SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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First Busey Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
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1
FIRST BUSEY CORPORATION
201 W. MAIN, URBANA, IL 61801
217/365-4556
March 19, 2003
Dear Stockholder:
The Annual Meeting of Stockholders of First Busey Corporation will be
held on Tuesday, April 22, 2003, at the Urbana Golf and Country Club, 100 E.
Country Club Road, Urbana, Illinois. The Annual Meeting will begin at 7:00 p.m.
At this Annual Meeting you will be asked:
1. To elect 14 directors of the Company to serve until the 2004
Annual Meeting or until their successors are duly elected and qualified.
2. To transact such other business as may properly come before
the Annual Meeting or any postponement or adjournment thereof.
Each of the nominees for director is identified in the accompanying
Proxy Statement which I urge you to read carefully. The Board of Directors has
unanimously approved and recommends a vote "FOR" the election of the nominees
for directors named in the accompanying Proxy Statement.
It is important that your shares be represented at the Annual Meeting.
Whether or not you attend personally, I urge you to sign, date and return the
enclosed proxy at your earliest convenience.
Kindest regards,
Douglas C. Mills
Chairman of the Board
First Busey Corporation
201 W. Main, Urbana, IL 61801
217/365-4556
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 22, 2003
To the Stockholders of
First Busey Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of First
Busey Corporation, a Nevada corporation, will be held at the Urbana Golf and
Country Club, 100 E. Country Club Road, Urbana, Illinois, on Tuesday, April 22,
2003, at 7:00 p.m. for the following purposes:
1. To elect 14 directors of the Company to serve until the 2004
Annual Meeting or until their successors are duly elected and qualified.
2. To transact such other business as may properly come before
the Annual Meeting or any postponement or adjournment thereof.
Only stockholders of record at the close of business on February 21,
2003 shall be entitled to notice of, and to vote at, the Annual Meeting or any
postponement or adjournment thereof. Even if you plan to attend the Annual
Meeting in person, please sign, date and return your proxy in the enclosed
envelope.
By order of the Board of Directors,
Barbara J. Kuhl
President and Chief Operating Officer,
Corporate Secretary and Treasurer
Urbana, Illinois
March 19, 2003
2
FIRST BUSEY CORPORATION
201 W. MAIN, URBANA, IL 61801
217/365-4556
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of First Busey Corporation for use at the
Annual Meeting of Stockholders. The Board has fixed the close of business on
February 21, 2003, as the record date for determining the stockholders entitled
to notice of, and to vote at, the Annual Meeting. On the record date, the
Company had outstanding and entitled to vote 13,635,620 shares of Common Stock,
without par value.
The Company's Form 10-K Annual Report, which includes audited financial
statements for the year ended December 31, 2002, accompanies this Proxy
Statement. The approximate date on which the Proxy Statement and the
accompanying proxy are first being sent to stockholders is March 19, 2003.
VOTING
General. Shares of Common Stock represented by properly executed
proxies received by the Company will be voted at the Annual Meeting in
accordance with the instructions on the proxies. If there are no such
instructions, the shares will be voted "FOR" the election of the nominees for
directors named in this Proxy Statement. Properly executed proxies received by
the Company will also be voted at the Annual Meeting in accordance with the
Board's recommendations on any other matters which may come before the Annual
Meeting.
In order to be elected a director, a nominee must receive a plurality
of the votes cast at the meeting for the election of directors. Because the 14
nominees receiving the largest number of affirmative votes will be elected,
shares represented by proxies which are marked "withhold authority" or "abstain"
will have no effect on the outcome of the election.
Directors and Executive Officers. All of the directors and executive
officers of the Company have advised the Company that they will vote their
shares of Common Stock "FOR" the election of the nominees for directors named in
this Proxy Statement. As of February 21, 2003, these individuals beneficially
owned an aggregate of 4,696,284 shares, or approximately 34.44% of the Common
Stock outstanding.
REVOCABILITY OF PROXIES
Stockholders may revoke their proxy by a later proxy or by giving
notice of such revocation to the Company in writing or at the Annual Meeting
before such proxy is voted. Attendance at the Annual Meeting will not in and of
itself constitute the revocation of a proxy.
SOLICITATION
The Company will pay the cost of solicitation of proxies. In addition
to solicitation by mail, officers, directors and regular employees of the
Company may solicit proxies by telephone, telefax or in person without
additional compensation. Brokerage houses, bank nominees, fiduciaries and other
custodians will be requested to forward soliciting material to the beneficial
owners of shares held of record by them and will be reimbursed for their
reasonable expenses.
3
ELECTION OF DIRECTORS
The 14 nominees named below have been recommended for election as
directors for a term of one year or until their successors have been duly
elected and qualified. All nominees are current members of the Company's Board
of Directors.
It is intended that the proxies received in response to this
solicitation will be voted for the election of the 14 persons so nominated,
unless otherwise specified. If, for any reason, any nominee shall become
unavailable for election or shall decline to serve, persons named in the proxy
may exercise discretionary authority to vote for a substitute proposed by the
Board. No circumstances are presently known which would render a nominee named
herein unavailable.
Set forth below is certain biographical information concerning each
nominee for director, including principal occupation and age as of February 21,
2003, the record date for the Annual Meeting. Unless otherwise noted, nominees
for director have been employed in their principal occupation with the same
organization for at least the last 5 years.
JOSEPH M. AMBROSE
Director since: 1993
Age: 45
Mr. Ambrose has served as Executive Vice President of AFNI, Inc., Bloomington,
Illinois since January 1999. Prior to that, Mr. Ambrose was an attorney with the
firm Hinshaw & Culbertson, Bloomington, Illinois.
SAMUAL P. BANKS
Director since: 1996
Age: 48
Mr. Banks is President and Chief Executive Officer of Cunningham Children's
Home, Urbana, Illinois. Mr. Banks has been associated with Cunningham Children's
Home since 1982.
T. O. DAWSON
Director since: 1995
Age: 62
Mr. Dawson is a retired Senior Vice President of Acordia, Inc., Champaign,
Illinois. Prior to being named Senior Vice President of Acordia in 1999, Mr.
Dawson was a partner in the firm of Insurance Risk Managers, Ltd., Champaign,
Illinois, which was acquired by Acordia.
VICTOR F. FELDMAN
Director since: 1996
Age: 67
Dr. Feldman is an ophthalmologist at Christie Clinic, Champaign, Illinois. Dr.
Feldman has been associated with Christie Clinic since 1967.
KENNETH M. HENDREN
Director since: 1996
Age: 56
Mr. Hendren is a self-employed farmer in LeRoy, Illinois.
E. PHILLIPS KNOX
Director since: 1980
Age: 56
Mr. Knox is an attorney with the firm Tummelson Bryan & Knox, Urbana, Illinois.
4
BARBARA J. KUHL
Director since: 2001
Age: 52
Mrs. Kuhl has served as President and Chief Operating Officer of First Busey
Corporation since November 2000. Previously, Mrs. Kuhl served in various
management capacities since joining Busey Bank in 1974. Mrs. Kuhl is married to
P. David Kuhl, a director.
P. DAVID KUHL
Director since: 1996
Age: 53
Mr. Kuhl has served as Chairman of the Board and Chief Executive Officer of
Busey Bank since January 2003. Prior to being named Chairman of the Board, Mr.
Kuhl served as President and Chief Executive Officer of Busey Bank from June of
1991. Prior to that, Mr. Kuhl served in various management capacities since
joining Busey Bank in 1979. Mr. Kuhl has served on the Board of Directors of
Busey Bank since 1991. Mr. Kuhl is married to Barbara J. Kuhl, a director.
V. B. LEISTER, JR.
Director since: 1996
Age: 57
Mr. Leister is Vice President & Treasurer of Carter's Furniture Inc., Urbana,
Illinois.
DOUGLAS C. MILLS
Director since: 1980
Age: 62
Mr. Mills has served as Chairman of the Board and Chief Executive Officer of
First Busey Corporation since its incorporation. He has been associated with
Busey Bank since 1971 when he assumed the position of Chairman of the Board. Mr.
Mills is married to Linda M. Mills, a director.
LINDA M. MILLS
Director since: 1996
Age: 62
Mrs. Mills is active with various charitable organizations and previously served
as Chairman of the Board of Busey Travel, Champaign, Illinois. Mrs. Mills is
married to Douglas C. Mills, a director.
DAVID C. THIES
Director since: 1996
Age: 47
Mr. Thies is an attorney with the law firm of Webber & Thies, P.C., Urbana,
Illinois.
EDWIN A. SCHARLAU II
Director since: 1984
Age: 58
Mr. Scharlau has served as Chairman of the Board of Busey Investment Group, Inc.
since January 2001 and First Busey Securities, Inc., since June 1994. Mr.
Scharlau also serves as Vice-Chairman of the Board of First Busey Corporation, a
position he was appointed to effective January 2003. Mr. Scharlau also served as
Chairman of the Board of Busey Bank from June 1991 to January 2003. Mr. Scharlau
has been associated with Busey Bank since 1964.
ARTHUR R. WYATT
Director since: 1995
Age: 75
Mr. Wyatt is a retired Professor of Accounting at the University of
Illinois-Urbana.
5
During 2002, the Board held 12 meetings. All directors attended at
least 75% of the meetings of the Board and the committees on which they served
during 2002.
The Board of Directors of the Company has established the following
committees, among others, to assist in the discharge of its responsibilities.
The Executive Management Compensation and Succession Committee met
three times in 2002. Members of the Compensation Committee are Messrs. Wyatt
(Chairman), Feldman and Knox.
In February 2003, the Nominating & Corporate Governance Committee of
the Board of Directors was formed and its governing charter was adopted
(attached to this Proxy Statement as Annex A). The Nominating & Corporate
Governance Committee members are Messrs. Wyatt (Chairman) and Ambrose. The
responsibilities of the Nominating & Corporate Governance Committee include the
nomination of individuals as members of the Board of Directors and the
implementation and maintenance of corporate governance procedures. Since this
committee was not established until after the slate of directors for the 2003
Annual Meeting was established, the Board of Directors, as a whole, performed
the function of nominating members for the Board.
The Audit Committee met six times in 2002. Members of the Audit
Committee are Messrs. Ambrose (Chairman), Hendren, Leister, and Wyatt. Mr. Thies
was replaced by Mr. Leister on the Audit Committee in August 2002. The Audit
Committee has at least one audit committee financial expert, Mr. Wyatt. Mr.
Wyatt is independent from management of the Company. The function of the Audit
Committee and its activities during 2002 are described in detail under the
heading Report of the Audit Committee.
The Audit Committee has adopted procedures for the treatment of
complaints or concerns regarding accounting, internal accounting controls or
auditing matters. The Audit Committee has also implemented pre-approval policies
and procedures for all audit and non-audit services. Generally, the Audit
Committee requires pre-approval of any services to be provided by the Company's
accountants, McGladrey & Pullen, LLP and RSM McGladrey, Inc., to the Company or
any of its affiliates. The pre-approval procedures include the designation of
such pre-approval responsibility to one individual on the Audit Committee,
currently Mr. Ambrose. In 2002, the Audit Committee pre-approved services to be
rendered by McGladrey & Pullen, LLP in connection with the Company's audit and
the audits of the Company's Employees' Stock Ownership Plan and Profit Sharing
Plan & Trust.
Fees paid to McGladrey & Pullen, LLP and RSM McGladrey, Inc. for
services rendered in 2002 are as follows:
--------------------------------------------------
FEES 2002 % OF TOTAL FEES
--------------------------------------------------
Audit $ 109,220 67.2%
--------------------------------------------------
Audit-related 29,100 17.9%
--------------------------------------------------
Tax 23,343 14.4%
--------------------------------------------------
All other 844 *
--------------------------------------------------
Total $ 162,507
--------------------------------------------------
* less than 1%
--------------------------------------------------
6
Services rendered in 2002 in connection with "audit-related" fees were
the audits of the Company's employee benefit plans, flexible benefits plan and
compliance with Uniform Single Attestation Program for Mortgage Bankers.
Services rendered in 2002 in connection with "tax" fees were preparation of
consolidated corporate tax return and corporate income tax planning. Services
rendered in 2002 in connection with "all other" fees were general consulting.
The Company did not retain McGladrey for the rendering of any financial
information design-related services in 2002.
The Company has not selected an independent auditor for the fiscal year
ending December 31, 2003 because the Audit Committee is currently engaged in the
process of evaluating qualified independent auditor candidates. For the fiscal
year ending December 31, 2002, the Board of Directors appointed McGladrey &
Pullen, LLP as independent auditors for the Company. A representative of
McGladrey & Pullen, LLP will be present at the Annual Meeting and will have the
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
In addition to the committees of the Board of Directors described
above, our non-employee directors met two times in executive session in 2002 and
expect to meet periodically in executive session in 2003. Mr. Wyatt, Chairman of
the Nominating & Corporate Governance Committee, will preside at these executive
sessions.
During 2002, non-employee directors of the Company received a cash
retainer of $7,500. Directors who are also employees of the Company or any of
its subsidiaries received no additional compensation for attending Board of
Directors' meetings.
REPORT OF THE AUDIT COMMITTEE
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee of the Board assists the Board in fulfilling its
responsibility for the oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. During the year, the
Committee met six times and also reviewed and discussed the interim financial
information contained in each quarterly earnings announcement with management
and the independent auditors prior to public release. The Committee also
recommended a revised charter, which the Board of Directors adopted. The Amended
and Restated Audit Committee Charter is attached to this Proxy Statement as
Annex B.
In discharging its oversight responsibility as to the audit process,
the Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and the Company that might
bear on auditors' independence consistent with Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," discussed with
the auditors any relationships that may impact their objectivity and
independence and satisfied itself as to the auditors' independence. The
Committee also discussed with management, the internal auditors and the
independent auditors the quality and adequacy of the Company's internal controls
and internal audit function's organization, responsibilities, budget and
staffing. The Committee reviewed with both the independent and internal auditors
their audit plans, scope, and identification of audit risk areas.
The Committee discussed and reviewed with the independent auditors all
communications required by auditing standards, generally accepted in the United
States of America including those described in Statement on Auditing Standards
No. 61, as amended, "Communication with Audit Committees," and discussed and
reviewed the results of the independent auditors' examination of the
consolidated financial statements. The Committee also discussed the results of
the internal audit examinations.
The Committee reviewed the consolidated audited financial statements of
the Company as of and for the year ended December 31, 2002, with management and
the independent auditors. Management has the responsibility for the preparation
of the Company's consolidated financial statements and the independent auditors
have the responsibility for the audit of those statements.
7
Based upon the above-mentioned review and discussions with management
and the independent auditors, the Committee recommended to the Board that the
Company's audited consolidated financial statements be included in its Annual
Report on Form 10-K for the year ended December 31, 2002, for filing with the
Securities and Exchange Commission.
AUDIT COMMITTEE
Joseph M. Ambrose (Chairman)
Kenneth M. Hendren
V. B. Leister
Arthur R. Wyatt
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of February 21, 2003 by all
directors and director nominees, by each person who is known by the Company to
be the beneficial owner of more than 5% of the outstanding Common Stock, by each
executive officer named in the Summary Compensation Table and by all directors
and executive officers as a group.
The number of shares beneficially owned by each director, director
nominee, 5% stockholder or executive officer is determined under rules of the
Commission, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership includes
any shares as to which the individual has sole or shared voting power or
investment power and also any shares which the individual has the right to
acquire within 60 days of February 21, 2003 through the exercise of any option
or other right. Unless otherwise indicated, each person has sole investment and
voting power (or shares such powers with his or her spouse) with respect to the
shares set forth in the following table. In certain instances, the number of
shares listed includes, in addition to shares owned directly, shares held by the
spouse or children of the person, or by a trust of which the person is a trustee
or in which the person may have a beneficial interest. In some cases, the person
has disclaimed beneficial interest in certain of these shares.
8
Common Stock Beneficially Owned
-------------------------------------------------------------
Number of Shares Right to Percent of
Name and Address of Beneficial Owner Owned Acquire (1) Outstanding Shares
------------------------------------ ----- ----------- ------------------
Douglas C. Mills (2) 2,795,583 46,000 20.72%
201 E. Main Street
Urbana, Illinois 61801
Linda M. Mills (3) 725,200 9,000 5.38%
2123 Seaton Court
Champaign, Illinois 61821
A. Barclay Klingel, Jr. (4) 833,158 0 6.11%
Joseph M. Ambrose 31,360 9,000 .30%
Samuel P. Banks 5,264 9,000 .10%
T. O. Dawson 89,726 9,000 .72%
Victor F. Feldman 72,544 0 .53%
Kenneth M. Hendren 144,238 9,000 1.12%
E. Phillips Knox 200,020 9,000 1.53%
Barbara J. Kuhl (5) 83,449 11,500 .70%
P. David Kuhl (6) 88,410 35,000 .90%
V. B. Leister, Jr. 21,248 9,000 .22%
Edwin A. Scharlau II 370,414 35,000 2.97%
David C. Thies 3,950 0 .03%
Arthur R. Wyatt 64,878 9,000 .54%
All directors and executive officers as a group 4,696,284 199,500 35.39%
(14 persons)
------------------------------------
(1) Shares that can be acquired through stock options available for
exercise within 60 days of February 21, 2003.
(2) Includes 670,002 shares held by the Martin A. Klingel Estate for which
Mr. Mills shares voting and dispositive powers with A. Barclay Klingel,
Jr. Excludes 725,200 shares of common stock beneficially owned by Linda
M. Mills, Mr. Mills' spouse. Includes 21,242 shares of common stock
owned by Busey Mills Foundation and 1,000,000 shares of common stock
owned by Mills Investment LP.
(3) Excludes 2,795,583 shares of common stock beneficially owned by Douglas
C. Mills, Mrs. Mills' spouse. Includes 10,000 shares of common stock
owned by Mills Family Foundation and 30,000 shares of common stock
owned by Mills Family Trust.
(4) Includes 670,002 shares held by the Martin A. Klingel Estate for which
Mr. Klingel shares voting and dispositive powers with Douglas C. Mills.
Also includes 108,000 shares held in the Klingel Insurance Trust, for
which Mr. Klingel acts as sole trustee.
(5) Excludes 88,410 shares of common stock beneficially owned by P. David
Kuhl, Mrs. Kuhl's spouse.
(6) Excludes 83,449 shares of common stock beneficially owned by Barbara J.
Kuhl, Mr. Kuhl's spouse.
9
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and holders of more than
10% of the Common Stock to file with the Commission, initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of the Company. The Company believes that during the fiscal year
ended December 31, 2002 its executive officers and directors complied with all
Section 16(a) filing requirements except for Mrs. Kuhl who was delinquent in
reporting one disposition transaction. In making these statements, the Company
has relied upon the written representations of its directors and executive
officers.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's
Chief Executive Officer and the other executive officers of the Company earning
at least $100,000 in 2002.
SUMMARY COMPENSATION TABLE
Restricted Stock Securities Underlying All Other
Name and Principal Positions Year Salary($) Bonus ($)(1) Awards ($) Options/SARS (#) Compensation ($) (2)
---------------------------- ---- --------- ------------ ---------- ---------------- --------------------
Douglas C. Mills 2002 100,000 140,000 0 30,000 83,281
Chairman of the Board and Chief 2001 105,000 140,005 0 15,000 48,241
Executive Officer 2000 100,000 121,813 1,994 15,000 77,016
Edwin A. Scharlau II 2002 140,000 80,000 0 20,000 63,712
Chairman of the Board of Busey 2001 140,000 76,008 0 7,500 11,648
Investment Group 2000 140,000 81,450 1,994 7,500 10,068
P. David Kuhl 2002 140,000 80,000 0 20,000 63,751
Chairman of the Board and Chief 2001 140,000 79,991 0 7,500 11,617
Executive Officer of Busey Bank 2000 140,000 81,450 1,994 7,500 10,047
Barbara J. Kuhl 2002 100,000 80,000 0 20,000 60,019
President, Corporate Secretary, 2001 100,000 79,991 0 7,500 10,993
Treasurer and Chief Operating Officer 2000 80,000 62,875 1,994 -0- 7,512
---------------------------------
(1) Mr. Mills, Mr. Scharlau, Mr. Kuhl and Mrs. Kuhl received 694, 377, 396
and 396 shares of Common Stock, respectively, under the 2001 Management
and Associate Dividend Program. The shares were valued at the closing
price on November 20, 2001, the date the award was approved by the
Board. The stock values included for Mr. Mills, Mr. Scharlau, Mr. Kuhl
and Ms. Kuhl were $14,005 , $7,608, $7,991 and $7,991, respectively.
(2) The amounts disclosed in this column for 2002 include:
Company contributions of $6,583, $10,655, $10,729 and $8,078 under the
First Busey Corporation Profit Sharing Plan & Trust, a defined
contribution plan, on behalf of Mr. Mills, Mr. Scharlau, Mr. Kuhl and
Mrs. Kuhl, respectively.
Discretionary company contributions of $1,058, $1,713, $1,725 and
$1,299, under the First Busey Corporation Employee Stock Ownership
Plan, a defined contribution plan, on behalf of Mr. Mills, Mr.
Scharlau, Mr. Kuhl and Mrs. Kuhl, respectively.
Company match of $50,000 on behalf of each individual under the First
Busey Corporation Deferred Compensation Plan for Executives. Interest
was also paid by the Company at a rate of 9.56%. The interest paid to
Mr. Mills was $1,221 and to Mr. Scharlau, Mr. Kuhl and Mrs. Kuhl the
interest paid was $642.
Compensation value of split-dollar life insurance policies on Mr. Mills
in the amount of $24,419. The Company will be reimbursed for those
premiums paid on the policies, without interest, from the proceeds of
the policies. Mr. Mills currently has two $10,000,000 split-dollar life
insurance policies. The first policy was acquired in 1992 and the
second policy was acquired in 2000. Split-dollar life insurance
policies were acquired on Mr. Scharlau and Mr. Kuhl in 1994. For 2002,
$702 and $655, respectively, represent the compensation value of these
policies to Mr. Scharlau and Mr. Kuhl.
10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants Appreciation for Option Term
--------------------------------------------------------------------------------- --------------------------------------
Number of Securities % of Total
Underlying Options Granted Exercise or
Options/SAR's to Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date 5%($) 10%($)
-------------------------- -------------------- ------------------ ----------- ----------- --------- -----------
Douglas C. Mills 30,000 13% $ 21.839 12/16/10 $ 366,934 $ 827,765
Edwin A. Scharlau II 20,000 9% $ 21.839 12/16/10 $ 244,622 $ 551,843
P. David Kuhl 20,000 9% $ 21.839 12/16/10 $ 244,622 $ 551,843
Barbara J. Kuhl 20,000 9% $ 21.839 12/16/10 $ 244,622 $ 551,843
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTIONS/SAR VALUES
The following table provides information on option exercises in fiscal
2002 by the named executive officers and the value of such officers' unexercised
options at December 31, 2002.
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options/SARs at Money Options/SARs at
December 31, 2002(#) December 31, 2002 ($) (1)
---------------------------------------------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
----------------------------------------------------------------------------------------------------------------------------------
Douglas C. Mills 0 0 46,000 34,642 297,618 65,921
Edwin A. Scharlau II 0 0 35,000 24,700 218,769 54,077
P. David Kuhl 0 0 35,000 24,700 218,769 54,077
Barbara J. Kuhl 0 0 11,500 24,400 82,608 52,184
(1) Based on the closing price of Common Stock of $23.06 as quoted on the
Nasdaq National Market on December 31, 2002.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the
Company's executive compensation program. After consideration of the Committee's
recommendations, the full Board of Directors reviews and approves all
compensation, both monetary and stock-based to all executive officers.
In the past, there have been three main components to the executive
officers' compensation package: salary, cash bonus and stock awards. It is the
intention of the Committee that compensation be set in such a manner as to be
competitive to attract, retain and motivate its management team. The Committee
also believes that stock ownership by its executive officers assists in aligning
the executive officers' interests with those of the Company's stockholders. In
April 2002, the Compensation Committee recommended and the Board of Directors
approved the Management and Associate Dividend Program, or the "MAD program."
Under the MAD program, the Board of Directors set four targeted
11
levels for "diluted earnings per share" for the Company for 2002. These levels
were $1.27, $1.28, $1.29, and $1.30. Based on the level of achievement of
earnings per share, the officer or associate would receive a dividend of a
predetermined percentage of their salary. If the minimum level was not reached,
there would be no dividend paid under the MAD program. If the top level was
exceeded, the dividend would not be increased. The goal of the MAD program is to
heighten awareness of the Company's earnings per share goal while emphasizing
the impact of the team concept throughout the organization. The term "dividend"
was used to indicate that this award was granted at the discretion of the Board
of Directors and would be based annually on the achievement of earnings per
share, similar to the dividend paid to the Company's stockholders. Under this
program, the Board hopes to further enhance the alignment of the staff's efforts
with those of the Company's stockholders. Stock Options were also granted in
April 2002 as part of the compensation package to Senior Vice Presidents and
above. A total of 229,000 shares were awarded with Mr. Mills receiving 30,000,
Mr. Scharlau, Mr. Kuhl and Mrs. Kuhl each received 20,000.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Base Salary/MAD Program. Mr. Mills' 2002 base salary was set at
$100,000, representing a 5% decrease from his base salary of $105,000 for 2001.
The Committee determined that under the MAD program, if the level of earnings
per share set by the Board was achieved, $1.27, $1.28, $1.29, or $1.30, Mr.
Mills' dividend would be $110,000, $120,000, $130,000, or $140,000,
respectively. Though Mr. Mills base salary was decreased, his potential MAD
compensation was increased. Based on the Company's achievement of earnings per
share of $1.31, Mr. Mills received the maximum cash dividend of $140,000.
Stock Options. The granting of stock options by the Committee is
designed to retain and motivate the management team as well as align executive
officers' financial interest with stockholder value. The number of stock options
granted to an executive officer and other officers is determined by the
Committee and approved by the Board. Grants of stock options are intended to
recognize different levels of contribution to the achievement of the Company's
annual corporate goals as well as different levels of responsibility and
experience. All stock options are granted with an exercise price equal to the
fair market value of Common Stock on the date of grant. On April 16, 2002, stock
options representing 229,000 shares were granted to officers and directors of
the Company. Mr. Mills received a stock option for 30,000 shares.
COMPENSATION COMMITTEE
Arthur R. Wyatt (Chairman)
Victor F. Feldman
E. Phillips Knox
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Exchange Act
that might incorporate future filings, including this Proxy Statement, in whole
or in part, the preceding report and the Performance Table included below shall
not be incorporated by reference into any such filings.
COMPANY PERFORMANCE
The following table compares the Company's performance, as measured by
the change in price of Common Stock plus reinvested dividends, with the CRSP
Nasdaq Total Return Index- United States and the SNL-Midwestern Banks Index for
the five years ended December 31, 2002.
12
FIRST BUSEY CORPORATION
Stock Price Performance
[TOTAL RETURN PERFORMANCE CHART]
PERIOD ENDING
-------------
INDEX 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
----- -------- -------- -------- -------- --------
First Busey Corporation 135.90 172.17 155.45 171.80 189.65
NASDAQ - Total US* 140.99 261.48 157.42 124.89 86.33
SNL Midwest Bank Index 106.37 83.57 101.20 103.43 99.77
The Banks in the Custom Peer Group -- SNL-Midwestern Banks Index --
represent all publicly traded banks, thrifts or financial service companies
located in Iowa, Illinois, Indiana, Kansas, Kentucky, Michigan, Minnesota,
Missouri, North Dakota, Nebraska, Ohio, South Dakota and Wisconsin.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Knox, a director of the Company, is an attorney with Tummelson
Bryan & Knox, Urbana, Illinois, and provided legal and certain consulting
services to the Company during fiscal 2002. The dollar amount of the fees paid
to Tummelson Bryan & Knox by the Company during the 2002 fiscal year was
$147,389.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's banking subsidiaries have, and may be expected to have in
the future, banking transactions in the ordinary course of business with
directors, executive officers and holders of 5% or more of the Company's Common
Stock, their immediate families and their affiliated companies. These
13
transactions have been and will be on the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
unaffiliated persons. These transactions have not involved and will not involve
more than the normal risk of collectibility or any other unfavorable features.
At December 31, 2002, these persons and companies were indebted to the Company's
banking subsidiaries for loans totaling approximately $4.55 million representing
3.95% of total stockholders' equity. In addition to these loans, the Company's
banking subsidiaries make loans to officers of the Company's subsidiaries who
are not executive officers of First Busey.
OTHER BUSINESS
So far as is presently known, there is no business to be transacted at
the Annual Meeting other than that referred to in the Notice of Annual Meeting
of Stockholders and it is not anticipated that other matters will be brought
before the Annual Meeting. If, however, other matters should properly be brought
before the Annual Meeting, it is intended that the proxy holders may vote or act
in accordance with the Company's Board of Directors' recommendation on such
matters.
STOCKHOLDER PROPOSALS
If a stockholder intends to present a proposal at the Company's 2004
Annual Meeting and desires that the proposal be included in the Company's Proxy
Statement and form of proxy for that meeting, the proposal must be in compliance
with Rule 14a-8 under the Exchange Act and received at the Company's principal
executive offices not later than November 15, 2003. As to any proposal that a
stockholder intends to present to stockholders without inclusion in the
Company's Proxy Statement for the Company's 2004 Annual Meeting of Stockholders,
the proxies named in management's proxy for that meeting will be entitled to
exercise their discretionary authority on that proposal unless the Company
receives notice of the matter to be proposed not later than January 29, 2004.
Even if proper notice is received on or prior to January 29, 2004, the proxies
named in management's proxy for that meeting may nevertheless exercise their
discretionary authority with respect to such matter by advising stockholders of
such proposal and how they intend to exercise their discretion to vote on such
matter, unless the stockholder making the proposal solicits proxies with respect
to the proposal to the extent required by Rule 14a-4(c)(2) under the Exchange
Act.
By order of the Board of Directors,
Barbara J. Kuhl
President and Chief Operating Officer,
Corporate Secretary and Treasurer
March 19, 2003
14
ANNEX A
FIRST BUSEY CORPORATION
NOMINATING & CORPORATE GOVERNANCE COMMITTEE CHARTER
PURPOSE
The Nominating & Corporate Governance Committee shall (1) identify
individuals qualified to become Board members, and recommend that the Board
select the director nominees for the next annual meeting of shareholders; and
(2) develop and recommend to the Board Corporate Governance Guidelines
applicable to the Company.
NOMINATING & CORPORATE GOVERNANCE COMMITTEE COMPOSITION AND MEETINGS
The Nominating & Corporate Governance Committee shall consist of no
fewer than two directors. Each member of the Nominating & Corporate Governance
Committee shall satisfy the independence requirements of The Nasdaq National
Market. The Board shall appoint the Chair and the other members of the
Nominating & Corporate Governance Committee annually. The members of the
Nominating & Corporate Governance Committee shall serve until their successors
are appointed and qualify. The Board shall have the power at any time to change
the membership of the Nominating & Corporate Governance Committee and to fill
vacancies in it, subject to such new member(s) satisfying the independence
requirements established by the Nasdaq.
The Chair shall be responsible for leadership of the Nominating &
Corporate Governance Committee, including overseeing the agenda, presiding over
the meetings and reporting to the Board. If the Chair is not present at a
meeting, the members of the Nominating & Corporate Governance Committee may
designate a Chair. The Nominating & Corporate Governance Committee shall meet at
least once each year and hold such other meetings from time to time as may be
called by its Chair, the Chief Executive Officer ("CEO") or any two members of
the Committee. Meetings may also be held telephonically or actions may be taken
by unanimous written consent. A majority of the members of the Nominating &
Corporate Governance Committee shall constitute a quorum of the Committee. The
vote of a majority of the members of the full Nominating & Corporate Governance
Committee shall be the act of the Committee. Except as expressly provided in the
Charter or the By-laws of the Company or as required by law, regulations or
Nasdaq listing standards, the Nominating & Corporate Governance Committee shall
fix its own rules of procedure.
NOMINATING & CORPORATE GOVERNANCE COMMITTEE AUTHORITY, DUTIES AND
RESPONSIBILITIES
1. The Nominating & Corporate Governance Committee shall develop
qualification criteria for Board members, and search for, interview and screen
individuals qualified to become Board members for recommendation to the Board
and consider stockholders' recommendations for director candidates, all in
accordance with the Corporate Governance Guidelines.
2. The Nominating & Corporate Governance Committee shall have the
sole authority to retain and terminate any search firm to be used to identify
director candidates and shall have sole authority to approve the search firm's
fees and other retention terms. The Nominating & Corporate Governance Committee
shall also have authority to obtain advice and assistance from internal or
external legal, accounting or other advisors.
3. The Nominating & Corporate Governance Committee shall
recommend to the Board the membership of the committees of the Board.
4. The Nominating & Corporate Governance Committee shall oversee
the evaluation of the performance of incumbent directors and determine whether
to recommend them for re-election to the Board.
5. The Nominating & Corporate Governance Committee shall oversee
the evaluation of the executive officers of the Company and make recommendations
to the Board as appropriate.
6. The Nominating & Corporate Governance Committee shall initiate
and oversee a periodic evaluation of (i) the quality, sufficiency and timeliness
of information furnished by management to the directors in connection with Board
and committee meetings and other activities of the directors, (ii) the
composition, organization (including its committee structure, membership and
leadership) and practices of the Board, (iii) tenure and other policies related
to the directors' service on the Board, and (iv) corporate governance matters
generally; and recommend action to the Board where appropriate.
7. The Nominating & Corporate Governance Committee shall monitor
the orientation and training needs of directors and recommend action to the
Board, individual directors and management where appropriate.
8. The Nominating & Corporate Governance Committee shall review
periodically with the Company's outside securities counsel, in light of changing
conditions, new legislation and other developments, the Company's Code of
Ethics, and make recommendations to the Board for such changes to or waivers of
the Code of Ethics as the Committee shall deem appropriate. The Nominating &
Corporate Governance Committee shall review whether the Company's Code of Ethics
has been communicated by the Company to all key employees of the Company with a
direction that all such key employees certify that they have read, understand
and are not aware of any violations of the Code of Ethics.
9. The Nominating & Corporate Governance Committee shall review
and reassess at least annually the adequacy of the Corporate Governance
Guidelines of the Company and recommend any proposed changes to the Board for
approval.
10. The Nominating & Corporate Governance Committee shall report
its actions and any recommendations to the Board after each Committee meeting.
11. The Nominating & Corporate Governance Committee shall review
and reassess the adequacy of this Charter annually and recommend any proposed
changes to the Board for approval.
12. The Nominating & Corporate Governance Committee shall annually
review its own performance.
13. The Nominating & Corporate Governance Committee shall have the
authority to delegate any of its responsibilities to subcommittees as the
Committee may deem appropriate in its sole discretion.
2
ANNEX B
FIRST BUSEY CORPORATION AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board and has sole responsibility for
(1) monitoring the integrity of the financial statements of the Company; (2)
oversight of the Company's internal and external auditors; (3) resolution of
disagreements between management and the auditors regarding financial reporting;
and (4) the determination of the independence of the external auditors.
The members of the Audit Committee shall meet the independence and experience
requirements of the Securities and Exchange Commission and the national
securities exchanges upon which the Company's common stock is listed and
trading, if any. The members of the Audit Committee shall be appointed by the
Board.
The Audit Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Audit Committee may request
any officer or employee of the Company or the Company's outside counsel or
external auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles and
practices as well as the adequacy of internal controls that could
significantly affect the Company's financial statements.
3. Review analyses prepared by management and the external auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements.
4. Review with management and, the external auditor, the Company's
quarterly financial statements prior to the release of quarterly
earnings and subsequent filing of such release with the Securities and
Exchange Commission.
5. Meet periodically, as necessary, with management to review the
Company's major financial risk exposures and the steps management has
taken to monitor and control such exposures.
6. Review major changes to the Company's auditing and accounting
principles and practices as suggested by the external auditor, internal
auditor or management.
7. Direct the appointment of the external auditor, which firm is
ultimately accountable to the Audit Committee.
8. Review management's internal control report prior to its inclusion in
the Company's annual report, which addresses the effectiveness of the
Company's internal controls and procedures for purposes of financial
reporting.
9. Review pertinent documentation relating to certificates of chief
executive officer and chief financial officer of the Company required
under the Sarbanes-Oxley Act of 2002 and rules of the Securities and
Exchange Commission formulated thereunder, including internal control
disclosure.
10. Approve the fees to be paid to the external auditor.
11. Receive periodic reports from the external auditor regarding the
auditor's independence, discuss such reports with the auditor, and take
appropriate action to satisfy itself of the independence of the
auditor.
12. Evaluate the performance of the external auditor and, if so determined,
replace the external auditor.
13. Review the appointment and replacement of the senior internal auditing
executive.
14. Review the significant reports to management prepared by the internal
auditing department and management's responses.
15. Meet with the external auditor prior to the audit to review the
planning and staffing of the audit.
16. Obtain from the external auditor assurance that Section 10A of the
Private Securities Litigation Reform Act of 1995 has not been
implicated.
17. Obtain reports from management, the Company's senior internal auditing
executive and the external auditor that the Company's subsidiary
affiliated entities are in conformity with applicable legal
requirements and the Company's Code of Conduct.
18. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
19. Review with the external auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or
access to required information.
(b) Any changes required in the planned scope of the internal
audit.
(c) The internal audit department responsibilities, budget and
staffing.
(d) Any disagreements between management and the external
auditors, which disagreements shall be resolved by the Audit
Committee.
20. Issue the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
21. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's Code of Conduct.
22. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators
or governmental agencies.
2
23. Meet periodically, as necessary, with the chief financial officer, the
senior internal auditing executive and the independent auditor in
separate executive sessions.
24. Pre-approve all audit and non-audit services to be performed by the
Company's external auditors. The responsibilities of pre-approval may
be designated to one member of the Audit Committee who, after giving
such pre-approval, must report to the full Audit Committee.
25. Review any and all reports issued by the external auditors, with
respect to the Company's financial statements and critical accounting
policies.
26. Establish reviews and adopt procedures to receive and handle anonymous
complaints about accounting, internal accounting controls, or auditor
matters.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor.
3
PROXY--FIRST BUSEY CORPORATION
KNOW ALL MEN BY THESE PRESENTS, THAT I, the undersigned stockholder of First
Busey Corporation (the "Company") having received notice of the Annual Meeting
of Stockholders, do hereby nominate, constitute and appoint, Tom Brown and Tom
Berns, my true and lawful attorney and proxy, with full power of substitution,
for me and in my name, place and stead to vote all of the shares of Common Stock
without par value ("Common Stock") of the Company standing in my name on its
books on February 21, 2003 at the Annual Meeting of Stockholders of the Company,
to be held at the Urbana Golf & Country Club, 100 W. Country Club Road, Urbana,
Illinois, on April 22, 2003 at 7:00 p.m., local time, and at any postponement or
adjournment thereof, with all powers the undersigned would possess if personally
present, as follows:
1. [ ] FOR all nominees listed below to serve as directors of the Company
until the next Annual Meeting of Stockholders (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Joseph M. Ambrose Linda M. Mills P. David Kuhl T. O. Dawson Edwin A. Scharlau II
V. B. Leister, Jr. E. Phillips Knox Victor F. Feldman Samuel P. Banks David C. Thies
Douglas C. Mills Barbara J. Kuhl Kenneth M. Hendren Arthur R. Wyatt
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through that nominee's name.)
To transact such other business as may properly come before the Annual Meeting
or any postponement or adjournment thereof.
This proxy will be voted as directed, or if no instructions are given, it will
be voted "FOR" election of all nominees as Directors of First Busey Corporation.
Also, this proxy will be voted at the Annual Meeting in accordance with the
Board of Directors' recommendations on any other matters which may come before
the Annual Meeting or any postponement or adjournment thereof.
This proxy is solicited on behalf of the Board of Directors and may be revoked
prior to its exercise.
Your vote is important. Any previously submitted proxies will not be used at the
Annual Meeting. Accordingly, even if you plan to attend the Annual Meeting,
please mark, sign and date this proxy and return it in the enclosed envelope.
________________________________________________________
________________________________________________________
Please sign your name or names exactly as they appear
on the stock certificate. Each joint tenant must
sign. When signing as attorney, administrator,
guardian, executor or trustee or as an officer of a
corporation, please give full title. If more than
one trustee, all should sign.