-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GibLJ9RVukbv9moOUchSNX2svww7qEdK2dGkXBPWo1o9zOvad+4Oov3dn4QeAnoK fSliEbGFSDPdo5whsBRMyQ== 0000908834-03-000118.txt : 20030319 0000908834-03-000118.hdr.sgml : 20030319 20030319150126 ACCESSION NUMBER: 0000908834-03-000118 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030319 EFFECTIVENESS DATE: 20030319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCOLN BANCORP /IN/ CENTRAL INDEX KEY: 0001070259 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 352055553 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-25219 FILM NUMBER: 03609058 BUSINESS ADDRESS: STREET 1: 1121 EAST MAIN STREET CITY: PLAINFIELD STATE: IN ZIP: 46168-0510 BUSINESS PHONE: 3178396539 MAIL ADDRESS: STREET 1: 1121 EAST MAIN STREET CITY: PLAINFIELD STATE: IN ZIP: 46168-0510 DEF 14A 1 lin_def14a.txt LINCOLN PROXY 2003 SCHEDULE 14A Information Required in Proxy Statement SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant: Yes. Filed by a Party other than the Registrant: No. Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 LINCOLN BANCORP (Name Of Registrant As Specified In Its Charter) LINCOLN BANCORP (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [X] No fee required [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11 (1) Title of each class of securities to which transaction applies: N/A (2) Aggregate number of securities to which transaction applies: N/A (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): N/A (4) Proposed maximum aggregate value of transaction: N/A (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. N/A (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: Lincoln Bancorp P.O. Box 510 1121 East Main Street Plainfield, Indiana 46168 (317) 839-6539 - -------------------------------------------------------------------------------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS - -------------------------------------------------------------------------------- To Be Held On April 22, 2003 Notice is hereby given that the Annual Meeting of Shareholders of Lincoln Bancorp (the "Holding Company") will be held at the Guilford Township Community Center, 1500 S. Center Street, Plainfield, Indiana, on Tuesday, April 22, 2003, at 12:00 p.m., Eastern Standard Time. The Annual Meeting will be held for the following purposes: 1. Election of Directors. Election of two directors of the Holding Company to serve three-year terms expiring in 2006. 2. Other Business. Such other matters as may properly come before the meeting or any adjournment thereof. Shareholders of record at the close of business on February 25, 2003, are entitled to vote at the meeting or any adjournment thereof. We urge you to read the enclosed Proxy Statement carefully so that you may be informed about the business to come before the meeting, or any adjournment thereof. At your earliest convenience, please sign and return the accompanying proxy in the postage-paid envelope furnished for that purpose. Lunch will be provided at the Annual Meeting of Shareholders. Accordingly, please R.S.V.P. to Susie Riggen at (317) 837-3604 if you plan to attend the meeting and enjoy lunch. A copy of our Annual Report for the fiscal year ended December 31, 2002, is enclosed. The Annual Report is not a part of the proxy soliciting material enclosed with this letter. By Order of the Board of Directors /s/ T. Tim Unger ---------------------------------- T. Tim Unger, Chairman, President and Chief Executive Officer Plainfield, Indiana March 19, 2003 IT IS IMPORTANT THAT THE PROXIES BE RETURNED 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. Lincoln Bancorp P.O. Box 510 1121 East Main Street Plainfield, Indiana 46168 (317) 839-6539 - -------------------------------------------------------------------------------- PROXY STATEMENT - -------------------------------------------------------------------------------- FOR ANNUAL MEETING OF SHAREHOLDERS April 22, 2003 This Proxy Statement is being furnished to the holders of common stock, without par value (the "Common Stock"), of Lincoln Bancorp (the "Holding Company"), an Indiana corporation, in connection with the solicitation of proxies by the Board of Directors of the Holding Company to be voted at the Annual Meeting of Shareholders to be held at 12:00 p.m., Eastern Standard Time, on April 22, 2003, at the Guilford Township Community Center, 1500 S. Center Street, Plainfield, Indiana, and at any adjournment of such meeting. The principal asset of the Holding Company consists of 100% of the issued and outstanding shares of common stock, $.01 par value per share, of Lincoln Federal Savings Bank (the "Bank" or "LFSB"). This Proxy Statement is expected to be mailed to the shareholders of the Holding Company on or about March 19, 2003. The proxy solicited hereby, if properly signed and returned to the Holding Company and not revoked prior to its use, will be voted in accordance with the instructions contained therein. If no contrary instructions are given, each proxy received will be voted for each of the matters described below and, upon the transaction of such other business as may properly come before the meeting, in accordance with the best judgment of the persons appointed as proxies. Any shareholder giving a proxy has the power to revoke it at any time before it is exercised by (i) filing with the Secretary of the Holding Company written notice thereof (John M. Baer, P.O. Box 510, 1121 East Main Street, Plainfield, Indiana 46168), (ii) submitting a duly executed proxy bearing a later date, or (iii) by appearing at the Annual Meeting and giving the Secretary notice of his or her intention to vote in person. Proxies solicited hereby may be exercised only at the Annual Meeting and any adjournment thereof and will not be used for any other meeting. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF Only shareholders of record at the close of business on February 25, 2003 ("Voting Record Date"), will be entitled to vote at the Annual Meeting. On the Voting Record Date, there were 4,451,823 shares of the Common Stock issued and outstanding, and the Holding Company 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 at the Annual Meeting. The holders of over 50% of the outstanding shares of Common Stock as of the Voting 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. The following table sets forth certain information regarding the beneficial ownership of the Common Stock as of February 25, 2003, by each person who is known by the Holding Company to own beneficially 5% or more of the Common Stock. Unless otherwise indicated, the named beneficial owner has sole voting and dispositive power with respect to the shares. Number of Shares Name and Address of Common Stock Percent of Beneficial Owner(1) Beneficially Owned of Class - ------------------------------- ------------------ -------- HomeFederal Bank, as Trustee 501 Washington Street Columbus, Indiana 47201 557,529 (2) 12.5% - ------------------------------- (1) The information in this chart is based on a Schedule 13G Report filed by the above-listed person with the Securities and Exchange Commission (the "SEC") containing information concerning shares held by it. It does not reflect any changes in those shareholdings which may have occurred since the date of such filing. (2) These shares are held by the Trustee of the Lincoln Bancorp Employee Stock Ownership Plan and Trust (the "ESOP"). The Employees participating in that Plan are entitled to instruct the Trustee how to vote shares held in their accounts under the Plan. Unallocated shares held in a suspense account under the Plan are required under the Plan terms to be voted by the Trustee in the same proportion as allocated shares are voted. PROPOSAL I -- ELECTION OF DIRECTORS The Board of Directors currently consists of eight 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 to be elected for a term of three years and until their successors are elected and qualified. One class of directors is to be elected annually. Directors must have their primary domicile in Clinton, Hendricks or Montgomery Counties, Indiana, must have had a loan or deposit relationship with the Bank for a continuous period of nine months prior to their nomination to the Board (or in the case of directors in office on September 10, 1998, prior to that date), and non-employee directors must have served as a member of a civic or community organization based in Clinton, Hendricks or Montgomery Counties, Indiana for at least a continuous period of 12 months during the five years prior to their nomination to the Board. The nominees for director this year are Lester N. Bergum, Jr. and Dennis W. Dawes, each of whom is a current director of the Holding Company. If elected by the shareholders at the Annual Meeting, the terms of Messrs. Bergum and Dawes will expire in 2006. Unless otherwise directed, each proxy executed and returned by a shareholder will be voted for the election of the nominees listed below. If any person named as a nominee should be unable or unwilling to stand for election at the time of the Annual Meeting, the proxy holders will nominate and vote for a replacement nominee recommended by the Board of Directors. At this time, the Board of Directors knows of no reason why the nominees listed below may not be able to serve as directors if elected. The following table sets forth certain information regarding the nominees for the position of director of the Holding Company and each director continuing in office after the Annual Meeting, including the number and percent of shares of Common Stock beneficially owned by such persons as of the Voting Record Date. Unless otherwise indicated, each nominee or director has sole investment and/or voting power with respect to the shares shown as beneficially owned by him. No nominee for director is related to any other director or executive officer of the Holding Company or nominee for director by blood, marriage, or adoption, and there are no arrangements or understandings between any nominee and any other person pursuant to which such nominee was selected. The table also sets forth the number of shares of Holding Company Common Stock beneficially owned by certain executive officers of the Holding Company, and by all directors and executive officers of the Holding Company as a group.
Director Common Stock Expiration of Director of the of the Beneficially Term as Holding Bank Owned as of Percentage Name Director Company Since Since February 25, 2003 of Class(1) - --------------------- ------------- --------------- -------- ----------------- ----------- Director Nominees Lester N. Bergum, Jr. 2006 1998 1996 45,178 (2) 1.0% Dennis W. Dawes 2006 1999 1999 15,000 (3) .3% Directors W. Thomas Harmon 2004 1998 1982 74,694 (4) 1.7% Jerry R. Holifield 2004 1998 1992 46,764 (5) 1.0% David E. Mansfield 2005 1998 1997 36,281 (6) .8% John C. Milholland 2004 1998 1988 71,140 (7) 1.6% T. Tim Unger 2005 1998 1996 225,903 (8) 4.9% John L. Wyatt 2005 1998 1992 51,829 (9) 1.2% Executive Officer John M. Baer Secretary, Treasurer and Chief Financial Officer 102,133 (10) 2.3% Paul S. Siebenmorgen 23,474 (11) .5% Vice President Rebecca J. Morgan 25,220 (12) .6% Vice President All directors and executive officers as a group (11 persons) 717,616 (13) 15.2% - -------------------------
(1) Based upon information furnished by the respective director nominees. Under applicable regulations, shares are deemed to be beneficially owned by a person if he or she directly or indirectly has or shares the power to vote or dispose of the shares, whether or not he or she has any economic power with respect to the shares. Includes shares beneficially owned by members of the immediate families of the directors residing in their homes. (2) Includes 12,814 shares held jointly by Mr. Bergum and his spouse, 4,206 shares held under the Lincoln Federal Savings Bank Recognition and Retention Plan and Trust (the "RRP"), and options for 15,768 shares granted under the Lincoln Bancorp Stock Option Plan (the "Option Plan"). Does not include options for 10,516 shares granted to Mr. Bergum under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (3) Includes options for 9,000 shares granted under the Option Plan and 5,000 shares held under the RRP. Does not include options for 6,000 shares granted to Mr. Dawes under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (4) Includes 4,206 shares held under the RRP and options for 15,768 shares granted under the Option Plan. Does not include options for 10,516 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (5) Includes 15,000 shares held jointly by Mr. Holifield and his spouse, 4,206 shares held under the RRP, and options for 15,768 shares granted under the Option Plan. Does not include options for 10,516 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (6) Includes 16,307 shares held jointly by Mr. Mansfield and his spouse, 4,206 shares held under the RRP and options for 15,768 shares granted under the Option Plan. Does not include options for 10,516 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (7) Includes 4,204 shares held jointly by Mr. Milholland and his spouse, 4,206 shares held under the RRP, and options for 15,768 shares granted under the Option Plan. Does not include options for 10,516 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (8) Includes 33,644 shares held jointly by Mr. Unger and his spouse, 22,430 shares held under the RRP, options for 105,138 shares granted under the Option Plan, and 12,191 shares allocated to Mr. Unger's account under the ESOP as of December 31, 2002. Does not include options for 70,093 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (9) Includes 18,646 shares held jointly by Mr. Wyatt with his spouse, 4,206 shares held under the RRP, and options for 15,768 shares granted under the Option Plan. Does not include options for 10,516 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (10) Includes 12,891 shares held jointly by Mr. Baer and his spouse, 14,019 shares held under the RRP, options for 32,000 shares granted under the Option Plan, and 9,823 shares allocated to Mr. Baer's account under the ESOP as of December 31, 2002. Does not include 28,092 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (11) Includes 1,870 shares held jointly by Mr. Siebenmorgen and his spouse, 9,000 shares held under the RRP, options for 8,000 shares granted under the Option Plan, and 3,004 shares allocated to Mr. Siebenmorgen's account under the ESOP as of December 31, 2002. Does not include options for 12,000 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (12) Includes 5,200 shares held under the RRP, options for 9,600 shares granted under the Option Plan, and 5,419 shares allocated to Mrs. Morgan's account under the ESOP as of December 31, 2002. Does not include options for 6,400 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. (13) Includes 80,885 shares held under the RRP, options for 258,346 shares granted under the Option Plan, and 30,437 shares allocated to the accounts of such persons under the ESOP as of December 31, 2002. Does not include options for 185,681 shares granted under the Option Plan which are not exercisable within 60 days of the Voting Record Date. Presented below is certain information concerning the director nominees and directors continuing in office of the Holding Company: Lester N. Bergum, Jr. (age 54) is an attorney and partner with the firm of Robison Robison Bergum & Johnson in Frankfort, Indiana, where he has practiced since 1974. He has also served since 1989 as president of Title Insurance Services, Inc., a title agency located in Frankfort, Indiana. Dennis W. Dawes (age 57) has served as President and Chief Executive Officer of Hendricks Community Hospital and President of Hendricks Community Hospital Foundation in Danville, Indiana since 1974. W. Thomas Harmon (age 63) has served as the co-owner, Vice President, Treasurer and Secretary of Crawfordsville Town & Country Homecenter, Inc. in Crawfordsville, Indiana, since 1978. Mr. Harmon is also a co-owner and officer of RGW, Inc., in Crawfordsville, a company that develops real estate subdivisions and manages apartment rental properties, a position he has held since 1965. Jerry Holifield (age 61) became Chairman of the Board of the Bank in December, 1999 and has been the School Superintendent of the Plainfield Community School Corporation since 1991. David E. Mansfield (age 60) is an Administrative Supervisor for Marathon Oil Company where he has worked since 1973. John C. Milholland (age 66) is a retired school administrator and real estate broker. He served as Principal of Frankfort Senior High School in Frankfort, Indiana from 1989 until 2001. T. Tim Unger (age 62) has been President, Chief Executive Officer and Chairman of the Board of the Holding Company since 1998, and President and Chief Executive Officer of the Bank since January, 1996. Previously, Mr. Unger served as President and Chief Executive Officer of Summit Bank of Clinton County from 1989 through 1995. John L. Wyatt (age 66) is a Senior Financial Representative for Northwestern Mutual Financial Network where he has been employed since 1960. The Bank also has a director emeritus program pursuant to which our former directors may continue to serve as advisors to the Board of Directors upon their retirement or resignation from the Board. Currently, Fred W. Carter, Edward E. Whalen and Wayne E. Kessler serve as directors emeritus of the Bank. THE DIRECTORS SHALL BE ELECTED UPON RECEIPT OF A PLURALITY OF VOTES CAST AT THE ANNUAL SHAREHOLDERS MEETING. PLURALITY MEANS THAT INDIVIDUALS WHO RECEIVE THE LARGEST NUMBER OF VOTES CAST ARE ELECTED UP TO THE MAXIMUM NUMBER OF DIRECTORS TO BE CHOSEN AT THE MEETING. ABSTENTIONS, BROKER NON-VOTES, AND INSTRUCTIONS ON THE ACCOMPANYING PROXY TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE OF THE NOMINEES WILL RESULT IN THE RESPECTIVE NOMINEE RECEIVING FEWER VOTES. HOWEVER, THE NUMBER OF VOTES OTHERWISE RECEIVED BY THE NOMINEE WILL NOT BE REDUCED BY SUCH ACTION. The Board of Directors and its Committees During the fiscal year ended December 31, 2002, the Board of Directors of the Holding Company met or acted by written consent 14 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 Holding Company held while he served as director and of meetings of committees which he served during that fiscal year. The Board of Directors of the Holding Company has an Audit/Compliance Committee, a Stock Compensation Committee and a Nominating Committee, among its other Board Committees. All committee members are appointed by the Board of Directors. The Audit/Compliance Committee, the members of which are W. Thomas Harmon, Dennis W. Dawes, David E. Mansfield and Jerry R. Holifield, recommends the appointment of the Holding Company's independent accountants, and meets with them to outline the scope and review the results of such audit. It also approves internal audit reports, compliance reviews and training schedules. The Audit/Compliance Committee met five times during the fiscal year ended December 31, 2002. The Stock Compensation Committee administers the Option Plan and the RRP. The members of that Committee are Messrs. Harmon, Holifield, Mansfield and Milholland. It met or acted by written consent two times during fiscal 2002. The Nominating Committee selects the individuals who will run for election to the Holding Company's Board of Directors each year. Its members for this year's nominations were Jerry R. Holifield, W. Thomas Harmon and John L. Wyatt. It did not meet in 2002 as it was recently constituted. Although the Nominating Committee will consider nominees recommended by shareholders, it has not actively solicited recommendations for nominees from shareholders nor has it established procedures for this purpose. Directors must satisfy certain qualification requirements set forth in the Holding Company's By-Laws. Article III, Section 12 of the Holding Company's By-Laws provides that shareholders entitled to vote for the election of directors may name nominees for election to the Board of Directors but there are certain requirements that must be satisfied in order to do so. Among other things, written notice of a proposed nomination must be received by the Secretary of the Holding Company not less than 120 days prior to the Annual Meeting; provided, however, that in the event that less than 130 days' notice or public disclosure of the date of the meeting is given or made to shareholders (which notice or public disclosure includes the date of the Annual Meeting specified in the Holding Company's By-Laws if the Annual Meeting is held on such date), notice must be received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Audit/Compliance Committee Report, Charter, and Independence Audit/Compliance Committee Report. The Audit/Compliance Committee reports as follows with respect to the audit of the Holding Company's financial statements for the fiscal year ended December 31, 2002, included in the Holding Company's Shareholder Annual Report accompanying this Proxy Statement ("2002 Audited Financial Statements"): The Committee has reviewed and discussed the Holding Company's 2002 Audited Financial Statements with the Holding Company's management. The Committee has discussed with its independent auditors, BKD, LLP, the matters required to be discussed by Statement on Auditing Standards 61, which include, among other items, matters related to the conduct of the audit of the Holding Company's financial statements. BKD, LLP did not use any employees other than its full-time permanent employees on its audit of the Holding Company's 2002 Audited Financial Statements. The Committee has received written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1 (which relates to the auditor's independence from the Holding Company and its related entities) and has discussed with the auditors the auditors' independence from the Holding Company. The Committee considered whether the provision of services by its independent auditors, other than audit services including reviews of Forms 10-Q, is compatible with maintaining the auditors' independence. Based on review and discussions of the Holding Company's 2002 Audited Financial Statements with management and with the independent auditors, the Audit/Compliance Committee recommended to the Board of Directors that the Holding Company's 2002 Audited Financial Statements be included in the Holding Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002. This Report is respectfully submitted by the Audit/Compliance Committee of the Holding Company's Board of Directors. Audit/Compliance Committee Members ---------------------------------- W. Thomas Harmon Dennis W. Dawes David E. Mansfield Jerry R. Holifield Audit/Compliance Committee Charter. The Board of Directors has adopted a written charter for the Audit/Compliance Committee. The Board of Directors reviews and approves changes to the Audit/Compliance Committee Charter annually. Independence of Audit/Compliance Committee Members. The Holding Company's Audit/Compliance Committee is comprised of Messrs. Harmon, Dawes, Mansfield and Holifield. Each of these members meets the current requirements for independence set forth in the Listing Standards of the National Association of Securities Dealers. Management Remuneration and Related Transactions Remuneration of Named Executive Officers During the fiscal year ended December 31, 2002, no cash compensation was paid directly by the Holding Company to any of its executive officers. Each of such officers was compensated by the Bank. The following tables set forth information as to annual, long term and other compensation for services in all capacities to the President and Chief Executive Officer of the Holding Company, the Chief Financial Officer, Secretary/Treasurer and Vice Presidents of the Holding Company for the last three fiscal years (the "Named Executive Officers"). There were no other executive officers of the Holding Company who earned over $100,000 in salary and bonuses during the fiscal year ended December 31, 2002.
Summary Compensation Table Annual Compensation Long Term Compensation Annual Compensation Awards -------------------------------------- ----------------------- Other All Annual Restricted Securities Other Name andFiscal Compen- Stock Underlying Compen- Principal Position Year Salary ($)(1) Bonus ($) sation($)(2) Awards($) Options(#) sation($)(3) - ---------------------- ---- ------------- --------- ------------ ---------- ---------- ------------ T. Tim Unger, 2002 $194,000 $38,800 $8,189 President and Chief 2001 $185,000 $37,000 -- -- -- $8,010 Executive Officer 2000 $175,000 $26,250 -- -- -- $8,123 John M. Baer, Chief 2002 $119,655 $17,948 $3,576 Financial Officer, 2001 $115,609 $17,341 -- -- -- $3,456 Secretary and 2000 $110,250 $11,025 -- -- -- $3,610 Treasurer Rebecca J. Morgan 2002 $ 95,000 $14,250 -- -- -- $2,596 Vice President Paul S. Siebenmorgen 2002 $117,000 $17,550 -- -- -- $3,496 Vice President - ------------------------
(1) Mr. Unger does not receive any directors fees. Includes amounts deferred pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code") under the Bank's 401(k) Plan. (2) The Named Executive Officers received certain perquisites, but the incremental cost of providing such perquisites did not exceed the lesser of $50,000 or 10% of their salary and bonus. (3) All Other Compensation includes the Bank's matching contributions under its 401(k) Plan and, in Mr. Unger's case, insurance premiums paid by the Bank for a policy on his life with his wife as beneficiary. The following table includes the number of shares covered by exercisable and unexercisable stock options held by the Named Executive Officers as of December 31, 2002. Also reported are the values for "in-the-money" options (options whose exercise price is lower than the market value of the shares at fiscal year end) which represent the spread between the exercise price of any such existing stock options and the fiscal year-end market price of the stock.
Outstanding Stock Option Grants and Value Realized as of 12/31/02 Number of Value of Unexercised Securities Underlying In-the-Money Unexercised Options Options at at Fiscal Year End (#) Fiscal Year End ($) (1) ------------------------------------ ---------------------------------- Name Exercisable Unexercisable(2) Exercisable Unexercisable(2) - ---- ----------- ---------------- ----------- ---------------- T. Tim Unger 105,138 70,093 $433,168 $288,783 John M. Baer 32,000 28,092 $131,840 $115,739 Rebecca J. Morgan 9,600 6,400 $ 39,552 $ 26,368 Paul S. Siebenmorgen 8,000 12,000 $ 28,460 $ 42,690 - --------------------
(1) Amounts reflecting gains on outstanding options are based on the closing price per share for the shares on December 31, 2002, which was $16.62 per share. (2) The shares represented could not be acquired by the Named Executive Officers as of December 31, 2002. No stock options were granted to or exercised by the Named Executive Officers during fiscal 2002. Employment Contract The Bank entered into a three-year employment contract with Mr. Unger and a two-year contract with Mr. Baer and Mrs. Morgan (the "Executives"). The contracts extend annually for an additional one-year term to maintain their three- or two-year terms if the Bank's Board of Directors determines to so extend them, unless notice not to extend is properly given by either party to the contract. The Executives receive their current salary under the contract with the Bank, subject to increases approved by the Board of Directors. The contracts also provide, among other things, for participation in other fringe benefits and benefit plans available to the Bank's employees. The Executives may terminate their employment upon 60 days' written notice to the Bank. The Bank may discharge the Executives for cause (as defined in the contract) at any time or in certain specified events. If the Bank terminates an Executive's employment for other than cause or if an Executive terminates his own employment for cause (as defined in the contract), the Executive will receive his base compensation under the contract for an additional three years if the termination follows a change of control in the Holding Company, and for the balance of the contract if the termination does not follow a change in control. In addition, during such period, the Executive will continue to participate in the Bank's group insurance plans and retirement plans, or receive comparable benefits. Moreover, within a period of three months after such termination following a change of control, the Executive will have the right to cause the Bank to purchase any stock options he holds for a price equal to the fair market value (as defined in the contract) of the shares subject to such options minus their option price. If the payments provided for in the contract, together with any other payments made to the Executive by the Bank, are deemed to be payments in violation of the "golden parachute" rules of the 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 the date hereof, the cash compensation which would be paid under the contract to each Executive if the contract were terminated after a change of control of the Holding Company, without cause by the Bank or for cause by the Executive, would be $615,000 for Mr. Unger, $373,323 for Mr. Baer, and $297,111 for Mrs. Morgan. For purposes of these employment contracts, a change of control of the Holding Company is generally an acquisition of control, as defined in regulations issued under the Change in Bank Control Act and the Savings and Loan Holding Company Act. The employment contracts protect the Bank's confidential business information and protect the Bank from competition by the Executives should they voluntarily terminate their employment without cause or be terminated by the Bank for cause. Compensation of Directors Non-employee directors of the Holding Company receive director fees of $3,000 per year. The Bank pays its non-employee directors a monthly retainer of $956 plus $450 for each regular meeting attended and $225 for each committee meeting attended, with a maximum of $1,872 in annual committee fees. The Bank's directors emeritus receive a $1,000 annual retainer. Total fees paid to directors and directors emeritus for the year ended December 31, 2002 were $166,439. The Bank's directors and directors emeritus may, pursuant to a deferred compensation agreement, defer payment of some or all of their directors fees, bonuses or other compensation into a retirement account. Under this agreement, deferred directors fees are to be distributed either in a lump-sum payment or in equal annual or monthly installments over any period of from five to ten years. The lump sum or first installment is payable to the director, at the director's discretion, on the first day of the calendar year immediately following the year in which he ceases to be a director, or in the year in which the director attains that age specified by the retirement income test of the Social Security Act. Any additional installments will be paid on the first day of each succeeding year thereafter. At present, the following directors participate in the deferred compensation plan: Lester N. Bergum, Jr., W. Thomas Harmon and John C. Milholland. The Bank has also adopted a Deferred Director Supplemental Retirement Plan (the "Supplemental Plan") which provides for the continuation of directors fees to a director upon the later of a director's attainment of age 70 or the date on which he ceases to be a director. A director's interest in the Supplemental Plan will vest gradually over a five-year period commencing upon the director's completion of five years of service on our board. Upon completing nine years of service, the director's interest in the Supplemental Plan will be fully vested. The interests of directors who, as of December 1, 1997, had served at least one year on the Board vested immediately upon the adoption of the Supplemental Plan. The benefits payable to a director under the Supplemental Plan are calculated by multiplying the director's vested percentage times the rate of directors fees paid to the director immediately prior to his attainment of age 70 or, if earlier, the date his status as a director terminated. In the event that a director's death occurs prior to the commencement of payments under the Supplemental Plan, the director's designated beneficiary shall receive a monthly payment calculated by multiplying the director's vested percentage times the rate of directors fees in effect immediately prior to the director's death or, if earlier, the date on which his status as a director terminated. Payments under the Supplemental Plan will continue for 120 months. Pension Plan The Bank's full-time employees are included in the Pension Plan. Separate actuarial valuations are not made for individual employer members of the Pension Plan. The Bank's employees are eligible to participate in the plan once they have attained the age of 21 and completed one year of service for the Bank and provided that the employee is expected to complete a minimum of 1,000 hours of service in the 12 consecutive months following his enrollment date. An employee's pension benefits are 100% vested after five years of service. The Pension Plan provides for monthly or lump sum retirement benefits determined as a percentage of the employee's average salary times his years of service. Salary includes base annual salary as of each January 1, exclusive of overtime, bonuses, fees and other special payments. Early retirement, disability, and death benefits are also payable under the Pension Plan, depending upon the participant's age and years of service. The Bank recorded expenses totaling $164,000 for the Pension Plan during the fiscal year ended December 31, 2002. The estimated base annual retirement benefits presented on a straight-line basis payable at normal retirement age (65) under the Pension Plan to persons in specified salary and years of service classifications are as follows (benefits noted in the table are not subject to any offset).
Years of Service Career ------------------------------------------------------------------------------------- Average Compensation 15 20 25 30 35 40 45 ------------ ------ ------ ------ ------- ------- ------- -------- $120,000 27,000 36,000 45,000 54,000 63,000 72,000 81,000 140,000 31,500 42,000 52,500 63,000 73,500 84,000 94,500 160,000 36,000 48,000 60,000 72,000 84,000 96,000 108,000 180,000 40,500 54,000 67,500 81,000 94,500 108,000 121,500 200,000 45,000 60,000 75,000 90,000 105,000 120,000 135,000 220,000 49,500 66,000 82,500 99,000 115,500 132,000 148,500 240,000 54,000 72,000 90,000 108,000 126,000 144,000 162,000
Benefits are currently subject to maximum Code limitations of $160,000 per year. The years of service credited under the Pension Plan as of December 31, 2002, to the Named Executive Officers are as follows: Name of Executive Officer Years of Service ------------------------- ---------------- T. Tim Unger 7 John M. Baer 6 Rebecca J. Morgan 4 Paul S. Siebenmorgen 3 Transactions With Certain 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 ..5% lower than the rate generally available to the public, but otherwise with substantially the same terms as those prevailing for comparable transactions, except that in order to receive the .5% discount, monthly payments must be automatically deducted from the employee's checking account. All loans to directors and executive officers must be approved in advance by a majority of the disinterested members of the Board of Directors. Loans to directors, executive officers and their associates totaled approximately $1,344,000, or 1.6% of equity capital at December 31, 2002. The law firm Robison Robison Bergum & Johnson, based in Frankfort, Indiana, of which Lester N. Bergum, Jr., a director of the Holding Company is a partner, serves as counsel to the Bank in connection with loan foreclosures, title searches, collection services, and related matters in Frankfort, Clinton County, Indiana. The Bank expects to continue using the services of the law firm for such matters in the current fiscal year. Joint Report of the Compensation Committee and the Stock Compensation Committee The Compensation Committee of the Bank's Board of Directors was comprised during fiscal 2002 of Messrs. Harmon, Holifield, Mansfield and Milholland. The Committee reviews payroll costs, establishes policies and objectives relating to compensation, and approves the salaries of all employees, including executive officers. All decisions by the Compensation Committee relating to salaries of the Holding Company's executive officers are approved by the full Board of Directors of the Bank. In fiscal 2002, there were no modifications to Compensation Committee actions and recommendations made by the full Board of Directors. In approving the salaries of executive officers, the Committee has access to and reviews compensation data for comparable financial institutions in the Midwest. Moreover, from time to time the Compensation Committee reviews information provided to it by independent compensation consultants in making its decisions. The objectives of the Compensation Committee and the Stock Compensation Committee with respect to executive compensation are the following: (1) provide compensation opportunities comparable to those offered by other similarly situated financial institutions in order to be able to attract and retain talented executives who are critical to the Holding Company's long-term success; (2) reward executive officers based upon their ability to achieve short-term and long-term strategic goals and objectives and to enhance shareholder value; and (3) align the interests of the executive officers with the long-term interests of shareholders by granting stock options which will become more valuable to the executives as the value of the Holding Company's shares increases. At present, the Holding Company's executive compensation program is comprised of base salary and annual incentive bonuses. The Option Plan and the RRP provide long-term incentive bonuses in the form of stock options and awards of Common Stock. Reasonable base salaries are awarded based on salaries paid by comparable financial institutions, particularly in the Midwest, and individual performance. The annual incentive bonuses are tied to the Holding Company's performance in the areas of growth, profit, quality, and productivity as they relate to earnings per share and return on equity for the current fiscal year, and it is expected that stock options will have a direct relation to the long-term enhancement of shareholder value. In years in which the performance goals of the Holding Company are met or exceeded, executive compensation tends to be higher than in years in which performance is below expectations. Base Salary. Base salary levels of the Holding Company's executive officers are intended to be comparable to those offered by similar financial institutions in the Midwest. In determining base salaries, the Compensation Committee also takes into account individual experience and performance. Mr. Unger was the Holding Company's Chief Executive Officer throughout fiscal 2002. Mr. Unger received a base salary of $185,000 in 2001 and $194,000 in 2002. Annual Incentive Bonuses. Under the Holding Company's Annual Incentive Plan, all qualifying employees of the Holding Company receive a cash bonus for any fiscal year in which the Holding Company achieves certain goals, as established by the Board of Directors, in the areas of growth, profit, quality and productivity as they relate to earnings per share and return on equity. Individual bonuses are equal to a percentage of the employee's base salary, which percentage varies with the extent to which the Holding Company exceeds these goals for the fiscal year. The Holding Company believes that this program provides an excellent link between the value created for shareholders and the incentives paid to executives, since executives may not receive bonuses unless the above-mentioned goals are achieved and since the level of those bonuses will increase with greater achievement of those goals. Mr. Unger's bonus for fiscal 2002 was $38,800 compared to $37,000 for fiscal 2001. Stock Options. The Option Plan is intended to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and shareholder return, and enabling executives to acquire a significant ownership position in the Holding Company's Common Stock. Stock options are granted at the prevailing market price and will only have a value to the executives if the stock price increases. The Stock Compensation Committee has determined and will determine the number of option grants to make to executive officers based on the practices of comparable financial institutions as well as the executive's level of responsibility and contributions to the Holding Company. RRP. The RRP is intended to provide directors and officers with an ownership interest in the Holding Company in a manner designed to encourage them to continue their service with the Holding Company. In fiscal 1999, the Bank contributed funds to the RRP to enable the RRP to acquire 280,370 shares of Common Stock. Of these shares, 245,124 have been awarded to the Holding Company's directors and officers, and vest gradually over a five-year period at a rate of 20% of the shares awarded at the end of each 12-month period of service by the director or officer with the Holding Company. In fiscal 1999, Mr. Unger received an award of 56,074 shares, 33,644 of which have vested as of the date hereof. This gradual vesting of a director's or officer's interest in the shares awarded under the RRP is intended to create a long-term incentive for the director or officer to continue his service with the Holding Company. Finally, the Committee notes that Section 162(m) of the Code, in certain circumstances, limits to $1 million the deductibility of compensation, including stock-based compensation, paid to top executives by public companies. None of the compensation paid to the executive officers named in the compensation table on page seven for fiscal 2002 exceeded the threshold for deductibility under section 162(m). The Compensation Committee and the Stock Compensation Committee believe that linking executive compensation to corporate performance results in a better alignment of compensation with corporate goals and the interests of the Holding Company's shareholders. As performance goals are met or exceeded, most probably resulting in increased value to shareholders, executives are rewarded commensurately. The Committee believes that compensation levels during fiscal 2002 for executives and for the chief executive officer adequately reflect the Holding Company's compensation goals and policies. Compensation Committee Members Stock Compensation Committee Members ------------------------------ ------------------------------------ W. Thomas Harmon W. Thomas Harmon Jerry R. Holifield Jerry R. Holifield David E. Mansfield David E. Mansfield John C. Milholland John C. Milholland Performance Graph The following graph shows the performance of the Holding Company's Common Stock since January 1, 1999, in comparison to the NASDAQ Combined Bank Index, KBW Bank Index and the SNL Thrift Index. [GRAPH OMITTED] Relative Return* Analysis 1999-2002 Nasdaq Combined LNCB BKX Bank Index SNL Thrift Index 12/31/98 100 100 100 100 03/31/99 96 106 96 100 06/30/99 114 113 103 99 09/30/99 110 95 93 86 12/31/99 98 98 94 80 03/31/00 94 102 86 77 06/30/00 95 94 84 80 09/30/00 114 115 101 102 12/31/00 124 117 111 124 03/31/01 129 112 108 125 06/30/01 138 120 122 137 09/30/01 151 105 120 135 12/31/01 176 115 125 130 03/31/02 173 120 137 143 06/30/02 172 112 142 159 09/30/02 188 95 130 139 12/31/02 168 102 133 152 * $100 invested on 12/31/98 in Stock or Index Including Reinvestment of Dividends Fiscal Year Ending December 31 ACCOUNTANTS BKD, LLP has served as auditors for the Bank since November 30, 1975, and for the Holding Company since its formation in 1998. The Holding Company believes that a representative of BKD, LLP will be present at the Annual Meeting with the opportunity to make a statement if he or she so desires. He or she will also be available to respond to any appropriate questions shareholders may have. The Board of Directors of the Holding Company has selected BKD, LLP to audit its books, records and accounts for the fiscal year ended December 31, 2003. Accountant's Fees Audit Services. The aggregate fees billed by BKD, LLP for audit services relating to the audit of the 2002 Audited Financial Statements and for reviews of the Holding Company's financial statements included in its Forms 10-Q for the year 2002 were $63,000. Financial Information System Design and Implementation Fees. BKD, LLP did not bill the Holding Company for any information technology services rendered during 2002. All Other Fees. BKD, LLP billed the Holding Company $114,997 for services other than those described above rendered during 2002. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), requires that the Holding Company's officers and directors and persons who own more than 10% of the Holding Company's Common Stock file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "SEC"). Officers, directors and greater than 10% shareholders are required by SEC regulations to furnish the Holding Company with copies of all Section 16(a) forms that they file. Based solely on its review of the copies of such forms received by it, and/or written representations from certain reporting persons that no Forms 5 were required for those persons, the Holding Company believes that during the fiscal year ended December 31, 2002, 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 Jerry R. Holifield failed to report until February 13, 2003, 351 shares he and his wife acquired periodically through a dividend reinvestment feature of their IRAs during the last three years, and W. Thomas Harmon reported his purchase of 13 shares for $18.57 on October 19, 2002, through a similar dividend reinvestment feature approximately four months late. SHAREHOLDER PROPOSALS Any proposal which a shareholder wishes to have presented at the next Annual Meeting of the Holding Company and included in the Proxy Statement and form of proxy relating to that meeting must be received at the main office of the Holding Company for inclusion in the proxy statement no later than 120 days in advance of March 19, 2004. Any such proposal should be sent to the attention of the Secretary of the Holding Company at P.O. Box 510, 1121 East Main Street, Plainfield, Indiana 46168, 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 Holding Company's proxy materials), the Holding Company's 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 Holding Company's proxy statement and form of proxy, will normally be considered untimely if it is received by the Holding Company later than 120 days prior to the Annual Meeting. If, however, less than 130 days' notice or prior public disclosure of the date of the next Annual Meeting is given or made to shareholders (which notice or public disclosure of the date of the meeting shall include the date of the Annual Meeting specified in publicly available By-Laws, if the Annual Meeting is held on such date), such proposal shall be considered untimely if it is received by the Holding Company later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. If the Holding Company receives notice of such proposal after such time, each proxy that the Holding Company 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 Holding Company's 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 matters described in the Proxy Statement. However, if any other matters should properly come before the Annual Meeting, it is intended that the proxies solicited hereby will be voted with respect to those other matters in accordance with the judgment of the persons voting the proxies. The cost of solicitation of proxies will be borne by the Holding Company. The Holding Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy material to the beneficial owners of the Common Stock. In addition to solicitation by mail, directors, officers, and employees of the Holding Company may solicit proxies personally or by telephone without additional compensation. Each shareholder is urged to complete, date and sign the proxy and return it promptly in the enclosed envelope. By Order of the Board of Directors /s/ T. Tim Unger ---------------------------------- T. Tim Unger March 19, 2003 REVOCABLE PROXY LINCOLN BANCORP Annual Meeting of Shareholders April 22, 2003 The undersigned hereby appoints John M. Baer and Rebecca J. Morgan, with full powers of substitution, to act as attorneys and proxies for the undersigned to vote all shares of common stock of Lincoln Bancorp which the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held at the Guilford Township Community Center, 1500 S. Center Street, Plainfield, Indiana, on Tuesday, April 22, 2003, at 12:00 p.m., and at any and all adjournments thereof, as follows: 1. The election as directors of all nominees listed below, except as marked to the contrary |_| FOR |_| VOTE WITHHELD INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike a line through the nominee's name on the list below: Lester N. Bergum, Jr. Dennis W. Daws (each for a three-year term) In their discretion, the proxies are authorized to vote on any other business that may properly come before the Meeting or any adjournment thereof. The Board of Directors recommends a vote "FOR" the listed proposition. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS This Proxy may be revoked at any time prior to the voting thereof. The undersigned acknowledges receipt from Lincoln Bancorp, prior to the execution of this Proxy, of a Notice of the Meeting, a Proxy Statement and an Annual Report to Shareholders. THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITION STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. ____________________, 2003 ---------------------------------------------- Signature of Shareholder ---------------------------------------------- Signature of Shareholder Please sign as your name appears on the envelope in which this card was mailed. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder should sign. -----END PRIVACY-ENHANCED MESSAGE-----