SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ______)
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First Busey Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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FIRST BUSEY CORPORATION
201 W. MAIN, URBANA, IL 61801
217/365-4556
March 12, 2004
Dear Stockholder:
The Annual Meeting of Stockholders of First Busey Corporation will be
held on Tuesday, April 13, 2004, at the Virginia Theatre, 203 West Park,
Champaign, Illinois. The Annual Meeting will begin at 7:00 p.m. At this Annual
Meeting you will be asked:
1. To elect seven directors of the Company to serve
until the 2005 Annual Meeting or until their successors are duly
elected and qualified.
2. To approve the First Busey Corporation 2004 Stock
Option Plan.
3. To transact such other business as may properly come
before the Annual Meeting or any postponement or adjournment thereof.
Each of the proposals is more fully described in the accompanying Proxy
Statement which I urge you to read carefully. The Board of Directors has
unanimously approved and recommends a vote "FOR" each of the proposals.
It is important that your shares be represented at the Annual Meeting.
Whether or not you attend personally, I urge you to sign, date and return the
enclosed proxy at your earliest convenience.
Kindest regards,
Douglas C. Mills
Chairman of the Board
FIRST BUSEY CORPORATION
201 W. MAIN, URBANA, IL 61801
217/365-4556
NOTICE OF 2004 ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 13, 2004
To the Stockholders of
First Busey Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of First
Busey Corporation, a Nevada corporation, will be held at the Virginia Theatre,
203 West Park, Champaign, Illinois, on Tuesday, April 13, 2004, at 7:00 p.m. for
the following purposes:
1. To elect seven directors of the Company to serve
until the 2005 Annual Meeting or until their successors are duly
elected and qualified.
2. To approve the First Busey Corporation 2004 Stock
Option Plan.
3. To transact such other business as may properly come
before the Annual Meeting or any postponement or adjournment thereof.
Only stockholders of record at the close of business on February 27,
2004 shall be entitled to notice of, and to vote at, the Annual Meeting or any
postponement or adjournment thereof. Even if you plan to attend the Annual
Meeting in person, please sign, date and return your proxy in the enclosed
envelope.
By order of the Board of Directors,
Barbara J. Kuhl
President and Chief Operating Officer,
Corporate Secretary and Treasurer
Urbana, Illinois
March 12, 2004
FIRST BUSEY CORPORATION
201 W. MAIN, URBANA, IL 61801
217/365-4556
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of First Busey Corporation for use at the
Annual Meeting of Stockholders. The Board has fixed the close of business on
February 27, 2004, as the record date for determining the stockholders entitled
to notice of, and to vote at, the Annual Meeting. On the record date, the
Company had outstanding and entitled to vote 13,696,902 shares of Common Stock,
without par value.
The Company's Form 10-K Annual Report, which includes audited financial
statements for the year ended December 31, 2003, accompanies this Proxy
Statement. The approximate date on which the Proxy Statement and the
accompanying proxy are first being sent to stockholders is March 12, 2004.
VOTING
General. Shares of Common Stock represented by properly executed
proxies received by the Company will be voted at the Annual Meeting in
accordance with the instructions on the proxies. If there are no such
instructions, the shares will be voted "FOR" (i) the election of the nominees
for directors named in this Proxy Statement and (ii) the approval of the First
Busey Corporation 2004 Stock Option Plan. Properly executed proxies received by
the Company will also be voted at the Annual Meeting in accordance with the
Board's recommendations on any other matters which may come before the Annual
Meeting.
In order to be elected a director, a nominee must receive a plurality
of the votes cast at the meeting for the election of directors. Because the
seven nominees receiving the largest number of affirmative votes will be
elected, shares represented by proxies which are marked "withhold authority" or
"abstain" as to election of directors will have no effect on the outcome of the
election. Approval of the proposed 2004 Stock Option Plan requires the vote of a
majority of the outstanding shares of Common Stock. Accordingly, proxies which
are marked "abstain" as to this matter will be the same as a negative vote on
the matter.
Directors and Executive Officers. All of the directors and executive
officers of the Company have advised the Company that they will vote their
shares of Common Stock "FOR" the election of the nominees for directors named in
this Proxy Statement and "FOR" the approval of the 2004 Stock Option Plan. As of
February 27, 2004, these individuals beneficially owned an aggregate of
4,778,272 shares, or approximately 34.9% of the Common Stock outstanding.
REVOCABILITY OF PROXIES
Stockholders may revoke their proxy by a later proxy or by giving
notice of such revocation to the Company in writing or at the Annual Meeting
before such proxy is voted. Attendance at the Annual Meeting will not in and of
itself constitute the revocation of a proxy.
SOLICITATION
The Company will pay the cost of solicitation of proxies. In addition
to solicitation by mail, officers, directors and regular employees of the
Company may solicit proxies by telephone, telefax or in person without
additional compensation. Brokerage houses, bank nominees, fiduciaries and other
custodians will be requested to forward soliciting material to the beneficial
owners of shares held of record by them and will be reimbursed for their
reasonable expenses.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The seven nominees named below have been recommended for election as
directors for a term of one year or until their successors have been duly
elected and qualified.
It is intended that the proxies received in response to this
solicitation will be voted for the election of the seven persons so nominated,
unless otherwise specified. If, for any reason, any nominee shall become
unavailable for election or shall decline to serve, persons named in the proxy
may exercise discretionary authority to vote for a substitute proposed by the
Board. No circumstances are presently known which would render a nominee named
herein unavailable.
Set forth below is certain biographical information concerning each
nominee for director, including principal occupation and age as of February 27,
2004, the record date for the Annual Meeting. Unless otherwise noted, nominees
for director have been employed in their principal occupation with the same
organization for at least the last 5 years.
JOSEPH M. AMBROSE
Director since: 1993
Age: 46
Mr. Ambrose is an attorney with Ambrose Law Offices, Ltd. Previously, Mr.
Ambrose served as Executive Vice President of AFNI, Inc., Bloomington, Illinois
from January 1999 until June 2003. Mr. Ambrose is considered "independent" under
the rules of The Nasdaq Stock Market.
E. PHILLIPS KNOX
Director since: 1980
Age: 57
Mr. Knox is an attorney with the firm Tummelson Bryan & Knox, Urbana, Illinois.
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DAVID L. IKENBERRY
Age: 43
Mr. Ikenberry has been a Professor of Finance and Department Chair at the
University of Illinois-Urbana since June 2002. Previously, Mr. Ikenberry was an
Associate Professor at Rice University, Houston, Texas, from 1996-2002. Mr.
Ikenberry is considered "independent" under the rules of Nasdaq.
V. B. LEISTER, JR.
Director since: 1996
Age: 58
Mr. Leister has been Chairman of the Board of Carter's Furniture Inc., Urbana,
Illinois, since 2002. Previously, Mr. Leister served as Vice President &
Treasurer of Carter's Furniture. Mr. Leister is considered "independent" under
the rules of Nasdaq.
DOUGLAS C. MILLS
Director since: 1980
Age: 63
Mr. Mills has served as Chairman of the Board and Chief Executive Officer of
First Busey Corporation since its incorporation. He has been associated with
Busey Bank since 1971 when he assumed the position of Chairman of the Board.
JOSEPH E. O'BRIEN
Age: 74
Mr. O'Brien is Chairman of O'Brien Steel Service Co., Peoria, Illinois. Mr.
O'Brien is considered "independent" under the rules of Nasdaq.
ARTHUR R. WYATT
Director since: 1995
Age: 76
Mr. Wyatt is a retired Professor of Accounting at the University of
Illinois-Urbana. Mr. Wyatt is considered "independent" under the rules of
Nasdaq.
BOARD OF DIRECTORS
During 2003, the Board held 12 meetings. All directors attended at
least 75% of the meetings of the Board and the committees on which they served
during 2003. The Company's
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policy with respect to director attendance at annual meetings of stockholders is
that each director attend the same. It is each director nominee's intention, at
this time, to attend the 2004 Annual Meeting.
The Board of Directors of the Company has established the following
committees, among others, to assist in the discharge of its responsibilities.
EXECUTIVE MANAGEMENT COMPENSATION AND SUCCESSION COMMITTEE
The Executive Management Compensation and Succession Committee met
three times in 2003. Members of the Compensation Committee in 2003 were Messrs.
Wyatt (Chairman), Samuel Banks and Leister. Mr. Banks replaced Dr. Victor
Feldman on the Committee in June 2003, upon Dr. Feldman's resignation from the
Committee. The responsibilities of this Committee include the approval, and
recommendation to the Board, of the compensation of the Chief Executive Officer
of the Company and the compensation of all other executive officers of the
Company. The Committee also reviews and analyzes existing and potential
management succession issues. Subject to election of the director nominees named
in this Proxy Statement, the members of the Executive Management Compensation
and Succession Committee are Messrs. Ambrose (Chairman), Leister and Wyatt for
2004. All such members are "independent" under Nasdaq rules. The Executive
Management Compensation and Succession Committee Charter is attached as Annex A.
NOMINATING & CORPORATE GOVERNANCE COMMITTEE
The Nominating & Corporate Governance Committee of the Board of
Directors met six times in 2003. The Nominating & Corporate Governance Committee
members are Messrs. Wyatt (Chairman), Banks and Leister. The responsibilities of
the Nominating & Corporate Governance Committee include the nomination of
individuals as members of the Board of Directors, including the review of
existing directors' self-assessments to determine qualifications to stand for
re-election, and the implementation and maintenance of corporate governance
procedures. Subject to the election of the director nominees named in this Proxy
Statement, the members of the Nominating & Corporate Governance Committee are
Messrs. Wyatt (Chairman), O'Brien and Leister for 2004. All such members are
"independent" under Nasdaq rules. The Nominating & Corporate Governance
Committee Charter is attached to this Proxy Statement as Annex B.
The Nominating & Corporate Governance Committee reviews qualified
candidates for directors and focuses on those who present varied, complementary
backgrounds that emphasize both business experience and community standing. The
Committee also believes that directors should possess the highest personal and
professional ethics.
In 2003, the Nominating & Corporate Governance Committee met and
reviewed all relevant qualifications of potential director nominees, including,
at a minimum, the following:
- independence from management, as defined specifically by the
corporate governance rules of Nasdaq;
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- relevant business experience;
- knowledge of the central Illinois communities in which the
Company predominantly operates;
- potential conflicts of interest; and
- judgment, skill, integrity and reputation.
The Committee reviews the qualifications of each potential candidate
for director and identifies nominees by consensus.
For 2004, the Committee determined to decrease the size of the Board to
both streamline processes and to create a primarily independent Board. All but
two of the director nominees, Messrs. Mills and Knox, have been determined to be
"independent" by the Board, under Nasdaq rules.
The Committee evaluates all candidates in the same way, reviewing the
aforementioned factors, among others, regardless of the source of such
candidate, including stockholder recommendation. There is no separate policy
with regard to consideration of candidates recommended by stockholders. The
Committee did not receive any stockholder recommendations for director nominees
for 2004. No third party was retained, in any capacity, to provide assistance in
either identifying or evaluating potential director nominees for 2004.
The two director nominees who have been approved by the Committee who
are not standing for reelection, Messrs. Ikenberry and O'Brien, are each
independent from management.
AUDIT COMMITTEE
The Audit Committee met six times in 2003. Members of the Audit
Committee are Messrs. Leister (Chairman), Kenneth Hendren, and Wyatt. The Audit
Committee has at least one audit committee financial expert, Mr. Wyatt. Mr.
Wyatt is independent from management of the Company. Subject to the election of
the director nominees named in this Proxy Statement, the members of the Audit
Committee are Messrs. Leister (Chairman), Wyatt and Ikenberry for 2004. All such
members are "independent" under Nasdaq rules and under Rule 10A-3 of the
Securities Exchange Act of 1934, as required for audit committee membership.
The responsibilities and functions of the Audit Committee and its
activities during 2003 are described in detail under the heading "Report of the
Audit Committee" in this Proxy Statement.
The Audit Committee has adopted procedures for the treatment of
complaints or concerns regarding accounting, internal accounting controls or
auditing matters. In addition, it has adopted procedures for the review and
approval of all related party transactions. The Audit Committee has also
implemented pre-approval policies and procedures for all audit and non-audit
services. Generally, the Audit Committee requires pre-approval of any services
to be provided by the
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Company's auditors, McGladrey & Pullen, LLP and the Company's tax accountants,
RSM McGladrey, Inc., to the Company or any of its affiliates. The pre-approval
procedures include the designation of such pre-approval responsibility to one
individual on the Audit Committee, currently Mr. Leister. In 2003, the Audit
Committee pre-approved services to be rendered by McGladrey & Pullen, LLP in
connection with the Company's audit and the audits of the Company's Employees'
Stock Ownership Plan and Profit Sharing Plan & Trust.
Fees paid to McGladrey & Pullen, LLP and RSM McGladrey, Inc., the
Company's auditors, for services rendered in 2003 and 2002 are as follows:
% OF % OF
FEES 2003 TOTAL FEES 2002 TOTAL FEES
-----------------------------------------------------------------
Audit $ 126,875 69.2% $ 102,220 62.9%
-----------------------------------------------------------------
Audit-related 34,850 19.0% 36,100 22.2%
-----------------------------------------------------------------
Tax 20,929 11.4% 23,343 14.4%
-----------------------------------------------------------------
All other 805 * 844 *
-----------------------------------------------------------------
TOTAL $ 183,459 $ 162,487
-----------------------------------------------------------------
*less than 1%
Services rendered in 2003 in connection with "audit-related" fees were
fees principally for professional services rendered for the audit of related
entities and agreed upon procedures for the trust department. Services rendered
in 2003 in connection with "tax" fees were compliance fees for the preparation
of original and amended tax returns, claims for refunds and tax payment-planning
services for tax compliance, tax planning and tax advice. Tax fees also include
fees relating to other tax advices, tax consulting and planning other than for
tax compliance preparation. "All other" services consisted primarily of
regulatory compliance advice. All services provided by McGladrey & Pullen, LLP
and RSM McGladrey, Inc. were pre-approved by the audit committee. The Company
did not retain McGladrey for the rendering of any financial information
design-related services in 2003.
The Company has not yet selected an independent auditor for the fiscal
year ending December 31, 2004. The Audit Committee is currently engaged in the
process of evaluating qualified independent auditor candidates and determining
which candidate will be retained by the Company. McGladrey & Pullen, LLP served
as the Company's independent auditors for the fiscal year ended December 31,
2003. A representative of McGladrey & Pullen, LLP will be present at the Annual
Meeting and will have the opportunity to make a statement if he or she desires
to do so and will be available to respond to appropriate questions.
In addition to the committees of the Board of Directors described
above, the Company's independent directors met one time in executive session in
2003 and will meet a minimum of two times in executive session in 2004. Mr.
Wyatt, Chairman of the Nominating & Corporate Governance Committee, will preside
at these executive sessions.
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Any stockholder who wishes to contact the Board directly may do so by
contacting either Mr. Mills or Mr. Leister, (1) in writing, in care of First
Busey Corporation, 201 W. Main, Urbana, IL 61801 or (2) electronically, through
the hyperlink available at the Company's website at www.busey.com. All such
communications will be forwarded to the entire Board, or only the independent
directors, in accordance with instructions provided in such communications.
During 2003, non-employee directors of the Company received a cash
retainer of $10,000. Directors who are also employees of the Company or any of
its subsidiaries do not receive additional compensation for serving on the
Board.
Report of the Audit Committee
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee of the Board assists the Board in fulfilling its
responsibility for the oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. During the year, the
Committee met six times and also reviewed and discussed the interim financial
information contained in each quarterly earnings announcement with management
and the independent auditors prior to public release. The Amended and Restated
Audit Committee Charter is attached to this Proxy Statement as Annex C.
In discharging its oversight responsibility as to the audit process,
the Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and the Company that might
bear on auditors' independence consistent with Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," discussed with
the auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the auditors' independence. The
Committee also discussed with management, the internal auditors and the
independent auditors the quality and adequacy of the Company's internal controls
and internal audit function's organization, responsibilities, budget and
staffing. The Committee reviewed with both the independent and internal auditors
their audit plans, scope, and identification of audit risk areas.
The Committee discussed and reviewed with the independent auditors all
communications required by auditing standards, generally accepted in the United
States of America including those described in Statement on Auditing Standards
No. 61, as amended, "Communication with Audit Committees," and discussed and
reviewed the results of the independent auditors' examination of the
consolidated financial statements. The Committee also discussed the results of
the internal audit examinations.
The Committee reviewed the consolidated audited financial statements of
the Company as of and for the year ended December 31, 2003, with management and
the independent auditors. Management has the responsibility for the preparation
of the Company's consolidated financial statements and the independent auditors
have the responsibility for the audit of those statements.
Based upon the above-mentioned review and discussions with management
and the independent auditors, the Committee recommended to the Board that the
Company's audited
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consolidated financial statements be included in its Annual Report on Form 10-K
for the year ended December 31, 2003, for filing with the Securities and
Exchange Commission.
AUDIT COMMITTEE
V. B. Leister (Chairman)
Kenneth M. Hendren
Arthur R. Wyatt
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of February 27, 2004 by all
directors and director nominees, by each person who is known by the Company to
be the beneficial owner of more than 5% of the outstanding Common Stock, by each
executive officer named in the Summary Compensation Table and by all directors
and executive officers as a group.
The number of shares beneficially owned by each director, director
nominee, 5% stockholder or executive officer is determined under rules of the
Commission, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership includes
any shares as to which the individual has sole or shared voting power or
investment power and also any shares which the individual has the right to
acquire within 60 days of February 27, 2004 through the exercise of any option
or other right. Unless otherwise indicated, each person has sole investment and
voting power (or shares such powers with his or her spouse) with respect to the
shares set forth in the following table. In certain instances, the number of
shares listed includes, in addition to shares owned directly, shares held by the
spouse or children of the person, or by a trust of which the person is a trustee
or in which the person may have a beneficial interest. In some cases, the person
has disclaimed beneficial interest in certain of these shares.
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NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK BENEFICIALLY OWNED
------------------------------------ -------------------------------
NUMBER OF PERCENT OF
SHARES OUTSTANDING
OWNED(1) SHARES
------ ------
Douglas C. Mills (2) ............................ 2,640,143 19.2
201 East Main Street
Urbana, Illinois 61801
Linda M. Mills(3)................................ 737,009 5.4
2123 Seaton Court
Champaign, Illinois 61821
A. Barclay Klingel, Jr.(4)....................... 715,156 5.2
Joseph M. Ambrose................................ 38,963 *
Samuel P. Banks.................................. 14,408 *
T. O. Dawson..................................... 98,726 *
Victor F. Feldman................................ 72,544 *
Barbara J. Harrington............................ 19,194 *
Kenneth M. Hendren............................... 153,238 1.2
David Ikenberry.................................. 1,000 *
E. Phillips Knox................................. 205,260 1.5
Barbara J. Kuhl(5)............................... 99,615 *
P. David Kuhl(6)................................. 128,707 *
V. B. Leister, Jr................................ 30,497 *
Joseph E. O'Brien................................ 1,000 *
Edwin A. Scharlau II............................. 409,388 3.0
David C. Thies................................... 3,950 *
Arthur R. Wyatt.................................. 69,758 *
All directors and executive officers as
a group (16 persons)............................. 4,904,572 35.5
-----------
* Less than one percent.
(1) Includes shares that can be acquired through stock options available
for exercise within 60 days of February 27, 2004, for the following
individuals, in the amount indicated:
Douglas C. Mills 30,000
Linda M. Mills 6,000
Joseph M. Ambrose 6,000
Samuel P. Banks 6,000
T. O. Dawson 6,000
Kenneth M. Hendren 6,000
E. Phillips Knox 6,000
Barbara J. Kuhl 11,900
P. David Kuhl 19,700
V. B. Leister, Jr. 6,000
Edwin A. Scharlau II 19,700
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Arthur R. Wyatt 3,000
All directors and executive
officers as a group 126,300
(2) Includes 552,000 shares held by the Martin A. Klingel Estate for which
Mr. Mills shares voting and dispositive powers with A. Barclay Klingel,
Jr. Excludes 737,009 shares of common stock beneficially owned by Linda
M. Mills, Mr. Mills' spouse. Includes 22,242 shares of common stock
owned by Busey Mills Foundation and 1,000,000 shares of common stock
owned by Mills Investment LP.
(3) Excludes 2,617,901 shares of common stock beneficially owned by Douglas
C. Mills, Mrs. Mills' spouse. Includes 15,000 shares of common stock
owned by Mills Family Foundation and 30,000 shares of common stock
owned by Mills Family Trust and 22,242 share of common stock owned by
Busey Mills Foundation.
(4) Includes 552,000 shares held by the Martin A. Klingel Estate for which
Mr. Klingel shares voting and dispositive powers with Douglas C. Mills.
Also includes 108,000 shares held in the Klingel Insurance Trust, for
which Mr. Klingel acts as sole trustee.
(5) Excludes 128,707 shares of common stock beneficially owned by P. David
Kuhl, Mrs. Kuhl's spouse.
(6) Excludes 99,615 shares of common stock beneficially owned by Barbara J.
Kuhl, Mr. Kuhl's spouse.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Common Stock to file with
the Commission, initial reports of ownership and reports of changes in ownership
of common stock and other equity securities of the Company. The Company believes
that during the fiscal year ended December 31, 2003 its executive officers and
directors complied with all Section 16(a) filing requirements except for Ms.
Harrington and Messrs. Ambrose, Banks, Dawson, Hendren, Leister and Mills who
were each delinquent in reporting one acquisition transaction. In making these
statements, the Company has relied upon the written representations of its
directors and executive officers.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's
Chief Executive Officer and four other executive officers of the Company earning
at least $100,000 in 2003.
SUMMARY COMPENSATION TABLE
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY($) BONUS ($)(1) OPTIONS/SARS (#) COMPENSATION ($)(2)
---------------------------- ---- --------- ------------ ---------------- -------------------
Douglas C. Mills 2003 150,000 100,000 0 98,629
Chairman of the Board and 2002 100,000 140,000 30,000 83,281
Chief Executive Officer 2001 105,000 140,005 15,000 48,241
Edwin A. Scharlau II 2003 170,000 60,000 0 71,955
Chairman of the Board of 2002 140,000 80,000 20,000 63,712
Busey Investment Group 2001 140,000 76,008 7,500 11,648
P. David Kuhl 2003 170,000 60,000 0 72,087
Chairman of the Board and 2002 140,000 80,000 20,000 63,751
Chief Executive Officer of Busey Bank 2001 140,000 79,991 7,500 11,617
Barbara J. Kuhl 2003 120,000 67,500 0 68,076
President, Corporate Secretary, 2002 100,000 80,000 20,000 60,019
Treasurer and Chief Operating Officer 2001 100,000 79,991 7,500 10,993
Barbara J. Harrington 2003 95,000 9,500 0 7,474
Executive Vice President and 2002 75,000 20,000 10,000 6,266
Chief Financial Officer 2001 75,000 19,998 0 7,349
--------------------
(1) Mr. Mills, Mr. Scharlau, Mr. Kuhl, Mrs. Kuhl and Mrs. Harrington
received 694, 377, 396, 396 and 99 shares of Common Stock,
respectively, under the 2001 Management and Associate Dividend Program.
The shares were valued at the closing price on November 20, 2001, the
date the award was approved by the Board. The stock values included for
Mr. Mills, Mr. Scharlau, Mr. Kuhl and Ms. Kuhl were $14,005, $7,608,
$7,991, $7,991 and $1,998 respectively.
(2) The amounts disclosed in this column for 2003 include:
Company contributions of $9,212, $11,054, $11,228, $8,393 and $6,357
under the First Busey Corporation Profit Sharing Plan & Trust, a
defined contribution plan, on behalf of Mr. Mills, Mr. Scharlau, Mr.
Kuhl, Mrs. Kuhl, and Mrs. Harrington, respectively.
Discretionary company contributions of $1,616, $1,939, $1,970, $1,472
and $1,117, under the First Busey Corporation Employee Stock Ownership
Plan, a defined contribution plan, on behalf of Mr. Mills, Mr.
Scharlau, Mr. Kuhl, Mrs. Kuhl, and Mrs. Harrington, respectively.
Company match of $50,000 on behalf of Mr. Mills, Mr. Scharlau, Mr. Kuhl
and Mrs. Kuhl under the First Busey Corporation Deferred Compensation
Plan for Executives. Interest was also paid by the Company at a rate of
7.715%. The interest paid to Mr. Mills was $15,535 and the interest
paid to Mr. Scharlau, Mr. Kuhl and Mrs. Kuhl was $8,211.
Compensation value of split-dollar life insurance policies on Mr. Mills
in the amount of $22,266. The Company will be reimbursed for those
premiums paid on the policies, without interest, from the proceeds of
the policies. Mr. Mills currently has two $10,000,000 split-dollar life
insurance policies. The first policy was acquired in 1992 and the
second policy was acquired in 2000. Split-dollar life insurance
policies were acquired on Mr. Scharlau and Mr. Kuhl in 1994. For 2003,
$751 and $678, respectively, represent the compensation value of these
policies to Mr. Scharlau and Mr. Kuhl.
- 11 -
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTIONS/SAR VALUES
The following table provides information on option exercises in fiscal
2003 by the named executive officers and the value of such officers' unexercised
options at December 31, 2003
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
DECEMBER 31, 2003(#) AT DECEMBER 31, 2003($)(1)
SHARES --------------------------- ---------------------------
ACQUIRED
ON VALUE
EXERCISE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Douglas C. Mills 20,642 268,987 30,000 30,000 204,938 154,830
Edwin A. Scharlau II 20,000 231,250 19,700 20,000 168,644 103,220
P. David Kuhl 20,000 231,250 19,700 20,000 168,644 103,220
Barbara J. Kuhl 4,000 58,480 11,900 20,000 113,538 103,220
Barbara J. Harrington 3,000 30,780 0 10,000 0 51,610
-----------------
(1) Based on the closing price of Common Stock of $27.00 quoted on Nasdaq
on December 31, 2003.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Executive Management Compensation and Succession Committee of the
Board of Directors administers the Company's executive compensation program.
After consideration of the Committee's recommendations, the full Board of
Directors reviews and approves all compensation, both monetary and stock-based
to all executive officers.
In the past, there have been three main components to the executive
officers' compensation package: salary, cash bonus and stock awards. It is the
intention of the Committee that compensation be set in such a manner as to be
competitive to attract, retain and motivate its management team. The Committee
also believes that stock ownership by its executive officers assists in aligning
the executive officers' interests with those of the Company's stockholders. In
January 2003, the Committee recommended and the Board of Directors approved the
Management and Associate Dividend Program, or the "MAD program." Under the MAD
program, the Board of Directors set four targeted levels for "diluted earnings
per share" for the Company for 2003. These levels were $1.43, $1.44, $1.45, and
$1.46. Based on the level of achievement of earnings per share, the officer or
associate would receive a dividend of a predetermined percentage of their
salary. If the minimum level was not reached, there would be no dividend paid
under the MAD program. If the top level was exceeded, the dividend would not be
increased. The goal of the MAD program is to heighten awareness of the Company's
earnings per share goal while emphasizing the impact of the team concept
throughout the organization. The term "dividend" was used to indicate that this
award was granted at the discretion of the Board of Directors and would be based
annually on the achievement of earnings per share, similar to the dividend paid
to the Company's stockholders. Under this program, the Board
- 12 -
hopes to further enhance the alignment of the staff's efforts with those of the
Company's stockholders.
Compensation of the Chief Executive Officer
Base Salary/MAD Program. Mr. Mills' 2003 base salary was set at
$150,000, representing a 50% increase from his base salary of $100,000 for 2002.
The Committee determined that under the MAD program, if the level of earnings
per share set by the Board was achieved, $1.43, $1.44, $1.45, or $1.46, Mr.
Mills' dividend would be $80,000, $90,000, $100,000, or $105,000, respectively.
Based on the Company's achievement of earnings per share of $1.45, Mr. Mills
received a cash dividend of $100,000. The Committee determined that the increase
in base compensation, along with the potential under the MAD program will bring
Mr. Mills' total compensation package more in line with peer chief executive
officers.
Stock Options. The granting of stock options by the Committee is
designed to retain and motivate the management team as well as align executive
officers' financial interests with stockholder value. The number of stock
options granted to an executive officer and other officers is determined by the
Committee and approved by the Board. Grants of stock options are intended to
recognize different levels of contribution to the achievement of the Company's
annual corporate goals as well as different levels of responsibility and
experience. All stock options are granted with an exercise price equal to the
fair market value of Common Stock on the date of grant. There were no stock
options granted in 2003.
COMPENSATION COMMITTEE
Arthur R. Wyatt (Chairman)
V. B. Leister
Samuel P. Banks
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Exchange Act
that might incorporate future filings, including this Proxy Statement, in whole
or in part, the preceding report and the Performance Table included below shall
not be incorporated by reference into any such filings.
COMPANY PERFORMANCE
The following table compares the Company's performance, as measured by
the change in price of Common Stock plus reinvested dividends, with the CRSP
Nasdaq Total Return Index- United States and the SNL-Midwestern Banks Index for
the five years ended December 31, 2003.
- 13 -
FIRST BUSEY CORPORATION
STOCK PRICE PERFORMANCE
[TOTAL RETURN PERFORMANCE GRAPH]
PERIOD ENDING
---------------------------------------------------------------
INDEX 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
----- -------- -------- -------- -------- -------- --------
First Busey Corporation 100.00 126.68 114.38 126.41 139.55 167.91
NASDAQ - Total US* 100.00 185.95 113.19 89.65 61.67 92.90
SNL Midwest Bank Index 100.00 78.57 95.15 97.24 93.80 120.07
The Banks in the Custom Peer Group -- SNL-Midwestern Banks Index --
represent all publicly traded banks, thrifts or financial service companies
located in Iowa, Illinois, Indiana, Kansas, Kentucky, Michigan, Minnesota,
Missouri, North Dakota, Nebraska, Ohio, South Dakota and Wisconsin.
- 14 -
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Ambrose, a director of the Company, is an attorney with Ambrose Law
Offices, Ltd., and provided legal services to the Company during fiscal 2003.
The dollar amount of the fees paid to Ambrose Law Offices, Ltd. for such
services during the 2003 fiscal year was $42,330.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Knox, a director of the Company, is an attorney with Tummelson
Bryan & Knox, Urbana, Illinois, and provided legal and certain consulting
services to the Company during fiscal 2003. The dollar amount of the fees paid
to Tummelson Bryan & Knox for such services during the 2003 fiscal year was
$172,896.
The Company's banking subsidiaries have, and may be expected to have in
the future, banking transactions in the ordinary course of business with
directors, director nominees, executive officers and holders of 5% or more of
the Company's Common Stock, their immediate families and their affiliated
companies. These transactions have been and will be on the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated persons. These transactions have not involved and
will not involve more than the normal risk of collectibility or any other
unfavorable features. At December 3l, 2003, these persons and companies were
indebted to the Company's banking subsidiaries for loans totaling approximately
$4.736 million representing 3.78% of total stockholders' equity. In addition to
these loans, the Company's banking subsidiaries make loans to officers of the
Company's subsidiaries who are not executive officers of First Busey.
PROPOSAL NO. 2
APPROVAL OF THE FIRST BUSEY CORPORATION 2004 STOCK OPTION PLAN
GENERAL
The Company previously awarded options under its 1999 Stock Option
Plan. Options covering 414,700 shares of Common Stock have been issued pursuant
to the 1999 Plan. As of February 27, 2004, 85,300 shares were reserved for
issuance pursuant to the 1999 Plan. The Board of Directors believes that,
because of the Company's continued anticipated growth, it will be necessary to
hire additional management personnel. In view of these personnel needs, and in
light of the present level of remuneration paid to management and the present
level of management's equity in the Company, the Board of Directors is of the
opinion that it is appropriate that stock options continue to be a major
component of the Company's management remuneration package. Accordingly, on
February 17, 2004, the Board of Directors, subject to
- 15 -
stockholder approval, adopted the First Busey Corporation 2004 Stock Option
Plan. The complete text of the 2004 Plan is attached hereto as Annex D.
TERMS OF THE PLAN
Under the 2004 Plan, options to purchase 1,000,000 shares of Common
Stock may be issued. Options available under the 1999 Stock Option Plan will be
issued prior to any issuance under the 2004 Stock Option Plan, if approved. The
2004 Plan is administered by the Executive Management Compensation and
Succession Committee, a committee consisting of at least three non-employee
directors within the meaning of Rule 16b-3 under the Exchange Act selected by
the Board of Directors. Within the applicable limits of the 2004 Plan, such
committee shall have full authority to select from among eligible individuals
those to whom options shall be granted under the 2004 Plan, the number of shares
subject to each option and the price, terms and conditions of any options to be
granted thereunder. The Board of Directors shall have full authority to amend
the 2004 Plan. No amendment to the 2004 Plan shall, without the consent of the
holder of an existing option, materially and adversely affect their rights under
such option.
Employees and directors of the Company and employees and directors of
its subsidiaries are eligible to receive options under the 2004 Plan. The
exercise price of any option must be equal to at least 100% of the fair market
value of the shares on the date of the grant.
No option may be exercisable for more than ten years from the date of
grant.
Under the 2004 Plan, only non-qualified stock options may be granted.
For federal income tax purposes, a holder of a non-qualified stock option will
generally realize taxable income upon the exercise of an option, and at that
time the Company will then be allowed a tax deduction equal to the excess of (a)
the aggregate market value, at the time of such exercise of shares acquired
pursuant to such exercise over (b) the aggregate option exercise price for such
shares.
Options may generally not be transferred except to the extent that
options may be exercised by an executor or administrator. Under the 2004 Plan,
options generally lapse if the optionee ceases to be an employee of the Company
or its subsidiaries. However, if the cessation of employment is due to
disability or death of the optionee, options may be exercised within 180 days of
the optionee's death or disability, provided, however, that no option may be
exercisable after its normal expiration date.
The 2004 Plan terminates on February 17, 2014. The 2004 Plan may be
altered, suspended or discontinued at any time by the Board of Directors,
provided that no such action may, without the consent of an optionee, materially
and adversely affect their rights under any outstanding options. If approval of
the stockholders is not obtained at the 2004 Annual Meeting, the 2004 Plan will
be terminated. Options are subject to adjustment to protect against dilution in
certain events, including the recapitalization or reorganization of the Company,
its merger into or consolidation with another corporation, stock splits and
stock dividends.
- 16 -
EQUITY COMPENSATION
The following table discloses the number of outstanding options,
warrants and rights granted by the Company to participants in equity
compensation plans, as well as the number of securities remaining available for
future issuance under these plans. All Company equity compensation plans have
been approved by stockholders. The table does not include shares available for
issuance under the proposed 2004 Stock Option Plan, as that plan is subject to
stockholder approval.
C. NUMBER OF
SECURITIES REMAINING
A. NUMBER OF AVAILABLE FOR FUTURE
SECURITIES TO BE ISSUED B. WEIGHTED-AVERAGE ISSUANCE UNDER EQUITY
UPON EXERCISE OF EXERCISE PRICE OF COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN A)
--------------------------------------------------------------------------------------------------
Equity compensation plans
approved by stockholders 401,900 $20.13 483,500
--------------------------------------------------------------------------------------------------
OTHER BUSINESS
So far as is presently known, there is no business to be transacted at
the Annual Meeting other than that referred to in the Notice of Annual Meeting
of Stockholders and it is not anticipated that other matters will be brought
before the Annual Meeting. If, however, other matters should properly be brought
before the Annual Meeting, it is intended that the proxy holders may vote or act
in accordance with the Company's Board of Directors' recommendation on such
matters.
STOCKHOLDER PROPOSALS
If a stockholder intends to present a proposal at the Company's 2005
Annual Meeting and desires that the proposal be included in the Company's Proxy
Statement and form of proxy for that meeting, the proposal must be in compliance
with Rule 14a-8 under the Exchange Act and received at the Company's principal
executive offices not later than November 20, 2004. As to any proposal that a
stockholder intends to present to stockholders without inclusion in the
Company's Proxy Statement for the Company's 2005 Annual Meeting of Stockholders,
the proxies named in management's proxy for that meeting will be entitled to
exercise their discretionary authority on that proposal unless the Company
receives notice of the matter to be
- 17 -
proposed not later than February 3, 2005. Even if proper notice is received on
or prior to February 3, 2005, the proxies named in management's proxy for that
meeting may nevertheless exercise their discretionary authority with respect to
such matter by advising stockholders of such proposal and how they intend to
exercise their discretion to vote on such matter, unless the stockholder making
the proposal solicits proxies with respect to the proposal to the extent
required by Rule 14a-4(c)(2) under the Exchange Act.
By order of the Board of Directors,
Barbara J. Kuhl
President and Chief Operating Officer,
Corporate Secretary and Treasurer
March 12, 2004
- 18 -
ANNEX A
FIRST BUSEY CORPORATION
EXECUTIVE MANAGEMENT COMPENSATION
AND SUCCESSION COMMITTEE CHARTER
PURPOSE
The Executive Management Compensation and Succession Committee shall
(1) discharge the Board's responsibilities relating to compensation of the
Company's directors and executive officers, (2) approve and evaluate all
compensation of directors and executive officers, including salaries, bonuses,
and compensation plans, policies and programs of the Company, (3) produce an
annual report on executive compensation for inclusion in the Company's proxy
statement in accordance with applicable rules and regulations and (4) consider
and propose to the Board management succession strategies.
EXECUTIVE MANAGEMENT COMPENSATION AND SUCCESSION COMMITTEE
COMPOSITION AND MEETINGS
The Committee shall consist of no fewer than three directors, the exact
number to be determined from time to time by resolution of the Board. Each
member of the Committee shall satisfy the independence requirements of the
listing standards of the exchange or quotation system upon which the Company's
common stock is listed and traded at any time, and applicable securities laws
and regulations. In addition, each member shall meet the definition of
"non-employee director" under Rule 16b-3 under the Securities Exchange Act of
1934, and "outside director" for purposes of Section 162(m) of the Internal
Revenue Code of 1986. The Board shall appoint the Chair and the other members of
the Committee annually, considering the recommendation of the Nominating &
Corporate Governance Committee. The members of the Committee shall serve until
their successors are appointed and qualify. The Board shall have the power at
any time to change the membership of the Committee and to fill vacancies in it,
subject to such new member, or members, satisfying the above requirements.
The Chair shall be responsible for leadership of the Committee,
including overseeing the agenda, presiding over the meetings and reporting to
the Board. If the Chair is not present at a meeting, the members of the
Committee may designate a Chair. The Committee shall meet at least twice each
year and hold such other meetings from time to time as may be called by its
Chair or any two members of the Committee. Meetings may also be held
telephonically or actions may be taken by unanimous written consent. A majority
of the members of the Committee shall constitute a quorum of the Committee. The
vote of a majority of the members of the full Committee shall be the act of the
Committee. Except as expressly provided in the Articles of Incorporation or the
Bylaws of the Company or as required by law, regulations or applicable listing
standards, the Committee shall fix its own rules of procedure. The Chair will
report the highlights of Committee meetings to the full Board at the Board's
next regular meeting.
The Committee shall have the sole authority to retain and terminate any
compensation consultant to be used to assist in the evaluation of director, CEO
or senior executive compensation and shall have sole authority to approve the
consultant's fees and other retention terms. The Committee shall also have
authority to obtain advice and assistance from internal or external legal,
accounting or other advisors.
EXECUTIVE MANAGEMENT COMPENSATION AND SUCCESSION COMMITTEE AUTHORITY,
DUTIES AND RESPONSIBILITIES
1. The Committee shall review and approve corporate goals and
objectives relevant to compensation of the CEO, evaluate the CEO's performance
in light of those goals and objectives, and set the CEO's respective
compensation level based on this evaluation.
2. In determining the long-term incentive component of
compensation for the CEO, the Committee should consider the Company's
performance and relative shareholder return, the value of similar incentive
awards to CEOs at comparable companies, and the awards given to the Company's
CEO in past years.
3. The Chair shall report the results of the annual performance
evaluation of the CEO at an executive session of non-management directors.
4. The Committee shall oversee the evaluation of the executive
officers of the Company and review and approve periodically a general
compensation program and salary structure for executive officers of the Company
that (i) supports the Company's overall business strategy and objectives; (ii)
attracts and retains key executives; (iii) links compensation with business
objectives and organizational performance; and (iv) provides competitive
compensation opportunities.
5. The Committee shall (i) make recommendations to the Board with
respect to base salary, incentive compensation and equity-based plans applicable
to executive officers; and (ii) adopt, administer, approve and ratify awards
under incentive compensation and equity-based plans applicable to executive
officers, including amendments to the awards made under any such plans, and
review and monitor awards under such plans.
6. The Committee shall assist the Board in developing and
evaluating potential candidates for executive positions, including the CEO, and
to oversee the development of executive succession plans.
7. The Committee shall review and approve any executive
employment agreements, severance agreements, and change in control agreements or
provisions and determine the Company's policy with respect to the application of
Internal Revenue Code Section 162(m).
8. The Committee shall annually review the Board's policy for
director compensation and benefits and recommend any proposed changes to the
Board for approval.
A-2
9. The Committee shall prepare an annual report for the Company's
proxy statement regarding executive compensation, as required by law and rules
of the applicable exchange.
10. The Committee shall, in the course of its review of executive
compensation, review the list of a peer group of companies to which the Company
shall compare itself for compensation purposes and make any changes in such
list.
11. The Committee shall report its actions and any recommendations
to the Board after each Committee meeting.
12. The Committee shall review and reassess the adequacy of this
Charter annually and recommend any proposed changes to the Board for approval.
A-3
ANNEX B
FIRST BUSEY CORPORATION
NOMINATING & CORPORATE GOVERNANCE COMMITTEE CHARTER
PURPOSE
The Nominating & Corporate Governance Committee shall (1) identify
individuals qualified to become Board members, and recommend that the Board
select the director nominees for the next annual meeting of shareholders; and
(2) develop and recommend to the Board Corporate Governance Guidelines
applicable to the Company.
NOMINATING & CORPORATE GOVERNANCE COMMITTEE COMPOSITION AND MEETINGS
The Nominating & Corporate Governance Committee shall consist of no
fewer than two directors. Each member of the Nominating & Corporate Governance
Committee shall satisfy the independence requirements of The Nasdaq National
Market. The Board shall appoint the Chair and the other members of the
Nominating & Corporate Governance Committee annually. The members of the
Nominating & Corporate Governance Committee shall serve until their successors
are appointed and qualify. The Board shall have the power at any time to change
the membership of the Nominating & Corporate Governance Committee and to fill
vacancies in it, subject to such new member(s) satisfying the independence
requirements established by the Nasdaq.
The Chair shall be responsible for leadership of the Nominating &
Corporate Governance Committee, including overseeing the agenda, presiding over
the meetings and reporting to the Board. If the Chair is not present at a
meeting, the members of the Nominating & Corporate Governance Committee may
designate a Chair. The Nominating & Corporate Governance Committee shall meet at
least once each year and hold such other meetings from time to time as may be
called by its Chair, the Chief Executive Officer ("CEO") or any two members of
the Committee. Meetings may also be held telephonically or actions may be taken
by unanimous written consent. A majority of the members of the Nominating &
Corporate Governance Committee shall constitute a quorum of the Committee. The
vote of a majority of the members of the full Nominating & Corporate Governance
Committee shall be the act of the Committee. Except as expressly provided in the
Charter or the By-laws of the Company or as required by law, regulations or
Nasdaq listing standards, the Nominating & Corporate Governance Committee shall
fix its own rules of procedure.
NOMINATING & CORPORATE GOVERNANCE COMMITTEE AUTHORITY, DUTIES AND
RESPONSIBILITIES
1. The Nominating & Corporate Governance Committee shall develop
qualification criteria for Board members, and search for, interview and screen
individuals qualified to become
Board members for recommendation to the Board and consider stockholders'
recommendations for director candidates, all in accordance with the Corporate
Governance Guidelines.
2. The Nominating & Corporate Governance Committee shall have the
sole authority to retain and terminate any search firm to be used to identify
director candidates and shall have sole authority to approve the search firm's
fees and other retention terms. The Nominating & Corporate Governance Committee
shall also have authority to obtain advice and assistance from internal or
external legal, accounting or other advisors.
3. The Nominating & Corporate Governance Committee shall
recommend to the Board the membership of the committees of the Board.
4. The Nominating & Corporate Governance Committee shall oversee
the evaluation of the performance of incumbent directors and determine whether
to recommend them for re-election to the Board.
5. The Nominating & Corporate Governance Committee shall oversee
the evaluation of the executive officers of the Company and make recommendations
to the Board as appropriate.
6. The Nominating & Corporate Governance Committee shall initiate
and oversee a periodic evaluation of (i) the quality, sufficiency and timeliness
of information furnished by management to the directors in connection with Board
and committee meetings and other activities of the directors, (ii) the
composition, organization (including its committee structure, membership and
leadership) and practices of the Board, (iii) tenure and other policies related
to the directors' service on the Board, and (iv) corporate governance matters
generally; and recommend action to the Board where appropriate.
7. The Nominating & Corporate Governance Committee shall monitor
the orientation and training needs of directors and recommend action to the
Board, individual directors and management where appropriate.
8. The Nominating & Corporate Governance Committee shall review
periodically with the Company's outside securities counsel, in light of changing
conditions, new legislation and other developments, the Company's Code of
Ethics, and make recommendations to the Board for such changes to or waivers of
the Code of Ethics as the Committee shall deem appropriate. The Nominating &
Corporate Governance Committee shall review whether the Company's Code of Ethics
has been communicated by the Company to all key employees of the Company with a
direction that all such key employees certify that they have read, understand
and are not aware of any violations of the Code of Ethics.
9. The Nominating & Corporate Governance Committee shall review
and reassess at least annually the adequacy of the Corporate Governance
Guidelines of the Company and recommend any proposed changes to the Board for
approval.
B-2
10. The Nominating & Corporate Governance Committee shall report
its actions and any recommendations to the Board after each Committee meeting.
11. The Nominating & Corporate Governance Committee shall review
and reassess the adequacy of this Charter annually and recommend any proposed
changes to the Board for approval.
12. The Nominating & Corporate Governance Committee shall annually
review its own performance.
13. The Nominating & Corporate Governance Committee shall have the
authority to delegate any of its responsibilities to subcommittees as the
Committee may deem appropriate in its sole discretion.
B-3
ANNEX C
FIRST BUSEY CORPORATION AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board and has sole
responsibility for (1) monitoring the integrity of the financial statements of
the Company; (2) oversight of the Company's internal and external auditors; (3)
resolution of disagreements between management and the auditors regarding
financial reporting; and (4) the determination of the independence of the
external auditors.
The members of the Audit Committee shall meet the independence and
experience requirements of the Securities and Exchange Commission and the
national securities exchanges upon which the Company's common stock is listed
and trading, if any. The members of the Audit Committee shall be appointed by
the Board.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or external auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board for approval.
2. Review the annual audited financial statements with
management, including major issues regarding accounting and auditing
principles and practices as well as the adequacy of internal controls
that could significantly affect the Company's financial statements.
3. Review analyses prepared by management and the
external auditor of significant financial reporting issues and
judgments made in connection with the preparation of the Company's
financial statements.
4. Review with management and, the external auditor, the
Company's quarterly financial statements prior to the release of
quarterly earnings and subsequent filing of such release with the
Securities and Exchange Commission.
5. Meet periodically, as necessary, with management to
review the Company's major financial risk exposures and the steps
management has taken to monitor and control such exposures.
6. Review major changes to the Company's auditing and
accounting principles and practices as suggested by the external
auditor, internal auditor or management.
7. Direct the appointment of the external auditor, which
firm is ultimately accountable to the Audit Committee.
8. Review management's internal control report prior to
its inclusion in the Company's annual report, which addresses the
effectiveness of the Company's internal controls and procedures for
purposes of financial reporting.
9. Review pertinent documentation relating to
certificates of chief executive officer and chief financial officer of
the Company required under the Sarbanes-Oxley Act of 2002 and rules of
the Securities and Exchange Commission formulated thereunder, including
internal control disclosure.
10. Approve the fees to be paid to the external auditor.
11. Receive periodic reports from the external auditor
regarding the auditor's independence, discuss such reports with the
auditor, and take appropriate action to satisfy itself of the
independence of the auditor.
12. Evaluate the performance of the external auditor and,
if so determined, replace the external auditor.
13. Review the appointment and replacement of the senior
internal auditing executive.
14. Review the significant reports to management prepared
by the internal auditing department and management's responses.
15. Meet with the external auditor prior to the audit to
review the planning and staffing of the audit.
16. Obtain from the external auditor assurance that
Section 10A of the Private Securities Litigation Reform Act of 1995 has
not been implicated.
17. Obtain reports from management, the Company's senior
internal auditing executive and the external auditor that the Company's
subsidiary affiliated entities are in conformity with applicable legal
requirements and the Company's Code of Conduct.
18. Discuss with the independent auditor the matters
required to be discussed by Statement on Auditing Standards No. 61
relating to the conduct of the audit.
C-2
19. Review with the external auditor any problems or
difficulties the auditor may have encountered and any management letter
provided by the auditor and the Company's response to that letter. Such
review should include:
(a) Any difficulties encountered in the course
of the audit work, including any restrictions on the scope of
activities or access to required information.
(b) Any changes required in the planned scope of
the internal audit.
(c) The internal audit department
responsibilities, budget and staffing.
(d) Any disagreements between management and the
external auditors, which disagreements shall be resolved by
the Audit Committee.
20. Issue the report required by the rules of the
Securities and Exchange Commission to be included in the Company's
annual proxy statement.
21. Advise the Board with respect to the Company's
policies and procedures regarding compliance with applicable laws and
regulations and with the Company's Code of Conduct.
22. Review with the Company's General Counsel legal
matters that may have a material impact on the financial statements,
the Company's compliance policies and any material reports or inquiries
received from regulators or governmental agencies.
23. Meet periodically, as necessary, with the chief
financial officer, the senior internal auditing executive and the
independent auditor in separate executive sessions.
24. Pre-approve all audit and non-audit services to be
performed by the Company's external auditors. The responsibilities of
pre-approval may be designated to one member of the Audit Committee
who, after giving such pre-approval, must report to the full Audit
Committee.
25. Review any and all reports issued by the external
auditors, with respect to the Company's financial statements and
critical accounting policies.
26. Establish reviews and adopt procedures to receive and
handle anonymous complaints about accounting, internal accounting
controls, or auditor matters.
While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor.
C-3
ANNEX D
FIRST BUSEY CORPORATION
2004 STOCK OPTION PLAN
1. Purpose of The Plan.
First Busey Corporation 2004 Stock Option Plan (herein called the
"Plan") of First Busey Corporation (herein called the "Company") and its
Subsidiaries is designed and intended (a) to encourage ownership of the
Company's Stock by employees and directors of the Company and its Subsidiaries,
and to provide additional incentive for them to promote the success of the
business of the Company, and (b) to attract personnel to enter and remain in the
employment of the Company and its Subsidiaries. It is expected that the added
interest of the participating Employees and Directors under this Plan, and their
proprietary attitude toward the Company resulting from their investment in the
Company's Stock, will promote the future growth, development and continued
success of the Company.
2. Definitions.
The following terms shall have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:
(a) "Board of Directors" shall mean the Board of Directors of
First Busey Corporation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean the Compensation Committee of the Board
of Directors.
(d) "Company" shall mean First Busey Corporation.
(e) "Director" shall mean a member of the Board of Directors who
is not an Employee of the Company.
(f) "Employee" shall mean an individual who performs services for
the Company or one or more of its Subsidiaries. The term "Employee" shall also
mean an officer of the Company or one of its Subsidiaries.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934.
(h) "Option" shall mean an Option to purchase Stock granted
pursuant to the provisions of paragraph 6.
(i) "Optionee" shall mean an Employee or Director to whom an
Option has been granted pursuant to this Plan.
(j) "Stock" shall mean the Common Stock, without par value, of the
Company, or in the event that the outstanding shares of Stock are exchanged for
shares of a different stock or securities of the Company or some other
corporation, such other stock or securities.
(k) "Subsidiary" shall mean any subsidiary corporation of the
Company as defined in Section 424(f) of the Code.
(l) "Termination of Employment" shall mean the later of (i) a
severance of the employer-employee relationship with the Company or (ii) the
resignation, removal or termination of an officer or Director of the Company.
3. Stock Subject to the Plan.
One million (1,000,000) shares of Stock shall be reserved for issue
upon the exercise of Options granted under the Plan. In the event an Option is
exercised, the Company may use authorized but unissued shares or shares held in
treasury in lieu thereof. If any Option granted under the Plan shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject to such Option shall again be available for the purposes of the
Plan.
4. Administration of the Plan.
4.1. The Plan shall be administered by the Compensation Committee
of the Board of Directors consisting of not less than three (3) members. Each
member of such Committee shall be a non-employee director as defined in Rule
16b-3 of the Rules and Regulations of the Securities and Exchange Commission, as
amended from time to time.
4.2. The Committee shall be appointed by the Board of Directors of
the Company. The Board of Directors of the Company may, within the limits herein
provided, from time to time in its discretion, fix and change the number of
members of the Committee, remove members of the Committee, appoint members of
the Committee in substitution for or in addition to members previously
appointed, and fill vacancies however caused in the Committee.
4.3. The Board of Directors shall select one of the Committee
members as its chairman, and the Committee shall hold its meetings at such times
and places as it may determine. A majority of its members shall constitute a
quorum, but all action of the Committee shall be taken by a majority of its
members. Any action, decision or determination reduced to writing and signed by
all members shall be fully as effective as if it had been done or made by a vote
of a majority of the members at the meeting duly called and held. The Committee
may appoint a secretary, and shall keep minutes of its meetings and actions, and
shall make such rules and regulations for the conduct of the business of the
Committee as it deems advisable. The secretary may be, but need not be, an
Employee of the Company or a Subsidiary. Serving as secretary of the Committee
shall not disqualify an Employee from receiving an Option under the Plan.
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4.4. Subject to the express provisions of the Plan, the Committee
shall have plenary authority, in its sole discretion, to determine the
individuals to whom Options shall be granted, the number of shares subject to
each Option, the Option exercise price, the time or times at which Options shall
be granted, and the other terms and conditions of such Options. Subject to the
express provisions of the Plan, the Committee shall also have plenary authority,
in its discretion, to construe and interpret the Plan, to make determinations in
administration of the Plan, to make, amend and rescind rules and regulations
regarding the Plan and its administration, to determine the terms and provisions
of the respective Stock Option agreements (which need not be identical), and to
take whatever action is necessary to carry out the purposes of the Plan;
provided, however, the Committee shall take no action which will impair any
Option previously granted under the Plan or cause the Plan to not meet the
requirements of Rule 16b-3 of the Rules and Regulations of the Securities and
Exchange Commission. The Committee's actions and determinations on matters
referred to in this section shall be conclusive on all persons whomsoever. No
act or failure to act on the part of the Committee, or on the part of any member
thereof, shall result in any liability whatsoever if taken in good faith.
5. Type of Option Granted By The Plan.
The Committee shall have authority to grant Options which do not
qualify as incentive stock options as defined in Section 422 of the Code.
6. Eligibility to Receive Options Under The Plan.
6.1. Options may be granted under the Plan to any Employee or
Director of the Company or any of its Subsidiaries. An Option may be granted to
an individual upon the condition that such individual will become an Employee or
Director of the Company or any of its Subsidiaries; provided, however, that such
a conditional Option shall be deemed to be granted only on the date such
individual becomes an Employee or Director.
6.2. In making a determination as to persons to whom Options shall
be granted under the Plan, and the number of shares to be covered by such
Options, the Committee shall take into consideration the nature of the services
rendered or to be rendered by the Employee or Director, the Employee's or
Director's present and potential contributions to the success of the Company,
and such other factors as the Committee shall deem relevant in accomplishing the
purposes of the Plan. Any and all determinations made by the Committee pursuant
to this section shall be binding upon all persons whomsoever, and no Employee or
Director eligible to receive an Option under the Plan shall have any legal right
to complain as to any determination which shall be made by the Committee
hereunder with respect to such Employee or Director.
6.3. Nothing contained in the Plan shall be construed to limit the
right of the Company to grant Options otherwise than under the Plan in
connection with (a) the employment or directorship of any person, (b) the
acquisition of any corporation, firm or association, or the business or assets
thereof, including Options granted to employees thereof who become employees of
the Company or a Subsidiary, or (c) other proper corporate purposes.
D-3
7. Option Price.
7.1. The purchase price of the Stock subject to each Option granted
hereunder shall be equal to at least 100% of the fair market value of the Stock
at the time of the grant of the Option.
7.2. The Committee shall adopt criteria for the determination of
the fair market value of Stock subject to any Option granted pursuant to this
Plan; provided, however, if the Stock is quoted on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq National Market") or any
national securities exchange, the fair market value shall be the closing price
on the date of such grant.
8. Term of Options.
8.1. Except as provided in paragraph 6.1, the term of each Option
granted pursuant to the Plan shall not exceed ten (10) years from the date of
granting thereof. Within such ten-year limit, Options will be exercisable only
at such time or times, subject to the restrictions of paragraphs 10, 11 and 12,
and any other restrictions and conditions, as the Committee shall in each
instance approve, which need not be uniform for all individuals to whom Options
are granted.
8.2. Except as provided in paragraphs 11 and 12, no Option may be
exercised at any time unless the Optionee is then an Employee of the Company or
a Subsidiary or a Director of the Company or a Subsidiary and has been so
employed or has been a Director continuously since the granting of the Option.
9. Date of Grant of Option.
The grant of an Option under the Plan shall take place on or as of the
date the Committee grants an Employee or Director a particular Option; provided,
however, that if the resolution or other written determination of the Committee
specifies that an Option is to be granted as of and at some future date, the
date of grant shall be such future date.
10. Exercise of Option.
10.1. Except as provided in paragraphs 11 and 12, unless otherwise
provided in the terms under which the Committee granted the Option, each Option
shall be exercisable in whole (i.e. the rights for all shares subject to any one
Option must be exercised in full) only at any time and from time to time on a
date specified in the relevant Option Agreement and provided in paragraph 10.2,
which shall be a date no earlier than six months after the date of grant of such
Option.
10.2. To the extent that the right to purchase shares under an
Option granted under the Plan is exercisable, in order to exercise an option,
the Optionee must provide written notice to the Company in accordance with the
rules and procedures established by the Committee. Such notice to the Company
shall state the number and identity of Stock with respect to which the
D-4
Option is being exercised, and shall be accompanied by payment in full in cash
or in any other form and term as the Committee shall permit.
10.3. After the exercise of an Option, the Company shall within a
reasonable time deliver to the person exercising the Option a certificate or
certificates issued in the name of the person who exercised the Option for the
appropriate number of shares. Each Option granted under the Plan shall be
subject to the requirement that if at any time the Board of Directors of the
Company shall determine that the listing, registration or qualification of the
shares subject to such Option upon any securities exchange or under any state or
Federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable, as a condition of, or in connection with, the granting
of such Option or the issue or purchase of shares thereunder, no such Option may
be exercised unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors.
10.4. An Optionee under an Option granted under the Plan shall have
no rights as a shareholder with respect to any shares covered by an Option until
one or more certificates for shares shall have been delivered to the Optionee
upon due exercise of an Option as above provided.
10.5. An Option granted under the Plan shall be nontransferable by
the Optionee other than by will or the laws of descent and distribution, and
shall be exercised during the Optionee's lifetime only by the Optionee, unless
the Optionee is under legal disability, in which case it may be exercised by the
Optionee's duly appointed legal representative.
11. Termination of Employment.
11.1. Except in the case of disability or death, as provided in
paragraphs 11.2 and 12, if an Optionee of an Option granted under the Plan has a
Termination of Employment with the Company or a Subsidiary, then all Options
granted to such person under the Plan shall terminate and expire as of the date
the Optionee ceases to be an Employee or a Director, unless otherwise provided
by the Committee in its sole discretion.
11.2. If an Optionee becomes permanently and totally disabled, all
Options which are not presently exercisable shall become exercisable on the date
the Optionee has a Termination of Employment because of such disability. Any
unexercised Option held by such disabled Optionee shall expire not later than
180 days after the Optionee has a Termination of Employment because of such
disability; provided, however, no Option may be exercised after the expiration
date specified for the particular Option in the Option grant.
11.3. The transfer of an Employee from one corporation to another
among the Company and its Subsidiaries, or a leave of absence (as described in
Section 1.421-7(h)(2) of the Income Tax Regulations) with the written consent of
the Company or a Subsidiary shall not be deemed a Termination of Employment for
the purposes of the Plan, and an option agreement may provide that retirement at
a time when the Optionee is eligible for an immediate retirement benefit under
D-5
any retirement plan of the Company shall not be a Termination of Employment for
purposes of an Option.
12. Death of Optionee.
12.1. If an Optionee under the Plan dies while an Employee or
Director of the Company or a Subsidiary, all Options which are not presently
exercisable shall become exercisable on the date of the Optionee's death. The
shares which the Optionee was or becomes entitled to purchase on the date of the
Optionee's death under an Option or Options granted under the Plan may be
purchased at any time after the Optionee's death by the person or persons to
whom said rights under the Option or Options shall have passed by the Optionee's
will or by the applicable laws of descent and distribution; provided, however,
that any unexercised Option held by an Optionee who dies shall expire not later
than 180 days after the date of the Optionee's death, and that no Option may be
exercised after the expiration date specified for the particular Option in the
Option grant.
13. Effect of Merger, Change in Capitalization, Etc.
13.1. In the event of any reclassification or increase or decrease
in the number of the issued shares of Stock of the Company by reason of the
payment of a Stock dividend, a split or consolidation of shares, a
recapitalization, a combination or exchange of shares or any like capital
adjustment, then (a) the aggregate number and the class of shares reserved under
the Plan shall be as though the shares reserved had been outstanding prior to
any adjustment as aforesaid, and (b) as to any outstanding unexercised Options
theretofore granted under the Plan, there shall be a corresponding adjustment as
to the class and number of shares covered by each Option, and as to the purchase
price under each Option, to the end that the Optionee's proportionate interest
shall be maintained as before the occurrence of such event without change in the
total purchase price applicable to said Option.
13.2. In the event the Company shall approve a plan of
reorganization or of merger into or consolidation with any other corporation,
and appropriate provision is made for the resulting corporation's assumption of
the Plan under terms whereby the unexercised portion of each Option then
outstanding under the Plan shall thereafter apply to such number and kind of
securities as would have been issuable by reason of such reorganization, merger
or consolidation to a holder of the number of shares which were subject to the
Option immediately prior to such reorganization, merger or consolidation,
without change in the total purchase price applicable to said Option, then such
Options shall continue under the Plan.
13.3. In the event the Company shall approve a plan of
reorganization or of merger into or consolidation with any other corporation,
and appropriate provision is not made for the assumption of the Plan by the
resulting corporation as above provided in paragraph 13.2, or in the event the
Company shall approve a plan of dissolution, liquidation or sale of
substantially all of its assets, then in any event, the unexercised portion of
each Option then outstanding under the Plan shall terminate as of a date fixed
by the Committee and approved by the Board of Directors of the Company upon not
less than thirty days' written notice to each Optionee; provided, however, that
any such Option shall be accelerated and may be exercised before the termination
D-6
date fixed as aforesaid; provided further, however, that such termination date
shall be fixed as of a date on or before the effective date of such
reorganization, merger, consolidation, dissolution, liquidation or sale.
13.4. In the event the Company shall issue additional capital Stock
of any class for cash or other consideration, there shall be no adjustment in
the number of shares covered by outstanding Options under the Plan, and no
adjustment in the purchase price under such Options.
14. Termination and Amendment of The Plan.
14.1. This Plan shall terminate ten years from the date the Plan was
adopted by the Board of Directors, and no Option shall be granted hereunder
after said date, but such termination shall not affect any Option theretofore
granted. The Board of Directors of the Company may suspend, discontinue or
terminate the Plan at any time, and may from time to time make such changes in
and additions to the Plan as the Board of Directors shall deem advisable;
provided, however, that the Board of Directors may not, without approval by the
shareholders of the Company, change any provision which otherwise requires
shareholder approval in accordance with applicable rules and regulations.
14.2. Subject to other provisions of the Plan, no termination or
amendment of the Plan may, without the consent of the Optionee under an Option
then outstanding, terminate such Option or materially and adversely affect the
rights of the Optionee thereunder.
15. Shareholder Approval.
Notwithstanding any other provision of this Plan, no Option granted
under this Plan may be exercised until this Plan is approved by vote of a
majority of the total votes cast by the shareholders of the Company at the
Company's Annual Meeting to be held on April 13, 2004. In the event such
shareholder approval is not forthcoming at the Company's Annual Meeting to be
held on April 13, 2004, this Plan and any Options granted pursuant to it shall
be null and void.
16. Amendments to Code or Regulations.
Any reference in this Plan to a section of the Code or a section of the
Income Tax Regulations shall include any amendments thereto and shall include
such additional sections of the Code or Regulations into which the substance of
the cited subsections shall be incorporated.
D-7
PROXY--FIRST BUSEY CORPORATION
KNOW ALL MEN BY THESE PRESENTS, THAT I, the undersigned stockholder of First
Busey Corporation (the "Company") having received notice of the Annual Meeting
of Stockholders, do hereby nominate, constitute and appoint, Tom Brown and Tom
Berns, my true and lawful attorney and proxy, with full power of substitution,
for me and in my name, place and stead to vote all of the shares of Common Stock
without par value ("Common Stock") of the Company standing in my name on its
books on February 27, 2004 at the Annual Meeting of Stockholders of the Company,
to be held at the Virginia Theatre, 203 W. Park, Champaign, Illinois, on April
13, 2004 at 7:00 p.m., local time, and at any postponement or adjournment
thereof, with all powers the undersigned would possess if personally present, as
follows:
1. [ ] FOR all nominees listed below to serve as directors of the Company
until the next Annual Meeting of Stockholders (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Joseph M. Ambrose David L. Ikenberry E. Phillips Knox
V. B. Leister Douglas C. Mills Joseph E. O'Brien
Arthur R. Wyatt
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through that nominee's name.)
2. Approval of the First Busey Corporation 2004 Stock Option Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
To transact such other business as may properly come before the Annual
Meeting or any postponement or adjournment thereof.
This proxy will be voted as directed, or if no instructions are given, it will
be voted "FOR" election of all nominees as Directors of First Busey Corporation.
Also, this proxy will be voted at the Annual Meeting in accordance with the
Board of Directors' recommendations on any other matters which may come before
the Annual Meeting or any postponement or adjournment thereof.
This proxy is solicited on behalf of the Board of Directors and may be revoked
prior to its exercise.
Your vote is important. Any previously submitted proxies will not be used at the
Annual Meeting. Accordingly, even if you plan to attend the Annual Meeting,
please mark, sign and date this proxy and return it in the enclosed envelope.
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Please sign your name or names exactly as
they appear on the stock certificate. Each
joint tenant must sign. When signing as
attorney, administrator, guardian, executor
or trustee or as an officer of a corporation,
please give full title. If more than one
trustee, all should sign.