Exhibit 10.9
REVISED SUMMARY SHEET
OF
2007 COMPENSATION
Director Compensation
Employee Directors
Directors who are employees of the Company receive no separate compensation for
Board service. Mr. Vea and Mr. Stevens are the only directors who are also
employees of the Company, and they do not receive any additional compensation
for such service.
Non-Employee Directors
Non-employee directors currently receive the following compensation:
Annual Retainer:

  •  
$12,000 restricted stock retainer, which vests over a three year period, issued
under the Company’s 2007 Equity Incentive Plan. A copy of the 2007 Equity
Incentive Plan is filed as an exhibit to the Company’s Form 8-K filed on
April 20, 2007.

  •  
$12,000 cash retainer payable in four quarterly payments.

Meeting Fees:

  •  
$900 cash fee for each Board of Directors meeting of the Company attended.

  •  
$600 cash fee for each committee meeting attended.

Presiding Independent Director/Committee Chair Fees:

  •  
$2,000 fee payable in four quarterly payments to Presiding Independent Director.

  •  
$2,000 fee payable in four quarterly payments to Committee Chairs.

Other:

  •  
$900 additional fee for each full day spent in training at seminars or other
training sessions approved in advance by the Chairman of the Board.

  •  
Reimbursement for travel and other expenses incurred for attending seminars or
other training sessions.

  •  
Reimbursement for accommodations, travel or meals in connection with attending
corporate, board or other authorized functions, which includes Board of
Directors meetings, committee meetings, and Board retreats.

Under the Corporate Governance Principles, non-employee directors are expected
to own shares with an aggregate value equal to $100,000 within five years of
being elected a director. Each non-employee director meets this requirement,
with the exception of Ms. Roxy Baas.

 

 

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Compensation of Named Executive Officers
The executive officers of the Company serve at the discretion of the Board of
Directors. The following are the current base salaries effective April 20, 2007,
for the Company’s Chief Executive Officer, Chief Financial Officer and its other
most highly compensated current executive officers based upon total compensation
for 2006 who were identified in the Company’s proxy statement for the 2007
annual meeting (the “Named Executive Officers”):

         
Michael T. Vea, Chairman,
President and Chief Executive
Officer
  $ 468,180  
 
       
Martin M. Zorn, Executive
Vice-President, Chief Risk
Officer and Secretary
  $ 271,500  
 
       
Archie M. Brown, Executive
Vice-President, Commercial
and Consumer Banking
  $ 271,500  
 
       
Roger M. Watson, Executive
Vice-President, Division
Manager, Commercial Real Estate
  $ 210,000  
 
       
Roger W. Duncan, Executive
Vice-President, Evansville and
Community Banking Division
President
  $ 210,000  

The Compensation Committee of the Board of Directors determines and approves the
compensation payable to the executive officers. Mr. Vea, Mr. Zorn and Mr. Brown
are parties to employment agreements with the Company. A copy of Mr. Vea’s
employment agreement is filed as an exhibit to the 2006 10-K. On May 22, 2007,
the Compensation Committee approved employment agreements to Mr. Zorn and
Mr. Brown. Copies of Mr. Zorn and Mr. Brown’s employment agreements are filed as
exhibits to the 10-Q for the quarterly period ended June 30, 2007. Their current
salaries are currently based on the terms of their employment agreement and may
be increased by action of the Compensation Committee. On May 22, 2007, the
Compensation Committee approved a Change in Control Benefits Agreement with
Mr. Duncan. Mr. Watson, who was not previously a party to an employment or
severance agreement, also entered into a Change in Control Benefits Agreement. A
copy of Mr. Watson and Mr. Duncan’s Change in Control Benefits Agreements are
filed as exhibits to the 10-Q for the quarterly period ended June 30, 2007.

 

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Cash Incentives.
Messrs. Vea, Zorn and Brown participated in the Incentive Plan, a four year plan
that ended in 2006. In February 2006, the committee set “minimum,” “target” and
“maximum” levels for the 2006 award under the Incentive Plan for two performance
measures: adjusted earnings per share (weighted at 66%) and credit quality
(weighted at 34%). The range of potential cash incentive payout was based on
earnings per share of $1.65 to $1.79 excluding stock option expensing. The
adjustment to exclude the effect of complying with FASB Statement 123(R), Share
Based Payments, (“FAS 123R”) from earnings per share allowed the committee to
establish growth goals that were comparable on a year over year basis. The
objectives for credit quality were divided equally between net charge-offs and
non-performing loans to total loans. We consider the objectives set for credit
quality as confidential information. However, the committee set the objectives
for the credit quality performance measures at levels the committee believed
were achievable, but which would represent continuing improvement in the quality
of our loan portfolio.
In February 2007, the committee determined that the “minimum” level for the
adjusted earnings per share measure had not been met, the “minimum” level for
net charge-offs had not been met, but the “maximum” level for non-performing
loans to total loans had been met. The amounts represented sixty percent of the
2006 award. The remaining forty percent of the 2006 award and forty percent of
the awards earned for 2003 through 2005 under the Incentive Plan had been
deferred until after December 31, 2006, subject to the achievement of long-term
targets tied to earnings per share growth and credit quality. The long-term
targets were not met and the deferred portion of the Incentive Plan awards will
not be paid. The total deferred portion of the Incentive Plan awards that were
forfeited was $631,570.
The other two named executive officers did not participate in the Incentive
Plan. The amount of the cash incentives paid to those officers for 2006 is shown
in the Summary Compensation Table.
Equity-Based Incentives.
The committee established equity-based incentive award opportunities for
Messrs. Vea, Zorn, and Brown as a percentage of base salary subject to the
achievement of “threshold”, “target”, and “maximum” levels. For 2006, the equity
award grant as a percentage of salary was based on achievement of 2005 goals and
was as follows: Mr. Vea: 50% at threshold, 80% at target and 160% at maximum;
Mr. Zorn: 20% at threshold, 35% at target, and 70% at maximum; and Mr. Brown:
20% at threshold, 35% at target, and 70% at maximum. The form of the award
opportunity was allocated between stock options (66%) and restricted stock (34%)
valued using their grant date fair value, vesting equally over three years. In
addition, the committee considered other factors in its determination of the
appropriate equity awards including quality of results, retention of management,
progress against strategic plan goals, and total compensation. Based on those
factors, the committee approved equity awards (expressed at a percentage of base
salary) as follows: Mr. Vea — 72%, Mr. Zorn — 46%, and Mr. Brown — 45%.
For Mr. Watson and Mr. Duncan, who were not executive officers at the time of
the 2006 equity grants, and the other executive officers, the awards were made
by the committee based upon recommendations of management and the comparative
compensation information provided by Clark Consulting. The blend of options and
restricted stock differed from the other named executive officers.
The stock option and restricted stock awards to the named executive officers for
2006 are shown in the Grants of Plan-Based Awards Table in the 2007 proxy
statement.
2007 Executive Compensation Decisions.
The committee has established 2007 award opportunities, which are similar to
2006, for the executive officers under the Annual Cash Incentive Plan, or Cash
Plan. These awards were contingent upon the shareholders approving the Cash Plan
at the 2007 annual meeting of shareholders which has occurred. The following
award opportunities, as a percentage of base salary, apply to the named
executive officers:

 

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                              Threshold     Target     Maximum  
Michael T. Vea
    0 %     60 %     100 %
Martin M. Zorn
    0 %     45 %     80 %
Archie M. Brown
    0 %     45 %     80 %
Roger D. Watson
    0 %     35 %     60 %
Roger M. Duncan
    0 %     35 %     60 %

The committee established two performance measures: earnings per share (weighted
at 66%) and credit quality (weighted at 34%). The earnings per share levels have
not been set at the time of printing the proxy statement. The objectives for
credit quality are divided equally between net charge-offs, and non-performing
loans to total loans. As we indicated earlier, we consider the objectives set
for credit quality as confidential information; however, the credit quality
goals were established to achieve performance at median or better of our peer
group. Mr. Watson’s award opportunity may have a more equal weighting between
these goals and the performance of his business unit.
The committee has established 2007 equity award opportunities for the executive
officers under the 2007 Equity Incentive Plan, or Equity Plan. These awards were
also subject to shareholder approval of the Equity Plan which has occurred. The
equity award opportunities are subject to the same performance measures as under
the Cash Plan, as well as the other factors discussed earlier under Equity-Based
Incentives. The following award opportunities, as a percentage of base salary,
apply to the named executive officers:

                              Threshold     Target     Maximum  
Michael T. Vea
    50 %     80 %     160 %
Martin M. Zorn
    20 %     35 %     70 %
Archie M. Brown
    20 %     35 %     70 %
Roger D. Watson
    20 %     35 %     60 %
Roger M. Duncan
    20 %     35 %     60 %

Other Compensation of Named Executive Officers
The Summary Compensation Table in the Company’s 2007 proxy statement identified
the aggregate perquisites and other personal benefits received by each of the
Named Executive Officers which equal or exceed $10,000. The primary perquisites
for Messrs. Vea, Brown and Zorn include an automobile allowance and social club
membership dues.
The Company also provides matching contributions to the accounts of the Named
Executive Officers under its Employees 401(k) Plan and pays for term life
insurance for each of the Named Executive Officers.
Agreements with Other Executive Officers
Mr. Bradley M. Stevens, Executive Vice President of the Company and President
and CEO – Chicago Region of the Bank entered into an Employment Agreement with
an effective date of April 9, 2007, the date the Prairie Financial Corporation
acquisition was completed. On May 22, 2007, the Compensation Committee approved
Change in Control Benefits Agreements with Mr. Raymond D. Beck, Executive Vice
President and Chief Credit Officer and Mr. Michael B. Carroll, Senior Vice
President and Controller. Mr. Stevens’ agreement is filed as an exhibit to the
10-Q for the quarterly period ended March 31, 2007. Mr. Beck and Mr. Carroll’s
agreements are filed as exhibits to the 10-Q for the quarterly period ended
June 30, 2007.

 

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