensions to maintain its three-year term, unless
the Bank or the employee provides written notice not to continue such extensions. The employment
agreement provides for a base salary equal to the amount Mr. Gorelick is currently being paid,
subject to increases awarded by the Board of Directors and possible decreases based on operating
results before a change of control of the Bank. The employee is also entitled to discretionary
bonuses, customary fringe benefits and vacation leave.
Mr. Gorelick may terminate his employment upon 60 days written notice. He may also terminate
his own employment for cause (as defined in the contract). Mr. Gorelick may be discharged for cause
(as defined in the contract) at any time. If the Bank terminates Mr. Gorelicks employment for
other than cause or if Mr. Gorelick terminates his own employment for cause (as defined in the
contract), he will receive his base compensation under the contract for the balance of the contract
unless the termination occurs within one year following a change of control (as defined in the
contract) of the Bancorp or the Bank. In addition, during such period, Mr. Gorelick will continue
to participate in the group insurance plans and retirement plans, or receive comparable benefits.
If Mr. Gorelicks employment is terminated because of his disability, he will receive his base
compensation for an additional 12 months, reduced by any disability benefits to which he is
entitled under the Banks disability policies or programs.
If Mr. Gorelicks employment is terminated within one year following a change of control of
the Bancorp or the Bank without cause or for cause by Mr. Gorelick, or as a result of his death or
disability, Mr. Gorelick will receive an amount equal to three times his base compensation, payable
in a lump sum, within 30 days after his termination of employment. In addition, during the three
years following his termination of employment, Mr. Gorelick will continue to participate in the
group insurance plans and retirement plans of the Bancorp and the Bank, or receive comparable
benefits. Change of control is defined in Mr. Gorelicks agreement in the same manner as in Mr.
Bochnowskis contract set forth above.
If the payments provided for in the contract, together with any other payments made to Mr.
Gorelick, are deemed to be payments in violation of the golden parachute rules of the Internal
Revenue Code, such payments will be reduced to the largest amount which would not cause the Bank to
lose a tax deduction for such payments under those rules. As of December 31, 2008, Mr. Gorelick
would be entitled to receive a lump sum cash payment of $663,441 plus the continuation of the group
insurance coverage and continued participation in the Banks profit sharing plan over a three-year
period, with an estimated value of $33,143 if the contract were terminated within one year after a
change of control without cause, or for cause by Mr. Gorelick.
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The employment agreement also protects confidential business information and protects the Bank
from competition by Mr. Gorelick if he voluntarily terminates his employment without cause or is
terminated for cause.
Compensation of Directors for 2008
The following table provides information concerning the compensation paid to or earned by the
members of the Bancorps Board of Directors (except for Messrs. Bochnowski and Gorelick, who do not
receive directors fees), whether or not deferred:
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Name (1) |
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Fees Earned or Paid in Cash ($) |
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Total ($) |
James L. Wieser |
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$ |
23,490 |
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$ |
23,490 |
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Kenneth V. Krupinski |
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$ |
23,490 |
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$ |
23,490 |
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Anthony Puntillo, D.D.S., M.S.D |
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$ |
23,490 |
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$ |
23,490 |
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Amy W. Han, Ph.D. |
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$ |
21,533 |
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$ |
21,533 |
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Stanley E. Mize |
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$ |
23,490 |
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$ |
23,490 |
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Frank J. Bochnowski |
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$ |
23,490 |
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$ |
23,490 |
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Lourdes M. Dennison |
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$ |
23,490 |
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$ |
23,490 |
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Don Fesko |
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$ |
23,490 |
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$ |
23,490 |
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Edward J. Furticella |
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$ |
23,490 |
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$ |
23,490 |
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(1) |
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Information on Messrs. Bochnowski and Gorelick, who are also directors, is included in the
Summary Compensation Table. |
Total fees paid to directors for the year ended December 31, 2008, were $209,453 in the
aggregate. For 2009, annual directors fees have been increased to $24,195.
Post 2004 Unfunded Deferred Compensation Plan for the Directors of Peoples Bank SB
Each director of the Bank may elect on or before December 31st of any year to defer
all or a portion of his annual director fees for succeeding calendar years. The rate of interest
paid on deferred fees is the Banks regular six-month certificate of deposit, plus 2%. Interest is
compounded quarterly and the interest rate is reset on the first business day of each month.
Amounts deferred under the plan, together with accumulated interest, are distributed in annual
installments over a ten-year period beginning with the first day of the calendar year immediately
following the year in which the director ceases to be a director, provided that the first annual
benefit for any director deemed a key employee under applicable tax regulations may not be paid
any earlier than six months after the director terminates his services. Upon the death of a
director, the balance of any unpaid deferred fees and interest will be paid in lump sum to the
directors designated beneficiary or estate.
The following directors are deferring fees under this plan: Stanley E. Mize, Kenneth V.
Krupinski and Amy W. Han.
Transactions with Related Persons
The Bank follows a policy of offering to its directors, officers, and employees real estate
mortgage loans secured by their principal residence as well as other loans. Current law authorizes
the Bank to make loans or extensions of credit to its executive officers, directors, and principal
shareholders on the same terms that are available with respect to loans made to all of its
employees. At present, the Bank offers loans to its executive officers, directors, principal
shareholders and employees with an interest rate that is generally available to the public with
substantially the same terms as those prevailing for comparable transactions. All loans to
directors and executive officers must be approved in advance by a majority of
14
the disinterested members of the Board of Directors. Loans to directors, executive officers
and their associates totaled approximately $9,176,329 or 17.4% of equity capital at December 31,
2008.
Risk Management Committee Report
We have reviewed and discussed with management the Bancorps audited financial statements as
of and for the year ended December 31, 2008. We have discussed with the Bancorps independent
registered public accounting firm, Crowe Horwath LLC, 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 Horwath LLC, required by
applicable requirements of the Public Company Accounting Oversight Board for independent auditor
communications with Audit Committees overseeing independence, and have discussed with the
independent registered public accounting firm 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 Bancorps Annual
Report on Form 10-K for the year ended December 31, 2008.
We have also concluded that the provision by Crowe Horwath LLC of non audit related services
to the Bancorp and the Bank during 2008 is compatible with maintaining the auditors independence.
This Report is respectfully submitted by the Risk Management Committee of the Bancorps Board
of Directors.
Risk Management Committee Members
Kenneth V. Krupinski (Chairman)
Stanley E. Mize
James L. Wieser
Proposal 2 Ratification of Appointment of Independent
Registered Public Accounting Firm
The Risk Management Committee has engaged Plante & Moran, an independent registered public
accounting firm, to be its auditors for the year ending December 31, 2009, subject to ratification
by shareholders. As discussed below, Plante & Moran was engaged to serve as auditors for the
Bancorp for the first time in 2009.
Crowe Horwath LLC audited the Bancorps financial statements for 2008. A representative of
Crowe Horwath LLC is expected to be present at the meeting, will have the opportunity to make a
statement if he or she so desires and will be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification.
Changes in and No Disagreements With Accountants on Accounting and Financial Disclosure
On January 26, 2009, upon the recommendation of the Bancorps Risk Management Committee, the
Bancorp engaged the accounting firm of Plante & Moran to examine the consolidated financial
statements of the Bancorp as of and for the year ended December 31, 2009. Crowe Horwath LLC
(Crowe), which had acted as the independent public accountants for the Bank since 1981, was
notified on January 26, 2009 of the Bancorps decision not to re-engage Crowe to examine the 2009
financial statements of the Bancorp.
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The audit reports issued by Crowe, with respect to the Bancorps consolidated financial
statements as of and for the years ended December 31, 2007 and December 31, 2008, did not contain
an adverse opinion or disclaimer of opinion, and were not qualified as to uncertainty, audit scope
or accounting principles. During the years ended December 31, 2007 and December 31, 2008, or any
subsequent period, there had been no disagreements between the Bancorp and Crowe on any matter of
accounting principles or practices, financial statement disclosure or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Crowe would have caused it to make a
reference to the subject matter of the disagreement in connection with its audit report. Moreover,
none of the events listed in Item 304(a)(1)(v) of Regulation S-K occurred during the years ended
December 31, 2007 and December 31, 2008, or any subsequent period.
Prior to its engagement, Plante & Moran had not been consulted by the Bancorp as to the
application of accounting principles to a specific completed or contemplated transaction or the
type of audit opinion that might be rendered on the Bancorps financial statements.
Independent Registered Public Accounting Firms Services and Fees
The Bancorp incurred the following fees for services performed by Crowe Horwath LLC in fiscal
2008 and 2007.
Audit Fees
Fees for professional services provided in connection with the audit of the Bancorps annual
financial statements and review of financial statements included in the Bancorps Forms 10-Q were
$87,575 for fiscal 2008 and $80,200 for fiscal 2007.
Audit Related Fees
Crowe Chizek and Company LLC provided no audit-related services in 2008 or 2007.
Tax Fees
Fees for services rendered to the Bancorp for tax compliance, tax advice and tax planning,
which included assistance in the establishment of an investment subsidiary and assistance in the
preparation and filing of tax returns, were $69,985 for fiscal 2008 and $45,455 for fiscal 2007.
All Other Fees
Fees for all other permissible services that do not fall within the above categories,
including Securities and Exchange Commission (the SEC) reporting compliance were $2,000 for
fiscal 2008 and $7,935 for fiscal 2007.
Pre Approval Policy
The Risk Management Committees policy is to pre approve all audit and permissible non audit
services provided by the independent auditor that exceed $2,500. These services may include audit
services, audit related services, tax services and other services. Pre approval is generally
provided for up to one year and any pre approval is detailed as to the particular service or
category of services and is generally subject to a specific budget. The independent auditor and
management are required to periodically report to the Risk Management Committee regarding the
extent of services provided by the independent auditor in accordance with this pre approval, and
the fees for the services performed to date. The Risk Management Committee may also pre approve
particular services on a case by case basis.
For fiscal 2007, pre approved non audit services included only those services described above
for Audit-Related Fees, Tax Fees, and All Other Fees.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that the Bancorps officers and
directors and persons who own more than 10% of the Bancorps Common Stock file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Officers, directors and
greater than 10% shareholders are required by SEC regulations to furnish the Bancorp with copies of
all Section 16(a) forms that they file.
Based solely on its review of the copies of the forms it received and/or written
representations from reporting persons, the Bancorp believes that during the fiscal year ended
December 31, 2008, all filing requirements applicable to its officers, directors and greater than
10% beneficial owners with respect to Section 16(a) of the 1934 Act were satisfied in a timely
manner, except that Robert T. Lowry filed a Form 4 reporting the grant of a stock option for 250
shares on February 22, 2008, at an option price of $28.50 per share three days late, and Edward J.
Furticella filed a Form 5 reporting his exercise on March 21, 2008, of a stock option for 1,105
shares at an option price of $21.13 per share approximately ten months and three weeks late.
Shareholder Proposals
Any proposal which a shareholder wishes to have presented at the next Annual Meeting of the
Bancorp and included in the proxy statement and form of proxy relating to that meeting must be
received at the main office of the Bancorp for inclusion in the proxy statement no later than 120
days in advance of March 23, 2010. Any such proposal should be sent to the attention of the
Secretary of the Bancorp at 9204 Columbia Avenue, Munster, Indiana 46321, and will be subject to
the requirements of the proxy rules under the Securities Exchange Act of 1934 and, as with any
shareholder proposal (regardless of whether included in the Bancorps proxy materials), the
Bancorps articles of incorporation, by-laws and Indiana law.
A shareholder proposal being submitted for presentation at the Annual Meeting but not for
inclusion in the Bancorps proxy statement and form of proxy, will be considered untimely if it is
received by the Bancorp later than 90 days prior to the Annual Meeting. If the Bancorp receives
notice of such proposal after such time, each proxy that the Bancorp receives will confer upon it
the discretionary authority to vote on the proposal in the manner the proxies deem appropriate,
even though there is no discussion of the proposal in the Bancorps proxy statement for the next
Annual Meeting.
Other Matters
Management is not aware of any business to come before the Annual Meeting other than those
described in the proxy statement. However, if any other matters should properly come before the
Annual Meeting, the proxies solicited by this proxy statement will be voted with respect to those
other matters in accordance with the judgment of the persons voting the proxies.
The Bancorp will bear the cost of the solicitation of proxies. The Bancorp will reimburse
brokerage firms and other custodians, nominees and fiduciaries for the reasonable expenses they
incur in sending proxy material to the beneficial owners of the Common Stock. In addition to
solicitation by mail, directors, officers, and employees of the Bancorp may solicit proxies
personally or by telephone without additional compensation.
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We urge each shareholder to complete, date and sign the proxy and return it promptly in the
enclosed envelope.
By Order of the Board of Directors
Jon E. DeGuilio
March 23, 2009
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NORTHWEST INDIANA BANCORP
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
I hereby appoint Robert T. Lowry my sole proxy, with power of substitution, to vote all shares of
the Companys Common Stock which I am entitled to vote at the Annual Meeting of Shareholders, to be
held at the Corporate Center of Peoples Bank, SB, 9204 Columbia Avenue, Munster, Indiana, on
Friday, April 24, 2009, at 9:00 A.M., local time, and at any adjournment, as follows:
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1. ELECTION OF DIRECTORS
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FOR nominees listed
below (except those
stricken below o
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WITHHOLD AUTHORITY
to vote for all
nominees listed
below o |
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David A. Bochnowski
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James L. Wieser
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Kenneth V. Krupinski
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Anthony Puntillo, D.D.S., M.S.D. |
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(each for a three-year term) |
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(INSTRUCTIONS: To withhold authority to vote for any individual nominee strike
through that nominees name above.)
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PLANTE & MORAN, as
independent registered public accounting firm for the fiscal year ending December 31, 2009.
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o FOR
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o AGAINST
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o 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 your 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.
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Signature
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Signature if Held Jointly |
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Date , 2009 |
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Please mark, sign, date and return the proxy card promptly using
the enclosed envelope. |
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be
Held on April 24, 2009.
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The Proxy Statement and Annual Report are available at
www.ibankpeoples.com/investor |