-----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, BMPXJ/jLamxLemB5pPbb2MG68/gkHEX7dA0oOGZ3zKgMgHYr8TwyUqRAXm1vJ6OY mW1HPVwFHMJkUXu0mC+Iug== 0000920112-00-000003.txt : 20000411 0000920112-00-000003.hdr.sgml : 20000411 ACCESSION NUMBER: 0000920112-00-000003 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEARTLAND FINANCIAL USA INC CENTRAL INDEX KEY: 0000920112 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 421405748 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-15393 FILM NUMBER: 583203 BUSINESS ADDRESS: STREET 1: 1398 CENTRAL AVE CITY: DUBUQUE STATE: IA ZIP: 52001 BUSINESS PHONE: 3195892000 MAIL ADDRESS: STREET 1: 1398 CENTRAL AVE CITY: DUBUQUE STATE: IA ZIP: 52001 DEF 14A 1 PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [ X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 HEARTLAND FINANCIAL USA, INC. (Name of Registrant as Specified in its Charter) (Name of Person(s) Filing Proxy Statement, if other than 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 with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule, or Registration Statement No.: 3) Filing Party: 4) Date Filed: [LOGO] Heartland Financial USA, Inc. April 5, 2000 Dear Fellow Stockholder: You are cordially invited to attend the annual stockholders' meeting of Heartland Financial USA, Inc. to be held at the corporate headquarters, located at 1398 Central Avenue, Dubuque, Iowa, on Wednesday, May 17, 2000, at 1:30 p.m. The accompanying notice of annual meeting of stockholders and proxy statement discuss the business to be conducted at the meeting. A copy of our 1999 Annual Report to Stockholders is enclosed. At the meeting we shall report on operations and the outlook for the year ahead. Your board of directors has nominated two persons to serve as Class I directors. Additionally, our management has selected and recommends that you ratify the selection of KPMG LLP to continue as our independent public accountants for the year ending December 31, 2000. We recommend that you vote your shares for each of the director nominees and in favor of the proposal. We encourage you to attend the meeting in person. Whether or not you plan to attend, however, please complete, sign and date the enclosed proxy and return it in the accompanying postpaid return envelope as promptly as possible. This will ensure that your shares are represented at the meeting. We look forward with pleasure to seeing and visiting with you at the meeting. With best personal wishes, /s/ Lynn S. Fuller ----------------------------- Lynn S. Fuller Chairman of the Board 1398 Central Avenue - Dubuque, Iowa 52001 - (319) 589-2100 [LOGO] Heartland Financial USA, Inc. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 17, 2000 TO THE STOCKHOLDERS: The annual meeting of stockholders of HEARTLAND FINANCIAL USA, INC. will be held at the corporate headquarters, 1398 Central Avenue, Dubuque, Iowa, on Wednesday, May 17, 2000, at 1:30 p.m., for the purpose of considering and voting upon the following matters: 1. to elect two Class I directors. 2. to approve the appointment of KPMG LLP as independent public accountants for the fiscal year ending December 31, 2000. 3. to transact such other business as may properly be brought before the meeting or any adjournments or postponements of the meeting. The board of directors is not aware of any other business to come before the meeting. Stockholders of record at the close of business on March 22, 2000, are the stockholders entitled to vote at the meeting and any adjournments or postponements of the meeting. In the event there are not sufficient votes for a quorum or to approve or ratify any of the foregoing proposals at the time of the annual meeting, the meeting may be adjourned or postponed in order to permit further solicitation of proxies. By order of the Board of Directors /s/ Lois K. Pearce ---------------------------------- Lois K. Pearce Secretary Dubuque, Iowa April 5, 2000 IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE US THE EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES. [LOGO] Heartland Financial USA, Inc. PROXY STATEMENT This proxy statement is furnished in connection with the solicitation by the board of directors of Heartland Financial USA, Inc. of proxies to be voted at the annual meeting of stockholders. This meeting is to be held at the corporate headquarters located at 1398 Central Avenue, Dubuque, Iowa, on Wednesday, May 17, 2000, at 1:30 p.m. local time, or at any adjournments or postponements of the meeting. Heartland Financial USA, Inc., a Delaware corporation, is a diversified financial services holding company headquartered in Dubuque, Iowa. We offer full-service community banking through six banking subsidiaries with a total of 29 banking locations in Iowa, Illinois, Wisconsin and New Mexico. In addition, we have separate subsidiaries in the consumer finance, vehicle leasing/ fleet management, insurance agency and investment management businesses. Our primary strategy is to balance ourfocus on in- creasing profitability with asset growth and diversification through acquisitions, de novo bank formations, branch openings and expansion into non-bank subsidiary activities. The proxy statement and the accompanying notice of meeting and proxy are first being mailed to holders of shares of common stock, par value $1.00 per share, on or about April 5, 2000. Voting Rights and Proxy Information All shares of common stock represented at the annual meeting by properly executed proxies received prior to or at the annual meeting, and not revoked, will be voted at the annual meeting in accordance with the instructions thereon. If no instructions are indicated, properly executed proxies will be voted for the nominees and for adoption of the proposal set forth in this proxy statement. A majority of the shares of the common stock present in person or represented by proxy will constitute a quorum for purposes of the meeting. Abstentions and broker non-votes will be counted for purposes of determining a quorum. Stockholders of record on our books at the close of business on March 22, 2000, will be entitled to vote at the meeting or any adjournments or postponements of the meeting. On March 22, 2000, we had outstanding 9,627,465 shares of common stock, with each share entitling its owner to one vote on each matter submitted to a vote at the annual meeting. Directors shall be elected by a plurality of the votes present in person or represented by proxy at the meeting and entitled to vote. In all other matters, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be required to constitute stockholder approval. Abstentions will be treated as votes against any proposal and broker non-votes will have no effect on the vote. We would like to have all stockholders represented at the annual meeting. Whether or not you plan to attend, please complete, sign and date the enclosed proxy and return it in the accompanying postpaid return envelope as promptly as possible. A proxy given pursuant to this solicitation may be revoked at any time before it is voted by: - executing and delivering to our corporate secretary a later dated proxy relating to the same shares prior to the exercise of such proxy; - filing with our corporate secretary, at or before the meeting, a written notice of revocation bearing a later date than the proxy; or - attending the meeting and voting in person (although attendance at the meeting will not in and of itself constitute revocation of a proxy). Any written notice revoking a proxy should be delivered to Ms. Lois K. Pearce, Secretary, Heartland Financial USA, Inc., 1398 Central Avenue, Dubuque, Iowa 52001. ELECTION OF DIRECTORS At the annual meeting to be held on May 17, 2000, you will be entitled to elect two Class I directors for terms expiring in 2003. The directors are divided into three classes having staggered terms of three years. Each of the nominees for election as a Class I director is an incumbent director. We have no knowledge that any of the nominees will refuse or be unable to serve, but if any of the nominees become unavailable for election, the holders of proxies reserve the right to substitute another person of their choice as a nominee when voting at the meeting. Set forth below is information concerning the nominees for election and for the other directors whose terms of office will continue after the meeting, including the age, year first elected a director and business experience of each during the previous five years as of March 22, 2000. Unless otherwise indicated, each person has held the positions indicated for at least five years. The nominees, if elected at the annual meeting, will serve as Class I directors for three-year terms expiring in 2003. The board of directors recommends that you vote your shares FOR each of the nominees for director. NOMINEES Served as Company Position with the Company Name Director and the Subsidiaries and (Age) Since and Principal Occupation - ------------------ --------- ------------------------ CLASS I (Term Expires 2003) Lynn B. Fuller 1987 President (1990-present) and (Age 50) and Chief Executive Officer (1999-present) of Heartland Financial USA, Inc.; Director, Vice Chairman of the Board (2000-present), President (1987-1999) and Chief Executive Officer (1986-1999) of Dubuque Bank and Trust; Director of Galena State Bank, First Community Bank, Riverside Community Bank (1995-present), Wisconsin Community Bank (1997-present), New Mexico Bank & Trust (1998- present) and Keokuk Bancshares, Inc.; Director and President of Citizens Finance; Director and Chairman of ULTEA 1996-present) Gregory R. Miller 1994 Executive Vice President of (Age 51) of Heartland Financial USA, Inc. (1996-1998); Director (1987-present), Vice Chairman (1998-present), President and Chief Executive Officer (1988- 1997) of First Community Bank; President and Chief Executive Officer of Keokuk Bancshares, Inc. (1990-1997); Senior Vice President and Portfolio Manager of Chicago Capital Fund Management (1998-present) CONTINUING DIRECTORS Served as Company Position with the Company Name Director and the Subsidiaries and (Age) Since and Principal Occupation - ------------------ --------- ------------------------ CLASS II (Term Expires 2001) Mark C. Falb 1995 Director of Dubuque Bank and (Age 52) Trust; Director of Citizens Finance (1997-present); Chairman of the Board and Chief Executive Officer of Westmark Enterprises, Inc. and Kendall/Hunt Publishing Company James A. Schmid 1981 Vice Chairman of the Board of (Age 76) Heartland Financial USA, Inc.; Chairman of the Board and Director of Dubuque Bank and Trust; Director of Citizens Finance; Chairman of the Board and Chief Executive Officer of Crescent Electric Supply Company Robert Woodward 1987 Director of Dubuque Bank and (Age 63) Trust and Citizens Finance; Chairman of the Board and Chief Executive Officer (1995- present) and Executive Vice President (1983-1994) of Woodward Communications, Inc. CLASS III (Term Expires 2002) Lynn S. Fuller 1981 Chairman of the Board (1988- (Age 75) present) and Chief Executive Officer (1988-1999) of Heartland Financial USA, Inc.; Director and Vice Chairman of the Board of Dubuque Bank and Trust; Director of Citizens Finance Evangeline K. Jansen 1981 Director of Dubuque Bank and (Age 83) Trust and Citizens Finance All of our directors will hold office for the terms indicated, or until their respective successors are duly elected and qualified. There are no arrangements or understandings between Heartland Financial USA, Inc. and any other person pursuant to which any of our directors have been selected for their respective positions. No member of the board of directors is related to any other member of the board of directors, except that Lynn S. Fuller is the father of Lynn B. Fuller. Meetings of the Board of Directors and Committees Regular meetings of the board of directors are held quarterly. During 1999, the board of directors held four regular meetings and eight special meetings. All directors during their terms of office in 1999 attended at least 75% of the total number of meetings of the board of directors and of meetings held by all committees of the board on which any such director served, with the exception of the audit committee. Of the four audit committee meetings held, Mr. Falb was absent for two meetings due to business travel. We do not currently have a standing nominating committee. Rather, the entire board participates in the process of selecting nominees to fill vacancies on the board. The board of directors will consider nominees recommended by stockholders provided any such recommendation is made in writing and delivered to the corporate secretary as further provided in our bylaws. The compensation committee, consisting of directors Schmid (Chairman), Falb, Jansen, Woodward and Miller, meets to review the salary, other compensation and performance of the chief executive officer and each of the other executive officers named in the summary compensation table and recommends adjustments. During 1999, the compensation committee met three times. The audit committee recommends independent auditors to the board, reviews the results of the auditors' services, reviews with management and the internal auditor the systems of internal control and internal audit reports and assures that the books and records are kept in accordance with applicable accounting principles and standards. The members of the audit committee are directors Schmid (Chairman), Falb, Jansen, Woodward and Miller. During 1999, the audit committee met four times. Compensation of Directors Each of our directors is paid a fee of $450 for each board meeting attended and $250 for each committee meeting attended, except that Mr. Lynn B. Fuller receives no fees for his services as director. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information with respect to the beneficial ownership of our common stock at March 22, 2000, by each person known by us to be the beneficial owner of more than 5% of the outstanding common stock, by each director or nominee, by each executive officer named in the summary compensation table below and by all directors and executive officers of Heartland Financial USA, Inc. as a group. Unless otherwise noted, the address of each five percent stockholder is 1398 Central Avenue, Dubuque, Iowa 52001. Amount and Nature Name of Individual and of Beneficial Percent of Number of Persons in Group Ownership (1) Class - -------------------------- ------------------ ---------- 5% Stockholders and Directors Dubuque Bank and Trust Company 735,460 (2) 7.6% Heartland Partnership, L.P. 556,000 (3) 5.8% Mark C. Falb 182,574 (4) 1.9% Lynn B. Fuller 329,690 (5) 3.4% Lynn S. Fuller 884,570 (6) 9.2% Evangeline K. Jansen 915,902 (7) 9.5% Gregory R. Miller 204,764 (8) 2.1% James A. Schmid 385,582 (9) 4.0% Robert Woodward 439,834 (10 4.6% Other Executive Officers John K. Schmidt 77,174 (11) * Kenneth J. Erickson 86,187 (12) * Douglas J. Horstmann 83,684 (13) * Paul J. Peckosh 72,774 (14) * All directors and executive officers as a group (12 persons) 3,726,031 38.7% * Less than one percent (1) The information contained in this column is based upon information furnished to Heartland Financial USA, Inc. by the persons named above and the members of the designated group. Amounts reported include shares held directly as well as shares which are held in retirement accounts and shares held by certain members of the named individuals' families or held by trusts of which the named individual is a trustee or substantial beneficiary, with respect to which shares the respective director may be deemed to have sole or shared voting and/or investment power. Also included are shares obtainable through the exercise of options within 60 days of the date of the information presented in this table in the following amounts: Mr. Lynn B. Fuller - 72,000 shares; Messrs. Miller and Peckosh - 36,000 shares; Messrs. Schmidt, Erickson and Horstmann - 48,000 shares and all directors and executive officers as a group - 336,000 shares. The nature of beneficial ownership for shares shown in this column is sole voting and investment power, except as set forth in the footnotes below. Inclusion of shares shall not constitute an admission of beneficial ownership or voting and investment power over included shares. (2) Includes 337,164 shares over which Dubuque Bank and Trust, Heartland Financial USA, Inc.'s leading bank subsidiary, has sole voting and investment power and 398,296 shares over which Dubuque Bank and Trust has shared voting or investment power. (3) Mr. Lynn S. Fuller, Chairman of the Board of Heartland Financial USA, Inc., is the general partner of Heartland Partnership, L.P., and in such capacity exercises sole voting and investment power over such shares. (4) Includes 109,376 shares over which Mr. Falb has shared voting and investment power and 44,704 shares held by Mr. Falb's spouse, as trustee, over which Mr. Falb has no voting or investment power. (5) Includes an aggregate of 4,305 shares held by Mr. Fuller's spouse and minor children and 77,848 shares held in a trust for which Mr. Fuller serves as co-trustee, over which Mr. Fuller has shared voting and investment power. Includes 14,000 shares held by the Heartland Partnership, L.P., over which Mr. Fuller has no voting or investment power but in which Mr. Fuller does have a beneficial interest. (6) Includes shares held by the Heartland Partnership, L.P., over which Mr. Fuller has sole voting and investment power, as well as 37,284 shares held by a trust for which Mr. Fuller's spouse is a trustee and 77,848 shares held in a trust for which Mr. Fuller serves as co-trustee, over which Mr. Fuller has shared voting and investment power. (7) Represents shares held in certain trusts for which Ms. Jansen serves as trustee or co-trustee. Voting and investment power is shared with respect to 288,512 of such shares. (8) Includes an aggregate of 66,100 shares held by Mr. Miller's spouse, over which Mr. Miller has shared voting and investment power. (9) Includes 10,784 shares held by Mr. Schmid's wife, over which Mr. Schmid has shared voting and investment power, 149,374 shares held in trust over which Mr. Schmid has sole voting and investment power, and 84,384 shares held by Crescent Realty Corp., of which Mr. Schmid is a controlling person. (10) Includes an aggregate of 261,200 shares held by various trusts of which Mr. Woodward is a trustee and over which Mr. Woodward has shared voting and investment power over 248,400 shares and sole voting and investment power over 12,800 shares. Mr. Woodward also has full power of attorney for the 5,712 shares held by his mother. (11) Includes 488 shares held by Mr. Schmidt jointly with his spouse, over which Mr. Schmidt has shared voting and investment power. (12) Includes 5,333 shares held by Mr. Erickson jointly with his spouse, over which Mr. Erickson has shared voting and investment power. (13) Includes 18,000 shares held by Mr. Horstmann's spouse, over which Mr. Horstmann has shared voting and investment power. (14) Includes 3,017 shares held by Mr. Peckosh jointly with his spouse, over which Mr. Peckosh has shared voting and investment power, and 1,600 shares held by Mr. Peckosh's spouse, over which Mr. Peckosh has no voting and investment power. Section 16(a) of the Securities Exchange Act of 1934 requires that our directors, executive officers and 10% stockholders file reports of ownership and changes in ownership with the Securities and Exchange Commission. Such persons are also required to furnish us with copies of all Section 16(a) forms they file. Based solely upon our review of such forms, we are not aware that any of our directors, executive officers or 10% stockholders failed to comply with the filing requirements of Section 16(a) during 1999. EXECUTIVE COMPENSATION The following table sets forth information concerning the compensation paid or granted to our Chief Executive Officer and to each of the other four most highly compensated executive officers of Heartland Financial USA, Inc. or our subsidiaries for the fiscal year ended December 31, 1999: SUMMARY COMPENSATION TABLE Annual Compensation ------------------- (a) (b) (c) (d) Fiscal Year Ended Name and Principal December Salary Bonus Position 31st ($)(1) ($)(2) - ------------------ -------- --------- -------- Lynn B. Fuller 1999 $180,000 $80,124 President and Chief 1998 170,000 58,155 Executive Officer of 1997 165,000 73,042 Heartland Financial USA, Inc. John K. Schmidt 1999 $118,000 $32,315 Executive Vice President 1998 108,000 28,346 and Chief Financial Officer of 1997 105,000 29,182 Heartland Financial USA, Inc. Kenneth J. Erickson 1999 $109,000 $35,290 Executive Vice President of 1998 104,000 17,538 Heartland Financial USA, Inc. 1997 100,000 20,808 Douglas J. Horstmann 1999 $105,000 $30,307 Senior Vice President of 1998 102,000 17,200 Heartland Financial USA, Inc. 1997 99,000 20,601 Paul J. Peckosh 1999 $ 94,250 $27,690 Senior Vice President of 1998 91,500 25,093 Heartland Financial USA, Inc. 1997 88,000 23,294 Long-term Compensation Awards --------------------- (a) (b) (f) (g) (h) Fiscal Year Securities Ended Restricted Underlying All Other Name and Principal December Stock Options/ Compensa- Position 31st Awards ($) SARs(#) tion($)(3) - ------------------ -------- ---------- ---------- ---------- Lynn B. Fuller 1999 $ --- 24,000 $21,974 President and Chief 1998 --- 24,000 24,636 Executive Officer of 1997 --- 24,000 47,179 Heartland Financial USA, Inc. John K. Schmidt 1999 $ --- 16,000 $19,497 Executive Vice 1998 --- 16,000 18,382 President and 1997 --- 16,000 31,382 Chief Financial Officer of Heartland Financial USA, Inc. Kenneth J. Erickson 1999 $ --- 12,000 $16,015 Executive Vice 1998 --- 16,000 18,024 President of Heartland 1997 --- 16,000 31,382 Financial USA, Inc. Douglas J. Horstmann 1999 $ --- 6,000 $15,443 Senior Vice President 1998 --- 16,000 16,150 of Heartland Financial 1997 --- 16,000 28,818 USA, Inc. Paul J. Peckosh 1999 $ --- 6,000 $15,191 Senior Vice President 1998 --- 12,000 15,951 of Heartland Financial 1997 --- 12,000 26,852 USA, Inc. (1) Includes amounts deferred under our retirement plan. (2) The amounts shown represent amounts received under our management incentive compensation plan. (3) The amounts shown represent amounts contributed on behalf of the respective officer to the retirement plan, the aggregate value of the discount to market price of shares purchased under the employee stock purchase plan and/or the executive restricted stock purchase plan, and the allocable portion of the premium paid for life insurance under the executive death benefit program. For Mr. Fuller, the amounts shown include an automobile allowance of $1,463 for 1999, $1,698 for 1998 and $1,901 for 1997. For Mr. Schmidt, the amount shown for 1999 includes an automobile allowance of $1,082. For 1999, the amount contributed for each officer under the retirement plan was $19,988 for Mr. Fuller, $18,283 for Mr. Schmidt, $15,808 for Mr. Erickson, $15,266 for Mr. Horstmann and $14,909 for Mr. Peckosh. There was no discount realized on shares purchased under the stock plans during 1999. For 1998, the amount contributed for each officer under the retirement plan and the aggregate value of the discount realized by each named individual was $20,000 and $2,490 for Mr. Fuller, $17,487 and $780 for Mr. Schmidt, $15,825 and $2,028 for Mr. Erickson, $15,590 and $414 for Mr. Horstmann and $14,555 and $1,167 for Mr. Peckosh. For 1997, such amounts were $19,632 and $25,023 for Mr. Fuller, $16,105 and $13,799 for Mr. Schmidt, $15,085 and $16,051 for Mr. Erickson, $14,349 and $14,252 for Mr. Horstmann and $14,113 and $12,418 for Mr. Peckosh. Stock Option Information The following table sets forth certain information concerning the number and value of stock options granted in the last fiscal year to the individuals named in the summary compensation table: OPTION GRANTS IN LAST FISCAL YEAR Individual Grants (a) (b) (c) (d) % of Total Options Granted Options to Employees Exercise or Granted in Fiscal Base Price Name (#) (1) Year ($/Share) - ----------------------- ------------ ----------- ----------- Lynn B. Fuller 24,000 22.6% $18.00 John K. Schmidt 16,000 15.1% 18.00 Kenneth J. Erickson 12,000 11.3% 18.00 Douglas J. Horstmann 6,000 5.7% 18.00 Paul J. Peckosh 6,000 5.7% 18.00 (a) (e) (f) Grant Date Expiration Present Value Name Date ($) (2)(3) - ---------------------- ---------- ------------- Lynn B. Fuller 01/02/09 $121,200 John K. Schmidt 01/02/09 80,800 Kenneth J. Erickson 01/02/09 86,560 Douglas J. Horstmann 01/02/09 86,560 Paul J. Peckosh 01/02/09 64,920 (1) Options become exercisable in three equal portions on the day after the third, fourth and fifth anniversaries of the January 2, 1999 date of grant. (2) The Black Scholes valuation model was used to deter- mine the grant date present values. Significant assumptions include: risk-free interest rate, 6.28%; expected option life, 10 years; expected volatility, 13.04%; expected dividends, 1.94%. (3) The ultimate value of the options will depend on the future market price of our common stock, which cannot be fore- cast with reasonable accuracy. The actual value, if any, an executive may realize upon the exercise of an option will depend on the excess of the market value of our common stock, on the date the option is exercised, over the exercise price of the option. The following table sets forth certain information concern- ing the stock options at December 31, 1999, held by the named executive officers. No stock options were exercised during 1999 by any of the named executive officers. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES (a) (b) (c) (d) Number of Securities Shares Underlying Unexercised Acquired On Value Options/SARs at FY-End Exercise Realized (#) Name (#) ($) Exercisable Unexercisable - ------------------ --------- -------- ----------- ------------- Lynn B. Fuller --- $--- 40,000 104,000 John K. Schmidt --- --- 26,667 69,333 Kenneth J. Erickson --- --- 26,667 65,333 Douglas J. Horstmann --- --- 26,667 59,333 Paul J. Peckosh --- --- 20,000 46,000 (a) (e) Value of Unexercised In-the-Money Options/SARs at FY-End ($) Name Exercisable Unexercisable - -------------------- ----------- ------------- Lynn B. Fuller $374,960 $491,920 John K. Schmidt 249,977 327,943 Kenneth J. Erickson 249,977 327,943 Douglas J. Horstmann 249,977 327,943 Paul J. Peckosh 187,480 245,960 Change of Control Agreements We have entered into a separate change of control agreement with each of the named executive officers and certain other of our officers. These agreements provide that if employment is terminated six months prior to a change in control of Heartland Financial USA, Inc. (as defined in the agreements) or within one year thereafter, the terminated officer is to be paid severance compensation equal to a multiple of such officer's total compensation (as defined in the agreements) at the time of termination. The multiple varies for each officer, up to a maximum of four times total compensation. Additionally, the agreements provide for the continuation of medical and dental benefits for up to two years after such termination and the payment of expenses for out-placement counseling for a period of one year, up to a maximum amount equal to twenty-five percent of total compensation. Messrs. Fuller, Schmidt and Erickson are prohibited by their respective agreements from competing with us or our subsidiaries within a designated geographic area for a period of two years following the termination of employment. Compensation Committee Report on Executive Compensation The incorporation by reference of this proxy statement into any document filed with the Securities and Exchange Commission by Heartland Financial USA, Inc. shall not be deemed to include the following report unless such report is specifically stated to be incorporated by reference into such document. Our compensation program is administered by the compensation committee. In determining appropriate levels of executive compensation, the committee has at its disposal independent reference information regarding compensation ranges and levels for executive positions in comparable companies. In determining compensation to be paid to executive officers, primary considera- tion is given to quality long-term earnings growth accomplished by achieving both financial and non-financial goals such as return on equity, earnings per share and asset and deposit growth. The objectives of this philosophy are to: - encourage a consistent and competitive return to stockholders; - reward bank and individual performances; - provide financial rewards for performance of those having a significant impact on corporate profitability; - provide competitive compensation in order to attract and retain key personnel. There are three major components of our executive officer compensation: base salary, annual incentive awards and long-term incentive awards. The process utilized by the committee in determining executive officer compensation levels for all of these components is based upon the committee's subjective judgment and takes into account both qualitative and quantitative factors. No specific weights are assigned to such factors with respect to any compensation component. Among the factors considered by the committee are the recommendations of the president with respect to the compensation of our other key executive officers. However, the committee makes the final compensation decisions concerning such officers. We have adopted the Heartland Financial USA, Inc. 1993 Stock Option Plan. The stock option plan is intended to promote equity ownership in Heartland Financial USA, Inc. by our directors and selected officers and employees to increase their proprietary interest in the success of Heartland Financial USA, Inc. and to encourage them to remain in the employ of Heartland Financial USA, Inc. or our subsidiaries. We have also purchased a split- dollar life insurance policy on each of our executive officers. The compensation of Mr. Fuller, the chief executive officer, during 1999 was based upon these factors: - our compensation program; - the individual's performance, substantial experience, expertise and length of service with our organization; - progress toward our performance objectives; - compensation of officers with similar duties and responsibilities at comparable organizations. Respectfully, James A. Schmid, Chairman Mark C. Falb Evangeline K. Jansen Robert Woodward Compensation Committee Interlocks and Insider Participation in Compensation Decisions During the last completed fiscal year, in addition to each of the members of the committee, Messrs. Lynn S. Fuller, Lynn B. Fuller and John K. Schmidt also participated in committee deliberations concerning executive compensation. However, no one participated in any decisions regarding their own compensation. Mr. Lynn S. Fuller serves as chairman of the board of Heartland Financial USA, Inc. and vice chairman of the board of Dubuque Bank and Trust. Mr. Lynn B. Fuller serves as president and chief executive officer of Heartland Financial USA, Inc. and vice chairman of the board of Dubuque Bank and Trust. Mr. Schmidt is not a director of Heartland Financial USA, Inc., but is the executive vice president and chief financial officer of Heartland Financial USA, Inc. and president and chief executive officer of Dubuque Bank and Trust. All of the regular members of the committee also serve as directors of Dubuque Bank and Trust, the leading bank subsidiary of Heartland Financial USA, Inc., except for Mr. Miller. Stockholder Return Performance Presentation The incorporation by reference of this proxy statement into any document filed with the Securities and Exchange Commission by Heartland Financial USA, Inc. shall not be deemed to include the following performance graph and related information unless such graph and related information is specifically stated to be incorporated by reference into such document. The following graph shows a five-year comparison of cumulative total returns for Heartland Financial USA, Inc., the NASDAQ Stock Market (U.S.) and an index of NASDAQ Bank stocks. Our shares are traded in the over-the-counter market under the symbol "HTLF" and are eligible for quotation on the OTC Bulletin Board. Figures for our common stock represent inter-dealer quotations, without retail markups, markdowns or commissions and do not necessarily represent actual transactions. The graph was prepared at our request by Research Data Group,Inc. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* ASSUMES $100 INVESTED ON DECEMBER 31, 1994 [GRAPH DEPICTING VALUES ON THE FOLLOWING TABLE] *Total return assumes reinvestment of dividends Cumulative Total Return Performance December 31, ---------------------------------- 1994 1995 1996 1997 1998 1999 Heartland Financial USA, Inc. 100 120 172 182 264 284 NASDAQ Stock Market (U.S.) 100 141 174 213 300 542 NASDAQ Bank Index 100 149 197 329 327 314 TRANSACTIONS WITH MANAGEMENT Directors and officers of Heartland Financial USA, Inc. and our subsidiaries, and their associates, were customers of and had transactions with us and one or more of our subsidiaries during 1999. Additional transactions may be expected to take place in the future. All outstanding loans, commitments to loan, transactions in repurchase agreements and certificates of deposit and depository relationships, in the opinion of management, were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present other unfavorable features. RELATIONSHIP WITH INDEPENDENT AUDITORS Our board of directors has appointed KPMG LLP, independent auditors, to be the auditors for the fiscal year ending December 31, 2000, and recommends that the stockholders ratify the appointment. KPMG LLP has been our auditors since June, 1994. A representative of KPMG LLP is expected to attend the meeting and will be available to respond to appropriate questions and to make a statement if he or she so desires. If the appointment of auditors is not ratified, the matter of the appointment of auditors will be considered by the board of directors. The board of directors recommends that you vote your shares FOR ratification of this appointment. STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING Any proposals of stockholders intended to be presented at the 2001 annual meeting of stockholders must be received by us on or before December 3, 2000, and must otherwise comply with our bylaws. OTHER MATTERS We are not aware of any business to come before the meeting other than those matters described above in this proxy statement. However, if any other matter should properly come before the meeting, it is intended that holders of the proxies will act in accordance with their best judgment. We will bear the cost of solicitation of proxies. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of our common stock. In addition to solicitation by mail, directors, officers and regular employees of Heartland Financial USA, Inc. or our subsidiaries may solicit proxies personally or by telegraph or telephone without additional compensation. FAILURE TO INDICATE CHOICE If any stockholder fails to indicate a choice in items (1) and (2) on the proxy card, the shares of such stockholder shall be voted FOR in each instance. By order of the Board of Directors /s/ Lynn B. Fuller ----------------------------------- Lynn B. Fuller President and Chief Executive Officer Dubuque, Iowa April 5, 2000 ALL STOCKHOLDERS ARE URGED TO SIGN AND MAIL THEIR PROXIES PROMPTLY [LOGO] Heartland Financial USA, Inc. Proxy Card PROXY FOR COMMON SHARES SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS OF HEARTLAND FINANCIAL USA, INC. TO BE HELD ON MAY 17, 2000 The undersigned hereby appoints Lynn S. Fuller and James A. Schmid, or either one of them acting in the absence of the other, with power of substitution, attorneys and proxies, for and in the name and place of the undersigned, to vote the number of common shares that the undersigned would be entitled to vote if then personally present at the annual meeting of stockholders of Heartland Financial USA, Inc., to be held at the corporate headquarters located at 1398 Central Avenue, Dubuque, Iowa, on the 17th day of May, 2000, at 1:30 p.m., local time, or any adjournments or postponements thereof, upon the matters set forth in the Notice of Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged, as follows: 1. ELECTION OF DIRECTORS: [ ] FOR all [ ] WITHHOLD AUTHORITY nominees listed to vote for all nominees below (except as listed below marked to the contrary below) (INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.) Class I (Term Expires 2003): Lynn B. Fuller and Gregory R. Miller 2. APPROVE THE APPOINTMENT OF KPMG LLP as Heartland Financial USA, Inc.'s independent public accountants for the year ending December 31, 2000: [ ] FOR [ ] AGAINST [ ] ABSTAIN 3. In accordance with their discretion, upon all other matters that may properly come before said meeting and any adjournments or postponements thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED UNDER PROPOSAL 1 AND FOR PROPOSAL 2. Dated: , 2000 ------------------ Signature(s) ------------------ ------------------------------ NOTE: PLEASE DATE PROXY AND SIGN IT EXACTLY AS NAME OR NAMES APPEAR ABOVE. ALL JOINT OWNERS OF SHARES SHOULD SIGN. STATE FULL TITLE WHEN SIGNING AS EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC. PLEASE RETURN SIGNED PROXY IN THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----