DEF 14A 1 proxy2002.txt PROXY 2002 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [ X ] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ X ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12 BNL FINANCIAL CORPORATION (Name of Registrant as Specified in its Charter) N/A (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [ X ] No fee required [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule -0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: [ ] Fee paid previously by written materials [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed: NOTICE OF ANNUAL MEETING OF STOCKHOLDERS of BNL FINANCIAL CORPORATION To Be Held May 21, 2002 The Annual Meeting of Shareholders of BNL Financial Corporation will be held at the Holiday Inn Airport, Des Moines, Iowa, commencing at 12:00 noon., local time, (and thereafter as it may be from time to time adjourned) for the following purposes: 1. To elect eighteen Directors. 2. To ratify or reject the Board of Directors' selection of Smith, Carney & Co., p.c., as the Company's independent auditors for the year ending December 31, 2002. 3. To transact such other business as may properly come before the meeting. The close of business on April 13, 2002, has been fixed as the record date for the determination of shareholders entitled to notice of and to vote at the meeting. By Order of the Board of Directors Pamela Randolph, Secretary Sherwood, AR May 1, 2002 WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON. PROXY STATEMENT ------------- BNL FINANCIAL CORPORATION GENERAL INFORMATION This Proxy Statement and accompanying proxy form are being mailed to shareholders on May 1, 2002, in connection with the solicitation of proxies by the Board of Directors of BNL Financial Corporation ("BNL" or the "Company") to be voted at the Annual Meeting of Shareholders of the Company to be held at the Holiday Inn Airport, Des Moines, Iowa, commencing on May 21, 2002, and any adjournment thereof. All expenses of this solicitation will be paid by the Company. If a proxy in the enclosed form is duly executed and returned, the shares of the Company's common stock, no par value, (the "Common Stock") represented thereby, where specification is made by the shareholder on the proxy, will be voted in accordance with such specification. Proxies are revocable until exercised. Proxies may be revoked by delivering either a later dated and properly executed proxy, or a written notice of revocation to the Secretary of the Company or in person at the Annual Meeting at any time prior to the voting thereof. Only shareholders of record at the close of business on April 13, 2002, have the right to receive notice of and to vote at the Annual Meeting and any adjournment thereof. As of that date, 23,173,149 shares of the Company's Common Stock were outstanding (excluding treasury shares). Each shareholder of record is entitled to one vote for each share of Common Stock held. There are no cumulative voting rights. Quorum; Abstentions; Broker Non-Votes: The required quorum for the transaction of business at the Annual Meeting is the presence, in person or by proxy, of a majority of the votes entitled to be cast with respect to a matter to be acted upon at the Annual Meeting. The Company will count abstentions in determining both the presence or absence of a quorum for the transaction of business at the Annual Meeting, as well as with respect to the total number of votes cast with respect to a matter to be acted upon at the Annual Meeting. Accordingly, abstentions will have the same effect as a vote against a proposal. Broker non-votes, if any, will be counted for purposes of determining the presence or absence of a quorum for the transaction of business at the Annual Meeting, but will not be counted for purposes of determining the number of votes cast with respect to a matter to be acted upon at the Annual Meeting. BENEFICIAL OWNERSHIP OF COMMON STOCK Principal Shareholders: The following table reflects the persons known to the Company to be the beneficial owners of 5% or more of the Company's voting securities as of April 13, 2002:
Amount and Nature of Name and Address of Beneficial Title of Class Beneficial Owner Ownership (1) Percent of Class -------------- ------------------------- ------------- ---------------- Common Stock Wayne E. Ahart 4,845,505(2)(3) 23.69% #14 Club Estates Parkway Austin, Texas 78738 Common Stock Barry N. Shamas 2,801,816(5) 13.70% 1095 Hidden Hills Drive Dripping Springs, Texas 78620 Common Stock Universal Guaranty Life 2,216,776(2) 10.84% Insurance Company 5250 S. Sixth Street Road Springfield, Illinois 62705 Common Stock C. Don Byrd 1,517,269(4) 7.42% 631 47th Street West Des Moines, Iowa 50265 ------------------------ --------------------------------- ------------------------ -----------------------
(1) To the Company's knowledge, all shares are beneficially owned by, and the sole voting and investment power is held by the persons named, except as otherwise indicated. (2) Mr. Ahart and Commonwealth Industries, Inc., a parent of Universal Guaranty Life Insurance Company ("UGL"), have agreed: (a) that if Mr. Ahart sells his shares of the Company to a third party, Mr. Ahart or the third party must also purchase UGL's shares of the Company at the same price and on the same terms; and (b) in the event UGL receives a bona fide offer to purchase its shares of the Company, Mr. Ahart has a first right of refusal to purchase such shares on the same terms and conditions. (3) Includes 2,400,000 shares held in the name of National Iowa Corporation and 2,178,926 shares (9.40% of Class) held in the name of Arkansas National Corporation, both of which are controlled by Mr. Ahart. (4) All of Mr. Byrd's shares are subject to a right of first refusal of the Company to acquire said shares on the same terms and conditions as any proposed sale or other transfer by Mr. Byrd (5) Includes 1,400,000 shares held in the name of Life Industries of Iowa, Inc. and 1,335,171 shares held in the name of Arkansas Industries Corporation, both of which are controlled by Mr. Shamas. Security Ownership of Management: The following table sets forth, as of April 13, 2002, certain information concerning the beneficial ownership of the Company's Common Stock by each director of the Company and by all directors and officers as a group:
Amount and Nature of Name of Beneficial Title of Class Beneficial Owner Ownership (1) Percent of Class -------------- ---------------- -------------- ---------------- Common Wayne E. Ahart 4,845,505(2) 23.69% Common Barry N. Shamas 2,801,816(4) 13.70% Common C. Don Byrd 1,517,269(3) 7.42% Common Kenneth Tobey 822,312 4.02% Common C. James McCormick 137,084(5) .67% Common Hayden Fry 69,047 .34% Common Roy Keppy 51,001 .25% Common John Greig 50,102 .24% Common James A. Mullins 50,000 .24% Common L. Stanley Schoelerman 50,000 .24% Common Orville Sweet 50,000 .24% Common Richard Barclay 46,088 .23% Common John E. Miller 46,088 .23% Common Eugene A. Cernan 37,088 .18% Common Roy Ledbetter 37,088 .18% Common Cecil Alexander 37,088 .18% Common Chris Schenkel 37,088 .18% Common Robert R. Rigler 3,295 .02% Common All Officers and Directors as a group (18 persons) 10,687,909 52.26% ------------------------ --------------------------------- ------------------------ -----------------------
(1) To the Company's knowledge, all shares are beneficially owned by, and the sole voting and investment power is held by the persons named, except as otherwise indicated. (2) Includes 2,400,000 shares held in the name of National Iowa Corporation and 2,178,926 shares held in the name of Arkansas National Corporation, both of which are controlled by Mr. Ahart. (3) All of Mr. Byrd's shares are subject to a right of first refusal of the Company to acquire said shares on the same terms and conditions as any proposed sale or other transfer by Mr. Byrd. (4) Includes 1,400,000 shares held in the name of Life Industries of Iowa, Inc. and 1,335,171 shares held in the name of Arkansas Industries Corporation, both of which are controlled by Mr. Shamas. (5) Includes 10,000 shares held in the name of Mr. McCormick and 90,000 shares divided equally among and held in the names of Mr. McCormick's four children. ELECTION OF DIRECTORS (Item 1) Directors: Under the Bylaws of the Company, the Shareholders are to elect Directors at the Annual Meeting to hold office until the next Annual Meeting of Shareholders. Proxies solicited by the Board of Directors, if properly signed and returned, will be voted in favor of the election of the nominees listed below as Directors of the Company. Although it is expected that each of the nominees will be available for election, if a nominee is not a candidate at the time the election occurs, the number of Directors will be reduced accordingly with no replacement to be named. Each of the nominees has served or currently serves as a Director of Brokers National Life Assurance Company ("BNLAC"), the Company's wholly owned life insurance subsidiary. The nominees are as follows: First Became Director Name Age or Executive Officer Wayne E. Ahart 62 1984 C. Don Byrd 61 1984 Kenneth Tobey 44 1988 Barry N. Shamas 55 1984 Cecil Alexander 66 1989 Richard Barclay 65 1989 Eugene A. Cernan 68 1989 Hayden Fry 73 1984 John Greig 67 1984 Roy Keppy 79 1984 Roy Ledbetter 72 1989 John E. Miller 73 1988 James A. Mullins 68 1984 C. James McCormick 77 1984 Robert R. Rigler 79 1989 Chris Schenkel 78 1989 L. Stanley Schoelerman 77 1984 Orville Sweet 78 1984 BACKGROUND OF MANAGEMENT Wayne E. Ahart has served as Chairman of the Board of BNL since 1984 and BNLAC since 1986. He has served as Chairman of the Board of United Arkansas since 1988 and served as Chairman of the Board of United Arkansas Life from 1990 to 1994. Prior to that time, Mr. Ahart served as Board Chairman and President of: Investors Trust, Inc. ("ITI") and its subsidiary, Investors Trust Assurance Company ("ITAC"), both of Indianapolis, Indiana (1973-1987); Liberty American Corporation ("LAC")(Chairman and President 1981-1987) and its subsidiary Liberty American Assurance Company ("LAAC"), both of Lincoln, Nebraska (1975-1987); (Chairman and President) American Investors Corporation ("AIC") and its subsidiary, Future Security Life Insurance Company ("FSL"), both of Austin, Texas (1980-1987). Mr. Ahart has been owner and Chairman of the Board of Lone Star Pizza Garden Inc. from 1986 to the present. C. Don Byrd has been Vice Chairman of the Board of BNL, BNL Equity, ("BNLE") and BNLAC since August 1, 1994. Mr. Byrd has been President and a Director of UIC and ILAC since 1984 and 1986, respectively. Mr. Byrd was Agency Director of FSL from 1983 to 1984 and Regional Director of AIC 1981 to 1983. He was an agent and Regional Director of ITI and ITA from 1974 to 1981. Kenneth Tobey has been President and a director of BNLAC and BNL since August 1, 1994. Mr. Tobey has served as President of UAC and successor companies since 1988 and served as President of United Arkansas Life from 1990 to 1994. He served as Assistant to the President and Training Director of ILAC from 1986 to 1988. From 1981 to 1986, Mr. Tobey served in various capacities for AIC and FSL, including Agent, Regional Manager, Executive Sales Director and Assistant to the President. Barry N. Shamas has served as Executive Vice-President, Secretary and Treasurer of BNLE since 1988 and United Arkansas Life from 1990 to 1994. From 1984 and 1986, respectively, he has served as Executive Vice President and Director of BNL and BNLAC, positions he presently holds. He served in various capacities for ITI and ITAC, including Executive Vice President, Senior Vice President, Treasurer and Financial Vice President beginning in 1976 through 1987. Mr. Shamas served as Executive Vice President, Secretary/Treasurer and as Director of AIC and FSL from 1980 and 1983, respectively, until 1987. From 1978 through 1987, Mr. Shamas served as a Director and a member of the Executive Committee of LAC and LAAC. Cecil L. Alexander retired as Vice President of Public Affairs for Arkansas Power & Light Company, where he had been employed since 1980. Prior to joining the AP&L Executive Staff, Mr. Alexander served for 16 years in the Arkansas General Assembly, and during 1975-76, was Speaker of the House of Representatives. Since 1971 Mr. Alexander has been involved in the real estate business as a partner in Heber Springs Realty. He is a past president of the Cleburne County Board of Realtors and has served on the governmental affairs committee of the Arkansas Association of Realtors. Mr. Alexander is currently on the Board of Directors of Mercantile Bank of Heber Springs, the Board of Directors of the Arkansas Tourism Development Foundation and the Board of Directors of Baptist Foundation. Richard L. Barclay, a Certified Public Accountant, is Director of the Arkansas Department of Finance and Administration. He has served in this capacity since being appointed to this position by Governor Mike Huckabee in 1999. As Director, he also serves as the state's Chief Fiscal Officer. From 1996 to 1999, he served as Executive Director of Budget, Legislative Affairs and Policy for Governor Mike Huckabee. He was engaged in public accounting from 1961 to 1999 as a partner in the Rogers, Arkansas firm of Barclay, Yarborough & Evans, CPAs. He is a member and past president of the Arkansas Society of Certified Public Accounts and is a member of the American Institute of Certified Public Accountants. He was a member of the Arkansas House of Representatives from 1977 to 1992. He is a member of the Advisory Board of Regions Bank, Rogers and is the past president of the Arkansas State Chamber of Commerce. Eugene A. Cernan has been President and Chairman of the Board of The Cernan Corporation, since 1981. In addition, he recently became Chairman of the Board of Johnson Engineering Corporation which provides the National Aeronautics and Space Administration (NASA) with Flight Crew Systems Development. Captain Cernan retired from the U. S. Navy in 1976 after serving 20 years as a naval aviator, 13 of which were dedicated to direct involvement with the United States Space Program as a NASA astronaut. Mr. Cernan was the pilot on the Gemini 9 mission and the second American to walk in space; lunar module pilot of Apollo 10; and Spacecraft Commander of Apollo 17, which resulted in the distinction of being the last man to have left his footprints on the surface of the moon. In 1973, he served as a Senior United States Negotiator in discussions with USSR on the Apollo-Soyuz Mission. Captain Cernan served as Executive Consultant- Aerospace and Government of Digital Equipment Corporation from 1986 to 1992, and he was a Director and Vice President-International of Coral Petroleum, Inc., Houston, Texas from 1976 to 1981. Captain Cernan is presently a Director of Up With People, an international educational foundation for young men and women; United States Space Foundation; the Young Astronaut Council; Alaska Aerospace Development Corporation, International Micro Space; and Johnson Engineering Corporation. Captain Cernan is also on the President's Engineering Committee, Purdue University and is a member of the Board of Trustees of the U. S. Naval Aviation Museum, NFL Alumni and the Major League Baseball Players Alumni. In addition, Captain Cernan has served as a consultant commentator to ABC News. He served on the Board of AIC and FSL from 1980 and 1983, respectively, to 1987. Hayden Fry was Head Football Coach at the University of Iowa from 1979 to 1998. He was Head Football Coach at North Texas State University from 1973 to 1978 and at Southern Methodist University from 1962 to 1972. He was named Football Coach of the Year in the Big Ten (1981, 1990, 1991), the Missouri Valley Conference (1973), and the Southwest Conference (1962, 1966 and 1968). He is on the Board of Advisors of Wilson Sporting Goods (1962 to date); the Board of Trustees of Pop Warner Football (1962 to date); and the American Football Coaches Association (1983 to date) and is the 1993 President. He was President of Hawkeye Marketing Group from 1979 - 1984. He is a member of the Board of Directors of the PPI Group. John Greig has been President of Greig and Co. since 1967. He is a Director of Boatmen's Bank of Iowa, NW., Estherville, Iowa. He has been President of the Iowa Cattlemen's Association (1975-1976) and a member of the Executive Committee of the National Cattlemen's Association (1975-1976). He was a member of the Iowa Board of Regents from 1985 to 1991. He was elected as an Iowa State Representative in 1993. Roy Keppy has operated his grain and livestock farming operation in Davenport, Iowa since 1946. In 1982, he and his son founded Town and Country Meats in Davenport, and he currently serves as its Vice President. He was a Director of Eldridge Cooperative Elevator Company for 33 years, retiring in 1982, serving as President for 6 years. He is now a Director of First State Bank N.A., Davenport, Iowa. He is a past Chairman of the National Livestock and Meat Board and was on its Board of Directors from 1970 to 1986. He was on the Board of Directors of the National Pork Producers from 1965 to 1972, serving as its President in 1970-1971. Roy E. Ledbetter presently serves as President and Chief Executive Officer of Highland Industrial Park, a division of Highland Resources, Inc. in East Camden, Arkansas. He holds a Bachelor of Science Degree in Education from Southern Arkansas University at Magnolia, a Masters Degree in Education from Henderson State University at Arkadelphia and an AMP from Harvard Business School at Boston. In 1966, Mr. Ledbetter joined Highland Resources, Inc. and coordinated organization of Southern Arkansas University Technical Branch; was promoted to division Manager (1972), Vice President and Division Manager (1975), Senior Vice President (1980), and President in 1984. He is past President of the Camden Chamber of Commerce; was 1977 Camden Jaycee's Man of the Year; was awarded first annual Camden Area Chamber of Commerce Community Service Award in 1983; served on Education Standards Committee of the State of Arkansas; and presently serves on the Boards of East Camden and Highland Railroad, Shumaker Public Service Corporation, Merchants and Planters Bank of Camden, and First United Bancshares of El Dorado. John E. Miller was a member of the State of Arkansas House of Representatives from 1959 until 1999. He has been self-employed in the insurance, abstract, real estate, heavy construction and farming business for more than 20 years. He presently serves on the Board of Directors of Calico Rock Medical Center, Easy K Foundation, National Conference of Christians and Jews, Council of State Governments, Southern Legislative Conference, State Advocacy Services, Lions World Services for the Blind, State Board of Easter Seals, Williams Baptist College Board of Trustees, and Izard County Chapter of the American Red Cross. James A. Mullins has owned and operated Prairie Flat Farms, Corwith, Iowa since 1969. He was a Director of the Omaha Farm Credit Bank from 1988 to 1994, a director of the Federal Farm Credit Banks Funding Corporation from 1986 to 1994, and a director of the U.S. Meat Export Federation from 1988 to 1995. He served as Chairman of the Foreign Trade Committee, National Cattlemen's Association (1988 - 1993). He was Chairman of the U.S. Meat Export Federation until 1984. He was Chairman of the National Livestock & Meat Board in 1983; Chairman of the Beef Industry Council in 1979 and 1980; and Chairman of the Omaha Farm Credit Bank in 1988 and 1989. C. James McCormick is Chairman Emeritus of the Board of McCormick, Inc., Best Way Express, Inc., and President of JAMAC Corporation, all of Vincennes, Indiana. He is the owner of CJ Leasing. Mr. McCormick is the former Chairman of the Board of Directors and CEO of First Bancorp, Vincennes, Indiana; First Vice Chairman of Vincennes University and a Life Director of the Indiana Chamber of Commerce; and a member of the Indiana President's Organization and the Indiana Automobile Dealers Association. He is a former Chairman of the Board of the American Trucking Association. Mr. McCormick is a Past Chairman of the National Board of Trustees of The Fellowship of Christian Athletes. Robert R. Rigler has been Chairman of the Board of Security State Bank, New Hampton, Iowa since 1989; he served as its President and CEO from 1968 to 1989. Mr. Rigler was Iowa Superintendent of Banking from 1989 to 1991. He was a member of the Iowa Transportation Commission from 1971 to 1986 and served as its Chairman from 1973 to 1986. He was a member of the Iowa State Senate from 1955 to 1971 and served as a Majority and Minority Floor Leader. Chris Schenkel is a retired television sportscaster of ABC Sports, New York, New York, from 1965 to present. He also served as Spokesperson for Owens-Illinois, Toledo, Ohio, from 1976 to present, for whom he speaks as voice on commercials, personal appearances, conventions and shows. Mr. Schenkel served as Chairman of the Board of Directors of Counting House Bank, North Webster, Indiana from 1974-1982. He also served as a director of ITI and ITAC from 1978 to 1986 and on the Board of Haskell Indian Junior College, Lawrence, Kansas. L. Stanley Schoelerman was President and a partner of Petersen Sheep & Cattle Co., Spencer, Iowa from 1964 to 2000. He was a Director of Home Federal Savings & Loan, Spencer, Iowa, from 1969 to 1988; and Honeybee Manufacturing, Everly, Iowa, from 1974 to 1986. He was President of Topsoil-Schoenewe, Everly, Iowa, from 1974 to 1986. Mr. Schoelerman was Commissioner of the Iowa Department of Transportation from 1974 to 1978 and was a member of the National Motor Carrier Advisory Board of the Federal Highway Administration from 1981 to 1985. Orville Sweet served as a Visiting Industry Professor at Iowa State University from 1989 to 1990 and is President of Sweet and Associates, a consulting firm for agricultural organizations. He was Executive Vice President of the 100,000 member National Pork Producers Council, Des Moines, Iowa, from 1979 to 1989. He was President of the American Polled Hereford Association, Kansas City, Missouri in 1963-79. He is past President of the U.S. Beef Breeds Council and the National Society of Livestock Records Association and was a Director of the Agricultural Hall of Fame and the U.S. Meat Export Federation. He is a member of the American Society of Animal Science. He has served as a member of the USDA Advisory Council Trade Policy, the State Department Citizens Network and the Executive Committee of the Agricultural Council of America. Board Meetings; Committees: The Board of Directors of the Company held four meetings during the year ended December 31, 2001. Messrs. Cernan, and Schenkel attended fewer than 75% of such meetings. The Company has an Investment Committee, consisting of Messrs. Ahart and Shamas. This Committee manages the Company's investments, and met periodically during fiscal year 2001 on both a formal and informal basis; Messrs. Ahart and Shamas did not miss any meetings. The Company has no standingnominating or compensation committees. Report of the Audit Committee: The Company has an Audit Committee consisting of Messrs. Barclay, Greig and Rigler. Mr. Barclay serves as Chairman of the Committee. Each of the members of the Audit Committee qualify as independent directors in accordance with exchange rules and guidelines. During fiscal year 2001, the Committee has met with senior members of the Company's management, as well as the Company's independent auditors. The Committee has reviewed the audited financial statements in the Company's Annual Report on Form 10-K. The Committee also discussed with the independent auditors matters required to be discussed by Statement on Accounting Standards No. 61. The Committee received and discussed with the auditors their annual written report on their independence from the Company and its management, in accordance with Independence Standards Board Standard No. 1. The Company currently is in the process of formulating an Audit Committee Charter for, consideration and adoption as adopted by the Board of Directors. Based on those reviews and discussions, and the report of the independent auditors, the Committee has approved that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, for filing with the Securities and Exchange Commission. The Audit Committee reviewed the fees Billed to BNL Financial Corporation and its subsidiaries by Smith, Carney & Co., p.c. for the Fiscal Year Ended December 31, 2001: Audit Fees Fees billed to the Company by Smith, Carney & Co., p.c. , for the audit of our 2001 annual financial statements and the review of our financial statements included in our quarterly reports on Form 10-Q for 2001 totaled $84,300. Financial Information Systems Design and Implementation Fees The Company did not engage Smith, Carney & Co., p.c. to provide advice regarding financial information systems design and implementation during the fiscal year ended December 31, 2001. All Other Fees Aggregate fees billed for all other services rendered by Smith, Carney & Co., p.c. were $85,800 for the fiscal year ended December 31, 2001. These services primarily included assistance with the accounting, tax and due diligence aspects of the EPSI transaction; assistance with SEC forms and reporting; research and consultation regarding various accounting inquiries; assistance with various accounting matters related to the class-action suit; research and consultation concerning tax matters, and preparation of the consolidated income tax returns and assistance with the filing of a Form S-3registration statement for the Company's stock option plan. In making its recommendation to ratify the appointment of Smith Carney & Co. as the Company's independent accountants for the year ending December 31, 2002, the Audit Committee has considered whether Smith Carney & Co.'s provision of services other than audit services are compatible with maintaining independence of our outside accountants. Respectfully, AUDIT COMMITTEE BNL FINANCIAL CORPORATION Richard Barclay, Chairman, John Greig, and Robert R. Rigler Executive Officers: The executive officers of the Company are as follows: Officer Name Age Since Positions (s) Wayne E. Ahart 62 1984 Chief Executive Officer and Chairman of the Board C. Don Byrd 61 1984 Vice Chairman of the Board Kenneth Tobey 44 1988 President Barry N. Shamas 55 1984 Executive Vice President and Treasurer ----------------------- ---------------- --------------------------------------- The Company's executive officers serve at the pleasure of the Board of Directors. Each of the above officers also holds the same office in BNLAC. Executive Compensation The following table sets forth certain information regarding remuneration of executive officers in excess of $100,000 during the three years ended December 31, 2001.
SUMMARY COMPENSATION TABLE Long Term Compensation Annual Compensation Awards ------------------------------------ (A) (B) (C) (D) (E) (F) (H) (I) Other Annual Restricted All Other Compensation Stock LTIP Compensation Name and Principal Position Year Salary Bonus $ $ Award(s) $ Payouts $ $ ----------------------------- ------- ------------- ---------- ------------ --------------- ------------- ------------ Wayne E. Ahart, CEO 2001 $125,000 $60,417 $10,462 $0 $0 $0 2000 $125,000 $10,739 $12,625 $0 $0 $0 " 1999 $125,000 $0 $9,416 $0 $0 $0 Barry N. Shamas, Executive V.P. 2001 $110,600 $39,217 $809 $0 $0 $0 " 2000 $106,700 $10,189 $7,220 $0 $0 $0 1999 $95,000 $0 $1,096 $0 $0 $0 C. Donald Byrd, Vice Chairman of the Board 2000 $92,500 $43,545 $3,922 $0 $0 $0 2000 $90,000 $58,031 $3,893 $0 $0 $0 " 1999 $80,500 $0 $3,463 $0 $0 $0 Kenneth Tobey, President 2001 $77,500 $42,295 $3,256 $0 $0 $0 2000 $75,000 $56,781 $2,874 $0 $0 $0 " 1999 $65,500 $0 $2,643 $0 $0 $0
The total number of executive officers of the Company is four and the total remuneration paid to all executive officers, as a group is $609,523 including accrued bonuses of $25,837 each for Mr. Byrd and Mr. Tobey under the Company's stock bonus plan. The Company does not have employment agreements with any of its officers. Compensation Determination: The Company has no compensation committee. Compensation decisions are made by the Board of Directors. The factors and criteria upon which the compensation of the executive officers of the Company are based include the financial performance of the Company, the nature of the officers' respective job duties and their seniority and experience with the Company. Respectfully, Board of Directors BNL Financial Corporation Wayne E. Ahart, C. Don Byrd, Kenneth Tobey, Barry N. Shamas, Cecil Alexander, Richard Barclay, Eugene A. Cernan, Hayden Fry, John Greig, Roy Keppy, Roy Ledbetter, John E. Miler, James Mullins, C. James McCormick, Robert R. Rigler, Chris Schenkel, C. Stanley, Schoelerman and Orville Sweet Compensation of Directors: Each Director receives a fee of $500, plus reasonable travel expenses, for each meeting of the Board of Directors attended. The Audit Committee Members receive $500 for each meeting attended. No said Director receives any other remuneration in their capacity of Director. Other Compensation; Indebtedness: In November 1996, the Board of Directors authorized a stock bonus plan for the benefit of certain officers of the Company subject to specific guidelines. No stock bonus can be granted under the plan unless the Company has consolidated after-tax profits of at least $250,000. For the fiscal year ended December 31, 2000, bonuses of $50,000 were accrued under the plan to each of Messrs. Byrd and Tobey. The amount of $25,837 was paid to each of Messrs. Byrd and Tobey under the stock bonus plan for 2001. In 2001, the Board of Directors approved the 2001 Incentive Bonus Plan for the benefit of certain officers of the Company. The plan provides for semi-annual payment of cash bonuses based on 10% of the consolidated pre-tax operating income. Bonus expense for 2001 was $144,662 under this plan. Except for the stock bonus plan, the Company does not have any contingent forms of remuneration to executive officers, such as options, warrants or other rights to purchase the Company's securities, or any pension, retirement, stock appreciation or other similar plans. No Officer, Director or nominee for Director of the Company or associate of any such person was indebted to the Company at any time during the year ended December 31, 2001, other than for ordinary travel and expense advances and for other transactions in the ordinary course of business, if any. Purchase of BNL Shares: Mr. Byrd and the Company entered into an agreement, dated December 21, 1990, whereby the Company acquired a right of first refusal to purchase the 1,452,719 shares of the Company's Common Stock owned by Mr. Byrd on the same terms and conditions that would apply in any proposed sale, pledge or other transfer of the shares by Mr. Byrd. The Company must exercise its right of first refusal within thirty days after receiving notification from Mr. Byrd of any such proposed transaction in the shares, and make payment for the shares within forty-five days after acceptance. The right of first refusal may be exercised only as to all of such shares and not as to any lesser amount. Mr. Byrd has retained the right to transfer his shares to a trust controlled by him or to members of his family or heirs in the event of death, but all of the shares so transferred remain subject to the Company's right of first refusal as to any subsequent transfer. Stock Performance Graph: The stock of the Company is not traded on any public market or exchange. From time to time the Company attempts to facilitate isolated private sales by providing shareholders who desire to sell their shares with names of persons who have expressed a desire to buy. The Company has no information regarding the terms on which such private transactions may have occurred. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS (Item 2) The Board of Directors has selected Smith, Carney & Co., p.c., as the independent public accountant to examine the accounts of the Company for 2002. In accordance with the resolution of the Board, this selection is being presented to the Shareholders for ratification or disapproval at this Annual Meeting. The Board recommends that the Shareholders vote "FOR" such ratification. It is not presently anticipated that a representative of the firm of Smith, Carney & Co. will be present at the Annual Meeting; however, should such a representative be present he will be given an opportunity to make a statement if he desires to do so and will be available to respond to appropriate questions. PROPOSALS BY SHAREHOLDERS A proposal submitted by a shareholder for the 2003 regular Annual Meeting of Shareholders must be received in writing by the Secretary, BNL Financial Corporation, P. O. Box 6600, North Little Rock, Arkansas 72124, no later than November 1, 2002, in order to be eligible to be included in the Company's Proxy Statement for that meeting. Any shareholder who submits such proposals must be a record or beneficial owner of at least 1% or $2,000 in market value of securities entitled to be voted at the meeting, have held such securities for at least one year, and continue to hold such securities through the date on which the meeting is held. OTHER MATTERS As far as is known or has been determined, no business other than the matters referred to herein will come before the Annual Meeting. However, it is intended that the proxy solicited herein will be voted on any other matters that may properly come before the Meeting in the discretion of the person or persons voting such proxy. FORM 10-K Upon written request to the Secretary, BNL Financial Corporation, P. O. Box 6600, North Little Rock, Arkansas 72124, shareholders will be provided a copy of the Company's Annual Report on Form 10-K for the year ended December 31, 2001 without charge.