(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [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 under Rule 14a-12.
QCR Holdings, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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QCR Holdings, Inc.
3551-7th Street, Suite 204
Moline, IL 61265
Phone (309) 736-3580
Fax (309) 736-3149
March 26, 2004
Dear Fellow Stockholder:
On behalf of the board of directors and management of QCR Holdings, Inc., we
cordially invite you to attend the annual meeting of stockholders of QCR
Holdings, Inc. to be held at 10:00 a.m. on May 5, 2004, at The Lodge located at
900 Spruce Hills Drive, Bettendorf, Iowa. The accompanying notice of annual
meeting of stockholders and proxy statement discuss the business to be conducted
at the meeting. We have also enclosed copies of our 2003 Annual Report to
Stockholders for your review. At the meeting we will report on our operations
and the outlook for the year ahead.
The annual meeting will be held for the purposes of electing three persons to
serve as Class II directors. In addition to the election of Class II directors,
stockholders are being asked to approve an amendment to our certificate of
incorporation increasing the number of authorized shares of common stock.
Stockholders are also being asked to approve the 2004 Stock Incentive Plan. We
recommend that you vote your shares for the director nominees and in favor of
the amendment to the certificate of incorporation and the Stock Incentive Plan.
We encourage you to attend the meeting in person. Regardless of whether you plan
to attend the meeting, please COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD in the enclosed envelope or vote by telephone or internet by following the
preprinted instructions on the enclosed proxy card. This will assure that your
shares are represented at the meeting.
We look forward to seeing you and visiting with you at the meeting.
Very truly yours,
Michael A. Bauer Douglas M. Hultquist
Chairman of the Board President
1
QCR Holdings, Inc.
3551-7th Street, Suite 204
Moline, IL 61265
Phone (309) 736-3580
Fax (309) 736-3149
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 2004
To the stockholders of QCR HOLDINGS, INC.:
The annual meeting of stockholders of QCR Holdings, Inc., a Delaware
corporation, will be held at The Lodge, 900 Spruce Hills Drive, Bettendorf, Iowa
on Wednesday, May 5, 2004, at 10:00 a.m., local time, for the following
purposes:
1. to elect three Class II directors for a term of three years;
2. to amend the certificate of incorporation to increase the number of
authorized shares of common stock from 5,000,000 shares, par value $1.00,
to 10,000,000 shares, par value $1.00 per share;
3. to approve the QCR Holdings 2004 Stock Incentive Plan; and
4. to transact such other business as may properly be brought before the
meeting and any adjournments or postponements of the meeting.
The board of directors has fixed the close of business on March 17, 2004, as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the meeting. In the event there is an insufficient number of 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
the further solicitation of proxies.
By order of the Board of Directors
Todd A. Gipple
Secretary
Moline, Illinois
March 26, 2004
2
PROXY STATEMENT
QCR Holdings, Inc., a Delaware corporation, is the holding company for Quad City
Bank and Trust Company and Cedar Rapids Bank and Trust Company. Quad City Bank
and Trust Company is an Iowa banking association located in Bettendorf, Iowa,
with banking locations in Bettendorf and Davenport, Iowa and in Moline,
Illinois. Cedar Rapids Bank and Trust Company is also an Iowa banking
association located in Cedar Rapids, Iowa. Quad City Bancard, Inc. is our wholly
owned subsidiary, which functions as a credit card center that provides
cardholder and merchant credit card processing services. We also own all of the
common stock of three business trust subsidiaries that we created to issue trust
preferred securities. When we refer to our subsidiaries in this proxy statement,
we are collectively referring to Quad City Bank & Trust, Cedar Rapids Bank &
Trust, Quad City Bancard and the business trusts.
This proxy statement is furnished in connection with the solicitation by the
board of directors of QCR Holdings of proxies to be voted at the annual meeting
of stockholders to be held at The Lodge, 900 Spruce Hills Drive, Bettendorf,
Iowa, on May 5, 2004, at 10:00 a.m., local time, and at any adjournments or
postponements of the meeting. We have enclosed our 2003 annual report, which
includes consolidated financial statements of QCR Holdings and our subsidiaries.
This proxy statement and related materials are first being mailed to
stockholders of QCR Holdings on or about March 26, 2004.
The following is information regarding the meeting and the voting process, and
is presented in a question and answer format.
Why am I receiving this proxy statement and proxy card?
You are receiving a proxy statement and proxy card from us because on March 17,
2004, the record date for the annual meeting, you owned shares of QCR Holdings'
common stock. This proxy statement describes the matters that will be presented
for consideration by the stockholders at the annual meeting. It also gives you
information concerning those matters to assist you in making an informed
decision.
When you sign the enclosed proxy card, you appoint the proxy holder as your
representative at the meeting. The proxy holder will vote your shares as you
have instructed in the proxy card, thereby ensuring that your shares will be
voted whether or not you attend the meeting. Even if you plan to attend the
meeting, you should complete, sign and return your proxy card in advance of the
meeting just in case your plans change.
If you have signed and returned the proxy card and an issue comes up for a vote
at the meeting that is not identified on the card, the proxy holder will vote
your shares, pursuant to your proxy, in accordance with his or her judgment.
What matters will be voted on at the meeting?
You are being asked to vote on the election of three Class II directors for a
term expiring in 2007, to approve an amendment to the certificate of
incorporation to increase the number of authorized shares of common stock and to
approve the 2004 Stock Incentive Plan. These matters are more fully described in
this proxy statement.
If I am the record holder of my shares, how do I vote?
You may vote by mail, by telephone, by internet or in person at the meeting. To
vote by mail, complete and sign the enclosed proxy card and mail it in the
enclosed pre-addressed envelope. No postage is required if mailed in the United
States. If you mark your proxy card to indicate how you want your shares voted,
your shares will be voted as you instruct.
If you sign and return your proxy card but do not mark the card to provide
voting instructions, the shares represented by your proxy card will be voted
"for" all nominees named in this proxy statement, "for" approval of the
amendment to the certificate of incorporation increasing the number of
authorized shares of common stock and "for" approval of the 2004 Stock Incentive
Plan.
Although you may vote by mail, we ask that you vote instead by internet or
telephone, which saves us postage and processing costs. You may vote by
telephone by calling the toll-free number specified on your proxy card or by
accessing the internet website specified on your proxy card and by following the
preprinted instructions on the proxy card. Votes submitted by telephone or
internet must be received by midnight CST on Monday, May 3, 2004. The giving of
a proxy by either of these means will not affect your right to vote in person if
you decide to attend the meeting.
3
If you want to vote in person, please come to the meeting. We will distribute
written ballots to anyone who wants to vote at the meeting. Please note,
however, that if your shares are held in the name of your broker (or in what is
usually referred to as "street name"), you will need to arrange to obtain a
legal proxy from your broker in order to vote in person at the meeting. Even if
you plan to attend the meeting, you should complete, sign and return your proxy
card in advance of the meeting just in case your plans change.
If I hold shares in the name of a broker or fiduciary, who votes my shares?
If you received this proxy statement from your broker or by a trustee or other
fiduciary who may hold your shares, your broker or fiduciary should have given
you instructions for directing how your broker or fiduciary should vote your
shares. It will then be their responsibility to vote your shares for you in the
manner you direct.
Under the rules of various national and regional securities exchanges, brokers
may generally vote on routine matters, such as the election of directors and the
ratification of independent auditors, but cannot vote on non-routine matters,
such as an amendment to the certificate of incorporation or the adoption or
amendment of a stock option plan, unless they have received voting instructions
from the person for whom they are holding shares. If your broker does not
receive instructions from you on how to vote particular shares on matters on
which your broker does not have discretionary authority to vote, your broker
will return the proxy card to us, indicating that he or she does not have the
authority to vote on these matters. This is generally referred to as a "broker
non-vote" and will affect the outcome of the voting as described below, under
"How many votes are needed for approval of each proposal?" Therefore, we
encourage you to provide directions to your broker as to how you want your
shares voted on all matters to be brought before the meeting. You should do this
by carefully following the instructions concerning its procedures that your
broker gives you. This ensures that your shares will be voted at the meeting.
A number of banks and brokerage firms participate in a program that also permits
stockholders to direct their vote by telephone or internet. If your shares are
held in an account at such a bank or brokerage firm, you may vote your shares by
telephone or internet by following the instructions on their enclosed voting
form. Votes made by telephone or internet through such a program must be
received by 11:59 p.m. EST on May 4, 2004. Voting your shares in this manner
will not affect your right to vote in person if you decide to attend the
meeting, however, you must first request a legal proxy either on the internet or
the enclosed proxy card. Requesting a legal proxy prior to the deadline stated
above will automatically cancel any voting directions you have previously given
by internet or by telephone with respect to your shares.
The internet and telephone proxy procedures are designed to authenticate
stockholders' identities, to allow stockholders to give their proxy instructions
and to confirm that those instructions have been properly recorded. Stockholders
authorizing proxies or directing the voting of shares by internet should
understand that there may be costs associated with electronic access, such as
usage charges from internet access providers and telephone companies. These
costs, if any, will be borne by the stockholder.
What does it mean if I receive more than one proxy card?
It means that you have multiple holdings reflected in our stock transfer records
and/or in accounts with brokers. Please sign and return ALL proxy forms to
ensure that all your shares are voted. If you received more than one proxy card
but only one copy of the proxy statement and annual and transitional reports,
you may request additional copies from us at any time.
What if I change my mind after I return my proxy?
If you hold your shares in your own name, you may revoke your proxy and change
your vote at any time before the polls close at the meeting. You may do this by:
o signing another proxy with a later date and returning that proxy to us;
o timely submitting another proxy via the telephone or internet;
o sending notice to us that you are revoking your proxy; or
o voting in person at the meeting.
If you hold your shares in the name of your broker or through a fiduciary and
desire to revoke your proxy, you will need to contact that person or entity to
revoke your proxy.
4
How many votes do we need to hold the annual meeting?
A majority of the shares that are outstanding and entitled to vote as of the
record date must be present in person or by proxy at the meeting in order to
hold the meeting and conduct business.
Shares are counted as present at the meeting if the stockholder either:
o is present in person at the meeting; or
o has properly submitted a signed proxy card or other proxy.
On March 17, 2004, the record date, there were 2,813,415 shares of common stock
outstanding. Therefore, at least 1,406,708 shares need to be present in person
or by proxy at the annual meeting in order to hold the meeting and conduct
business.
What happens if a nominee is unable to stand for re-election?
The board may, by resolution, provide for a lesser number of directors or
designate a substitute nominee. In the latter case, shares represented by
proxies may be voted for a substitute nominee. Proxies cannot be voted for more
than the number of nominees presented for election at the meeting. The board has
no reason to believe any nominee will be unable to stand for re-election.
What options do I have in voting on each of the proposals?
You may vote "for" or "withhold authority to vote for" each nominee for
director. You may vote "for," "against" or "abstain" on any other proposal that
may properly be brought before the meeting. Abstentions will be considered in
determining the presence of a quorum but will not affect the vote required for
the election of directors.
How many votes may I cast?
Generally, you are entitled to cast one vote for each share of stock you owned
on the record date. The proxy card included with this proxy statement indicates
the number of shares owned by an account attributable to you.
How many votes are needed for each proposal?
The three individuals receiving the highest number of votes cast "for" their
election will be elected as Class II directors of QCR Holdings. Broker non-votes
and abstentions will not be counted in tabulating the vote on the election of
directors, but will count for purposes of determining whether or not a quorum is
present on the matter.
Holders of a majority of the outstanding shares of our common stock as of the
close of business on March 17, 2004, must approve the amendment of our
certificate of incorporation to increase the number of authorized shares of QCR
Holdings' common stock. All other proposals must receive the affirmative vote of
a majority of the shares present in person or by proxy at the meeting and
entitled to vote. Broker non-votes and abstentions will not be counted in
tabulating the vote on such proposals, but will count for purposes of
determining whether or not a quorum is present on the matter.
Where do I find the voting results of the meeting?
We will announce voting results at the meeting. The voting results will also be
disclosed in our Form 10-Q for the quarter ending June 30, 2004.
Who bears the cost of soliciting proxies?
We will bear the cost of soliciting proxies. In addition to solicitations by
mail, officers, directors or employees of QCR Holdings or of our subsidiaries
may solicit proxies in person or by telephone. These persons will not receive
any special or additional compensation for soliciting proxies. We may reimburse
brokerage houses and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses for forwarding proxy and solicitation
materials to stockholders.
5
ELECTION OF DIRECTORS
Our directors are divided into three classes having staggered terms of three
years. Stockholders will be entitled to elect three Class II directors for a
term expiring in 2007. The board has nominated Larry J. Helling, Douglas M.
Hultquist and Mark C. Kilmer to serve as Class II directors.
Other than as described above, we have no knowledge that any of the nominees
will refuse or be unable to serve, but if any of the nominees becomes
unavailable for election, the holders of the 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 each of the other persons whose terms of office will continue after the
meeting, including age, year first elected a director and business experience
during the previous five years. The nominees, if elected at the annual meeting
of stockholders, will serve as Class II directors for three-year terms expiring
in 2007. The board of directors recommends that stockholders vote FOR all of the
nominees for director.
NOMINEES
Name Director
(Age) Since Positions with QCR Holdings and subsidiaries
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CLASS II
(Term Expires 2007)
Larry J. Helling 2001 Director of QCR Holdings; President, Chief Executive Officer
(Age 47) and Director of Cedar Rapids Bank & Trust; Director of Quad
City Bank & Trust
Douglas M. Hultquist 1993 President, Chief Executive Officer and Director of QCR
(Age 48) Holdings; Chairman of the Board and Director of Quad City
Bank & Trust; Director of Cedar Rapids Bank & Trust;
Secretary, Treasurer and Director of Quad City Bancard
Mark C. Kilmer -- Director of Quad City Bank & Trust
(Age 45)
CONTINUING DIRECTORS
Name Director
(Age) Since Positions with QCR Holdings and subsidiaries
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CLASS III
(Term Expires 2005)
Patrick S. Baird 2002 Director of QCR Holdings and Cedar Rapids Bank & Trust
(Age 49)
John K. Lawson 2000 Director of QCR Holdings and Quad City Bank & Trust
(Age 63)
Ronald G. Peterson 1993 Director of QCR Holdings and Quad City Bank & Trust
(Age 60)
CLASS I
(Term Expires 2006)
Michael A. Bauer 1993 Chairman of the Board and Director of QCR Holdings; President,
(Age 55) Chief Executive Officer and Director of Quad City Bank & Trust;
Director of Cedar Rapids Bank & Trust; Chairman of the Board
and Director of Quad City Bancard
James J. Brownson 1997 Director of QCR Holdings; Secretary and Director of Quad City
(Age 58) Bank & Trust
Henry Royer 2002 Director of QCR Holdings; Chairman of the Board and Director of
(Age 72) Cedar Rapids Bank & Trust
All of our continuing directors and nominees will hold office for the terms
indicated, or until their earlier death, resignation, removal or
disqualification, and until their respective successors are duly elected and
qualified. All of our executive officers hold office for a term of one year.
There are no arrangements or understandings between any of the directors,
executive officers or any other person pursuant to which any of our directors or
executive officers have been selected for their respective positions. Mr. Royer
is also a director of Media Sciences International, Inc., a company registered
under the Securities Exchange Act, and a trustee of Berthel Growth and Income
Fund I, a business trust registered under the Investment Company Act of 1940.
The business experience of each of the nominees and continuing directors for the
past five years is as follows:
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Patrick S. Baird is President and Chief Executive Officer of AEGON USA, Inc., a
U.S. subsidiary of the international insurance company, AEGON nv. He is also an
officer and director of many of AEGON USA's life insurance subsidiaries. He
currently serves on the board of directors of the Kirkwood Community College
Foundation, Waypoint (formerly YMCA) and Priority One in Cedar Rapids. Mr. Baird
has been a director of Cedar Rapids Bank & Trust since September 2001.
Michael A. Bauer, prior to co-founding QCR Holdings, was employed from 1971 to
1992 by Davenport Bank and Trust Company located in Davenport, Iowa with assets
of approximately $1.8 billion, as of December 31, 1992. In January 1992 he was
named President and Chief Operating Officer, while from 1989 to 1992 he served
as Senior Vice President in charge of all lending. Mr. Bauer currently serves as
a director of St. Ambrose University, Genesis Medical Center, Kahl Home for the
Aged and Infirm, Davenport ONE and the Iowa Council, Boy Scouts of America. He
also currently serves on the Community Bank Council of the Chicago Federal
Reserve. Mr. Bauer is a member of Rotary Club of Davenport. He also serves as
Chairman of the Finance Council of the Diocese of Davenport and the Finance
Council of St. Paul The Apostle Church. Along with Mr. Hultquist, Mr. Bauer
received the 1998 Ernst & Young "Entrepreneur of the Year" award for the Iowa
and Nebraska region, and was inducted into the Quad Cities Area Junior
Achievement Business Hall of Fame in 2003.
James J. Brownson is the President of W.E. Brownson Co., a manufacturers'
representative agency located in Davenport, Iowa, and has been in that position
since 1978. Mr. Brownson began his career in 1967 as a staff auditor with Arthur
Young & Co., CPA's, of Chicago, Illinois. From 1969 until 1978, Mr. Brownson was
employed by Davenport Bank & Trust Company, where he left as Senior Vice
President and Cashier. He is a past member of the National Sales Representative
Council of Crane Plastics, Columbus, Ohio, and Dayton Rogers Manufacturing Co.,
Minneapolis, Minnesota. Mr. Brownson has been a director and Secretary of Quad
City Bank & Trust since October 1993.
Larry J. Helling was previously the Executive Vice President and Regional
Commercial Banking Manager of Firstar Bank in Cedar Rapids with a focus on the
Cedar Rapids metropolitan area and the Eastern Iowa region. Prior to his seven
years with Firstar, Mr. Helling spent twelve years with Omaha National Bank. He
is a graduate of Cedar Rapids' Leadership for Five Seasons program and currently
serves on the board of directors of the United Way of East Central Iowa, the
board of trustees of Big Brothers/Big Sisters, the board of directors of
Downtown Rotary, and the board of trustees of Junior Achievement. In addition,
he is actively involved in numerous school and church related activities and
committees.
Douglas M. Hultquist is a certified public accountant and previously served as a
tax partner with two major accounting firms. He began his career with KPMG Peat
Marwick in 1977 and was named a partner in 1987. In 1991, the Quad Cities office
of KPMG Peat Marwick merged with McGladrey & Pullen. Mr. Hultquist served as a
tax partner in the Illinois Quad Cities office of McGladrey & Pullen from 1991
until co-founding QCR Holdings in 1993. During his public accounting career, Mr.
Hultquist specialized in bank taxation and mergers and acquisitions. Mr.
Hultquist served on the board of directors of the PGA TOUR John Deere Classic
and was its Chairman for the July 2001 tournament. Mr. Hultquist serves on the
board of The Robert Young Center for Mental Health and is a member of the
Augustana College board of trustees and serves on its Planned Giving Council. He
also serves on the Board of the TPC at Deere Run and as Finance Chairman of the
William Butterworth Memorial Trust. Mr. Hultquist is a member of the Unified
Growth Strategy-Policy Committee of the Illinois Quad City Chamber of Commerce
and is a board member of the NewVentures Initiative. He is also a member of the
American Institute of CPAs and the Iowa Society of CPAs. Along with Mr. Bauer,
Mr. Hultquist received the 1998 Ernst & Young "Entrepreneur of the Year" award
for the Iowa and Nebraska region, and was inducted into the Quad Cities Area
Junior Achievement Business Hall of Fame in 2003.
Mark C. Kilmer is President of The Republic Companies, an 88-year old
family-owned group of businesses headquartered in Davenport, Iowa involved in
the wholesale equipment and supplies distribution of electrical, refrigeration,
heating and air-conditioning systems. Prior to joining Republic in 1984, Mr.
Kilmer worked in the Management Information Systems Department of Standard Oil
of California (Chevron) in San Francisco. Mr. Kilmer currently serves on the
boards of Genesis Medical Center and Genesis Health System. He is the immediate
two-term past Chairman of the PGA TOUR John Deere Classic and the past Chairman
of the Scott County YMCA's board of directors. Mr. Kilmer has also served on the
boards of The Genesis Heart Institute, St. Luke's Hospital, Rejuvenate
Davenport, The Vera French Foundation and Trinity Lutheran Church and was a
four-time Project Business consultant for Junior Achievement. Mr. Kilmer has
been a director of Quad City Bank & Trust since February 1996.
7
John K. Lawson began his career with Deere & Company in 1958 as an engineering
co-op trainee and retired in 2002. He received his mechanical engineering degree
in 1962, and by the mid 1960's, he was assigned to the Deere & Company European
Office in Heidelberg, Germany. His responsibilities included working with the
manufacturing engineering operations in eight European and African countries. He
returned to the United States in 1968, and held positions in several
manufacturing operations, including General Manager, Dubuque and Davenport. In
1985, Mr. Lawson was named Vice President, Manufacturing, Agricultural Equipment
Division. In 1992, he became President, Lawn and Grounds Care Division. In his
final position with Deere & Company as Senior Vice President, Technology and
Engineering for Deere & Company, Mr. Lawson was responsible for the company's
engineering, business computer systems, quality, supply management and
communications areas. He serves on the board of directors of the Iowa State
University Foundation and Junior Achievement of the Quad Cities Area. Mr. Lawson
also serves as an Advisory Board Member for Varied Investments, located in
Muscatine, Iowa. Mr. Lawson has been a director of Quad City Bank & Trust since
July 1997.
Ronald G. Peterson is the President and Chief Executive Officer of the First
State Bank of Western Illinois, located in La Harpe, Illinois, and has served in
that position since 1982. Mr. Peterson is also President of that bank's holding
company, Lamoine Bancorp, Inc. He currently serves as President of the LaHarpe
Educational Foundation, Treasurer of the Western Illinois University Foundation
and a member of the McDonough District Hospital Development Council. Mr.
Peterson has been a director of Quad City Bank & Trust since October 1993.
Henry Royer is a 30-year veteran of the banking industry who served as President
of Merchants National Bank in Cedar Rapids, IA from 1983 to 1994. He is
currently Executive Vice President of Berthel Fisher Planning, Inc., President
of Berthel SBIC, LLC and General Manager of Berthel Growth and Income Trust I.
Mr. Royer currently serves as the Chairman of the board of directors of the
Mid-America Housing Partnership. He is the past President of the Cedar Rapids
Chamber of Commerce and the past Chairman of Priority One. Mr. Royer has served
as a director or trustee for many Cedar Rapids companies and institutions
including the Cedar Rapids Art Museum, Coe College, Iowa Electric Light and
Power Company, Mercy Hospital and United Way. Mr. Royer has been the Chairman of
the board of directors of Cedar Rapids Bank & Trust since September 2001.
CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
General. Currently, there are nine members of the board of directors of QCR
Holdings. Generally, the board oversees our business and monitors the
performance of our management. In accordance with our corporate governance
procedures, the board does not involve itself in the day-to-day operations of
QCR Holdings, which is monitored by our executive officers and management. Our
directors fulfill their duties and responsibilities by attending regular
meetings of the full board, which are held on a quarterly basis. Additionally,
the Executive Committee, which is comprised of directors who are deemed to be
"independent" pursuant to the listing requirements of the Nasdaq Stock Market,
Inc., also meets quarterly and has the authority to carry out many of the
oversight functions of the full board. Our directors also discuss business and
other matters with Mr. Hultquist, our Chief Executive Officer, other key
executives and our principal external advisers (legal counsel, auditors and
other consultants).
Directors, Baird, Brownson, Lawson, Peterson and Royer, as well as nominee
Kilmer, are deemed to be "independent" as that term is defined by Nasdaq. The
board of directors has established an Audit Committee, an Executive Committee, a
Compensation and Benefits Committee and a Technology Committee. The current
charters of the Audit Committee and the Executive Committee are available on our
banking subsidiaries' websites at www.qcbt.com and www.crbt.com. Also posted on
the websites is general information regarding the company and our common stock,
many of our corporate polices and links to our filings with the Securities and
Exchange Commission.
A total of six regularly scheduled and special meetings were held by the board
of directors of QCR Holdings in 2003. During that time, all directors attended
at least 75 percent of the meetings of the board and the committees on which
they served during the period they served on the board. Although we do not have
a formal policy regarding director attendance at the annual meeting, we
encourage and expect all of our directors to attend. Last year, seven of the
nine directors were present at the annual meeting.
8
All directors of QCR Holdings received quarterly fees of $2,000 and received
fees of $100 for attendance at each meeting of the board of directors during
2003. In addition, non-employee directors received fees of $200 per committee
meeting attended. All directors of Quad City Bank & Trust received quarterly
fees of $1,500 and fees of $100 for attendance at each meeting of the board of
directors during 2003. In addition, non-employee directors received fees of $200
per committee meeting attended. All non-employee directors of Cedar Rapids Bank
& Trust received fees of $450 for attendance at each meeting of the board of
directors and $200 for attendance at each committee meeting during the 2003
year.
Audit Committee. The Audit Committee consists of directors Baird, Brownson,
Lawson and Royer. Each of the members is considered "independent" according to
the Nasdaq listing requirements and the regulations of the Securities and
Exchange Commission. The board of directors has determined that director Baird
qualifies as an "Audit Committee Financial Expert" under the regulations of the
Securities and Exchange Commission. The board based this decision on director
Baird's educational and professional experience.
The Audit Committee met five times in 2003.
The functions performed by the Audit Committee include, but are not limited to,
the following:
o selecting our independent auditors and pre-approving all engagements and
fee arrangements;
o reviewing the independence of the independent auditors;
o reviewing actions by management on recommendations of the independent
auditors and internal auditors;
o meeting with management, the internal auditors and the independent auditors
to review the effectiveness of our system of internal control and internal
audit procedures;
o reviewing our earnings releases and reports filed with the Securities and
Exchange Commission; and
o reviewing reports of bank regulatory agencies and monitoring management's
compliance with recommendations contained in those reports.
In 2003, the Audit Committee requested proposals from five accounting firms to
provide independent external audit services to QCR Holdings. After an extensive
review of the proposals, the Audit Committee selected McGladrey & Pullen, LLP to
provide these services.
To promote independence of the audit function, the Audit Committee consults
separately and jointly with the independent auditors, the internal auditors and
management. The Audit Committee has adopted a written charter, which sets forth
the committee's duties and responsibilities. Our current charter was attached to
our 2001 proxy statement, is available on our websites at www.qcbt.com and
www.crbt.com and a copy is also attached as Exhibit A to this proxy statement.
Executive Committee. The Executive Committee is comprised of Messrs. Baird,
Brownson, Lawson, Peterson and Royer, each of whom is considered "independent"
according to the Nasdaq listing requirements. The Executive Committee is charged
with overseeing our corporate governance programs, board policies, committee
structure and membership reviewing and recommending the nominees for election to
the board of directors, and reviewing and establishing the salaries and
compensation of our executive officers. In carrying out the nominating function,
the committee is charged with identifying and nominating individuals to be
presented to our stockholders for election or re-election to the board of
directors. The committee also reviews and monitors our policies, procedures and
structure as they relate to corporate governance. The committee's
responsibilities and functions are further described in its charter, which is
available on our websites at www.qcbt.com and www.crbt.com. The Executive
Committee met five times in 2003.
9
Director Nominations and Qualifications. In carrying out its nominating
function, the Executive Committee evaluates all potential nominees for election,
including incumbent directors, board nominees and those stockholder nominees
included in the proxy statement, in the same manner. Generally, the committee
believes that, at a minimum, directors should possess certain qualities,
including the highest personal and professional ethics and integrity, a
sufficient educational and professional background, demonstrated leadership
skills, sound judgment, a strong sense of service to the communities which we
serve and an ability to meet the standards and duties set forth in our code of
business conduct and ethics. The committee also evaluates potential nominees to
determine if they have any conflicts of interest that may interfere with their
ability to serve as effective board members, to determine if they meet QCR
Holdings' age eligibility requirements (a person who has reached age 72 before
the date of the annual meeting is not eligible for election to the board) and to
determine whether they are "independent" in accordance with Nasdaq requirements,
to ensure that at least a majority of the directors will, at all times, be
independent. The committee has not, in the past, retained any third party to
assist it in identifying candidates, but it has the authority to retain a third
party firm or professional for the purpose of identifying candidates.
By mutual agreement of John W. Schricker, a current director whose term is set
to expire this year, and the board, Mr. Schricker decided not to seek reelection
to the board of directors. Mr. Schricker retired as President of Quad City
Bancard, Inc. in November 2003. As a result, Mr. Hultquist, Chief Executive
Officer of QCR Holdings, Mr. Bauer, Chairman of the Board of QCR Holdings, and
the independent members of the board decided to look to the directors of QCR
Holdings' subsidiaries for potential candidates. Using the same criteria
discussed above, they recommended to the Executive Committee that Mark C. Kilmer
be nominated for director. The Executive Committee reviewed the nomination and
determined that Mr. Kilmer should be a nominee for director along with Messrs.
Hultquist and Helling, both incumbent directors. The board did not receive any
stockholder nominations for director for the 2004 annual meeting.
Stockholder Communication with the Board, Nomination and Proposal Procedures.
General Communications with the Board. Stockholders may contact QCR Holdings'
board of directors by contacting Todd A. Gipple, Corporate Secretary, at QCR
Holdings, Inc., 3551-7th Street, Suite 204, Moline, Illinois 61265 or (309)
743-7745. All comments will be forwarded directly to the Chairman of the board
of directors.
Nominations of Directors. In order for a stockholder nominee to be considered by
the Executive Committee to be its nominee and included in our proxy statement,
the nominating stockholder must file a written notice of the proposed director
nomination with our Corporate Secretary, at the above address, at least 120 days
prior to the anniversary of the date the previous year's proxy statement was
mailed to stockholders. Nominations must include the full name and address of
the proposed nominee and a brief description of the proposed nominee's business
experience for at least the previous five years. All submissions must be
accompanied by the written consent of the proposed nominee to be named as a
nominee and to serve as a director if elected. The committee may request
additional information in order to make a determination as to whether to
nominate the person for director.
In accordance with our bylaws, a stockholder may otherwise nominate a director
for election at an annual meeting of stockholders by delivering written notice
of the nomination to our Corporate Secretary, at the above address, not less
than 30 days nor more than 75 days prior to the date of the annual meeting,
provided, however, that if less than 40 days' notice of the meeting is given,
notice by the stockholder, to be timely, must be delivered no later than 10 days
from the date on which notice of the meeting was mailed. The stockholder's
notice of intention to nominate a director must include (i) the name and address
of record of the nominating stockholder; (ii) a representation that the
stockholder is a record holder entitled to vote at the meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (iii) the name, age, business and residence addresses,
and principal occupation or employment of each nominee; (iv) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (v) any other
information regarding each proposed nominee as would be required to comply with
the rules and regulations set forth by the Securities and Exchange Commission;
and (vi) the consent of each nominee to serve as a director of the corporation
if so elected. We may request additional information after receiving the
notification for the purpose of determining the proposed nominee's eligibility
to serve as a director. Persons nominated for election to the board pursuant to
this paragraph will not be included in our proxy statement.
10
Other Stockholder Proposals. To be considered for inclusion in our proxy
statement and form of proxy for our 2005 annual meeting of stockholders,
stockholder proposals must be received by our Corporate Secretary, at the above
address, no later than November 25, 2004, and must otherwise comply with the
notice and other provisions of our bylaws, as well as Securities and Exchange
Commission rules and regulations.
For proposals to be otherwise brought by a stockholder at an annual meeting, the
stockholder must file a written notice of the proposal to our Corporate
Secretary not less than 30 days nor more than 75 days prior to the date of the
annual meeting, provided, however, that if less than 40 days' notice of the
meeting is given, notice by the stockholder, to be timely, must be delivered no
later than 10 days from the date on which notice of the meeting was mailed. The
notice must set forth: (i) a brief description of the proposal and the reasons
for conducting such business at the meeting; (ii) the name and address of the
proposing stockholder; (iii) the number of shares of the corporation's common
stock beneficially owned by the stockholder on the date of the notice; and (iv)
any financial or other interest of the stockholder in the proposal. Stockholder
proposals brought under this paragraph will not be included in our proxy
statement.
Independent Director Sessions. Consistent with the Nasdaq listing requirements,
the independent directors regularly have the opportunity to meet without Messrs.
Bauer, Helling or Hultquist in attendance. In 2003, the board of directors
created the position of a lead independent director and appointed director
Brownson to serve in this position. The lead independent director assists the
board in assuring effective corporate governance and serves as chairperson of
the independent director sessions.
Compensation and Benefits Committee. The Compensation and Benefits Committee
consists of directors Bauer, Hultquist, Helling and Lawson, as well as Arthur L.
Christofferson, director of Cedar Rapids Bank & Trust and Joyce E. Bawden, John
H. Harris and Cathie S. Whiteside, directors of Quad City Bank & Trust. The
Compensation and Benefits Committee has authority to perform policy reviews and
to oversee and direct the compensation and personnel functions of the employees,
with the exception of our executive officers. The Compensation and Benefits
Committee met three times during 2003.
Technology Committee. The Technology Committee consists of directors Bauer,
Helling, Hultquist, Ann M. Lipsky, director of Cedar Rapids Bank & Trust, and
John H. Harris and Cathie S. Whiteside, directors of Quad City Bank & Trust. The
Technology Committee reviews the technology plans of QCR Holdings and our
subsidiaries for the future. The Technology Committee met four times during
2003.
Code of Business Conduct and Ethics. We have a code of business conduct and
ethics in place that applies to all of our directors and employees. The code
sets forth the standard of ethics that we expect all of our directors and
employees to follow, including our Chief Executive Officer and Chief Financial
Officer. The code is posted on our websites at www.qcbt.com and www.crbt.com. We
intend to satisfy the disclosure requirements under Item 10 of Form 8-K
regarding any amendment to or waiver of the code with respect to our Chief
Executive Officer and Chief Financial Officer, and persons performing similar
functions, by posting such information on our website.
PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION
REGARDING AUTHORIZED SHARES OF STOCK
General
Our board of directors has unanimously approved, and recommends to our
stockholders for their approval and adoption, an amendment to the certificate of
incorporation that would increase the number of our authorized shares of common
stock from 5,000,000 shares to 10,000,000 shares.
As of March 17, 2004, we had 2,873,561 and 2,813,415 shares of common stock
issued and outstanding, respectively, and no preferred stock issued and
outstanding. Our board of directors believes that this proposed amendment is in
the best interests of QCR Holdings and our stockholders. Holders of a majority
of the outstanding shares of our common stock as of the close of business on
March 17, 2004, must approve the amendment of our certificate of incorporation
to increase the number of authorized shares of QCR Holdings' common stock.
Unless instructed to the contrary, all shares represented by proxy cards signed
and returned to us will be voted in favor of the adoption of this amendment.
Proposed Amendment to Certificate of Incorporation
If this amendment is approved by our stockholders, the first sentence of Article
IV of the certificate of incorporation will be amended to read as follows:
"The total number of shares of capital stock which the corporation shall
have authority to issue is 10,000,000 shares of Common Stock, par value
$1.00 per share, and 250,000 shares of Preferred Stock, par value $1.00 per
share."
11
Reasons for the Proposed Amendment
This proposed amendment authorizes additional shares of common stock. If the
proposed amendment is approved, our board of directors will be able to use the
additional shares of common stock for a variety of purposes.
First, the additional shares of stock would provide us with shares of stock that
could be used to make acquisitions that may be advisable from time to time.
These transactions could include the acquisition of additional branch locations,
subsidiaries or bank or thrift holding companies. Although no such transactions
are planned for the immediate future, we believe that it is in our best interest
to have available a sufficient number of authorized shares of common stock if
such transactions become advisable.
Second, the additional shares of stock authorized by the amendment could be used
to raise additional working capital for QCR Holdings or any of our subsidiaries.
It is possible that our board of directors may in the future decide to conduct a
private or public offering of stock to raise additional capital for contribution
to our subsidiaries and for general corporate purposes. Although our board of
directors does not currently have any specific plans in this regard, these
shares would be available for that purpose.
Third, additional authorized shares of common stock could be used to fund the
grant of stock options to our officers, employees and directors. Equity based
compensation can be used to provide additional incentive to personnel without
causing an immediate adverse effect on our profitability. Moreover, the grant of
stock options can perhaps be used to retain valuable employees who might
otherwise be lured away by the promise of higher cash salaries from competitors.
Fourth, additional authorized shares of common stock could be used for a variety
of other purposes, including the declaration of a stock split or stock dividend.
It is possible that our board of directors may in the future decide to declare a
stock split or stock dividend.
The increase in the authorized number of shares of stock would allow for the
possibility of substantial dilution of the voting power of our current
stockholders, although no dilution will occur as a direct result of the increase
in the number of our authorized shares. The degree of any dilution that would
occur following the issuance of any additional shares of stock would depend upon
the number of shares of stock that are actually issued in the future, which
cannot be determined at this time. Issuance of a large number of additional
voting shares could significantly dilute the voting power of our existing
stockholders.
The existence of a substantial number of authorized and unissued shares of stock
could also impede an attempt to acquire control because our board of directors
would have the ability to issue additional shares of stock in response to any
such attempt. We are not aware at this time of any attempt to acquire control of
QCR Holdings, and no decision has been made as to whether any or all newly
authorized but unissued shares of stock would be issued in response to any
attempt of that kind.
Stockholder Vote Necessary For Approval of the Amendment
To be approved by our stockholders, this amendment must receive the affirmative
vote of the majority of the outstanding shares of our common stock. Our board of
directors believes that the adoption of this amendment is in the best interests
of our stockholders and unanimously recommends that you vote your shares FOR
this amendment.
APPROVAL OF STOCK INCENTIVE PLAN
On January 23, 2004, our board of directors unanimously adopted resolutions
approving the QCR Holdings 2004 Stock Incentive Plan, subject to stockholder
approval, to promote equity ownership of QCR Holdings by our directors,
officers, employees, consultants and advisors to sustain a sense of
proprietorship and personal involvement in the continued development and
financial success of QCR Holdings and its affiliates, and to encourage them to
remain with and devote their best efforts to our business and the business of
our affiliates, thereby advancing the interests of QCR Holdings and its
stockholders. A summary of the Stock Incentive Plan is set forth below. This
summary is qualified in its entirety by reference to the Stock Incentive Plan, a
copy is attached as Exhibit B to this proxy statement.
Administration
The Stock Incentive Plan is to be administered by the Executive Committee, each
member of which is a non-employee director. Among other things, the committee
will have the authority to select individuals to whom awards may be granted, to
determine the terms of each award, to interpret the provisions of the plan, to
correct any defects or inconsistencies in the plan or any award and to adopt
rules, regulations, forms and agreements that it may deem necessary or advisable
for the administration of the plan.
12
Shares Subject to the Plan
The aggregate number of shares that may be obtained by directors, officers,
employees, consultants and advisors under the plan is 150,000 shares. Each
person is eligible to receive awards with respect to an aggregate maximum of
100,000 shares over the term of the plan. Any shares that remain unissued at the
termination of the plan will cease to be subject to the plan, but until
termination, QCR Holdings will make available sufficient shares to meet the
requirements of the plan.
Options
The board may issue options that constitute incentive stock options to officers
and employees and nonqualified options to directors, officers, employees,
consultants and advisors. Each option granted under the plan will be subject to
the terms and conditions set by the committee, including option price, vesting
schedule and option term. The option price of incentive options granted under
the plan must be 100% of the fair market value of a share on the date the option
is granted. For individuals owning more than 10% of the total combined voting
power of all classes of capital stock of QCR Holdings, the option price must be
at least 110% of the fair market value of a share on the date the option is
granted. Incentive stock options are also subject to the further restriction
that the aggregate fair market value (determined as of the date of grant) of
common stock as to which any incentive stock option first becomes exercisable in
any calendar year, is limited to $100,000. Under the terms of the plan and in
connection with the listing standards of Nasdaq, no option may be repriced to
reduce the exercise price of such option without stockholder approval (except in
connection with a change in our capitalization).
The exercise price of an option must be paid in full (i) in cash; (ii) in common
stock valued at its fair market value on the date of exercise, provided it has
been owned by the optionee for at least six (6) months prior to the exercise;
(iii) in cash by an unaffiliated broker-dealer to whom the holder of the option
has submitted an exercise notice consisting of a fully endorsed option; (iv) by
agreeing to surrender Stock Appreciation Rights ("SARs") then exercisable valued
at their fair market value on the date of exercise; (v) by other means of
payment as authorized by the committee; or (vi) by any combination of the above,
as elected by the optionee. Options may not be exercised more than ten (10)
years after the date of grant. In the case of a 10% or more stockholder, options
may not be exercised more than five (5) years after the date of grant.
Tax Benefit Rights
In addition to the options authorized under the plan, the committee may also
issue Tax Benefit Rights ("TBRs") to individuals in tandem with options under
the plan. Each TBR granted will relate to a specific option under the plan, and
will be awarded to an individual concurrently with the grant of that option.
Each TBR entitles an individual to the following payment - the excess of the
fair market value of a share on the exercise date over the option price, times
the difference between the highest rate of tax on ordinary income over the rate
of tax on capital gains (federal and state). A TBR may be exercised only by
giving written notice to QCR Holdings and only at the same time as an individual
exercises options under the plan.
Restricted Stock Awards
The Stock Incentive Plan also provides for the award of Restricted Stock
(`RSAs"), which will be evidenced by a written agreement in a form authorized by
the committee. A grantee can accept an RSA only by signing and delivering to QCR
Holdings a purchase agreement and full payment of the purchase price, within
thirty (30) days from the date the RSA agreement was delivered to the grantee.
If the grantee does not accept the RSA in this manner within thirty (30) days,
then the offer of the RSA will terminate, unless the committee determines
otherwise.
RSAs awarded under the plan will be subject to terms, conditions and
restrictions as determined by the committee at the time of grant, including: (i)
prohibitions against transfer; (ii) substantial risks of forfeiture; (iii)
attainment of performance objectives; and (iv) repurchase by or right of first
refusal of QCR Holdings. The committee may, in its discretion, accelerate the
expiration of the restriction period with respect to any part or all of the RSAs
awarded to a grantee. RSAs awarded, and the right to vote underlying shares and
to receive dividends thereon, may not be sold, assigned, transferred, exchanged,
pledged, hypothecated or otherwise encumbered during the restriction period,
except under limited circumstances. Each certificate issued in connection with
the RSAs will be deposited with QCR Holdings, or its designee, and will bear an
appropriate legend referencing the applicable restrictions. Each restricted
stock agreement will specify the terms and conditions upon which any
restrictions on shares awarded under the plan will lapse. Upon the lapse of the
restrictions, shares (which will not contain a restrictive legend) will be
issued to the grantee. If a grantee is terminated prior to the lapse of
restrictions applicable to RSAs awarded, those shares will be forfeited without
payment and without any future right or interest therein.
13
Stock Appreciation Rights
The committee may also award Stock Appreciation Rights under the plan ("SARs"),
which may be granted separately or in tandem with or by reference to an option
granted prior to or simultaneously with the grant of SARs, to eligible
directors, officers, employees, consultants and advisors as selected by the
committee. The SARs will be evidenced by a written agreement in a form
authorized by the committee.
SARs may be granted in tandem with or with reference to a related option, in
which event the grantee may elect to exercise either the option or the SAR, but
not both, as to the same share subject to the option and the SAR, or the SAR may
be granted independently of a related option. SARs will generally not be
transferable, except under limited circumstances. Upon exercise of an SAR, the
grantee will be paid, in cash, the excess of the then fair market value of the
number of shares to which the SAR relates over the fair market value of such
number of shares at the date of grant of the SAR or of the related option, as
the case may be.
Amendment and Termination
The board may amend, suspend or terminate the plan or any portion thereof at any
time, but no amendment may be made without approval of the stockholders which
will materially increase the aggregate number of shares with respect to which
incentive stock option awards may be made under the plan, or change the class of
persons eligible to receive incentive stock option awards under the plan.
Term of the Plan
The plan will become effective upon the date of its adoption by the board,
provided that incentive stock options may be granted only if the plan is
approved by the stockholders within twelve (12) months before or after the date
of adoption by the board. Unless sooner terminated, options, TBRs, RSAs and SARs
may not be granted under the plan after the expiration of ten (10) years from
the effective date. However, awards may be exercisable after the end of the term
of the plan.
Stockholder Vote Necessary For Approval of the Stock Incentive Plan
The affirmative vote of the holders of a majority of the shares of common stock
present in person or by proxy at the annual meeting is required to approve the
Stock Incentive Plan. Our board of directors unanimously recommends a vote FOR
the proposed Stock Incentive Plan.
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth the following information as of December 31, 2003 for
(i) all compensation plans previously approved by QCR Holdings' stockholders and
(ii) all compensation plans not previously approved by QCR Holdings'
stockholders:
(a) the number of securities to be issued upon the exercise of outstanding
options, warrants and rights;
(b) the weighted-average exercise price of such outstanding options, warrants
and rights; and
(c) other than securities to be issued upon the exercise of such outstanding
options, warrants and rights, the number of securities remaining available
for future issuance under the plans.
EQUITY COMPENSATION PLAN INFORMATION
------------------------------------------------------------------------------------------------------------------------------------
Number of securities
Number of securities remaining available for
to be issued upon future issuance under equity
exercise of Weighted-average exercise compensation plans (excluding
outstanding options, price of outstanding options, securities reflected in
warrants and rights warrants and rights column (a))
Plan category (a) (b) (c)
------------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security holders ..... 151,596 $12.92 116,244 (1)
Equity compensation plans
not approved by security holders . - - -
---------------------------------------------------------------------
Total....................... 151,596 $12.92 116,244 (1)
=====================================================================
(1) Includes 91,327 shares available under the QCR Holdings, Inc. Employee
Stock Purchase Plan.
14
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation paid or
granted to QCR Holdings' Chief Executive Officer and the other executive
officers who had an aggregate salary and bonus which exceeded $100,000 for the
year ended December 31, 2003.
SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------------- ------------
(a) (b) (c) (d) (e) (g) (i)
Securities
Other Annual Underlying All Other
Name and Calendar Year Compensation Options/ Compensation
Principal Position (1) Salary($)(2) Bonus($)(3) ($)(4) SARs(#) ($)
---------------------------- --------------- -------------- ------------- ------------------- ----------------- ------------------
Douglas M. Hultquist 2003 $ 175,000 $ 94,792 $ 41,756 $ -- $ 27,046(6)
President and Chief 2002 $ 172,500 $ 116,146 $ 33,558 $ -- $ 21,701(7)
Executive Officer of 2001 $ 170,000 $ 65,000 $ -- $ 5,000 $ 24,820(8)
QCR Holdings,
Chairman of Quad City
Bank & Trust
Michael A. Bauer 2003 $ 175,000 $ 94,792 $ 54,281 $ -- $ 32,046(6)
Chairman of QCR 2002 $ 172,500 $ 116,146 $ 15,587 $ -- $ 30,213(7)
Holdings, President 2001 $ 170,000 $ 65,000 $ -- $ 5,000 $ 29,820(8)
and Chief Executive
Officer of Quad City
Bank & Trust
Larry J. Helling(5) 2003 $ 163,000 $ 75,790 $ -- $ -- $ 23,801(6)
President and Chief 2002 $ 161,500 $ 49,800 $ -- $ -- $ 21,677(7)
Executive Officer of 2001 $ 124,450 $ 16,000 $ -- $ 18,100 $ 12,964(8)
Cedar Rapids Bank &
Trust
Todd A. Gipple 2003 $ 132,600 $ 38,675 --- 1,500 $ 20,333(6)
Executive Vice President, 2002 $ 127,500 $ 58,700 --- 1,575 $ 20,434(7)
Chief Financial Officer 2001 $ 120,000 $ 33,000 --- 4,100 $ 8,287(8)
and Secretary of QCR
Holdings
(1) QCR Holdings changed its fiscal year end from June 30 to December 31
following its filed Form 10-K for the fiscal year ended June 30, 2002.
Therefore, the Summary Compensation Table has been restated to include
information regarding the compensation of the named executive officers for
the fiscal year 2003 and the calendar years ended December 31, 2002 and
2001.
(2) Includes amounts deferred under the QCR Holdings, Inc. 401(k)/Profit
Sharing Plan (the "401(k) Plan") and the deferred compensation agreements.
(3) As indicated above, bonus payments have been restated to a calendar year
basis from a fiscal year basis for the years 2002 and 2001. The bonus for
2003 was paid in February 2004. The bonus for the six month transition
period ended December 2002 was paid in January 2003 for Messrs. Helling and
Gipple, and in two installments in January 2003 and May 2003 for Messrs.
Bauer and Hultquist. Bonuses were previously paid in July each year.
(4) Represents amount of tax benefit rights paid on behalf of Messrs. Bauer and
Hultquist in connection with their exercise of stock options.
(5) Mr. Helling joined Cedar Rapids Bank & Trust as Chief Executive Officer in
April 2001.
(6) During the 2003 calendar year, each individual had contributions made to
the 401(k) Plan for his benefit as follows: Messrs. Hultquist and Bauer -
$10,996; Mr. Helling - $10,823; and Mr. Gipple - $9,537. In addition, each
received term life insurance which had a per person premium cost as
follows: Messrs. Hultquist and Bauer - $1,050; Mr. Helling - $978; and Mr.
Gipple - $796. In addition, pursuant to the deferred compensation
agreements entered into between QCR Holdings and each of Messrs. Hultquist,
Bauer, Helling and Gipple, QCR Holdings contributed deferred compensation
as follows: Mr. Hultquist - $15,000, Mr. Bauer - $20,000, Mr. Helling -
$12,000, and Mr. Gipple - $10,000.
15
(7) During the 2002 calendar year, each individual had contributions made to
the 401(k) Plan for his benefit as follows: Mr. Hultquist - $5,666; Mr.
Bauer - $9,178; Mr. Helling - $8,712; and Mr. Gipple - $9,669. In addition,
each received term life insurance which had a per person premium cost as
follows: Messrs. Hultquist and Bauer - $1,035; Mr. Helling - $965; and Mr.
Gipple - $765. In addition, pursuant to the deferred compensation
agreements entered into between QCR Holdings and each of Messrs. Hultquist,
Bauer, Helling and Gipple, QCR Holdings contributed deferred compensation
as follows: Mr. Hultquist - $15,000, Mr. Bauer - $20,000, Mr. Helling -
$12,000, and Mr. Gipple - $10,000.
(8) During the 2001 calendar year, each individual had contributions made to
the 401(k) Plan for his benefit as follows: Messrs. Hultquist and Bauer -
$8,800, Mr. Helling - $6,004, and Mr. Gipple - $7,567. In addition, each
received term life insurance which had a per person premium cost as
follows: Messrs. Bauer and Hultquist - $1,020, Mr. Helling - $960, and Mr.
Gipple - $720. In addition, pursuant to the deferred compensation
agreements entered into between QCR Holdings and each of Messrs. Hultquist,
Bauer and Helling, QCR Holdings contributed deferred compensation as
follows: Mr. Hultquist - $15,000, Mr. Bauer - $20,000, and Mr. Helling -
$6,000.
The following table sets forth certain information concerning the number and
value of stock options granted in the 2003 calendar year to the individuals
named in the Summary Compensation Table.
OPTION GRANTS IN 2003 CALENDAR YEAR
-----------------------------------------------------------------------------------------------------------------------
Individual Grants
-----------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
% of Total
Options Options Granted Exercise or Grant Date
Granted to Employees in Base Price Expiration Present Value
Name (#)(1) Year ($/Sh) Date ($)(2)(3)
-----------------------------------------------------------------------------------------------------------------------
Douglas M. Hultquist --- --- $ --- --- $ ---
Michael A. Bauer --- --- $ --- --- $ ---
Larry J. Helling --- --- $ --- --- $ ---
Todd A. Gipple 1,500 30.6% $ 17.11 January 5, 2013 $ 10,380
(1) Options vest in five equal annual portions beginning one year from the date
of grant.
(2) The Black-Scholes valuation model was used to determine the grant date
present values. Significant assumptions include: risk-free interest rate,
4.33%; expected option life, 10 years; expected volatility 23.87% and
expected dividends, 0.58%.
(3) The ultimate value of the options will depend on the future market price of
our common stock, which cannot be forecast 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 concerning the number of
stock options and Stock Appreciation Rights ("SARs") at December 31, 2003 held
by the individuals named in the Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN 2003 CALENDAR YEAR ANDCY-END
OPTION/SAR VALUES
--------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Value of
Securities Unexercised
Underlying in-the-money
Unexercised Options/SARs
Options/SARs at at
CY End (#) CY End ($)
--------------------------------------------------------------------------------------------------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------------------------------------
Douglas M. Hultquist 16,000 $217,855 19,250 4,500 $ 219,519 $ 70,763
Michael A. Bauer 20,000 $281,425 19,250 4,500 $ 219,519 $ 70,763
Larry J. Helling --- --- 7,240 10,860 $ 126,706 $ 190,059
Todd A. Gipple --- --- 6,515 8,260 $ 101,075 $ 128,616
16
Employment and Deferred Compensation Agreements with Michael A. Bauer and
Douglas M. Hultquist. We entered into new employment agreements with Messrs.
Bauer and Hultquist dated January 1, 2004. These agreements amend and restate
the prior employment agreements, dated July 1, 2000, under which Messrs. Bauer
and Hultquist served. The new agreements each have a three-year term and in the
absence of notice from either party to the contrary, the employment term under
each agreement extends for an additional one year on the anniversary of each
agreement. Pursuant to these agreements, Messrs. Bauer and Hultquist will each
receive minimum salaries of $175,000. The agreements include provisions for the
increase of compensation on an annual basis, performance bonuses, membership in
various local clubs, an automobile allowance and participation in our benefit
plans. The agreements further provide for severance compensation equal to one
year of their respective salaries plus average annual bonuses in the event they
are terminated without cause and three times the sum of their respective
salaries and average annual bonuses if they are terminated upon a change in
control.
Messrs. Bauer and Hultquist also entered into new deferred compensation
agreements with us on January 1, 2004. These agreements amend and restate the
prior agreements, dated July 1, 2000. Under Mr. Hultquist's agreement, he may
defer up to $15,000 of his salary annually and we will match the amount deferred
by him. Under Mr. Bauer's agreement, he may defer up to $20,000 of his salary
annually and we will match the amount deferred by him. Full benefits under the
agreements will be payable to Messrs. Bauer and Hultquist when they reach 65
years of age.
Employment and Deferred Compensation Agreements with Todd A. Gipple and Larry J.
Helling. We also entered into new employment agreements with Messrs. Gipple and
Helling dated January 1, 2004. Mr. Gipple's employment agreement, which amends
and restates his prior employment agreement dated January 5, 2000, provides that
Mr. Gipple is to receive a minimum salary of $140,500. The agreement includes a
provision for the increase in compensation on an annual basis, performance
bonuses, membership in a Quad Cities country club, a monthly automobile
allowance and participation in our benefit plans. The agreement further provides
that he is entitled to a payment equal to six months of his salary plus one-half
of his average annual bonus if he is terminated without cause and two times his
annual salary and average annual bonus if he is terminated upon a change in
control. Mr. Gipple also entered into a new deferred compensation agreement with
us on January 1, 2004, which amends and restates his prior agreement dated
January 1, 2002, under which he may defer up to $10,000 of his salary annually
and we will match the amount deferred by him.
Mr. Helling's employment agreement, which amends and restates his prior
employment agreement dated April 11, 2001, provides that Mr. Helling is to
receive a base annual salary of $167,000. The agreement includes a provision for
the increase in compensation on an annual basis, performance bonuses, membership
in various country clubs, a monthly automobile allowance, participation in
certain cash incentive programs and participation in our benefit plans. The
agreement further provides for a severance payment equal to six months of his
salary in the event of a termination without cause and two times his annual
salary in the event of a termination upon a change in control. Mr. Helling also
entered into a new deferred compensation agreement with us on January 1, 2004,
which amends and restates his prior agreement dated April 11, 2001, under which
he may defer up to $12,000 of his salary annually and we will match the amount
deferred by him.
All of the employment agreements described above are terminable at any time by
either our board of directors or the respective officer. We may terminate these
agreements at any time for cause without incurring any post-termination
obligation to the terminated officer. If the officers are terminated without
cause or upon a change in control, we must make severance payments as described
in the previous sections. In addition to the severance payments that must be
made, we must also pay all accrued salary, vested deferred compensation and
other benefits then due each officer. The employment agreements also contain
non-compete provisions, which provide that each officer is prohibited from
competing with us or our subsidiaries within a 60-mile radius of any of our
offices for a period of two years following the termination of the agreement.
Compensation Committee Interlocks and Insider Participation
During 2003, the Executive Committee, which sets the salaries and compensation
for our executive officers, was comprised solely of independent directors;
Messrs. Baird, Brownson, Lawson, Peterson and Royer. The Compensation and
Benefits Committee, which sets the salaries and compensation of all employees
who are not executive officers, consisted of Messrs. Bauer, Hultquist, Helling,
Lawson, Christofferson and Harris, Ms. Bawden and Ms. Whiteside. Messrs. Bauer,
Hultquist and Helling are executive officers and do not participate in any
decisions involving their own compensation.
17
Executive Committee Report on Executive Compensation
The report of the Executive Committee below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent QCR Holdings specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
General. The Executive Committee is comprised of five "independent" directors of
QCR Holdings. The committee is committed to providing a total compensation
program that supports our long-term business strategy and performance culture
and creates a commonality of interest within our stockholders. The Executive
Committee is responsible for the oversight of executive compensation and reviews
the compensation program of QCR Holdings on an ongoing basis.
The overall philosophy used by the Executive Committee when making decisions is
as follows:
o to provide incentives for executive officers to work toward achieving
successful short-term and long-term goals and objectives;
o to provide significant reward for achievement of superior performance, as
well as significant risk to penalize substandard performance;
o to create significant opportunity and incentive for executives to be
long-term stockholders;
o to link executive compensation rewards to increases in shareholder value,
as measured by favorable long-term results and continued strengthening of
our financial condition;
o to provide flexibility to recognize, differentiate and reward individual
performance; and
o to facilitate stock ownership through granting of stock options.
For each executive officer, the Executive Committee was responsible for the
establishment of base salary and bonuses paid, as well as an award level for the
annual incentive compensation program, each of which is subject to the approval
of the non-employee directors. The Executive Committee was also responsible for
the administration of the stock programs for the executive officers, as well as
recommendations regarding other executive benefits and plans, subject to the
same approval process.
Additionally, the Executive Committee is currently considering adopting a
Non-Qualified Supplemental Executive Retirement Agreement ("SERP") for executive
officers. If adopted, the SERP would provide supplemental retirement income to
certain key executive officers of QCR Holdings and our subsidiaries.
Salary and Bonus. The Executive Committee reviews each executive's base salary
on an annual basis. It is the Executive Committee's policy that the base
salaries of our executives should offer each executive security and allow us to
attract qualified executives and maintain a stable management team and
environment. The Executive Committee targets base salaries at levels comparable
to those of comparable positions within the market place. We recently entered
into new employment contracts with each of our executive officers. The initial
base salary provided in the agreements may be increased to reflect the executive
officer's performance, as well as our overall financial performance.
Additionally, base salaries are determined by examining, among other things, the
executive's level of responsibility, prior experience, length of time with us as
an employee, breadth of knowledge and internal performance objectives. An
executive's current salary in relation to the executive's salary range and the
median salary practices of the market place are also considered. All of the
factors described herein are considered on a subjective basis in the aggregate,
and none of the factors is accorded a specific weight.
Annual adjustments to an executive's base salary, as well as the amount of any
bonus, are driven by corporate and individual performance. Corporate
performance, measured primarily in terms of earnings per share, return on equity
and enhancement of total assets, impacts an executive's base salary. In
addition, the Executive Committee will also measure individual performance. When
measuring individual performance, the Executive Committee considers the
individual's efforts in achieving established financial and business objectives,
both short-term and long-term strategic objectives, managing and developing
employees and enhancing long-term relationships with customers.
18
Annually, the Executive Committee evaluates four primary areas of performance in
determining the Chief Executive Officer's level of compensation. These areas
are:
o our long-range strategic planning and implementation;
o our financial performance;
o our compliance with regulatory requirements and relations with regulatory
agencies; and
o the individual's effectiveness of managing relationships with stockholders
and the board of directors.
The base salary paid to Mr. Hultquist, as President and Chief Executive Officer,
during 2003 was also based in part upon the Executive Committee's satisfaction
with our profitability, asset growth and risk management. The primary evaluation
criteria are considered to be essential to our long-term viability and were
given equal weight in the evaluation. The Executive Committee determined that
Mr. Hultquist's leadership had a significant impact on our attaining this level
of performance while maintaining our excellent safety and soundness ratings.
Additionally, the Executive Committee considered Mr. Hultquist's personal
performance as President and Chief Executive Officer, his previous years'
salaries and the salary levels of other similarly situated financial
institutions in setting his base salary at $175,000 for 2003 and 2004.
Stock Awards. Our current long-term incentive plans are intended to promote
equity ownership in QCR Holdings by the directors and selected officers and
employees, to increase their proprietary interest in our success and to
encourage them to remain with us as employees. They also promote tax efficiency
and replacement of benefit opportunities lost to regulatory limits. We have
established the QCR Holdings, Inc. 401(k)/Profit Sharing Plan and the QCR
Holdings, Inc. Employee Stock Purchase Plan, each of which allows participants
to purchase shares of our common stock.
We also granted stock options in the past through the QCR Holdings, Inc. 1997
Stock Incentive Plan, which we are asking the stockholders to supplement at this
year's annual meeting with the 2004 Stock Incentive Plan. We use stock options
in our compensation program to reinforce our long-term perspective and to retain
valued executives. In the future, we may also grant restricted stock under the
2004 Stock Incentive Plan as well as traditional stock options, as restricted
stock may give us more favorable tax treatment. We did not grant options to most
of our executive officers in 2003 because the 1997 plan was close to running out
of shares reserved under the plan, with only 24,917 remaining options available
for grant at December 31, 2003. We anticipate that we will grant more options in
2004 if stockholders approve the 2004 Stock Incentive Plan.
Conclusion. The Executive Committee believes these executive compensation
policies and programs effectively serve the interests of stockholders and QCR
Holdings. The Executive Committee believes these policies motivate executives to
contribute to our overall future success, thereby enhancing the value of QCR
Holdings for the benefit of all stockholders.
Executive Committee:
Patrick S. Baird
James J. Brownson
John K. Lawson
Ronald G. Peterson
Henry Royer
Stockholder Return Performance Presentation
The incorporation by reference of this proxy statement into any document filed
with the Securities and Exchange Commission by QCR Holdings shall not be deemed
to include the following performance graph and related information unless such
graph and related information are specifically stated to be incorporated by
reference into such document.
19
The graphical presentation omitted herein shows, for the period commencing June
30, 1999, a comparison of cumulative total returns for QCR Holdings, the Nasdaq
Stock Market (US Companies), the Nasdaq Bank Index and the SNL Midwest Bank
Index prepared by SNL Securities, Charlottesville, Virginia. We were recently
informed by SNL Securities that the cost for use of the Nasdaq Bank Index will
increase considerably in the future. QCR Holdings believes that the SNL Midwest
Bank Index is an accurate comparison of performance and significantly more cost
effective to use. As a result, QCR Holdings intends to replace the Nasdaq Bank
Index with the SNL Midwest Bank Index in the future. The omitted graph was
prepared at our request by SNL Securities.
The following are the data points utilized in the omitted graph.
QCR Holdings, Inc.
Period Ending
-----------------------------------------------------------------------------------------
Index 06/30/99 06/30/00 06/30/01 06/30/02 12/31/02 12/31/03
-----------------------------------------------------------------------------------------
QCR Holdings, Inc. ..... $100.00 $ 90.85 $ 58.31 $ 83.38 $ 95.50 $158.98
Nasdaq - US ........... 100.00 147.96 80.83 54.91 50.23 75.67
Nasdaq Bank Index * .... 100.00 82.03 113.91 127.80 118.17 152.03
SNL - Midwest Bank Index 100.00 82.42 115.63 130.25 120.90 156.06
* Source: CRSP, Center for Research in Security Pricos, Graduate School of
Business, The University of Chicago 2004. Used with permission. All rights
reserved. crsp.com
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding our common stock
beneficially owned on December 31, 2003, by each director and nominee, by each
executive officer named in the summary compensation table and by all directors,
and executive officers of QCR Holdings as a group. To the best of our knowledge,
no person was the beneficial owner of more than five percent of our common stock
as of December 31, 2003. Beneficial ownership has been determined for this
purpose in accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), under which a person is deemed to be the
beneficial owner of securities if he or she has or shares voting power or
investment power in respect of such securities or has the right to acquire
beneficial ownership of securities within 60 days of December 31, 2003.
Name of Individual and Amount and Nature of Percent
Number of Persons in Group Beneficial Ownership(1) of Class
-------------------------- ----------------------- --------
Directors and Nominees
Patrick S. Baird 23,833(2) *
Michael A. Bauer 38,291(3) 1.37%
James J. Brownson 20,724(4) *
Larry J. Helling 29,120(5) 1.04%
Douglas M. Hultquist 39,235(6) 1.40%
Mark C. Kilmer 17,062(7) *
John K. Lawson 7,315(8) *
Ronald G. Peterson 9,749(9) *
Henry Royer 6,183(10) *
John W. Schricker 25,604(11) *
Named Executive Officer
Todd A. Gipple 22,799(12) *
All directors, nominees and executive
officers as a group (11 persons) 239,915(13) 8.51%
------------------------------------
* Less than 1%.
(1) Amounts reported include shares held directly, including certain shares
subject to options, as well as shares held in retirement accounts, by
certain members of the named individuals' families or held by trusts of
which the named individual is a trustee or substantial beneficiary.
Inclusion of shares shall not constitute an admission of beneficial
ownership or voting and sole investment power over included shares. The
nature of beneficial ownership for shares listed in this table is sole
voting and investment power, except as set forth in the following
footnotes.
20
(2) Includes 80 shares subject to options which are presently exercisable and
over which Mr. Baird has no voting and sole investment power. Also includes
22,750 shares held jointly by Mr. Baird and his spouse and 1,003 shares
held in a trust, over which he has shared voting and investment power.
Excludes 320 option shares not presently exercisable.
(3) Includes 3,378 shares held by his minor children, 4,575 shares held in an
IRA account, 4,796 shares held in a trust, 4,650 shares held in the 401(k)
Plan and 12 shares held by his wife, all of which Mr. Bauer has shared
voting and investment power.
(4) Includes 1,300 shares subject to options which are presently exercisable
and over which Mr. Brownson has no voting and sole investment power. Also
includes 2,165 shares held jointly by Mr. Brownson and his spouse, 1,350
shares held by his spouse, 4,779 shares held in a trust, and 11,130 shares
held in an IRA account, all of which he has shared voting and investment
power. Excludes 600 option shares not presently exercisable.
(5) Includes 4,840 shares subject to options which are presently exercisable
and over which shares Mr. Helling has no voting and sole investment power.
Also includes 21,500 shares held in an IRA account, 1,721 shares held in a
trust and 980 shares held in the 401(k) Plan, all of which he has shared
voting and investment power. Excludes 7,260 option shares not presently
exercisable.
(6) Includes 6,225 shares held by his spouse or for the benefit of his
children, 2,700 shares held in an IRA account, 4,902 shares held in a trust
and 2,939 shares in the 401(k) Plan, all of which Mr. Hultquist has shared
voting and investment power.
(7) Includes 540 shares subject to options which are presently exercisable and
over which Mr. Kilmer has no voting and sole investment power. Also
includes 3,390 shares held by his spouse or minor children, 2,882 shares
held in a trust and 2,250 shares held in an IRA account, all of which he
has shared voting and investment power. Excludes 310 option shares not
presently exercisable.
(8) Includes 500 shares subject to options which are presently exercisable and
over which Mr. Lawson has no voting and sole investment power. Also
includes 3,815 shares held in trust, over which shares he has shared voting
and investment power. Excludes 500 option shares not presently exercisable.
(9) Includes 2,350 shares subject to options which are presently exercisable
and over which Mr. Peterson has no voting and sole investment power. Also
includes 5,149 shares held in a trust, over which shares he has shared
voting and investment power. Excludes 600 option shares not presently
exercisable.
(10) Includes 80 shares subject to options which are presently exercisable and
over which Mr. Royer has no voting and sole investment power. Includes
4,500 shares held in an IRA account and 1,603 shares held in a trust, over
all of which Mr. Royer has shared voting and investment power. Excludes 320
option shares not presently exercisable.
(11) Includes 1,768 shares subject to options which are presently exercisable
and over which Mr. Schricker has no voting and sole investment power. Also
includes 311 shares held by his spouse or minor children, 2,912 shares held
in a trust and 10,498 shares held in the 401(k) Plan, all of which he has
shared voting and investment power.
(12) Includes 5,515 shares subject to options which are presently exercisable
and over which shares Mr. Gipple has no voting and sole investment power.
Also includes 9,815 shares held in an IRA account, 200 shares held by his
children and 1,000 shares held in the 401(k) Plan, over which he has shared
voting and investment power. Excludes 6,760 option shares not presently
exercisable.
(13) Excludes 16,670 option shares not presently exercisable.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
directors, executive officers and persons who own more than 10% of our common
stock file reports of ownership and changes in ownership with the Securities and
Exchange Commission and with the exchange on which the shares of common stock
are traded. These persons are also required to furnish us with copies of all
Section 16(a) forms they file. Based solely on our review of the copies of such
forms furnished to us, we are not aware that any of our directors or executive
officers failed to comply with the filing requirements of Section 16(a) during
the last fiscal year. We are not aware of any 10% stockholders.
21
TRANSACTIONS WITH MANAGEMENT
Our directors and officers and their associates were customers of and had
transactions with QCR Holdings, Quad City Bancard, Quad City Bank & Trust and
Cedar Rapids Bank & Trust during the fiscal year ended December 31, 2003.
Additional transactions are expected to take place in the future. All
outstanding loans, commitments to loan, 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. From January 1, 2003
through December 31, 2003, Quad City Bancard paid approximately $1,953,965 to
Nobel Electronic Transfer, LLC, for merchant credit card processing services.
John W. Schricker, a director of QCR Holdings and the former President and a
director of Quad City Bancard, is a principal of Nobel. Additionally, QCR
Holdings owns 20% of the capital of Nobel. Our management believes that the
terms on which the above described transaction was conducted are no less
favorable to us than would have been obtained from an unaffiliated third party.
AUDIT COMMITTEE REPORT
The incorporation by reference of this proxy statement into any document filed
with the Securities and Exchange Commission by QCR Holdings shall not be deemed
to include the following report and related information unless such report is
specifically stated to be incorporated by reference into such document.
The Audit Committee assists the board of directors in carrying out its oversight
responsibilities for our financial reporting process, audit process and internal
controls. The Audit Committee also reviews the audited financial statements and
recommends to the board that they be included in our annual report on Form 10-K.
The committee is comprised solely of independent directors.
The Audit Committee has reviewed and discussed our audited financial statements
for the fiscal year ended December 31, 2003 with our management and McGladrey &
Pullen, LLP, our independent auditors. The committee has also discussed with
McGladrey & Pullen, LLP the matters required to be discussed by SAS 61
(Codification for Statements on Auditing Standards) as well as having received
and discussed the written disclosures and the letter from McGladrey & Pullen,
LLP required by Independence Standards Board Statement No. 1 (Independence
Discussions with Audit Committees). Based on the review and discussions with
management and McGladrey & Pullen, LLP, the committee has recommended to the
board that the audited financial statements be included in our annual report on
Form 10-K for the fiscal year ending December 31, 2003 for filing with the
Securities and Exchange Commission.
Audit Committee:
Patrick S. Baird
James J. Brownson
John K. Lawson
Henry Royer
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of McGladrey & Pullen, LLP, our independent public accountants,
are expected to be present at the meeting and will be given the opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
Accountant Fees
Audit Fees. The aggregate amount of fees billed by McGladrey & Pullen, LLP in
connection with the audit of our annual financial statements and for fiscal year
2003 and calendar year 2002 and for its required reviews of our unaudited
interim financial statements included in our Form 10-Qs filed during fiscal 2003
and calendar 2002 were $99,797 and $76,311, respectively.
Audit Related Fees. The aggregate amounts of audit related fees billed by
McGladrey & Pullen for fiscal year 2003 and calendar year 2002 were $7,035 and
$8,699, respectively. The majority of these services were related to research
and consultations concerning financial accounting and reporting manners in 2003
and the audit of QCR Holdings' employee benefit plan in 2002.
22
Tax Fees. The aggregate amounts of tax related services billed by McGladrey &
Pullen for fiscal year 2003 and calendar year 2002 were $3,756 and $11,583,
respectively, for professional services rendered for tax compliance, tax advice
and tax planning. The services provided included assistance with the preparation
of QCR Holdings' 2002 and prior tax returns and guidance with respect to
estimated tax payments.
All Other Fees. We did not incur any other fees from McGladrey & Pullen for
fiscal year 2003. In calendar 2002, we incurred other fees from McGladrey &
Pullen in the amount of $57,003, which was attributable to consulting fees
related to loan reviews and information technology security.
The Audit Committee, after consideration of the matter, does not believe the
rendering of these services by McGladrey & Pullen, LLP to be incompatible with
maintaining McGladrey & Pullen, LLP's independence as our principal accountant.
Audit Committee Approval Policy
Among other things, the Audit Committee is responsible for appointing, setting
compensation for and overseeing the work of the independent auditor. The Audit
Committee's policy is to approve, on a case-by-case basis, all audit and
permissible non-audit services provided by McGladrey & Pullen, LLP. These
services include audit and audit-related services, tax services and other
services. The Audit Committee has a formal policy of pre-approving any of these
services.
REPORT ON FORM 10-K
Our report on Form 10-K (without exhibits) will be included as part of our
annual report to stockholders, which will be mailed to each stockholder of
record as of the record date for the annual meeting. We will furnish without
charge to each person whose proxy is solicited, and to each person representing
that he or she is a beneficial owner of our common stock as of the record date
for the meeting, upon written request, copies of our annual report on Form 10-K
as filed with the Securities and Exchange Commission, together with the
financial statements and schedules thereto. Such written request should be sent
to Ms. Shellee R. Showalter, QCR Holdings, Inc.
By order of the Board of Directors
Michael A. Bauer Douglas M. Hultquist
Chairman President
Moline, Illinois
March 26, 2004
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
23