UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Centrue Financial Corporation
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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)(4) 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
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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Centrue
Financial Corporation
March 23, 2009
Dear Fellow Stockholder:
You are cordially invited to attend Centrue Financial Corporation's annual
meeting of stockholders at the Hilton Chicago O'Hare Airport, O'Hare
International Airport, Chicago, Illinois, on Wednesday, April 22, 2009, at 8:00
a.m. local time.
Your board of directors has nominated three persons to serve as Class II
directors on the board of directors. Their names appear in the enclosed proxy
materials. All three of the nominees are incumbent directors. The board of
directors recommends that you vote your shares for each of the nominees.
You are welcome to attend the meeting in person. Because it is important
that your shares be represented at the meeting, please sign and return the
enclosed proxy, whether or not you plan to attend the meeting. This will save us
additional expense in soliciting proxies and will ensure that your shares are
represented at the meeting.
A copy of our annual report to stockholders for 2008 is also enclosed.
Thank you for your attention to this important matter.
Very truly yours,
/s/ Thomas A. Daiber
-----------------------------------
Thomas A. Daiber
President and
Chief Executive Officer
7700 Bonhomme Avenue . St. Louis Missouri . 314-505-5500
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Centrue
Financial Corporation
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 2009
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TO HOLDERS OF COMMON STOCK:
The annual meeting of stockholders of Centrue Financial Corporation, a
Delaware corporation, will be held at the Hilton Chicago O'Hare Airport, O'Hare
International Airport, Chicago, Illinois, on Wednesday, April 22, 2009, at 8:00
a.m. local time, for the purpose of considering and voting upon the following
matters:
1. To elect three Class II directors.
2. To approve the compensation of Centrue's named executive officers as
determined by the executive & compensation committee.
3. To take action with respect to any other matters that may be
properly brought before the meeting and that might be considered by
the stockholders of a Delaware corporation at their annual meeting.
We are not aware of any other business to come before the meeting. Only
those stockholders of record as of the close of business on February 23, 2009,
shall be entitled to notice of the meeting and to vote at the meeting and any
adjournments or postponements of the meeting. In the event there are not
sufficient votes for a quorum or to approve or ratify any of the foregoing
proposals at the time of the meeting, the meeting may be adjourned or postponed
in order to permit our further solicitation of proxies.
By Order of the Board of Directors
/s/ Thomas A. Daiber
-----------------------------------
Thomas A. Daiber
President and
Chief Executive Officer
St. Louis, Missouri
March 23, 2009
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PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON. YOUR VOTE IS IMPORTANT TO ENSURE THAT A MAJORITY OF THE STOCK IS
REPRESENTED. YOU ARE WELCOME TO ATTEND THE MEETING, AND IF YOU DO YOU MAY VOTE
YOUR STOCK IN PERSON IF YOU WISH. IF YOU LATER FIND THAT YOU MAY BE PRESENT AT
THE MEETING OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO
AT ANY TIME PRIOR TO ITS EXERCISE. STOCKHOLDERS HOLDING SHARES IN BROKERAGE
ACCOUNTS ("STREET NAME" HOLDERS) WHO WISH TO VOTE AT THE MEETING WILL NEED TO
OBTAIN A PROXY FROM THE INSTITUTION THAT HOLDS THEIR SHARES.
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Centrue
Financial Corporation
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
board of directors of Centrue Financial Corporation of proxies to be voted at
the annual meeting of stockholders to be held at the Hilton Chicago O'Hare
Airport, O'Hare International Airport, Chicago, Illinois, on Wednesday, April
22, 2009, at 8:00 a.m., local time, or at any adjournments or postponements of
the meeting.
Centrue Financial Corporation, a Delaware corporation, is a regional financial
services company based in St. Louis, Missouri which has one bank subsidiary. Our
offices serve a market area which extends from the far western and southern
suburbs of the Chicago metropolitan area across Central and Northern Illinois
down to the metropolitan St. Louis area.
This proxy statement and the accompanying notice of meeting and proxy are first
being mailed to holders of shares of our common stock, par value $1.00 per
share, on or about March 23, 2009 to stockholders of record as of February 23,
2009. We are required to file an annual report, called a Form 10-K, with the
SEC. A copy of Form 10-K for the fiscal year ended December 31, 2008 is enclosed
for your reference.
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting
The proxy statement and annual report to security holders are available in the
investor relations section of our website at www.centrue.com.
Voting Rights and Proxy Information
The board of directors has fixed the close of business on February 23, 2009, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the annual meeting. Our transfer books will not be closed between
the record date and the date of the annual meeting. The board of directors hopes
that all stockholders can be represented at the annual meeting. Whether or not
you expect to be present, please sign and return your proxy in the enclosed
self-addressed, stamped envelope. Stockholders giving proxies retain the right
to revoke them at any time before they are voted by written notice of revocation
to the secretary of Centrue Financial Corporation and stockholders present at
the meeting may revoke their proxy and vote in person.
The shares represented by each valid proxy received in time will be voted at the
annual meeting and, if a choice is specified on the proxy, it will be voted in
accordance with that specification. If no instructions are specified in a signed
proxy returned to the company, the shares represented thereby will be voted in
FAVOR of the election of the directors listed in the enclosed proxy and FOR the
approval of our executive officers' compensation. If any other matters are
properly presented at the annual meeting, including, among other things,
consideration of a motion to adjourn the meeting to another time or place, the
individuals named as proxies and acting thereunder will have the authority to
vote on those matters according to their best judgment to the same extent as the
person delivering the proxy would be entitled to vote. If the annual meeting is
adjourned or postponed, a proxy will remain valid and may be voted at the
adjourned or postponed meeting. As of the date of printing of this proxy
statement, we do not know of any other matters that are to be presented at the
annual meeting other than the election of three Class II directors and the
non-binding executive compensation proposal.
Stockholders giving proxies retain the right to revoke them at any time before
they are voted by written notice of revocation to the secretary of Centrue
Financial Corporation or by a later executed proxy. Attendance at the annual
meeting will not automatically revoke a proxy, but a stockholder attending the
annual meeting may request a ballot and vote in person, thereby revoking a prior
granted proxy.
On February 23, 2009, we had 6,028,491 issued and outstanding shares of common
stock. For the election of directors, and for all other matters to be voted upon
at the annual meeting, each share of common stock is entitled to one vote. A
majority of the outstanding shares of the common stock must be present in person
or represented by proxy to constitute a quorum for purposes of the annual
meeting. Abstentions and broker non-votes (i.e., shares held by brokers in
street name, voting on certain matters due to discretionary authority or
instructions from the beneficial owners but not voting on other matters due to
lack of authority to vote on such matters without instructions from the
beneficial owner) will be counted for purposes of determining a quorum but will
not count toward the determination of whether such matters are approved or
directors are elected. Directors will be elected by a plurality of the votes
present in person or represented by proxy at the meeting and entitled to vote.
In all other matters, the affirmative vote of the majority of shares of common
stock present in person or represented by proxy at the annual meeting and
entitled to vote on the subject matter shall be required to constitute
stockholder approval.
I. ELECTION OF DIRECTORS
We have a staggered board of directors, divided into three classes. One class is
elected annually to serve for three years. At the annual meeting, our
stockholders will be entitled to elect three Class II directors for terms of
three years or until their successors are elected and qualified. Each of the
nominees for election as Class II directors are incumbent directors. Our board
of directors has reviewed the independence of the nominees for election to the
board and the independence of the incumbent directors in accordance with the
standards of the Nasdaq Stock Market. In accordance with such review, the board
of directors has determined that each of Messrs. Berry, Breipohl, Ganim,
Griffith, Hejna, McDonnell, Shinkle, Smith and Sullivan are independent under
those standards.
The proxy provides instructions for voting for all director nominees or for
withholding authority to vote for one or more director nominees. Unless
instructed to the contrary, the persons acting under the proxy which we are
soliciting will vote for the nominees listed below. In the event, however, that
any nominee shall be unable to serve, which is not now contemplated, the proxy
holders reserve the right to vote at the annual meeting for a substitute
nominee.
Information About Directors and Nominees
Set forth below is information, current as of February 23, 2009, concerning the
nominees for election and for the other directors whose terms of office will
continue after the meeting, including the age, year first elected a director and
business experience of each during the previous five years. Unless otherwise
indicated, each person has held the positions shown for at least five years. The
three nominees, if elected at the annual meeting, will serve as Class II
directors for three-year terms, expiring in 2012. We recommend that you vote
your shares FOR all three nominees.
NOMINEES
Position with Centrue Financial Corporation
Name (Age) Director Since and Principal Occupation
------------------- -------------- -------------------------------------------
Class II
(term expires 2012)
Michael A. Griffith 2006 Director of Centrue Financial Corporation
(Age 50) and Centrue Bank (post-merger since
November 2006 and pre-merger since 2002);
founder and Chief Executive Officer of
Aptuit, Inc. (2004-August 2008);
Self-employed Investor (August 2008 -
present)
Michael J. Hejna 2006 Director of Centrue Financial Corporation
(Age 55) and Centrue Bank (post-merger since
November 2006 and pre-merger since 2003);
President and Chief Executive Officer of
Gundaker Commercial Group, Inc.
2.
NOMINEES (Continued)
Position with Centrue Financial Corporation
Name (Age) Director Since and Principal Occupation
------------------- -------------- -------------------------------------------
Class II
(term expires 2012)
John A. Shinkle 1997 Director of Centrue Financial Corporation;
(Age 57) Senior Vice President, Stifel Nicolaus &
Company, Inc. (2006-present); Executive
Vice President and Director, Synovus
Securities, Inc. (1986-2006)
CONTINUING DIRECTORS
Position with Centrue Financial Corporation
Name (Age) Director Since and Principal Occupation
------------------- -------------- -------------------------------------------
Class III
(term expires 2010)
Thomas A. Daiber 2006 Director, President and Chief Executive
(Age 51) Officer of Centrue Financial Corporation
and Centrue Bank (post-merger since
November 2006 and pre-merger since October
2003)
Dennis J. McDonnell 2000 Director and Chairman of the Board of
(Age 66) Centrue Financial Corporation; Director and
Chairman of the Board of Centrue Bank since
November 2006; Chairman, McDonnell
Investment Management, LLC.
Mark L. Smith 2006 Director of Centrue Financial Corporation
(Age 59) and Centrue Bank (post-merger since
November 2006 and pre-merger since 2001);
President of Smith, Koelling, Dykstra &
Ohm, P.C., managing member of Solutions for
Wealth Management, LLC and North Convent,
LLC.
Scott C. Sullivan 1996 Director of Centrue Financial Corporation;
(Age 54) Director of Centrue Bank since November
2006; Attorney, Williams McCarthy LLP
Class I
(term expires 2011)
Richard J. Berry 1985 Director of Centrue Financial Corporation
(Age 56) and Centrue Bank; Attorney, Myers, Berry,
O'Conor & Kuzma, Ltd.
Walter E. Breipohl 1993 Director of Centrue Financial Corporation
(Age 55) and Centrue Bank; Owner/Broker, Walter E.
Breipohl & Company
Randall E. Ganim 2006 Director of Centrue Financial Corporation
(Age 55) and Centrue Bank (post-merger since
November 2006 and pre-merger since 2005);
President of Ganim, Meder, Childers &
Hoering, P.C.
3.
All of our directors will hold office for the terms indicated, or until their
respective successors are duly elected and qualified. There are no arrangements
or understandings between Centrue Financial Corporation and any person pursuant
to which any director has been selected. No member of the board of directors is
related to any other member of the board of directors.
Board Committees and Meetings
Our board of directors generally meets on a quarterly basis. The board of
directors met six times during 2008. During 2008, all directors attended at
least 75 percent of the meetings of the board and the committees on which they
served. Our board of directors has standing executive & compensation, corporate
governance & nominating and audit committees.
Executive & Compensation Committee
The members of the executive & compensation committee are Messrs. Griffith
(Chair), Hejna, McDonnell and Shinkle. The committee met four times during 2008.
The executive & compensation committee adopted a charter on June 16, 2005, which
was last revised in January 2009. The executive & compensation committee charter
combines the duties of both the executive committee and the compensation
committee and is available on the company's website at www.centrue.com.
The executive & compensation committee is organized, and its members appointed,
by the board of directors to carry out the responsibilities of the board of
directors relating to the effective administration of the company's executive
compensation and benefits programs as well as the general oversight of the
company's compensation program for all company employees. The committee
responsibilities include reviewing the performance of the CEO and all
compensation matters for our executive officers. The committee is comprised of
four independent directors and is responsible for providing oversight to ensure
that the company's compensation incentives and benefits are competitive and are
aligned with company goals so that such goals can be successfully achieved.
The executive & compensation committee does not generally delegate any matters
relating to the compensation and benefits of named executive officers to any
other party other than to the full board of directors. Items of daily management
and decisions relating to company-wide compensation and benefits, not
specifically targeting named executive officers, is delegated to company
management to the extent that it does not result in decisions that may
materially benefit named executive officers in comparison with the overall
employee population. The company's chief executive officer may recommend or
provide information for consideration regarding the compensation and benefits of
named executive officers to members of the board of directors.
In the course of determining base salaries and total compensation for our
executive officers, the committee reviews data for institutions which are deemed
to be the company's peer group. In determining base salaries throughout 2008,
the committee considered peer data as compiled and reported internally and by
consultants including Amalfi Consulting. When determining the base salaries of
the chief executive officer and the chief financial officer, specifically, the
committee reviewed a group of ten high-performing publicly traded banks ranging
in asset size from $1-2 billion with respect to their base salaries, bonus, all
other compensation and total compensation. This group included: Camden National
Corp, Columbia Bancorp, Horizon Bancorp, Lakeland Financial Corp, Merchants
Bancshares, Royal Banchshares, SY Bancorp, Southside Bancshares, Univest Corp
and West Bancorporation. These institutions were identified as "high performing"
based on each having achieved a return on equity consistent with the company's
goal of being in the upper quartile of comparably sized institutions in relation
to this benchmark. No peer institutions were selected from the states of
California, Florida or New York. The committee also reviewed a group of 17
comparably-sized Midwest financial institutions with respect to direct
compensation, bonus, total equity, retirement benefits, all other compensation
and total compensation specific to the positions of chief executive officer,
chief financial officer, and the next three most highly compensated officers.
This group included: Lakeland Financial Corporation, Enterprise Financial
Services Corp, Farmers Capital Bank Corporation, People Bancorp Inc., Mercantile
Bancorp Inc., S.Y. Bancorp, Inc., QCR Holdings, Inc. Porter Bancorp, Inc., MBT
Financial Corp., West Bancorporation Inc., Firstbank Corporation, Hawthorn
Bancshares, Inc., Horizon Bancorp, German American Bancorp, Inc., Princeton
National Bancorp, Inc., Dearborn Bancorp, Inc., and Camco Financial Corporation.
The executive & compensation committee also periodically reviews director
compensation. This oversight may be done in conjunction with or as delegated to
the corporate governance committee or the full board of directors.
4.
Audit Committee
The audit committee is responsible for assisting the board of directors with
oversight of (1) the integrity of our financial statements, (2) our compliance
with legal and regulatory requirements, (3) the independent auditor's
qualifications and independence and (4) the performance of our internal
accounting function and independent auditors. The audit committee has the direct
authority and responsibility to select, evaluate and, where appropriate, replace
the independent auditors, and is an "audit committee" for purposes of Section
3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the audit
committee are Messrs. Smith (Chair), Breipohl, Ganim and Sullivan. The committee
met ten times during 2008.
Corporate Governance & Nominating Committee
Our board of directors has a corporate governance & nominating committee which
consists of four directors. Messrs. McDonnell (Chair), Hejna, Smith and Sullivan
are the current members of this committee. The corporate governance & nominating
committee identifies individuals to become board members and selects, or
recommends for the board's selection, director nominees to be presented for
stockholder approval at the annual meeting of stockholders or to fill any
vacancies. The corporate governance & nominating committee met once in 2008.
Our board of directors has adopted a written charter for the corporate
governance & nominating committee. The charter and principles are available on
the company's website at www.centrue.com. Based upon the review described above
under the section "Election of Directors", the board of directors has determined
that each of the members of our corporate governance & nominating committee is
independent under the applicable standards of the Nasdaq Stock Market.
The corporate governance & nominating committee will consider director nominees
recommended by stockholders. A stockholder who wishes to recommend a person or
persons for consideration as a nominee for election to the board of directors
must send a written notice by mail, c/o corporate governance & nominating
committee, Centrue Financial Corporation, 7700 Bonhomme Avenue, St. Louis,
Missouri 63105, that sets forth: (1) the name, address (business and residence),
date of birth and principal occupation or employment (present and for the past
five years) of each person whom the stockholder proposes to be considered as a
nominee; (2) the number of shares of the common stock beneficially owned (as
defined by section 13(d) of the Securities Exchange Act of 1934) by each such
proposed nominee; (3) any other information regarding such proposed nominee that
would be required to be disclosed in a definitive proxy statement to
stockholders prepared in connection with an election of directors pursuant to
section 14(a) of the Securities Exchange Act of 1934; and (4) the name and
address (business and residential) of the stockholder making the recommendation
and the number of shares of the common stock beneficially owned (as defined by
section 13(d) of the Securities Exchange Act of 1934) by the stockholder making
the recommendation.
We may require any proposed nominee to furnish additional information as may be
reasonably required to determine the qualifications of such proposed nominee to
serve as a director of Centrue Financial Corporation. Stockholder
recommendations will be considered only if received no less than 120 days or no
more than 150 days before the date of the proxy statement sent to stockholders
in connection with the previous year's annual meeting of stockholders. The
corporate governance & nominating committee will consider any nominee
recommended by a stockholder in accordance with the preceding paragraph under
the same criteria as any other potential nominee.
The corporate governance & nominating committee seeks board members from diverse
professional backgrounds who combine a broad spectrum of experience and
expertise with a reputation for integrity. Directors should have experience in
positions with a high degree of responsibility, be leaders in the companies or
institutions with which they are affiliated and be selected based upon
contributions they can make to the board in performing its oversight
responsibilities. The corporate governance & nominating committee uses a
subjective process for identifying and evaluating nominees for director, based
on the information available to, and the subjective judgments of, the members of
the corporate governance & nominating committee and our then current needs. We
do not believe there would be any difference in the manner in which the
committee evaluates nominees based on whether the nominee is recommended by a
stockholder or not.
5.
Code of Ethics
The company has adopted a code of ethics that applies to all of our employees,
officers and directors, including our principal executive officer, principal
financial officer, principal accounting officer or controller, or persons
performing similar functions. Our code of ethics contains written standards that
we believe are reasonably designed to deter wrongdoing and to promote:
o Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
o Full, fair, accurate, timely, and understandable disclosure in
reports and documents that we file with, or submit to, the
Securities and Exchange Commission and in other public
communications we make;
o Compliance with applicable governmental laws, rules and regulations;
o The prompt internal reporting of violations of the code to an
appropriate person or persons named in the code; and
o Accountability for adherence to the code.
Stockholder Communications with the Board and Policy for Director Attendance at
Annual Meetings
Our board of directors has a process for stockholders to send communications to
the board of directors, its executive & compensation committee, its corporate
governance & nominating committee or its audit committee, including complaints
regarding accounting, internal accounting controls, or auditing matters.
Communications can be sent to the board of directors, its executive &
compensation committee, its corporate governance & nominating committee or its
audit committee or specific directors either by regular mail to the attention of
the board of directors, its executive & compensation committee, its corporate
governance & nominating committee, its audit committee or specific directors, at
our principal executive offices at 7700 Bonhomme Avenue, St. Louis, Missouri
63105. All of these communications will be reviewed by our secretary (1) to
filter out communications that our secretary deems, in his or her reasonable
judgment, are not appropriate for our directors, such as spam and communications
offering to buy or sell products or services, and (2) to sort and relay the
remainder to the appropriate committee or directors.
We expect and encourage all of our directors and nominees for election as
directors to attend the annual meeting of stockholders, absent a compelling
reason. All of our directors at the time of the 2008 annual meeting of
stockholders, with the exception of Mr. Griffith, attended that meeting.
Compensation of Directors
Each non-employee Centrue Financial Corporation director received an annual
retainer of $10,000, and each non-employee Centrue Bank director received an
annual retainer of $5,000. Additionally, the audit committee chairman received
an annual retainer of $40,000. Each non-employee Centrue Financial Corporation
director earned a fee of $1,750 for each board meeting attended and $750 for
each committee meeting attended, and each non-employee Centrue Bank director
earned $1,500 for each board meeting attended, $1,000 for each credit committee
meeting attended and $750 for all other committee meetings attended.
Additionally, the credit committee chairman received an annual retainer of
$18,350. Non-employee directors may also receive an annual grant of options to
purchase shares of common stock under the company's 2003 Stock Option Plan. The
2003 Stock Option Plan provides for annual formula grants to each of our
directors of options to purchase shares of common stock with an exercise price
of not less than 100% of the then current market price of the common stock on
the date of the grant. Such previously issued options were exercisable over five
years. During 2008, non-employee directors were granted 5,000 in stock options.
6.
Director Compensation
Change in
Pension
Fees Value and
Earned or Non-Equity Nonqualified
Paid in Stock Option Incentive Plan Deferred All Other
Cash Awards Awards Compensation Compensation Compensation Total
Name ($) (1) ($) ($) (2) ($) Earnings ($) ($)
--------------------------------------------------------------------------------------------------------------
Richard J. Berry $ 65,250 -- $ 23,100 -- -- -- $ 88,350
--------------------------------------------------------------------------------------------------------------
Walter E. Breipohl $ 73,750 -- $ 23,100 -- -- -- $ 96,850
--------------------------------------------------------------------------------------------------------------
Randall E. Ganim $ 51,750 -- $ 23,100 -- -- -- $ 74,850
--------------------------------------------------------------------------------------------------------------
Michael A. Griffith $ 32,500 -- $ 23,100 -- -- -- $ 55,600
--------------------------------------------------------------------------------------------------------------
Michael J. Hejna $ 86,350 -- $ 23,100 -- -- -- $ 109,450
--------------------------------------------------------------------------------------------------------------
Dennis J. McDonnell $ 36,000 -- $ 18,450 -- -- -- $ 54,450
--------------------------------------------------------------------------------------------------------------
John A. Shinkle $ 34,333 -- $ 18,450 -- -- -- $ 52,783
--------------------------------------------------------------------------------------------------------------
Mark L. Smith $ 85,750 -- $ 23,100 -- -- -- $ 108,850
--------------------------------------------------------------------------------------------------------------
Scott C. Sullivan $ 40,500 -- $ 23,100 -- -- -- $ 63,600
--------------------------------------------------------------------------------------------------------------
(1) Includes deferrals of director fees earned in 2008 pursuant to the Centrue
Financial Corporation Non-Employee Directors' Deferred Compensation Plan,
which became effective January 1, 2007. The Plan allows participants to
defer up to 100% of director fees earned. Participant deferrals are
invested in a phantom account representing units of Centrue Financial
Corporation common stock. As of December 31, 2008, participants in the
Plan held the following shares in their accounts: Mr. Ganim-6,401 shares;
Mr. Griffith-1,366 shares; Mr. Hejna-9,713 shares; Mr. Smith-5,214 shares;
and Mr. Sullivan-5,048 shares. Also includes fees related to bank
committees including the credit committee, compliance committee,
Sarbanes-Oxley steering committee, asset management group investment
committee, trust administrative committee and annual retainer for the
credit committee chairman.
(2) Stock option values are based on the Black-Scholes model assuming a
five-year option life. Stock option awards issued in 2008 for the above
directors vested at issuance. The amount reflected above is the portion of
options that were expensed in 2008 per FASB 123R for prior years and the
entire amount for options issued in 2008. The grant date market values of
the option awards made in 2008 that are listed in the table above were as
follows for the following directors: Mr. Berry-$18,450; Mr.
Breipohl-$18,450; Mr. Ganim-$18,450; Mr. Griffith-$18,450; Mr. Hejna
-$18,450; Mr. McDonnell-$18,450; Mr. Shinkle-$18,450; Mr. Smith-$18,450
and Mr. Sullivan-$18,450. As of December 31, 2008, the following directors
listed in the table above have the following number of option awards
outstanding: Mr. Berry-29,500 shares; Mr. Breipohl-29,500 shares; Mr.
Ganim-16,000 shares; Mr. Griffith-64,000 shares; Mr. Hejna-28,000 shares;
Mr. McDonnell-17,500 shares; Mr. Shinkle-29,500 shares; Mr. Smith-34,000
shares and Mr. Sullivan-29,500 shares.
7.
II. ADVISORY VOTE ON EXECUTIVE COMPENSATION
On February 17, 2009, the President signed into law the American Recovery and
Reinvestment Act of 2009. Among other things, the broad sweeping legislation
requires that "TARP recipients during the period in which any obligation arising
from financial assistance provided under the TARP remains outstanding shall
permit a separate [nonbinding] shareholder vote to approve the compensation of
executives, as disclosed pursuant to the compensation disclosure rules of the
Commission." The nonbinding vote is required annually at each annual or other
meeting of shareholders during the period that any obligation arising from
financial assistance provided under the TARP remains outstanding.
On January 9, 2009, the Company completed the sale of $32.7 million of preferred
stock and a warrant to purchase up to 508,320 shares of the Company's common
stock to the U.S. Treasury under the TARP Program. As a result, the Company is
submitting this nonbinding proposal for consideration by shareholders in
compliance with Section 7001 of the American Recovery and Reinvestment Act of
2009.
This proposal, commonly known as a "Say-on-Pay" proposal, gives you as a
shareholder the opportunity to endorse or not endorse our executive pay program
and policies through the following resolution:
"Resolved, that the shareholders approve the executive compensation of the
Company, as described in the "Compensation Discussion and Analysis" and the
tabular disclosure regarding named executive officer compensation (together with
the accompanying narrative disclosure) in this Proxy Statement. "
Because your vote is advisory, it will not be binding upon the Board. However,
the executive & compensation committee will take into account the outcome of the
vote when considering future executive compensation arrangements.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
EXECUTIVE COMPENSATION OF THE COMPANY, AS DESCRIBED IN THE "COMPENSATION
DISCUSSION AND ANALYSIS", AND THE TABULAR DISCLOSURE REGARDING NAMED EXECUTIVE
OFFICER COMPENSATION (TOGETHER WITH THE ACCOMPANYING NARRATIVE DISCLOSURE) IN
THIS PROXY STATEMENT.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of our common stock at February 23, 2009, by each person
known by us to be the beneficial owner of more than 5% of the outstanding common
stock, by each director or nominee, by each executive officer named in the
summary compensation table which can be found later in this proxy statement, and
by all of our directors and executive officers as a group.
The following table is based on information supplied to us by the directors,
officers and stockholders described above. The company has determined beneficial
ownership in accordance with the rules of the SEC. Shares of common stock
subject to options that are either currently exercisable or exercisable within
60 days of February 23, 2009 are treated as outstanding and beneficially owned
by the option holder for the purpose of computing the percentage ownership of
the option holder. However, these shares are not treated as outstanding for the
purpose of computing the percentage ownership of any other person. The table
lists applicable percentage ownership based on 6,028,491 shares outstanding as
of February 23, 2009. Unless otherwise indicated, the address for each person
listed below is 7700 Bonhomme Avenue, St. Louis, Missouri 63105.
Name of Individual or Amount and Nature of Percent
Number of Individuals in Group Beneficial Ownership(1)(2)(3) of Class
--------------------------------- ----------------------------- ----------
5% Stockholders
Wayne W. Whalen 879,396(4) 14.59%
333 W. Wacker Drive, Suite 2100
Chicago, Illinois 60606
8.
Name of Individual or Amount and Nature of Percent
Number of Individuals in Group Beneficial Ownership(1)(2)(3) of Class
--------------------------------- ----------------------------- ----------
5% Stockholders (Continued)
Tontine Partners 520,070 8.63%
55 Railroad Avenue, 1st Floor
Greenwich, Connecticut 06830
Royce & Associates, LLC 302,555 5.02%
1414 Avenue of the Americas
New York, New York 10019
Directors and Nominees
Richard J. Berry 49,411(5) *
Walter E. Breipohl 46,829 *
Thomas A. Daiber 118,989(6) 1.97%
Randall E. Ganim 61,225(7) 1.02%
Michael A. Griffith 105,343(8) 1.75%
Michael J. Hejna 68,521(9) 1.14%
Dennis J. McDonnell 686,341(10) 11.38%
John A. Shinkle 38,949(11) *
Mark L. Smith 56,843(12) *
Scott C. Sullivan 47,341(13) *
Other Named Executive Officers
Donald M. Davis 29,596(14) *
Steven E. Flahaven 16,602(15) *
Everett J. Solon 62,923(16) 1.04%
Kurt R. Stevenson 27,141(17) *
All directors and all executive
officers as a group (21 persons) 1,480,462(18) 24.56%
----------
* Indicates less than one percent.
(1) The information contained in this column is based upon information
furnished to us by the persons named above and the members of the
designated group. Amounts reported include shares held directly as well as
shares which are held in retirement accounts and shares held by members of
the named individuals' families or held by trusts of which the named
individual is a trustee or substantial beneficiary, with respect to which
shares the respective individual may be deemed to have sole or shared
voting and/or investment power. The nature of beneficial ownership for
shares shown in this column is sole voting and investment power, except as
set forth in the footnotes below. Inclusion of shares shall not constitute
an admission of beneficial ownership or voting and investment power over
included shares.
(2) Amounts shown include shares obtainable as of February 23, 2009 (or
obtainable within 60 days of February 23, 2009) through the exercise of
options to purchase shares of common stock granted under the company's
stock option plans as follows: Mr. Berry-24,500 shares; Mr.
Breipohl-24,500 shares; Mr. Daiber-65,400 shares; Mr. Ganim-13,000 shares;
Mr. Griffith-61,000 shares; Mr. Hejna-25,000 shares; Mr. McDonnell-14,500
shares; Mr. Shinkle-24,500 shares; Mr. Smith-31,000 shares; Mr.
Sullivan-24,500 shares; Mr. Davis-21,000 shares; Mr. Flahaven-4,000; Mr.
Solon-18,307 shares and Mr. Stevenson-18,262 shares. Option holders have
the sole power to exercise their respective options and would also be
entitled to exercise sole voting and investment power over the shares
issued upon the exercise of such options.
(3) Amounts shown also include phantom shares obtainable as of February 23,
2009 (or obtainable within 60 days of February 23, 2009) in accordance
with the terms of the company's non-employee directors' deferred
compensation plan and the executive deferred compensation plan to
participants as follows: Mr. Daiber-2,320 shares; Mr. Ganim-9,148 shares;
Mr. Griffith-1,366 shares; Mr. Hejna-12,443 shares; Mr. Smith-6,889
shares; Mr. Sullivan-6,873; Mr. Davis-1,504 shares; Mr. Flahaven-2,166
shares; Mr. Solon-1,151 shares and Mr. Stevenson-1,262 shares.
9.
(4) Includes shares held by Mr. Whalen's wife, Paula Wolff, Mr. Whalen's
children, the WPW Family Foundation and WPW Associates, L.P., a family
limited partnership, with shared voting and investment power over such
shares. The amount above also includes approximately 86,021 shares which
are issuable upon the conversion of 1,381 shares of Centrue Financial
Corporation convertible preferred stock held by Mr. Whalen.
(5) Includes 11,100 shares held in trusts for which Mr. Berry is a co-trustee,
over which shares Mr. Berry has shared voting and investment power.
(6) Includes 16,968 shares held jointly by Mr. Daiber and his spouse and 1,440
shares held in an individual retirement account for the benefit of his
spouse, over which shares Mr. Daiber has shared voting and investment
power. Also includes 5,095 shares held by Mr. Daiber in his 401(k)
retirement plan.
(7) All shares are held jointly by Mr. Ganim and his spouse.
(8) Includes 19,777 shares held jointly by Mr. Griffith and his spouse.
(9) All shares are held jointly by Mr. Hejna and his spouse.
(10) Includes shares held jointly by Mr. McDonnell and his wife over which
voting and dispositive power is shared. Also includes shares held in trust
for which Mr. McDonnell is trustee. The amount above also includes
approximately 86,021 shares which are issuable upon the conversion of
1,381 shares of Centrue Financial Corporation convertible preferred stock
held by Mr. McDonnell. Mr. McDonnell's address is 1515 W. 22nd Street,
11th Floor, Oak Brook, Illinois 60523.
(11) Includes 5,870 shares held in trust for which Mr. Shinkle serves as
trustee, over which Mr. Shinkle has voting and investment power. Also
includes 100 shares held by Mr. Shinkle's spouse, over which Mr. Shinkle
has no voting or investment power.
(12) Includes 9,366 shares held jointly by Mr. Smith and his spouse, over which
voting and investment power is shared and 480 shares held by Mr. Smith's
spouse, over which Mr. Smith has no voting or investment power. Also
includes 3,240 shares held in a trust in which Mr. Smith serves as
trustee, over which he has sole voting and investment power. However, he
does not have any financial interest over those shares and disclaims any
beneficial interest.
(13) Includes 1,687 shares held by Mr. Sullivan's spouse and 1,000 shares held
by members of Mr. Sullivan's family, over which shares Mr. Sullivan has
shared voting and investment power.
(14) Includes 2,092 shares held by Mr. Davis in his 401(k) retirement plan.
(15) Includes 5,959 shares held by Mr. Flahaven in his 401(k) retirement plan.
(16) Includes 9,695 shares held jointly by Mr. Solon with his spouse and 24,730
shares held by Mr. Solon in his 401(k) retirement plan.
(17) Includes 425 shares held by Mr. Stevenson jointly with his spouse, over
which shares Mr. Stevenson has shared voting and investment power. Also
includes 6,292 shares held by Mr. Stevenson in his 401(k) retirement plan.
(18) Footnotes (2), (3) and (5) through (17) are incorporated herein.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that our executive
officers, directors 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. They 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,
and, if appropriate, representations made to us by any reporting person
concerning whether a Form 5 was required to be filed for 2008, we are not aware
that any of our directors, executive officers or 10% stockholders failed to
comply with the filing requirements of Section 16(a) during 2008, with the
exception of Messrs. Ganim and Hejna who each failed to timely file one Form 4
in connection with the purchase of company common stock; Messrs. Ganim,
Griffith, Hejna, Smith and Sullivan who each failed to timely file Form 4's in
connection with the purchase of phantom shares of company common stock as a
participant in the Centrue Financial Corporation Non-Employee Directors'
Deferred Compensation Plan; and Messrs. Daiber, Davis, Flahaven, Solon and
Stevenson who each failed to timely file Form 4's in connection with the
purchase of phantom shares of company common stock as a participant in the
Centrue Financial Corporation Executive Deferred Compensation Plan.
10.
Report of Executive & Compensation Committee
The executive & compensation committee has reviewed and discussed the
Compensation Discussion and Analysis (the "CD&A") for the year ended December
31, 2008 with management. Based on the review and discussions, the executive &
compensation committee recommended to the board of directors that the CD&A be
included in the company's annual report on Form 10-K for the year ended December
31, 2008 and the company's 2009 proxy statement for filing with the SEC.
The committee certifies that it has reviewed with the company's senior risk
officers the company's incentive compensation arrangements that it has with its
senior risk officers (as such term is defined in the Emergency Economic
Stabilization Act of 2008) and that the committee has made reasonable efforts to
ensure that such arrangements do not encourage the company's senior executive
officers to take unnecessary and excessive risks that threaten the value of the
company.
Respectively Submitted,
2008 Executive & Compensation Committee
Michael A. Griffith, Chair
Michael J. Hejna
Dennis J. McDonnell
John A. Shinkle
Executive & Compensation Committee Interlocks
The members of the executive & compensation committee are set forth in the
preceding section. There are no members of the executive & compensation
committee who were officers or employees of the company, former officers of the
company or its subsidiaries or had any relationship otherwise requiring
disclosure here.
COMPENSATION DISCUSSION AND ANALYSIS
Philosophy
The executive & compensation committee's principal responsibilities include
acting upon matters delegated to the committee by the full board and ensuring
the alignment of compensation with the strategic objectives of the organization.
The executive & compensation committee recognizes that the company's success is
largely dependent on the selection, training and development of top caliber
executive, managerial, and professional talent. Ongoing investment in human
capital is expected to produce favorable long-term returns to our customers and
shareholders by offering extensive and progressive services that provide a
unique and pleasant banking experience to an ever-growing customer base. The
company has positioned itself for future balance sheet growth and enhanced
operating performance that is dependent upon many factors including its ability
to retain existing and attract new customers, maintain strong asset quality,
continue to improve operational efficiencies, offer comprehensive financial
products and services, and enhance technological capabilities.
The committee has established an objective that the company's executives be
among the most highly qualified and talented professionals available in their
respective areas of expertise, when compared to a peer group that represents
competition for business and talent. The committee evaluates the performance of
the chief executive officer and other executive officers of the organization
considering input from other board members, the chief executive officer and the
head of human resources in order to evaluate the company's progress in relation
to this objective.
The company believes successful compensation programs link business and
compensation strategies with thought processes that address a broad array of
program influences. This approach to strategy is a core value as it relates to
how the company competes with other organizations while meeting the needs of its
customers.
Elements of Compensation and Determination of Payments
The executive & compensation committee annually reviews and approves goals and
objectives relevant to the incentive compensation plans of the chief executive
officer and other executive officers of the organization.
11.
Executive officers shall, for the purposes of the committee's oversight, include
those individuals who are the annually named executive officers of the company.
In determining the compensation and benefits of our executive officers, the
following factors are generally taken into consideration: the performance of the
executive officers in achieving short and long-term goals; payment of
compensation commensurate with the ability and expertise of the executive
officers; and payment of compensation that is competitive with similar companies
(see "Executive & Compensation Committee" above). The committee considers the
foregoing factors, as well as others, in determining the compensation and
benefits plans of our executive officers.
In the course of determining base salaries and total compensation for our
executive officers, the committee reviews data for institutions which are deemed
to be the company's peer group. In determining base salaries throughout 2008,
the committee considered peer data as compiled through proxy data and reported
internally and by independent consultants including Amalfi Consulting.
The following elements include factors that will be considered when reviewing
executive officer compensation and benefits: base salary, bonus, long-term
incentives, officer benefits, retirement plan funding, perquisites and group
insurance benefits.
The following is a general description of how each of these elements applies to
our executive officers.
Base Salary - In determining the base salary of executive officers, the
executive & compensation committee defines base salary as the annualized regular
cash compensation of an employee, excluding bonus awards, company contributions
to employee benefits plans, or other compensation not designated as salary. The
executive & compensation committee considers the individual job performance of
the executive officers, as well as overall corporate performance, and the median
salaries as published by our peers and other third party consultants. Base
salaries are generally reviewed and considered for adjustment on an annual
basis, unless circumstances exist in which the executive is assuming a scope and
degree of responsibilities materially greater or lesser than the executive's
present duties, or it is deemed that an adjustment is needed to meet marketplace
demands.
Short-Term Incentive Compensation (Cash Bonus) -The short-term incentive
compensation program is intended to sustain management's focus on the company's
requirement for strategic long-range planning by encouraging attainment of the
annual profitability goals. The plan is designed to attract, develop, retain and
reward well-qualified management and executive staff.
Each year, the executive & compensation committee approves participants for the
program and corresponding rewards tiers ranging up to 50% of base salary,
commensurate with the responsibility level of each position. Eligible rewards,
including those of the chief executive officer, are based on both personal goals
and corporate performance. A minimum threshold must be met before any rewards
are paid, and all rewards are subject to final approval by the board of
directors. In 2008, the minimum threshold was an earnings per share target of
$1.91. No corporate or personal rewards would be payable unless this minimum
core earnings level was achieved (without credit for one time items such as
gains on the sale of branches). The committee may, at its discretion, recommend
rewards when the threshold is not met to recognize exemplary performance during
times when unforeseen circumstances may negatively impact attainment of the
earnings per share target.
The corporate performance goal was an earnings per share of $2.05. Corporate
performance rewards would be paid if the final budgeted corporate earnings per
share level was achieved. In 2008, the chief executive officer had a bonus
potential equal to 50% of his base salary with half of that tied to the
corporate performance goal and half tied to attainment of the company's
strategic plan objectives. The chief financial officer had a bonus potential
equal to 30% of his base salary with half of that tied to the corporate
performance goal and half tied to personal goals. Executive vice presidents had
a bonus potential equal to 25% of base salary with half of that tied to the
corporate performance goal and half tied to personal goals. Market presidents
(with the exception of Donald Davis whose bonus structure is discussed in
"Employment Agreements and Other Arrangements") had a bonus potential of 25% of
base salary with 25% of that tied to the corporate performance goal and 75% tied
to personal goals. All other officers have a bonus potential of between 5%-20%
with personal goals representing a more significant portion as the officer
levels lessen.
12.
Personal goals are set jointly by the participant and company management and are
comprised of tactical initiatives to be completed within the period that can
ultimately advocate the successful completion of long-range strategic
initiatives. Specific accomplishments considered in granting bonuses may include
goals linked to: attainment of annual budget and key strategic accomplishments
including, but not limited to, earnings per share and return on equity targets,
efficiency ratio, growth goals, asset quality, compliance, capital planning and
human resources accomplishments.
Beginning with the 2009 plan year, a corporate threshold related to maintaining
a satisfactory compliance program will also be incorporated. The committee, at
its sole discretion, may scale down the payment to as far as a $0 reward if
management fails to maintain risk management controls sufficient to protect
depositors and capital. For those executives whose primary job responsibility is
the control of risk, and compliance with rules and laws, the incentive
compensation structure will specifically incorporate achievement of risk
management objectives and exclude targets related to earnings. In addition,
direct reports of these executives will be reviewed for applicability to this
provision.
Long-Term Incentive Compensation - The company's primary long-term incentive
vehicle is stock options. Inclusion in the company's long-term incentive program
is based on the recommendation of the chief executive officer and the executive
& compensation committee, and is approved by the board of directors. No specific
formula is used in determining the amount and frequency of long-term incentives.
However, the committee considers factors such as earnings per share, return on
equity and total return to shareholders and generally reserves long-term
incentive grants to motivate and reward extraordinary performance that may
positively impact the company's long-term objectives. Restricted stock awards
may also be utilized.
Officer Benefits - Officer benefits programs focus on two general types of
officer benefits: nonqualified retirement benefits and officer life insurance.
Officer benefits are considered to be a critical component in attracting,
retaining and motivating key talent.
On January 1, 2008, the Centrue Financial Corporation Executive Deferred
Compensation Plan took effect. Participants may defer up to 50% of salary and up
to 100% of bonus (beginning with bonuses earned in 2008). The plan is available
to members of the senior management team and other select individuals deemed to
meet the criteria of "top hat" plan participants. Participant deferrals are
invested in a phantom account representing units of Centrue Financial
Corporation common stock. The company may make discretionary matching
contributions with respect to a portion of the participant's deferral and
discretionary contributions that are not related to the participant's deferrals.
The company match, and any discretionary employer contributions, are credited
quarterly (with the exception of an annual 3% contribution to those officers who
would have otherwise received a 3% safe harbor 401(k) match of deferred dollars)
and invested per the participant's direction into one or more of the following:
Centrue Financial Corporation common stock (phantom units), Vanguard Lifestyle
Income, Vanguard Lifestyle Conservative Growth, Vanguard Lifestyle Moderate
Growth, Vanguard Lifestyle Growth. Participants are always 100% vested in their
own deferrals. Company dollars (with the exception of an annual 3% contribution
to those officers who would have otherwise received a 3% safe harbor 401(k)
match of deferred dollars) are subject to a five-year cliff vesting schedule per
each year's match (e.g. all company dollars credited in 2008 will be vested on
12/31/13). No trust was established for the plan. However, the plan is
structured to allow for a rabbi trust. Participants may elect to receive
distributions upon separation of service or upon normal retirement age (65) in a
lump sum, over a five-year period or over a 10-year period. Participants have
the option to take a distribution upon a change of control.
Several officers, not including our chief executive officer, are currently
covered by a bank owned life insurance (BOLI) policy. A small group of officers
with BOLI are also covered by a split dollar plan which, subject to the
achievement of certain conditions, pays out a portion of death benefits to the
executives' named beneficiaries.
Retirement Benefits - The executive & compensation committee considers various
benefits, including retirement benefits, in determining compensation. The
primary retirement vehicle is the company's 401(k) plan. The 401(k) plan holds a
safe harbor status and allows eligible participants to defer compensation up to
annual IRS limits. In 2008, all eligible participants received a safe harbor
contribution equal to 3% of their total eligible compensation regardless of
whether and to what extent salary deferrals were elected.
13.
Company executives participate in retirement plan programs in a manner
consistent with plan provisions covering other employees. Currently, the company
does not provide executives with any supplemental executive retirement plan
benefits.
Perquisites - Executive officers may have a limited number of perquisites made
available to them. The main perquisites that may be offered are country club
memberships, reimbursement of business expenses and employment or
change-in-control agreements. In March of 2008, the company stopped paying
country club dues for executives. Modest one-time base salary adjustments were
made to offset this loss of benefits for covered executives. A detailed
explanation of employment agreements is provided in the section designated as
Employment Agreements and Other Arrangements.
Group Insurance Benefits - The company offers a comprehensive employee benefits
package for all eligible employees which includes group health, dental, vision,
life, dependent life, short and long-term disability insurance and a flexible
spending account plan. Executive officers are afforded the same participation
and rewards terms as all other eligible staff.
Total Rewards - The company considers compensation a single package consisting
of the parts described in this statement. When viewed in this manner, the
organization is positioned to: 1) establish specific goals for each form of
compensation, 2) project funding requirements consistent with the company's
business strategies, and 3) administer the program with predetermined goals as a
guide. Assuming strategic goals are met, the combined total rewards would be
expected to be comparable to similarly sized banks within the company's market
area.
Tarp Related Compensation Matters
In connection with the company's participation in January 2009 in the U.S.
Department of Treasury's Troubled Asset Relief Program Capital Purchase Program
(the "TARP Program"), the executive & compensation committee is required to
identify the features in the company's incentive compensation arrangements that
could encourage its senior executive officers to take unnecessary and excessive
risks that could threaten the value of the company. The committee is required to
review the company's incentive compensation arrangements to ensure that senior
executive officers are not encouraged to take such risks. The committee must
also meet at least annually with the company's senior risk officers to discuss
and review the relationship between the company's risk management policies and
practices and its incentive compensation arrangements. The committee began this
dialogue with the company's senior risk officers in January of 2009.
In order to further assist the executive & compensation committee in ensuring
that all compensation matters as they relate to TARP were properly addressed,
management formed a task force consisting of: the executive management team, the
senior risk management team and finance. A checklist of action items, along with
responsible parties and due dates, was developed. The company's legal counsel
reviewed the document to ensure that all critical items were being addressed and
was called upon periodically throughout the process to provide clarification and
guidance on TARP's mandates, as well as best practices, as they relate to
compensation. After analyzing various company practices and procedures as they
relate to compensation risk, the senior risk managers concluded that the
compensation plan arrangements do not encourage unnecessary and excessive risks
that threaten the value of Centrue Financial Corporation. The collective group
provided the executive & compensation committee with its findings, observations
and recommendations and served as a resource for the committee during its
certification exercises.
During the period that the U.S. Treasury holds the company's preferred or common
stock, the company may be restricted from paying bonus and other incentive
compensation in cash to the company's executive officers.
14.
Executive Compensation
The following table shows the compensation earned by the chief executive
officer, chief financial officer and the three other most highly compensated
executive officers in 2008.
Summary Compensation Table
Change in
Pension
Value and
Non-
qualified
Deferred
Non-Equity Compen-
Name and Stock Option Incentive Plan sation All Other
Principal Salary Bonus Awards Awards Compensation Earnings Compensation Total
Position Year ($) ($) ($) ($) ($) ($) ($) ($)
---------------------------------------------------------------------------------------------------------------------------
Thomas A. 2008 $ 325,000 $ -- -- $ 24,545 -- -- $ 8,490 $ 358,035
Daiber 2007 $ 298,984 $ 152,500 -- $ 12,225 -- -- $ 6,750 $ 470,459
President & 2006 $ 289,712 $ 60,000 -- $ 63,793 -- -- $ 7,938 $ 421,443
Chief Executive
Officer (1)
---------------------------------------------------------------------------------------------------------------------------
Kurt R. 2008 $ 180,639 $ -- -- $ 13,495 -- -- $ 7,332 $ 201,466
Stevenson 2007 $ 162,917 $ 54,269 -- $ 7,335 -- -- $ 6,824 $ 231,345
Senior 2006 $ 147,687 $ 59,405 -- $ 33,900 -- -- $ 11,044 $ 204,991
Executive Vice
President &
Chief Financial
Officer(2)
---------------------------------------------------------------------------------------------------------------------------
Donald M. 2008 $ 340,000 $ 48,968 -- $ 65,216 -- -- $ 20,958 $ 475,142
Davis 2007 $ 299,167 $ 75,000 -- $ 49,980 -- -- $ 30,460 $ 454,607
Market
President(3)
---------------------------------------------------------------------------------------------------------------------------
Steven E. 2008 $ 172,000 $ -- -- $ 10,740 -- -- $ 6,383 $ 189,123
Flahaven 2007 $ 151,250 $ 36,596 -- $ 4,483 -- -- $ 5,365 $ 197,694
EVP/Head of
Commercial
Banking(4)
---------------------------------------------------------------------------------------------------------------------------
Everett J. 2008 $ 157,625 $ -- -- $ 7,660 -- -- $ 8,884 $ 174,169
Solon 2007 $ 145,667 $ 33,179 -- $ 4,483 -- -- $ 7,212 $ 190,541
Market 2006 $ 144,500 $ 34,680 -- $ 11,606 -- -- $ 13,381 $ 204,167
President(5)
---------------------------------------------------------------------------------------------------------------------------
(1) Mr. Daiber's All Other Compensation figure represents $6,900 of employer
contributions to his 401(k) account and $1,590 of imputed income related
to Mr. Daiber's group-term life insurance. Stock option values are based
on the Black-Scholes model assuming a five-year option life for the number
of months in 2008 the options were held.
(2) Mr. Stevenson's All Other Compensation figure represents $6,673 of
employer contributions to his 401(k) account, $268 of imputed income
related to Mr. Stevenson's split dollar bank-owned life insurance (BOLI)
policy, and $391 of imputed income related to Mr. Stevenson's group-term
life insurance. Stock option values are based on the Black-Scholes model
assuming a five-year option life for the number of months in 2008 the
options were held.
15.
(3) We were not required to disclose Mr. Davis' salary information with
respect to his compensation prior to 2007. Mr. Davis was granted 50,000
stock options in association with his employment agreement in October of
2007, 20% of which were immediately vested. Mr. Davis' All Other
Compensation figure represents $6,900 of employer contributions to his
401(k) account; $1,008 of imputed income related to Mr. Davis' group-term
life insurance; $2,060 related to dividend payments of Mr. Davis' unvested
restricted stock and $10,990 of W-2 reported income related to the vested
income of 1,000 restricted shares of Centrue Financial Corporation common
stock. Stock option values are based on the Black-Scholes model assuming a
five-year option life for the number of months in 2008 the options were
held.
(4) We were not required to disclose Mr. Flahaven's salary information with
respect to his compensation prior to 2007. Mr. Flahaven's All Other
Compensation figure represents $5,580 of employer contributions to his
401(k) account and $803 of imputed income related to Mr. Flahaven's
group-term life insurance. Stock option values are based on the
Black-Scholes model assuming a five-year option life for the number of
months in 2008 the options were held.
(5) Mr. Solon's All Other Compensation figure represents $5,341 of employer
contributions to his 401(k) account, $2,134 of imputed income related to
Mr. Solon's split dollar bank-owned life insurance (BOLI) policy, and
$1,409 of imputed income related to Mr. Solon's group-term life insurance.
Stock option values are based on the Black-Scholes model assuming a
five-year option life for the number of months in 2008 the options were
held.
Employment Agreements and Other Arrangements
We are party to the following employment agreements with our executive officers
named in the compensation table:
Thomas A. Daiber and Kurt R. Stevenson
The post-merger Centrue entered into employment agreements with Thomas A. Daiber
and Kurt R. Stevenson on June 30, 2006. Except as described below, each
agreement is substantially identical. Initially the agreements are effective for
a three-year term. On the second anniversary of the agreements' effective date,
the term was extended an additional day so that the term is always one year,
unless either party gives written notice of non-renewal to the other party.
The agreement for Mr. Daiber provides for an annual base salary of not less than
$290,000. Additionally, Mr. Daiber will have the opportunity to receive an
annual performance bonus of up to 50% of his base salary. The agreement also
provided for the award of incentive stock options to Mr. Daiber, and on July 7,
2006 Mr. Daiber was awarded options to purchase equal to 12,500 shares of
Centrue stock after the merger. Mr. Daiber is entitled to not less than
twenty-three days of paid time off as well as benefits at least as favorable to
the benefits provided to all other employees.
The agreement for Mr. Stevenson provides for an annual base salary of not less
than $170,000. Additionally, Mr. Stevenson will have the opportunity to receive
an annual performance bonus of up to 30% of his base salary. The agreement also
provided for the award of incentive stock options to Mr. Stevenson, and on July
7, 2006 Mr. Stevenson was awarded options to purchase equal to 7,500 shares of
Centrue stock after the merger. Mr. Stevenson is entitled to not less than
twenty-three days of paid time off as well as benefits at least as favorable to
the benefits provided to all other employees.
The employment agreements include customary provisions prohibiting the executive
from competing and other activities that would be harmful to the company.
Payments under the employment agreements will be reduced to the extent necessary
to prevent any portion of the payments from being treated as a nondeductible
excess parachute payment under the federal tax laws.
Both executives signed non-material contract amendments in December 2008 to
address Internal Revenue Code Section 409A compliance matters for 2009.
Donald M. Davis
On October 5, 2007, the company entered into an employment agreement with Donald
M. Davis. Initially the agreement is effective for a four-year term. On the
third anniversary of the agreement's effective date and each anniversary
thereafter, the term will be extended for one additional year, unless either
party gives written notice of non-renewal to the other party.
16.
The agreement for Mr. Davis provides for an annual base salary of not less than
$325,000. Additionally, Mr. Davis had the opportunity to receive an annual
performance bonus of up to 25% of his salary in 2007 and annually thereafter
based on 10% of the pretax profit of the bank's St. Louis, Missouri branch(es)
with up to half of the bonus (i.e. 5% of the pretax profit of the bank's St.
Louis, Missouri branch(es)) available to be paid to Mr. Davis' direct reports
for the applicable year. Mr. Davis is entitled to not less than twenty-five days
of paid time off as well as benefits at least as favorable to the benefits
provided to all other employees.
The employment agreement includes customary provisions prohibiting the executive
from competing and other activities that would be harmful to the company.
Payments under the employment agreements will be reduced to the extent necessary
to prevent any portion of the payments from being treated as a nondeductible
excess parachute payment under the federal tax laws.
Mr. Davis signed a non-material contract amendment in December 2008 to address
Section 409A compliance matters for 2009. The amendment also addressed matters
related to the calculation of his bonuses earned in 2009 and beyond.
Steven E. Flahaven and Everett J. Solon
On January 31, 2007, the company entered into employment agreements with Steven
E. Flahaven and Everett J. Solon. Except as described below, each agreement is
substantially identical. Initially the agreements are effective for a one-year
term for Mr. Flahaven and a two-year term for Mr. Solon. On the first
anniversary of the date the agreements become effective, the term may be
extended for one or more additional years by resolution of the board of
directors. In 2008, the board extended each agreement for one additional year.
Mr. Flahaven's agreement was extended through December 31, 2009, while Mr.
Solon's agreement was extended through December 31, 2010.
Mr. Flahaven's agreement specifies a minimum base salary of $172,000. He will
have the opportunity to receive annual performance bonuses of up to 25% of his
base salary and is entitled to not less than twenty-five days of paid time off
as well as benefits at least as favorable to the benefits provided to all other
employees.
Mr. Flahaven received a grant of 10,000 stock options in February 2008.
The employment agreement includes customary provisions prohibiting Mr. Flahaven
from competing and other activities that would be harmful to the company.
Payments under the employment agreement will be reduced to the extent necessary
to prevent any portion of the payments from being treated as a nondeductible
excess parachute payment under the federal tax laws.
Mr. Solon's agreement specifies a minimum base salary of $157,000. He will have
the opportunity to receive annual performance bonuses of up to 25% of his base
salary and is entitled to not less than twenty-five days of paid time off as
well as benefits at least as favorable to the benefits provided to all other
employees.
Mr. Solon received a grant of 5,000 stock options in February 2008.
The employment agreement includes customary provisions prohibiting Mr. Solon
from competing and other activities that would be harmful to the company.
Payments under the employment agreement will be reduced to the extent necessary
to prevent any portion of the payments from being treated as a nondeductible
excess parachute payment under the federal tax laws.
Both executives signed contract amendments in December 2008 to address Section
409A compliance matters for 2009, contract term extensions, and new base
salaries.
Compensation of the Chief Executive Officer
Thomas A. Daiber
During 2008, Thomas A. Daiber served as the chief executive officer of Centrue
Financial Corporation. The board of directors approved Mr. Daiber's 2008 salary
of $325,000 as part of the company's customary annual review of all salaries.
This represented a $20,000 or 6.5% increase and was based on a combination of
factors including personal and company performance.
17.
Since the corporate threshold of $1.91 earnings per share was not met, Mr.
Daiber received no bonus for year 2008 performance.
In an effort to provide incentive toward achievement of the company's long-term
objectives and further promote ownership of the senior management team, Mr.
Daiber received a grant of 20,000 stock options in February 2008.
Mr. Daiber was eligible for participation in all company-sponsored benefits
programs in 2008, including the company's group health/dental/vision coverage,
group-term life insurance coverage, and company-sponsored retirement programs
including the Centrue Financial Corporation 401(k) and Profit Sharing Plan.
Mr. Daiber did not receive any compensation associated with a car allowance or
country club dues.
The compensation and benefits package for 2008 for Mr. Daiber was approved by
the company's board of directors and was commensurate with his knowledge, skills
and abilities, as supported by his professional experience and accomplishments,
as well as the Board's belief in his ability to successfully lead the
organization. The executive & compensation committee has reviewed all components
of the total compensation package of the chief executive officer and the other
named executive officers in this proxy statement and believes them to be
reasonable and not excessive.
Annually, the executive & compensation committee evaluates four primary areas of
performance in determining the chief executive officer's level of compensation.
Changes to the base salary, cash bonus, long-term rewards and other benefits of
the chief executive officer are based on:
o long-range strategic planning and implementation;
o the company's financial performance;
o 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.
When evaluating the company's financial performance, the executive &
compensation committee considers profitability, asset growth, asset quality and
risk management. The primary evaluation criteria are considered to be essential
to our long-term viability and are given equal weight in the evaluation.
Finally, the executive & compensation committee reviews compensation packages of
peer institutions, as well as compensation surveys provided by independent third
parties, to ensure that the chief executive officer's compensation is
competitive and commensurate with his level of performance.
Compensation of Other Executive Officers
Kurt R. Stevenson
During 2008, Kurt R. Stevenson served as the chief financial officer of Centrue
Financial Corporation. The board of directors approved Mr. Stevenson's 2008
salary of $180,000 as part of the company's customary annual review of all
salaries. This represented a $10,000 or 5.9% increase and was based on a
combination of factors including personal and company performance. In March of
2008, Mr. Stevenson received a one-time adjustment to $182,320 in conjunction
with the loss of his country club reimbursement benefit.
Since the corporate threshold of $1.91 earnings per share was not met, Mr.
Stevenson received no bonus for year 2008 performance.
In an effort to provide incentive toward achievement of the company's long-term
objectives and further promote ownership of the senior management team, Mr.
Stevenson received a grant of 10,000 stock options in February 2008.
Mr. Stevenson was eligible for participation in all company-sponsored benefits
programs in 2008, including the company's group health/dental/vision coverage,
group-term life insurance coverage, and company-sponsored retirement programs
including the Centrue Financial Corporation 401(k) and Profit Sharing Plan.
18.
Mr. Stevenson did not receive any compensation associated with a car allowance,
but did have country club dues paid in the first quarter of 2008 with a value of
$1,752. The country club benefit was eliminated in March 2008.
Donald M. Davis
During 2008, Donald M. Davis served as a market president of Centrue Financial
Corporation. The board of directors approved Mr. Davis' 2008 salary of $325,000
which was set in conjunction with his October 2007 employment agreement. In
March of 2008, Mr. Davis received a one-time adjustment to $343,000 in
conjunction with the loss of his country club reimbursement benefit. In
determining Mr. Davis' base salary, the production and profitability levels of
the St. Louis market which is headed by Mr. Davis, in comparison to overall
company production and profitability levels was considered. Based on the
significantly more substantial contributions made by that market area, Mr.
Davis' compensation package includes a base salary higher than that of other
similarly situated executives.
In February of 2009, Mr. Davis received a bonus for year 2008 performance in the
amount of $48,968. Per the terms of Mr. Davis' employment agreement, his bonus
for 2008 and annually hereafter was based on the profitability of the St. Louis
market. The bonus for Mr. Davis is calculated after adjusting for all direct
costs related to operating the St. Louis, Missouri market, including funding a
loan loss reserve for the St. Louis loan portfolio.
In an effort to provide incentive toward achievement of the company's long-term
objectives and further promote ownership of the senior management team, Mr.
Davis received a grant of 5,000 stock options in February 2008.
Mr. Davis was eligible for participation in all company-sponsored benefits
programs in 2008, including the company's group health/dental/vision coverage,
group-term life insurance coverage, and company-sponsored retirement programs
including the Centrue Financial Corporation 401(k) and Profit Sharing Plan.
Mr. Davis did not receive any compensation associated with a car allowance, but
did have country club dues paid in the first quarter of 2008 with a value of
$2,793. The country club benefit was eliminated in March 2008.
Steven E. Flahaven
During 2008, Steven E. Flahaven served as the executive vice president/head of
commercial banking of Centrue Financial Corporation. The board of directors
approved Mr. Flahaven's 2008 salary of $172,000 as part of the company's
customary annual review of all salaries. This represented a $12,000 or 7.5%
increase and was based on a combination of factors including personal and
company performance.
Since the corporate threshold of $1.91 earnings per share was not met, Mr.
Flahaven received no bonus for year 2008 performance.
In an effort to provide incentive toward achievement of the company's long-term
objectives and further promote ownership of the senior management team, Mr.
Flahaven received a grant of 10,000 stock options in February 2008.
Mr. Flahaven was eligible for participation in all company-sponsored benefits
programs in 2008, including the company's group health/dental/vision coverage,
group-term life insurance coverage, and company-sponsored retirement programs
including the Centrue Financial Corporation 401(k) and Profit Sharing Plan.
Mr. Flahaven did not receive any compensation associated with a car allowance or
country club dues.
Everett J. Solon
During 2008, Everett J. Solon served as a market president of Centrue Financial
Corporation. The board of directors approved Mr. Solon's 2008 salary of $157,000
as part of the company's customary annual review of all salaries. This
represented a $5,000 or 3.3% increase and was based on a combination of factors
including personal and company performance. In March of 2008, Mr. Solon received
a one-time adjustment to $158,500 in conjunction with the loss of his country
club reimbursement benefit.
19.
Since the corporate threshold of $1.91 earnings per share was not met, Mr. Solon
received no bonus for year 2008 performance.
In an effort to provide incentive toward achievement of the company's long-term
objectives and further promote ownership of the senior management team, Mr.
Solon received a grant 5,000 shares in February 2008.
Mr. Solon was eligible for participation in all company-sponsored benefits
programs in 2008, including the company's group health/dental/vision coverage,
group-term life insurance coverage, and company-sponsored retirement programs
including the Centrue Financial Corporation 401(k) and Profit Sharing Plan.
Mr. Solon did not receive any compensation associated with a car allowance, but
did have country club dues paid in the first quarter of 2008 with a value of
$248. The country club benefit was eliminated in March 2008.
Grants of Plan-Based Awards
All Other Option
Awards: Number of Exercise or Base Grant Date Fair
Securities Price of Option Value of Stock
Underlying Options Awards and Option Awards
Name Grant Date (1) (#) ($/Sh) ($)
-----------------------------------------------------------------------------------------------
Thomas A. Daiber 02/07/2008 20,000 $ 17.63 $ 67,200
-----------------------------------------------------------------------------------------------
Kurt R. Stevenson 02/07/2008 10,000 $ 17.63 $ 33,600
-----------------------------------------------------------------------------------------------
Donald M. Davis 02/07/2008 5,000 $ 17.63 $ 16,800
-----------------------------------------------------------------------------------------------
Steven E. Flahaven 02/07/2008 10,000 $ 17.63 $ 33,600
-----------------------------------------------------------------------------------------------
Everett J. Solon 02/07/2008 5,000 $ 17.63 $ 16,800
-----------------------------------------------------------------------------------------------
(1) All options granted in 2008 were qualified opti ons subject to a five-year
graded vesting schedule in which options vest 20% per year. The exercise
price for all options reflects the end of day close price as of the grant
date.
20.
Outstanding Equity Awards at Fiscal Year-End
Option Awards Stock Awards
----------------------------------------------------------------------------------------------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Equity Plan Market or
Incentive Number Awards: Payout
Plan of Market Number of Value of
Awards: Shares Value of Unearned Unearned
Number of Number of Number of or Units Shares or Shares, Shares,
Securities Securities Securities of Stock Units of Units or Units or
Underlying Underlying Underlying That Stock Other Other
Unexercised Unexercised Unexercised Option Have That Rights Rights That
Options Options Unearned Exercise Not Have Not That Have Have Not
Exercisable Un-exercisable Options Price Option Vested Vested Not Vested Vested
Name (#) (#) (1) (#) ($) Expiration Date (#) ($) (#) ($)
----------------------------------------------------------------------------------------------------------------------------------
Thomas A. 24,000 -- -- $21.8800 10/09/2013(2) -- -- -- --
Daiber 18,000 -- -- 22.9200 10/19/2014(2)
14,400 -- -- 22.5000 12/29/2012(2)
5,000 7,500 -- 19.5800 07/07/2013(3)
-- 20,000 -- 17.6300 02/07/2015(4)
----------------------------------------------------------------------------------------------------------------------------------
Kurt R. 500 -- -- 15.0000 02/11/2009(5) -- -- -- --
Stevenson 2,935 -- -- 11.7500 02/15/2011(6)
2,935 -- -- 14.2500 02/20/2012(2)
2,392 -- -- 15.0900 12/19/2012(2)
5,000 -- -- 20.3000 06/16/2015(2)
3,000 4,500 -- 19.6000 07/07/2013(3)
-- 10,000 -- 17.6300 02/07/2015(4)
----------------------------------------------------------------------------------------------------------------------------------
Donald M. 20,000 30,000 -- 19.8800 10/05/2014(7) 3,000 $ 18,510
Davis -- 5,000 -- 17.6300 02/07/2015(4)
----------------------------------------------------------------------------------------------------------------------------------
Steven E. 1,000 4,000 -- 19.0300 01/31/2014(8) -- -- -- --
Flahaven -- 10,000 -- 17.6300 02/07/2015(4)
----------------------------------------------------------------------------------------------------------------------------------
Everett J. 3,500 -- -- 15.0000 02/11/2009(5) -- -- -- --
Solon 100 -- -- 16.0625 11/18/2009(9)
3,196 -- -- 11.7500 02/15/2011(6)
4,076 -- -- 14.2500 02/20/2012(2)
2,935 -- -- 15.0900 12/19/2012(2)
5,000 -- -- 20.3000 06/16/2015(2)
1,000 4,000 -- 19.0300 01/31/2014(8)
--- 5,000 -- 17.6300 02/07/2015(4)
----------------------------------------------------------------------------------------------------------------------------------
(1) All outstanding options for executives will continue to vest at 20% per
year. With the exception of Mr. Davis, who was immediately vested in 20%
of his 50,000 options at the time of grant on October 30, 2007, all other
executives follow a five-year vesting schedule. Mr. Davis will continue to
vest 20% per year over a four-year vesting period with respect to his
initial grant of 50,000 options.
(2) The option became immediately and fully vested upon merger of the former
Centrue Financial Corporation and the former UnionBancorp, Inc (current
Centrue Financial Corporation) in November of 2006.
(3) The option vested in one-fifth cumulative annual increments beginning
November 13, 2007.
(4) The option will vest in one-fifth cumulative annual increments beginning
February 7, 2009.
(5) The option vested in one-fifth cumulative annual increments beginning
February 11, 2000.
(6) The option vested in one fifth cumulative annual increments beginning
February 15, 2002.
(7) One fifth of the option grant immediately vested on October 5, 2007.
Remaining options vested in one-fifth cumulative annual increments
beginning October 5, 2008.
21.
(8) The option vested in one-fifth cumulative annual increments beginning
January 31, 2008.
(9) The option was subject to a three-year cliff vesting schedule and was
fully vested on November 18, 2002.
Option Exercises and Stock Vested
Option Awards Stock Awards
---------------------------- --------------------------
Number of Number of
Shares Shares
Acquired Value Realized Acquired Value Realized
on Exercise on Exercise on Vesting on Vesting
Name (#) ($) (#) ($)
--------------------------------------------------------------------------------
Kurt R. Stevenson(1) 600 $ 1,060 -- --
--------------------------------------------------------------------------------
Donald M. Davis -- -- 1,000 $ 10,990
--------------------------------------------------------------------------------
Everett J. Solon 3,000 $ (480) --
--------------------------------------------------------------------------------
(1) Mr. Stevenson's acquisition of 600 shares included 500 which were ISO's
and 100 which were non-qualified options with values realized of $680 and
$380, respectively.
Non-Qualified Deferred Compensation Plan
Executive Registrant Aggregate Aggregate Aggregate Balance
Contributions Contributions in Earnings in Last Withdrawals/ at Last
Name in Last FY(5) Last FY FY(4) Distributions FYE
($) ($) ($) ($) ($)
----------------------------------------------------------------------------------------------------------------
Thomas A. Daiber $ 23,000 $ 10,000 $ (16,855) N/A $ 16,145
----------------------------------------------------------------------------------------------------------------
Kurt R. Stevenson (1) $ 10,500 $ 5,565 $ (6,458) N/A $ 9,607
----------------------------------------------------------------------------------------------------------------
Donald M. Davis $ 20,010 $ 10,000 $ (14,664) N/A $ 15,346
----------------------------------------------------------------------------------------------------------------
Steven E. Flahaven (2) $ 20,000 $ 10,600 $ (20,044) N/A $ 10,556
----------------------------------------------------------------------------------------------------------------
Everett J. Solon(3) $ 10,620 $ 5,629 $ (7,779) N/A $ 8,470
----------------------------------------------------------------------------------------------------------------
(1) The Registrant Contributions in Last FY for Mr. Stevenson included a
Company match of $5,250 which is subject to a five-year cliff vesting
schedule and a Company match of $315 which is immediately vested.
(2) The Registrant Contributions in Last FY for Mr. Flahaven included a
Company match of $10,000 which is subject to a five-year cliff vesting
schedule and a Company match of $600 which is immediately vested.
(3) The Registrant Contributions in Last FY for Mr. Solon included a Company
match of $5,310 which is subject to a five-year cliff vesting schedule and
a Company match of $319 which is immediately vested.
(4) Aggregate Earning in Last FY reflects the difference between all
participant and Company contributions (both vested and unvested) versus
the account's FMV at December 31, 2008.
(5) Executive Contributions in Last FY amounts are included within the Summary
Compensation Table as 2008 Salary.
Please refer to the discussion above under the sub-heading "Officer Benefits"
for a summary of the material features of the plan.
22.
Other Potential Post-Employment Payments
The following paragraphs describe the post-termination benefits payable to the
company's executive officers. During the period that the U.S. Treasury holds
preferred or common stock of the company pursuant to the TARP Capital Purchase
Program, the company may be prohibited or restricted from making the payments
described in this section to the executive officers.
Thomas A. Daiber and Kurt R. Stevenson
The agreements for Mr. Daiber and Mr. Stevenson provide that in the event of a
termination of the executive's employment without cause or by the executive due
to constructive discharge prior to the end of the term of the agreement, the
executive will be entitled to certain severance benefits including payments of
the executive's annual compensation for the greater of twenty-four months or the
remaining period left in the employment agreement's term. Annual compensation is
the executive's base salary plus the performance bonus for the most recent
performance period. The executive would also be entitled to receive
reimbursement for premiums the executive pays for the continuation of medical
benefits for the executive and the executive's dependents.
During the twelve months following a change of control, the executive will be
entitled to receive a lump sum payment equal to three times the executive's
annual compensation, which is the sum of the executive's base salary and the
performance bonus for the most recent performance period, plus reimbursement for
premiums the executive pays for the continuation of medical benefits for the
executive and the executive's dependents. Payments under the employment
agreements will be reduced to the extent necessary to prevent any portion of the
payments from being treated as a nondeductible excess parachute payment under
the federal tax laws.
At December 31, 2008, if the company would have paid out Mr. Daiber under his
constructive discharge or termination without cause provision, he would have
been entitled to $650,000 (reflects two years) in base salary, $0 (reflects two
years; estimates based off of earned bonus 2008) in bonus and approximately
$29,226 in COBRA continuation premiums (reflects two years; estimates based off
of current premium levels) for Mr. Daiber's family for health, dental and vision
benefits for a period of 24 months plus normal accruals paid upon termination of
employment. In addition, all outstanding stock options and awards would have
become fully and immediately exercisable. The value of in-the-money unvested
awards for Mr. Daiber was $0.
At December 31, 2008, if the company would have paid out Mr. Daiber under his
change of control provision, he would have been entitled to $975,000 (reflects
three years) in base salary, $0 (reflects three years; estimates based off of
earned bonus in 2008) in bonus and approximately $43,839 in COBRA continuation
premiums (reflects three years; estimates based off of current premium levels)
for Mr. Daiber's family for health, dental and vision benefits for a period of
36 months plus normal accruals paid upon termination of employment. In addition,
all outstanding stock options and awards would have become fully and immediately
exercisable. The value of in-the-money unvested awards for Mr. Daiber was $0.
At December 31, 2008, if the company would have paid out Mr. Stevenson under his
constructive discharge or termination without cause provision, he would have
been entitled to $364,640 (reflects two years) in base salary, $0 (reflects two
years; estimates based off of earned bonus in 2008) in bonus and approximately
$28,606 in COBRA continuation premiums (reflects two years; estimates based off
of current premium levels) for Mr. Stevenson's family for health, dental, vision
and life benefits for a period of 24 months plus normal accruals paid upon
termination of employment. In addition, all outstanding stock options and awards
would have become fully and immediately exercisable. The value of in-the-money
unvested awards for Mr. Stevenson was $0.
At December 31, 2008, if the company would have paid out Mr. Stevenson under his
change of control provision, he would have been entitled to $546,960 (reflects
three years) in base salary, $0 (reflects three years; estimates based off of
earned bonus in 2008) in bonus and approximately $43,839 in COBRA continuation
premiums (reflects three years; estimates based off of current premium levels)
for Mr. Stevenson's family for health, dental and vision benefits for a period
of 36 months plus normal accruals paid upon termination of employment. In
addition, all outstanding stock options and awards would have become fully and
immediately exercisable. The value of in-the-money unvested awards for Mr.
Stevenson was $0.
23.
Donald M. Davis
The agreement for Mr. Davis provides that in the event of a termination of the
executive's employment without cause or by the executive due to change of
control prior to the end of the term of the agreement, the executive will be
entitled to certain severance benefits including payments of the executive's
annual compensation for twenty-four months. Annual compensation is the
executive's base salary and annual performance bonus (which shall be based on
the performance of the Bank's St. Louis, Missouri branch(es) for the twelve (12)
whole calendar months prior to the date of termination and capped at 5% of the
pre-tax profit of the Bank's St. Louis, Missouri branch(es)). The executive
would also be entitled to receive reimbursement for premiums the executive pays
for the continuation of medical benefits for the executive and the executive's
dependents. Payments under the employment agreement will be reduced to the
extent necessary to prevent any portion of the payments from being treated as a
nondeductible excess parachute payment under the federal tax laws.
If the executive voluntarily terminates his employment due to constructive
discharge, the executive will be entitled to receive a sum equal to two times
the executive's base salary and the percentage of the annual performance bonus
earned from the end of the calendar year preceding until the last date of the
executive's employment (based on 5% of the pretax profit of the Bank's St.
Louis, Missouri branch(es)). The executive would also be entitled to receive
reimbursement for premiums the executive pays for the continuation of medical
benefits for the executive and the executive's dependents.
At December 31, 2008, if the company would have paid out Mr. Davis due to
termination of the executive's employment without cause or by the executive due
to change of control he would have been entitled to $686,000 (reflects two
years) in base salary, $97,936 (reflects two years; estimates based off of
earned bonus in 2008) in bonus and approximately $27,167 in COBRA continuation
premiums (reflects two years; estimates based off of current premium levels) for
Mr. Davis' family for health, dental and vision benefits for a period of 24
months plus normal accruals paid upon termination of employment. In addition,
all outstanding stock options and awards would have become fully and immediately
exercisable. The value of in-the-money unvested awards for Mr. Davis was $0.
At December 31, 2008, if the company would have paid out Mr. Davis due to
constructive discharge, he would have been entitled to $686,000 (reflects two
years) in base salary, $97,936 (reflects 100% of the annual performance bonus
earned from the end of the calendar year preceding until the last date of the
executive's employment (based on up to 5% of the pretax profit of the Bank's St.
Louis, Missouri branch(es)). in bonus and approximately $29,094 in COBRA
continuation premiums (reflects two years; estimates based off of current
premium levels) for Mr. Davis' family for health, dental, vision and life
benefits for a period of 24 months plus normal accruals paid upon termination of
employment. In addition, all outstanding stock options and awards would have
become fully and immediately exercisable. The value of in-the-money unvested
awards for Mr. Davis was $0.
Steven E. Flahaven
During the twelve months following a change of control, if Mr. Flahaven
voluntarily terminates his employment due to constructive discharge or if the
company terminates his employment for any reason other than cause, Mr. Flahaven
will be entitled to receive a lump sum payment equal to one times his annual
compensation, which is the sum of his base salary and the performance bonus for
the most recent performance period, plus reimbursement for premiums he pays for
the continuation of medical benefits for him and his dependents. Payments under
the employment agreement will be reduced to the extent necessary to prevent any
portion of the payments from being treated as a nondeductible excess parachute
payment under the federal tax laws.
At December 31, 2008, if the company would have paid out Mr. Flahaven under his
constructive discharge, termination without cause or change of control
provision, he would have been entitled to $172,000 in base salary, $0 in bonus
(estimated based off of earned bonus in 2008) in bonus and approximately $12,226
in COBRA continuation premiums (estimated based off of current premium levels)
for Mr. Flahaven and his spouse for health, dental, vision and life benefits for
a period of 12 months plus normal accruals paid upon termination of employment.
In addition, all outstanding stock options and awards would have become fully
and immediately exercisable. The value of in-the-money unvested awards for Mr.
Flahaven was $0.
24.
Everett J. Solon
During the twelve months following a change of control, if Mr. Solon voluntarily
terminates his employment due to constructive discharge or if the company
terminates his employment for any reason other than cause, Mr. Solon will be
entitled to receive a lump sum payment equal to two times his annual
compensation, which is the sum of his base salary and the performance bonus for
the most recent performance period, plus reimbursement for premiums he pays for
the continuation of medical benefits for him and his dependents. Payments under
the employment agreement will be reduced to the extent necessary to prevent any
portion of the payments from being treated as a nondeductible excess parachute
payment under the federal tax laws.
At December 31, 2008, if the company would have paid out Mr. Solon under his
constructive discharge, termination without cause or change of control
provision, he would have been entitled to $317,000 in base salary (reflects two
years of current base), $0 (reflects two years; estimates based off of earned
bonus in 2008) in bonus and approximately $28,479 in COBRA continuation premiums
(reflects two years; estimates based off of current premium levels) for Mr.
Solon's family for health, dental, vision and life benefits for a period of 24
months plus normal accruals paid upon termination of employment. In addition,
all outstanding stock options and awards would have become fully and immediately
exercisable. The value of in-the-money unvested awards for Mr. Solon was $0.
TRANSACTIONS WITH MANAGEMENT
The company's audit committee charter requires the review of all related party
transactions, other than Regulation O transactions, to the extent required by
the rules of the Securities and Exchange Commission and NASDAQ (or by the rules
and regulations of any other exchange or national market on which the company's
common stock is quoted or listed for trading).
Several of our directors and executive officers (including their affiliates,
families and companies in which they are principal owners, officers or
directors) were loan customers of, and had other transactions with, us and our
subsidiaries in the ordinary course of business. These loans and lines of credit
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
transactions with other persons and did not involve more than the normal risk of
collectibility or present other unfavorable features. During 2008, the law firm
of Myers, Berry, O'Conor & Kuzma, Ltd. received $32,263 in fees attributable to
company related matters in which the law firm provided legal services. Richard
J. Berry, a director of Centrue Financial Corporation and Centrue Bank, is a
principal of that firm.
ACCOUNTANT FEES
Audit Fees
Audit fees and expenses billed to the company by Crowe Horwath LLP for the audit
of the company's financial statements, including the audit of internal control
over financial reporting, for 2008 and 2007 were $298,500 and $291,785. The
audit services also include the review of financial statements included in our
quarterly reports on Form 10-Q and other services normally performed by
independent registered public accounting firms in connection with statutory and
regulatory filings.
Audit Related Fees
Audit related fees and expenses billed to the company by Crowe Horwath LLP for
fiscal years 2008 and 2007 were $0 and $0 for services related to the
performance of the audit or review of the company's financial statements.
Tax Fees
Tax fees and expenses billed to the company for fiscal years 2008 and 2007 were
$35,500 and $47,285 for services related to tax compliance, tax advice and tax
planning, consisting primarily of preparing the company's federal and state
income tax returns for the previous fiscal periods and inclusive of expenses.
All Other Fees
Fees and expenses billed to the company for fiscal years 2008 and 2007 were
$41,050 and $72,150 for all other services, which primarily consisted of the
audit of the benefit plans.
25.
The audit committee, after consideration of the matter, does not believe that
the rendering of these services by Crowe Horwath LLP to be incompatible with
maintaining its independence as our principal accountant. In accordance with
Section 10A(i) of the Exchange Act, before Crowe Horwath LLP is engaged by us to
render audit or non-audit services, the engagement is approved by our audit
committee. None of the audit-related, tax and other services described above
were required to be approved by the audit committee pursuant to Rule
2-01(c)(7)(i)(C) of Regulation S-X.
The audit committee is responsible for reviewing and pre-approving any non-audit
services to be performed by the company's independent auditors. The audit
committee has delegated its pre-approval authority to the chairman of the audit
committee to act between meetings of the audit committee. Any pre-approval given
by the chairman of the audit committee pursuant to this delegation is presented
to the full audit committee at its next regularly scheduled meeting. The audit
committee or chairman of the audit committee reviews and, if appropriate,
approves non-audit service engagements, taking into account the proposed scope
of the non-audit services, the proposed fees for the non-audit services, whether
the non-audit services are permissible under applicable law or regulation and
the likely impact of the non-audit services on the independence of the
independent auditors.
AUDIT COMMITTEE REPORT
The incorporation by reference of this proxy statement into any document filed
with the Securities and Exchange Commission by us shall not be deemed to include
the following report unless the report is specifically stated to be incorporated
by reference into such document.
The audit committee assists the board in carrying out its oversight
responsibilities for our financial reporting process, audit process and internal
controls. The 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 current charter
is available on the company's website at www.centrue.com.
Management is responsible for the preparation, presentation and integrity of our
financial statements, accounting and financial reporting principles, internal
controls, and procedures designed to ensure compliance with accounting
standards, applicable laws and regulations. Crowe Horwath LLP, our independent
registered public accounting firm, is responsible for performing an independent
audit of the financial statements in accordance with standards of the Public
Company Accounting Oversight Board and auditing management's assessments of its
internal controls. Centrue Financial Corporation outsources the internal audit
function to a third party that reports directly to the audit committee and
management. This third party is responsible for objectively reviewing and
evaluating the adequacy, effectiveness and quality of our system of internal
controls relating to the reliability and integrity of our financial information.
The audit committee has ultimate authority and responsibility to select,
evaluate and, when appropriate, replace our independent auditors.
The audit committee has reviewed and discussed our audited financial statements
for the fiscal year ended December 31, 2008 with our management and Crowe
Horwath LLP, our independent registered public accounting firm. The committee
has also discussed with Crowe Horwath LLP the matters required to be discussed
by the statement on Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol 1 AU section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T. as well as having received and discussed the
written disclosures and the letter from Crowe Horwath LLP required by applicable
requirements of the Public Company Accounting Oversight Board regarding the
independent accountant's communications with the audit committee concerning
independence, and has discussed with Crowe Horwath LLP their independence. Based
on the review and discussions with management and Crowe Horwath 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, 2008 for filing with the Securities and Exchange Commission.
Audit Committee
Mark L. Smith, Chair
Walter E. Breipohl
Randall E. Ganim
Scott C. Sullivan
26.
Audit Committee Financial Expert
The board of directors has determined that two of the four audit committee
members, Messrs. Ganim and Smith, are qualified for designation as "audit
committee financial experts." Both directors are independent under the listing
standards of the Nasdaq Stock Market.
STOCKHOLDER PROPOSALS FOR 2010 ANNUAL MEETING
For inclusion in our proxy statement and form of proxy relating to the 2010
annual meeting of stockholders, stockholder proposals in compliance with SEC
Rule 14a-8 must be received by us on or before November 23, 2009. For proposals
outside of SEC Rule 14a-8, in order to be presented at such meeting, notice of
the proposal must be received by Centrue Financial Corporation on or before
March 23, 2010, and must otherwise comply with our bylaws.
"HOUSEHOLDING" OF PROXY MATERIALS
The company intends to household proxy materials this year. Brokers to Centrue
Financial Corporation stockholders will deliver a single proxy statement and
Form 10-K annual report to multiple stockholders sharing an address unless
contrary instructions have been received from an affected stockholder. Once you
have received notice from your broker or the company that they will be
"householding" communications to your address, "householding" will continue
until you are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in "householding" and would prefer to
receive a separate proxy statement and Form 10-K annual report, please notify
your broker, direct your written request to Centrue Financial Corporation,
Investor Relations, 122 W. Madison Street, Ottawa, IL 61350 or contact Investor
Relations at (815) 431-2720.
Stockholders who currently receive multiple copies of the proxy statement and
Form 10-K annual report at their address and would like to request
"householding" of their communications should contact their broker or, if a
stockholder is a direct holder of Centrue Financial Corporation shares, they
should submit a written request to Computershare Investor Services, the
company's transfer agent, at 2 North LaSalle Street, Chicago, IL 60602.
OTHER MATTERS
We do not intend to present any other business at the meeting and know of no
other matters which will be presented. However, if any other matters come before
the meeting, it is the intention of the persons named in the accompanying proxy
to vote in accordance with their best judgment on those matters. A
representative of our independent auditors, Crowe Horwath LLP, is expected to
attend the annual meeting and will be available to respond to appropriate
questions and to make a statement if he or she so desires.
Your proxy is solicited by the board of directors, and we will pay the cost of
solicitation. In addition to soliciting proxies by use of the mail, officers,
directors and regular employees of Centrue Financial Corporation or our
subsidiaries, acting on our behalf, may solicit proxies by telephone, telegraph
or personal interview. We will, at our expense, upon the receipt of a request
from brokers and other custodians, nominees and fiduciaries, forward proxy
soliciting material to the beneficial owners of shares held of record by such
persons.
27.
FAILURE TO INDICATE CHOICE
If any stockholder fails to indicate a choice with respect to any of the
proposals on the proxy for the annual meeting, the shares of such stockholder
shall be voted FOR the nominees listed and FOR the approval of the company's
executive compensation as described in Proposal II.
By Order of the Board of Directors
/s/ Thomas A. Daiber
------------------------------------------
Thomas A. Daiber
President and
Chief Executive Officer
St. Louis, Missouri
March 23, 2009
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
28.
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THIS PAGE INTENTIONALLY
LEFT BLANK
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PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN
THE ENCLOSED ENVELOPE.
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[GRAPHIC OMITTED]
Centrue
Financial Corporation
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Proxy -- Centrue Financial Corporation
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Notice of 2009 Annual Meeting of Stockholders
Hilton Chicago O'Hare Airport
O'Hare International Airport, Chicago, Illinois
Wednesday, April 22, 2009 at 8:00 a.m. local time
Walter E. Breipohl and Mark L. Smith, or any of them, each with the power of
substitution, are hereby authorized to represent and vote the shares of the
undersigned, with all the powers which the undersigned would possess if
personally present, at the Annual Meeting of Stockholders of Centrue Financial
Corporation to be held on Wednesday, April 22, 2009 or at any postponement or
adjournment thereof.
Shares represented by this proxy will be voted by the stockholder. If no such
directions are indicated, the Proxies will have authority to vote FOR Michael A.
Griffith, FOR Michael J. Hejna and FOR John A. Shinkle and FOR the non-binding
executive compensation proposal.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
(Items to be voted appear on reverse side.)
[GRAPHIC OMITTED]
Centrue
Financial Corporation
Using a black ink pen, mark your votes with an X as shown in [X]
this example. Please do not write outside the designated areas.
================================================================================
Annual Meeting Proxy Card
================================================================================
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE
BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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[A] Proposals -- The Board of Directors recommends a vote FOR all the nominees
listed and FOR Proposal 2.
1. Election of Directors: For Withhold [+]
01 - Michael A. Griffith [ ] [ ]
02 - Michael J. Hejna [ ] [ ]
03 - John A. Shinkle [ ] [ ]
For Against Abstain
2. To approve the following advisory (non-binding) [ ] [ ] [ ]
proposal: "Resolved, that the shareholders approve
the executive compensation of the Company, as
described in the "Compensation Discussion and
Analysis" and the tabular disclosure regarding
named executive officer compensation (together
with the accompanying narrative disclosure) in
this Proxy Statement."
[B] Non-Voting Items
Change of Address -- Please print new address below.
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[C] Authorized Signatures -- This section must be completed for your vote to
be counted. -- Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, corporate officer, trustee,
guardian, or custodian, please give full title.
Date (mm/dd/yyyy) -- Signature 1 -- Please keep Signature 2 -- Please keep
Please print date below. signature within the box. signature within the box.
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