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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule
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Soliciting Material Pursuant to §240.14a-12 |
Wintrust Financial Corporation
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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WINTRUST FINANCIAL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 26, 2011
To the Shareholders of Wintrust Financial Corporation:
You are cordially invited to attend the 2011 Annual Meeting of Shareholders of
Wintrust Financial Corporation to be held at the Deer Path Inn, 255 East Illinois Road, Lake
Forest, IL 60045, on Thursday, May 26, 2011, at 10:00 a.m. local time, for the following purposes:
1. To elect the thirteen nominees for director named in this Proxy Statement to hold
office until the 2012 Annual Meeting of Shareholders;
2. To consider a proposal to amend the Companys 2007 Stock Incentive Plan to (i) add an
additional 2,860,000 shares of common stock to the number of shares that may be offered under the
plan, and (ii) reapprove the material terms of the performance measures for the 2007 Plan, in
accordance with Section 162(m) of the Internal Revenue Code of 1986, as amended;
3. To consider an advisory (non-binding) proposal approving the Companys 2010
executive compensation as described in the Companys accompanying Proxy Statement for the 2011
Annual Meeting of Shareholders;
4. To consider an advisory (non-binding) proposal to determine whether the
shareholder advisory vote to approve executive compensation (Item 3 above) should occur every one,
two or three years;
5. To ratify the appointment of Ernst & Young LLP to serve as the independent registered
public accounting firm for the year 2011; and
6. To transact such other business as may properly come before the meeting and any
adjournment thereof.
The Record Date for determining shareholders entitled to notice of, and to vote at,
the Annual Meeting was the close of business on April 4, 2011. We encourage you to attend the
Annual Meeting. Whether or not you plan to attend the Annual Meeting, we urge you to vote by either
completing your proxy card and returning it in the enclosed postage-paid envelope or by Internet or
telephone voting. The instructions printed on your proxy card describe how to use these convenient
services.
By order of the Board of Directors,
David A. Dykstra
Secretary
April 28, 2011
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, IT IS IMPORTANT
THAT YOU VOTE BY ONE OF THE METHODS NOTED ABOVE.
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WINTRUST FINANCIAL CORPORATION
727 North Bank Lane
Lake Forest, Illinois 60045
PROXY STATEMENT
FOR THE 2011 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 26, 2011
These proxy materials are furnished in connection with the solicitation by the Board of
Directors (the Board with individual members of the Board being referred to herein as a
Director) of Wintrust Financial Corporation, an Illinois corporation (Wintrust or the
Company), of proxies to be used at the 2011 Annual Meeting of Shareholders of the Company and at
any adjournment of such meeting (the Annual Meeting). This Proxy Statement (this Proxy
Statement), together with the Notice of Annual Meeting and proxy card, is first being mailed to
shareholders on or about April 28, 2011.
ABOUT THE MEETING
What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon the matters described in the Notice of
Annual Meeting that accompanies this Proxy Statement, including the election of the thirteen
nominees for Director named in this Proxy Statement, a proposal to amend the Companys 2007 Stock
Incentive Plan (the 2007 Plan), an advisory (non-binding) proposal approving the Companys 2010
executive compensation as described in this Proxy Statement, an advisory (non-binding) proposal to
determine whether the shareholder advisory vote to approve executive compensation should occur
every one, two or three years, and the ratification of the Audit Committees selection of Ernst &
Young LLP as Wintrusts independent registered public accounting firm for 2011.
Who may vote at the Annual Meeting?
Only record holders of the Companys common stock, no par value per share (the Common
Stock) as of the close of business on April 4, 2011 (the Record Date), will be entitled to vote
at the meeting. On the Record Date, the Company had outstanding 34,945,852 shares of Common Stock.
Each outstanding share of Common Stock entitles the holder to one vote.
What constitutes a quorum?
The Annual Meeting will be held only if a quorum is present. A quorum will be present if
a majority of the shares of Company Common Stock issued and outstanding on the Record Date are
represented, in person or by proxy, at the Annual Meeting. Shares represented by properly completed
proxy cards either marked abstain or withhold authority, or returned without voting
instructions are counted as present for the purpose of determining whether a quorum is present at
the Annual Meeting. Also, if shares are held by brokers who are prohibited from exercising
discretionary authority for beneficial owners who have not given voting instructions (broker
non-votes), those shares will be counted as present for the purpose of determining whether a
quorum is present at the Annual Meeting.
How do I submit my vote?
If you are a shareholder of record, you can vote by:
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attending the Annual Meeting; |
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signing, dating and mailing in your proxy card; |
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using your telephone, according to the instructions on your proxy card; or |
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visiting www.istshareholderservices.com, clicking on Shareholder Services,
clicking on Internet Voting and following the instructions on the screen. |
The deadline for voting by telephone or on the Internet is 11:59 p.m. Central Time on May
24, 2011.
What do I do if I hold my shares through a broker, bank or other nominee?
If you hold your shares through a broker, bank or other nominee, that institution will
instruct you as to how your shares may be voted by proxy, including whether telephone or Internet
voting options are available. If you hold your shares through a broker, bank or other nominee and
would like to vote in person at the Annual Meeting, you must first obtain a proxy issued in your
name from the institution that holds your shares.
Can I change my vote after I return my proxy card?
Yes. If you are a shareholder of record, you may change your vote by:
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voting in person by ballot at the Annual Meeting; |
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returning a later-dated proxy card; |
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entering a new vote by telephone or on the Internet; or |
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delivering written notice of revocation to the Companys Secretary by mail at 727
North Bank Lane, Lake Forest, Illinois 60045. |
If you vote other than by phone or Internet, you may change your vote at any time before
the actual vote. If you vote by phone or Internet, you may change your vote if you do so prior to
11:59 p.m. Central Time on May 24, 2011. If you hold your shares through an institution, that
institution will instruct you as to how your vote may be changed.
Who will count the votes?
The Companys tabulator, IST Shareholder Services, will count the votes.
Will my vote be kept confidential?
Yes. As a matter of policy, shareholder proxies, ballots and tabulations that identify
individual shareholders are kept secret and are available only to the Company, its tabulator and
inspectors of election, who are required to acknowledge their obligation to keep your votes
confidential.
Who pays to prepare, mail and solicit the proxies?
The Company pays all of the costs of preparing, mailing and soliciting proxies. The
Company asks brokers, banks, voting trustees and other nominees and fiduciaries to forward proxy
materials to the beneficial owners and to obtain authority to execute proxies. The Company will
reimburse the brokers, banks, voting trustees and other nominees and fiduciaries upon request. In
addition to solicitation by mail, telephone, facsimile, Internet or personal contact by its
officers and employees, the Company has retained the services of Morrow & Co., LLC, 470 West
Avenue, Stamford, Connecticut 06902, to solicit proxies for a fee of $5,000 plus expenses.
What are my voting choices when voting for the election of Directors?
With respect to each Director nominee, shareholders may:
(a) Vote FOR (in favor of) such nominee; or
(b) WITHHOLD authority to vote for such nominee.
What are my voting choices when voting on the proposal to amend the Companys 2007 Plan to (i)
increase the number of shares that may be offered under the plan by 2,860,000, and (ii) re-approve
the material terms of the performance measures for the 2007 Plan, in accordance with Section 162(m)
of the Internal Revenue Code of 1986, as amended (the Code)?
Shareholders may:
(a) Vote FOR the proposal;
(b) Vote AGAINST the proposal; or
(c) ABSTAIN from voting on the proposal.
2
What are my voting choices when voting on the advisory (non-binding) proposal approving the
Companys 2010 executive compensation as described in this Proxy Statement?
Shareholders may:
(a) Vote FOR the proposal;
(b) Vote AGAINST the proposal; or
(c) ABSTAIN from voting on the proposal.
What are my voting choices when voting on the advisory (non-binding) proposal to determine
whether the shareholder advisory vote to approve the Companys executive compensation should occur
every one, two or three years?
Shareholders may:
(a) Vote for holding an advisory (non-binding) vote to approve the Companys
executive compensation every ONE year;
(b) Vote for holding an advisory (non-binding) vote to approve the Companys
executive compensation every TWO years;
(c) Vote for holding an advisory (non-binding) vote to approve the Companys
executive compensation every THREE years; or
(d) ABSTAIN from voting on the proposal.
What are my voting choices when voting on the ratification of the Audit Committees selection of
Ernst & Young LLP as the Companys independent registered public accounting firm for 2011?
Shareholders may:
(a) Vote FOR the ratification;
(b) Vote AGAINST the ratification; or
(c) ABSTAIN from voting on the ratification.
What are the Boards recommendations?
The Board recommends a vote:
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FOR the election of the thirteen Director nominees named in this Proxy Statement; |
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FOR the proposal to amend the Companys 2007 Plan to (i) increase the number of
shares that may be offered under the plan by 2,860,000, and (ii) re-approve the
material terms of the performance measures for the 2007 Plan, in accordance with
Section 162(m) of the Code; |
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FOR the advisory (non-binding) proposal approving the Companys 2010 executive
compensation as described in this Proxy Statement; |
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FOR the advisory (non-binding) proposal to hold an advisory vote to approve the
Companys executive compensation every year; and |
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FOR the ratification of the Audit Committees selection of Ernst & Young LLP as the
Companys independent registered public accounting firm for 2011. |
How will my shares be voted if I sign, date and return my proxy card?
If you sign, date and return your proxy card and indicate how you would like your shares
voted, your shares will be voted as you have instructed. If you sign, date and return your proxy
card but do not indicate how you would like your shares voted, your proxy will be voted:
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FOR the election of the thirteen Director nominees named in this Proxy Statement; |
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FOR the proposal to amend the Companys 2007 Plan to (i) increase the number of
shares that may be offered under the plan by 2,860,000, and (ii) re-approve the
material terms of the performance measures for the 2007 Plan, in accordance with
Section 162(m) of the Code; |
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FOR the advisory (non-binding) proposal approving the Companys 2010 executive
compensation as described in this Proxy Statement; |
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FOR the advisory (non-binding) proposal to hold an advisory vote to approve the
Companys executive compensation every year; and |
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FOR the ratification of the Audit Committees selection of Ernst & Young LLP as the
Companys independent registered public accounting firm for 2011. |
With respect to any other business that may properly come before the meeting, or any
adjournment of the meeting, that is submitted to a vote of the shareholders, including whether or
not to adjourn the meeting, your shares will be voted in accordance with the best judgment of the
persons voting the proxies.
How will broker non-votes be treated?
A broker non-vote occurs when a broker who holds its customers shares in street name
submits proxies for such shares, but indicates that it does not have authority to vote on a
particular matter. Generally, this occurs when brokers have not received any instructions from
their customers. In these cases, the brokers, as the holders of record, are permitted to vote on
routine matters only, but not on other matters. In this Proxy Statement, brokers who have not
received instructions from their customers would only be permitted to vote on the ratification of
the appointment of Ernst & Young LLP.
Brokers who have not received instructions from their customers would not be permitted to vote
on the following proposals:
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To elect the thirteen Director nominees named in this Proxy Statement; |
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To amend the Companys 2007 Plan to (i) increase the number of shares that may be
offered under the plan by 2,860,000, and (ii) re-approve the material terms of the
performance measures for the 2007 Plan, in accordance with Section 162(m) of the Code; |
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The advisory (non-binding) proposal approving the Companys 2010 executive
compensation as described in this Proxy Statement; and |
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The advisory (non-binding) proposal to hold an advisory vote to approve the
Companys executive compensation every year. |
We will treat broker non-votes as present to determine whether or not we have a quorum at the
Annual Meeting, but they will not be treated as entitled to vote on the proposals, if any, for
which the broker indicates it does not have discretionary authority.
How will abstentions or withheld votes be treated?
If you vote to abstain or withhold authority to vote, your shares will be counted as present
to determine whether or not we have a quorum at the Annual Meeting. If you withhold authority to
vote for one or more of the nominees for director, this will have the same effect as a vote against
such nominee.
If you abstain from voting on the following proposals, your abstention will have the same
effect as a vote against such proposal:
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To amend the Companys 2007 Plan to (i) increase the number of shares that may be
offered under the plan by 2,860,000, and (ii) re-approve the material terms of the
performance measures for the 2007 Plan, in accordance with Section 162(m) of the Code; |
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The advisory (non-binding) proposal approving the Companys 2010 executive
compensation as described in this Proxy Statement; and |
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Ratification of the Audit Committees selection of Ernst & Young LLP as the
Companys independent registered public accounting firm for 2011. |
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If you abstain from voting on the advisory (non-binding) proposal to hold an advisory vote to
approve the Companys recommendation to approve executive compensation every year, your abstention
will have no effect on the frequency that is selected by shareholders.
What vote is required to elect Directors at the Annual Meeting?
Election as a Director of the Company requires that a nominee receive the affirmative
vote of a majority of the shares of Common Stock represented at the Annual Meeting, in person or by
proxy, and entitled to vote thereon. Accordingly, instructions to withhold authority will have the
same effect as a vote against such nominee.
What vote is required to amend the Companys 2007 Plan to (i) increase the number of shares
that may be offered under the plan by 2,860,000, and (ii) re-approve the material terms of the
performance measures for the 2007 Plan, in accordance with Section 162(m) of the Code?
The approval of the amendment to the 2007 Plan requires the affirmative vote of a majority of
the shares of Common Stock represented at the Annual Meeting, in person or by proxy, and entitled
to vote thereon. Abstentions will have the same effect as a vote against the proposal.
What vote is required to approve the advisory (non-binding) proposal approving the Companys 2010
executive compensation as described in this Proxy Statement?
The approval of the advisory (non-binding) proposal on the Companys 2010 executive
compensation described in this Proxy Statement requires the affirmative vote of a majority of the
shares of Common Stock represented at the Annual Meeting, in person or by proxy, and entitled to
vote thereon. Abstentions will have the same effect as a vote against the proposal.
What vote is required to approve the advisory (non-binding) proposal to determine whether the
shareholder advisory vote to approve the Companys executive compensation should occur every one,
two or three years?
The option of one year, two years or three years that receives the highest number of
votes cast by shareholders will be considered by the Company as the shareholders recommendation as to the
frequency of future advisory votes to approve the Companys executive compensation. Abstentions
will have no effect on the frequency that is selected by shareholders.
What vote is required to ratify the Audit Committees selection of Ernst & Young LLP as the
Companys independent registered public accounting firm for 2011?
Ratification of the appointment of Ernst & Young LLP as the Companys independent
registered public accounting firm for the fiscal year ending December 31, 2011 requires the
affirmative vote of a majority of the shares of Common Stock represented at the Annual Meeting, in
person or by proxy, and entitled to vote thereon. Abstentions will have the same effect as a vote
against ratification.
What if other matters come up during the Annual Meeting?
If any matters other than those referred to in the Notice of Annual Meeting properly come
before the Annual Meeting, the individuals named in the accompanying form of proxy will vote the
proxies held by them in accordance with their best judgment. The Company is not aware of any
business other than the items referred to in the Notice of Annual Meeting that may be considered at
the Annual Meeting.
Your vote is important. Because many shareholders cannot personally attend the
Annual Meeting, it is necessary that a large number be represented by proxy. Whether or not you
plan to attend the meeting in person, prompt voting will be appreciated. Registered shareholders
can vote their shares via the Internet or by using a toll-free telephone number. Instructions for
using these convenient services are provided on the proxy card. Of course, you may still vote your
shares on the proxy card. To do so, we ask that you complete, sign, date and return the enclosed
proxy card promptly in the postage-paid envelope.
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders to be Held on May 26, 2011:
This Proxy Statement and the 2010 Annual Report on Form 10-K are Available at:
https://materials.proxyvote.com/97650W
5
PROPOSAL NO. 1 ELECTION OF DIRECTORS
The Companys Board of Directors is comprised of 13 Directors, each serving a term that
will expire at this years Annual Meeting. At the Annual Meeting, you will elect 13 individuals to
serve on the Board of Directors until the next Annual Meeting. The Board of Directors, acting
pursuant to the recommendation of the Nominating and Corporate Governance Committee, has nominated
each Director standing for election. All of the nominees currently serve as Directors. Each nominee
has indicated a willingness to serve, and the Board of Directors has no reason to believe that any
of the nominees will not be available for election. However, if any of the nominees is not
available for election, proxies may be voted for the election of other persons selected by the
Board of Directors. Proxies cannot, however, be voted for a greater number of persons than the
number of nominees named. Shareholders of the Company have no cumulative voting rights with respect
to the election of Directors.
The following sections set forth the names of the Director nominees, their ages, a brief
description of their recent business experience, including recent occupation and employment,
certain directorships held by each, certain experiences, qualifications, attributes and skills, and
the year in which they became Directors of the Company. Director positions in the Companys
subsidiaries are included in the biographical information set forth below.
The Companys main operating subsidiaries include Advantage Bank, Barrington Bank,
Beverly Bank, Chicago Trust Company, Crystal Lake Bank, First Insurance Funding, Hinsdale Bank,
Lake Forest Bank, Libertyville Bank, North Shore Bank, Northbrook Bank, Old Plank Trail Community
Bank, State Bank of The Lakes, St. Charles Bank, Tricom, Town Bank, Village Bank, Wayne Hummer
Investments, Wheaton Bank, Wintrust Information Technology Services, Wintrust Capital Management
and Wintrust Mortgage Company. The Chicago Trust Company, Wayne Hummer Investments and Wintrust
Capital Management are collectively referred to herein as Wintrust Wealth Management.
Nominees to Serve as Directors until the 2012 Annual Meeting of Shareholders
Peter D. Crist (59), Director since 1996. Mr. Crist has served as the Companys Chairman
since 2008. Mr. Crist founded Crist Kolder Associates, an executive recruitment firm which focuses
on chief executive officer and director searches, in 2003 and has served since inception as its
Chairman and Chief Executive Officer. From December 1999 to January 2003, Mr. Crist served as Vice
Chairman of Korn/Ferry International (NYSE), the largest executive search firm in the world.
Previously, he was President of Crist Partners, Ltd., an executive search firm he founded in 1995
and sold to Korn/Ferry International in 1999. Immediately prior thereto he was Co-Head of North
America and the Managing Director of the Chicago office of Russell Reynolds Associates, Inc., the
largest executive search firm in the Midwest, where he was employed for more than 18 years. He also
serves as a director and chairman of the compensation committee of Northwestern Memorial Hospital
and as a director of Northwestern Memorial HealthCare. Mr. Crist is a Director of Hinsdale Bank.
Mr. Crists experience assisting companies with executive searches provides him with
insight into the attraction and retention of Company personnel, an important concern of the
Company. In addition, Mr. Crists experience as an executive of several large, Chicago-based
businesses provides him with insight into the management and operational challenges and
opportunities facing the Company in its markets. He also brings experience as a member of the
compensation committee of Northwestern Memorial Hospital. In addition, Mr. Crists experience as a
director of a Hinsdale Bank gives him valuable insight into the Companys banking operations.
Bruce K. Crowther (59), Director since 1998. Mr. Crowther has served as President and
Chief Executive Officer of Northwest Community Healthcare, Northwest Community Hospital and certain
of its affiliates since January 1992. Prior to that time he served as Executive Vice President and
Chief Operating Officer from 1989 to 1991. He is a Fellow of the American College of Healthcare
Executives. Mr. Crowther is the past Chairman of the board of directors of the Illinois Hospital
Association as well as a member of the board of directors of the Max McGraw Wildlife Foundation.
Mr. Crowther is a Director of Barrington Bank.
Mr. Crowthers experience as President and Chief Executive officer of Northwest Community
Healthcare, Northwest Community Hospital and certain of its affiliates provides him with insight
into the challenges of leading a large and complex organization in the greater Chicago area and an
understanding of the operation and management of a large business. In addition, Mr. Crowthers
experience as a director of Barrington Bank gives him valuable insight into the Companys banking
operations.
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Joseph F. Damico (57), Director since 2005. Mr. Damico is a founding partner and Co-Chairman
of RoundTable Healthcare Partners, an operating-oriented private equity firm focused on the
healthcare industry. Mr. Damico has more than 30 years of healthcare industry operating experience,
previously as Executive Vice President of Cardinal Health, Inc. and President & Chief Operating
Officer of Allegiance Corporation. Mr. Damico also held senior management positions at Baxter
International Inc. and American Hospital Supply and serves as a Director of Northwestern Memorial
Hospital and James Madison University. Mr. Damico is an advisory Director of Libertyville Bank.
Mr. Damicos experience in senior leadership positions with Cardinal Health, Allegiance,
Baxter International, and American Hospital Supply provides him with knowledge of the issues faced
by large and complex businesses. In addition, his experience as Co-Chairman of RoundTable
Healthcare Partners provides him with insight into issues faced by entrepreneurial companies. His
experience as a corporate director also provides him with knowledge of the operations of various
boards of directors. Mr. Damicos experience as an advisory director of Libertyville Bank gives him
valuable insight into the Companys banking operations.
Bert A. Getz, Jr. (43), Director since 2001. Mr. Getz joined Globe Corporation in 1991
and serves as Director and Co-Chief Executive Officer. He is also President of Globe Development
Corporation (a wholly-owned real estate development subsidiary of Globe Corporation), an Officer
and Director of Globe Management Company, and Chairman of the Investment Committee for Globe
Investment Company, LP. Additionally, Mr. Getz is a Director of the Globe Foundation, the National
Historical Fire Foundation and Childrens Memorial Hospital, and is a Trustee of the Chicago
Zoological Society at Brookfield Zoo, The Lawrenceville School and North Shore Country Day School.
Mr. Getz serves as a Director of Libertyville Bank, Wintrust Capital Management, Wayne Hummer
Investments and The Chicago Trust Company.
Mr. Getzs experience in real estate investment and development, through Globe
Corporation and its affiliates, provides him with knowledge of the real estate market in the
Chicago area, which affects numerous aspects of the Companys business, particularly the Companys
lending operations. In addition, Mr. Getzs experience as a real estate developer provides insight
into the operation of credit-intensive businesses. His experience as a director of various
corporate and non-profit boards provide him with knowledge of the concerns of various
constituencies of the Company. As a result of his financial experience, Mr. Getz qualifies as a
financial expert for purposes of rules governing audit committees. In addition, Mr. Getzs
experience as a director of Libertyville Bank and Wintrust Wealth Management gives him valuable
insight into the Companys banking, brokerage and investment advisory operations.
H. Patrick Hackett, Jr. (59), Director since 2008. Mr. Hackett is the Principal of HHS
Co., a real estate development and management company located in the Chicago area. Previously, he
served as the President and Chief Executive Officer of RREEF Capital, Inc. and as Principal of The
RREEF Funds, an international commercial real estate investment management firm. Mr. Hackett taught
real estate finance at the Kellogg Graduate School of Management for 15 years when he also served
on the real estate advisory boards of Kellogg and the Massachusetts Institute of Technology. He
serves on the board of First Industrial Realty Trust, Inc. (NYSE) and is a director of North Shore
Bank.
Mr. Hacketts experience as Principal of HHS Co. provides him with knowledge of the real
estate market in the Chicago area, a market which impacts not only the value of collateral pledged
to the Company, but also affects demand for the Companys lending products. In addition, Mr.
Hacketts 25 years of experience reviewing and analyzing commercial real estate investments for
registered investment advisors provides him with knowledge of financial analysis and modeling of
commercial real estate transactions as well as the investment committee process. Mr. Hacketts
experience as a director of North Shore Bank gives him valuable insight into the Companys banking
operations.
Scott K. Heitmann (62), Director since 2008. Mr. Heitmann, retired for the past six
years, has over 30 years of experience in the banking industry, including his service as Vice
Chairman of LaSalle Bank Corporation and President, Chairman and Chief Executive Officer of
Standard Federal Bank from 1997 to 2005. He served as the President and Chief Executive Officer of
LaSalle Community Bank Group and LaSalle Bank FSB from 1988 to 1996. Mr. Heitmann currently serves
as a member of the board of The Illinois Chapter of The Nature Conservancy, and as an Advisory
Director of Boys Hope Girls Hope of Illinois. Mr. Heitmann has previously served as a director of
LaSalle Bank Corporation, Standard Federal Bank and the Federal Home Loan Bank of Chicago. Mr.
Heitmann is a Director of North Shore Bank, Wintrust Capital Management, Wayne Hummer Investments
and The Chicago Trust Company.
7
Mr. Heitmanns experience in the banking industry, including service in executive
leadership roles at LaSalle Bank and Standard Federal Bank, provide him with knowledge of the
financial services business, generally, and the business of community banking, in particular. His
experience as a former bank lender also provides insight into the Companys community banking
business. In addition, his experience with LaSalle Banks various predecessors provides him with
insight into the opportunities and challenges posed to a growth-oriented Chicago-based community
bank. As a result of his financial experience, Mr. Heitmann qualifies as a financial expert for
purposes of rules governing audit committees. Mr. Heitmanns experience as a director of North
Shore Bank and Wintrust Wealth Management gives him valuable insight into the Companys banking,
brokerage and investment advisory operations.
Charles H. James III (52), Director since 2008. Mr. James is the Chairman and Chief
Executive Officer of C.H. James & Co., an investment holding company with interests in wholesale
food distribution businesses, and is Managing Owner of C.H. James Restaurant Holdings LLC, which
owns quick service restaurants. From 2001 to 2003 Mr. James served as Chairman of the Board and
Chief Executive Officer of PrimeSource Foodservice Equipment, Inc., a food service equipment and
supplies distributor that specializes in servicing quick service restaurant chains and multi-unit
operators. Mr. James also serves on the board of directors of Summit Housing Partners, Morehouse
College, and the Childrens Memorial Hospital. Mr. James is a Director of Lake Forest Bank.
Mr. Jamess experience as Chairman and Chief Executive Officer of C.H. James & Co. and
Managing Owner of C.H. James Restaurant Holdings provides him with knowledge of businesses engaged
in both wholesale distribution and consumer sales, each an important segment of the Companys
customer base. As a chief executive, Mr. James also brings substantial operational and management
experience to the Board. In addition, Mr. James experience as a director of Lake Forest Bank
gives him valuable insight into the Companys banking operations.
Albin F. Moschner (58), Director since 1996. Mr. Moschner is currently a consultant in
the wireless industry and recently retired from the position of Executive Vice President and Chief
Operating Officer of Leap Wireless. He joined Leap Wireless in 2004 as the Chief Marketing Officer.
In the eight years prior to joining Leap Wireless, Mr. Moschner held executive positions in both
early stage and corporate, internet and telecommunications companies as President of Verizon Card
Services, President and Chief Executive Officer of One Point Services and Vice-Chairman of Diba,
Inc. Mr. Moschner also served as Director, Chief Operating Officer and President and Chief
Executive Officer of Zenith Electronics, Glenview, Illinois, from 1991 to 1996.
Mr. Moschners experience as President and Chief Executive Officer of Zenith Electronics
provides him with insight into the management of a public company. Mr. Moschners experience in the
telecommunications industry also provides him with insight into the challenges and opportunities of
businesses undergoing secular change. As a result of his financial experience, Mr. Moschner
qualifies as a financial expert for purposes of rules governing audit committees.
Thomas J. Neis (62), Director since 1999. Mr. Neis is the owner of Neis Insurance
Agency, Inc., QR Insurance Agency and Pachini Insurance Agency and is an independent insurance
agent with these companies. Mr. Neis also owns Parr Insurance Brokerage Inc., marketing insurance
products to insurance agencies. Through QR Insurance Agency, he provides insurance consulting for
banking and financial institutions. Mr. Neis is a member of the Board of Trustees of Illinois
Wesleyan University, where he serves on its Audit, Investment and Business Affairs committees. In
addition, Mr. Neis is a member of the universitys national alumni board and served as past
president of the universitys Chicago Alumni Board. He also founded and chaired the Crystal Lake
Sister City organization with Holtzgerlingen, Germany and has been active in several other
charitable and fraternal organizations. Mr. Neis is a Director of Crystal Lake Bank.
Mr. Neis has experience in the insurance industry, which, through the Companys premium
finance receivable financing business, impacts a substantial and growing portion of the Companys
business. Through his insurance businesses, Mr. Neis also has experience operating in an industry
with multiple layers of regulation. In addition, Mr. Neis experience as a director of Crystal Lake
Bank gives him valuable insight into the Companys banking operations.
Christopher J. Perry (55), Director since 2009. Mr. Perry is currently a partner at CIVC
Partners LLC, a private equity investment firm which he joined in 1994 after leading Continental
Banks Mezzanine Investments and Structured Finance groups. Prior to joining Continental in 1985,
he served as a Vice President in the Corporate Finance Department of the Northern Trust Company. He
has been in the financial services industry for the past 25 years. During his time at CIVC
Partners, he has served on the boards of over a dozen public and private companies. He serves as
chairman of the Board of Trustees for Cristo Rey Jesuit High School and serves on the
8
Executive
Committee of Loyola Academy. Mr. Perry previously served as a director of Wintrust from 2001 to
2002. An affiliate of CIVC Partners LLC owns all of Wintrusts 8.00% Non-Cumulative Perpetual
Convertible Preferred Stock, Series A, as described under Related Party Transactions.
Mr. Perrys role as a partner of CIVC Partners gives him insight into a broad range of
privately held companies across a number of industries, including financial services. In addition,
his experience as a leader at CIVC, Continental Banks Mezzanine Investments Group and Structured
Finance Group gives him insight into complex capital structures, financial instruments and all
aspects of transactions. Mr. Perrys over two decades of experience in the financial services
industry have given him considerable experience in many aspects of the industry during several
credit and economic cycles.
Hollis W. Rademacher (75), Director since 1996. Mr. Rademacher is self-employed as a
business consultant and private investor. From 1957 to 1993, Mr. Rademacher held various positions,
including Officer in Charge, U.S. Banking Department and Chief Credit Officer of Continental Bank,
N.A., Chicago, Illinois, and from 1988 to 1993 held the position of Chief Financial Officer. Mr. Rademacher is also a director
of Schawk, Inc. (NYSE), a provider of prepress graphics for the packaging industry. Mr. Rademacher
currently serves as a Director of each of the Companys main operating subsidiaries except for
Beverly Bank, Old Plank Trail Community Bank, St. Charles Bank, Town Bank, Wheaton Bank, Wintrust
Information Technology Services, Wintrust Capital Management, Wayne Hummer Investments, The Chicago
Trust Company and Wintrust Mortgage Corporation.
Mr. Rademachers experience as a credit officer and chief financial officer of
Continental Bank provide insight into the credit decision-making process, one of the Companys core
competencies. In addition, as noted above, Mr. Rademacher is a member of the board of most of the
Companys bank subsidiaries for which, in most cases, he serves as chair of such banks credit or
risk management committee. As such, Mr. Rademacher has substantial experience with the Companys
banking business, including the management of the risks of that business. In addition, Mr.
Rademachers experience as director of various publicly-traded companies provides him with
knowledge of board operations. In addition, Mr. Rademachers experience as a director of Wintrust
Wealth Management gives him valuable insight into the Companys brokerage, investment advisory, and
trust services operations.
Ingrid S. Stafford (57), Director since 1998. Ms. Stafford has held various positions
since 1977 with Northwestern University, where she is currently Associate Vice President for
Financial Operations and Treasurer. Ms. Stafford is a trustee of the Board of Pensions of the
Evangelical Lutheran Church in America, where she serves on its Executive, Finance and Nominating
Committees and is Chair of its Audit Committee. She also serves on the investment committee of
Wittenberg University and the investment and audit committees of the Evanston Community Foundation.
She is an emeritus director of Wittenberg University where she served from 1993 to 2006, including
serving as Board Chair from 2001-2005. Ms. Stafford is a Director of North Shore Bank.
Ms. Staffords experience as Associate Vice President for Financial Operations and
Treasurer of Northwestern University provides experience with the management of the liquidity,
financial reporting, risk and audit management of a large organization. She serves in a management
support role to its Board of Trustees Audit, Finance and Investment Committees. In addition, as a
member of the investment committees of Wittenberg University and the Evanston Community Foundation,
she has experience with investment strategy and asset allocation. She also has concurrent
experience as an audit committee member of the Board of Pensions of the Evangelical Lutheran Church
in America and the Evanston Community Foundation. As a result of her financial experience, Ms.
Stafford qualifies as a financial expert for purposes of rules governing audit committees. In
addition, Ms. Staffords experience as a director of North Shore Bank gives her valuable insight
into the Companys banking operations.
Edward J. Wehmer (57), Director since 1996. Mr. Wehmer, a founder of the Company, has
served since May 1998 as President and Chief Executive Officer of the Company. Prior to May 1998,
he served as President and Chief Operating Officer of the Company since its formation in 1996. He
served as the President of Lake Forest Bank from 1991 to 1998. He serves as an Advisory Director of
each of the Companys main operating subsidiaries. Mr. Wehmer is a certified public accountant and
earlier in his career spent seven years with the accounting firm of Ernst & Young LLP specializing
in the banking field and particularly in the area of bank mergers and acquisitions. Mr. Wehmer
serves on the board of directors of Stepan Company (NYSE), a chemical manufacturing and
distribution company. He also serves as a director of Northwestern Lake Forest Hospital and the
Catholic Extension Society, on the audit committee of Northwestern Memorial Health Care, as a
trustee for Childrens Memorial
9
Hospital and Foundation, as a member of the advisory board of the
Farmer School of Business of Miami University, and on the Finance Board and the School Board of the
Archdiocese of Chicago.
Mr. Wehmer is the only member of the Board who is also a manager of the Company. As such,
he provides the views of the management of the Company and substantial insight into the operations
of the Company. As an employee of the Company since its inception, he also provides historical
context for the Boards discussions.
Required Vote
Election as a Director of the Company requires that a nominee receive the affirmative
vote of a majority of the shares of Common Stock represented at the Annual Meeting, in person or by
proxy, and entitled to vote thereon. Accordingly, instructions to withhold authority will have the
same effect as a vote against such nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE NOMINEES FOR
DIRECTOR NAMED ABOVE.
10
PROPOSAL NO. 2 APPROVAL OF AN AMENDMENT TO THE 2007 STOCK INCENTIVE PLAN AND
RE-APPROVAL OF PERFORMANCE MEASURES AVAILABLE UNDER THE 2007 STOCK INCENTIVE PLAN
General
The Wintrust Financial Corporation 2007 Stock Incentive Plan was adopted by the Board of
Directors on November 9, 2006 and became effective when it was approved by shareholders on January
9, 2007. The 2007 Plan was amended and restated by the Board of Directors as of October 22, 2007
and April 6, 2009 and approved by shareholders on May 28, 2009. In December 2010, the Compensation
Committee of the Board of Directors amended the 2007 Plan to require a double trigger for the
accelerated vesting of awards in the event of certain change of control transactions. At their
meeting on April 11, 2011, the Compensation Committee recommended and the Board of Directors
approved, subject to shareholder approval at the Annual Meeting, an amendment to the 2007 Plan (the
2007 Plan Amendment) that would increase the number of shares authorized for issuance or delivery
pursuant to awards granted under the 2007 Plan by 2,860,000 shares of the Companys Common Stock.
In addition to the above-described change made by this amendment, the Company is also
requesting that the Companys shareholders reapprove the material terms of the performance measures
for the 2007 Plan in accordance with Section 162(m) of the Code.
Purpose of the 2007 Plan
The 2007 Plan is intended to provide the Company with the ability to provide
market-responsive, stock-based incentives and other rewards for employees and directors of the
Company and its subsidiaries and consultants to the Company and its subsidiaries that (i) provide
such employees, directors and consultants a stake in the growth of the Company and (ii) encourage
them to continue in the service of the Company and its subsidiaries.
The 2007 Plan enhances our ability to link pay to performance and our ability to attract key
employees to manage our banks and other businesses. The 2007 Plan also helps promote the retention
of key employees while aligning their interests closely with those of our shareholders.
Accordingly, management believes the ability to award equity incentives is an important component
in continuing the Companys growth.
History and Reason for Proposing the 2007 Plan Amendment
As noted above, the 2007 Plan was adopted by the Board of Directors on November 9, 2006 and
became effective when it was approved by shareholders on January 9, 2007. As of March 31, 2011,
only 97,800 shares of Common Stock remain available to be granted under the 2007 Plan. As of such
date, 351,177 full value awards were outstanding and 1,920,054 options were outstanding. The
outstanding options had a weighted average exercise price of $38.97 and a weighted average
remaining term of 3.03 years. At current participation levels, we estimate that, in the absence of
an amendment to increase the number of shares of Common Stock that may be offered under the 2007
Plan, such shares would be substantially exhausted during 2011. If the 2007 Plan Amendment is
approved, the number of shares available to be granted in the future under the 2007 Plan will be
increased from 97,800 to 2,957,800 shares. We believe that this increase in the number of shares
available under the 2007 Plan will enable the Company to grant awards to eligible persons until
approximately 2014.
In December 2010 the Compensation Committee amended the 2007 Plan to reflect what the
Compensation Committee believes to be a best corporate governance practice, requiring a double
trigger for the accelerated vesting of awards in the event of certain change of control
transactions. This means that, effective for awards granted on or after January 1, 2011, equity
awards will accelerate only if a participant is involuntarily terminated (other than for cause,
death or disability) or, if permitted under the participants award agreement, terminates his or
her own employment voluntarily for good reason within 18 months after the date of certain change
of control transactions. In the case of a change of control transaction in which the awards are not
effectively assumed by the surviving or acquiring corporation or the Common Stock does not
otherwise remain outstanding following the change in control, the awards are still subject to
single trigger vesting, meaning that the awards will accelerate upon the occurrence of such
change of control transactions.
11
Key Features of the 2007 Plan
We believe that the following features of the 2007 Plan help assure that the 2007 Plan both
provides incentives to our employees and protects shareholder value:
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an independent body, the Compensation Committee, administers the 2007 Plan; |
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the 2007 Plan counts each full-value award as 2.21 shares against the number of
shares available for grant; |
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the 2007 Plan limits unrestricted stock awards to an aggregate maximum of 25,000; |
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the 2007 Plan prohibits repricing or repurchasing of stock option awards (or other
material amendments) without prior shareholder approval; |
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the 2007 Plan does not provide for the payment of dividends on unvested performance
awards and does not allow discounted awards; and |
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the 2007 Plan does not provide for liberal share counting or recycling of shares. |
Description of the 2007 Plan
The following is a description of the terms of the 2007 Plan. This description is qualified in
its entirety by reference to the plan document, as proposed to be amended and restated, a copy of
which is attached to this Proxy Statement as Annex A and incorporated herein by reference.
Shares Available. As noted above, 97,800 shares remain available as of March 31, 2011, and it
is anticipated that substantially all available shares under the 2007 Plan will be awarded during
2011. If shareholders approve the 2007 Plan Amendment, a total of 2,957,800 shares would be
available under the 2007 Plan, subject to adjustment in the event of certain changes to our capital
structure. This represents an increase of 2,860,000 shares over the number of shares that would
have been available in the absence of the 2007 Plan Amendment. In addition, each share awarded
pursuant to a full value award (including an award of unrestricted stock) granted on or after the
effective date of the 2007 Plan Amendment will be counted as 2.21 shares against the 2007 Plans
share reserve. This effectively limits the number of full value awards that may be granted under
the 2007 Plan because these awards would be counted against the 2007 Plans share reserve as 2.21
shares for every one share issued in connection with such awards.
Shares covered by an award granted under the 2007 Plan are not counted as used under the 2007
Plan unless and until they are actually issued and delivered to a participant. Consequently, in the
event that an award granted under the 2007 Plan is ultimately paid in cash rather than shares, any
shares that were covered by that award will remain available for issue or transfer under the 2007
Plan (in the same number as such shares were counted against the 2007 Plans share reserve).
Notwithstanding anything to the contrary: (a) shares tendered in payment of the exercise price of
an option will not be added to the aggregate plan limit described above; (b) shares withheld by the
Company to satisfy tax withholding obligations will not be added to the aggregate plan limit
described above; (c) shares that are repurchased by the Company with proceeds from option exercises
will not be added to the aggregate plan limit described above; and (d) the full number of shares
covered by a stock appreciation right, to the extent that it is exercised and settled in shares and
whether or not shares are actually issued to the participant upon exercise of the right, will be
considered issued or transferred pursuant to the 2007 Plan.
The shares of Common Stock subject to awards under the 2007 Plan and available for future
awards may be reserved for issuance out of the Companys total authorized but unissued shares or
they may be shares held in treasury or acquired by the Company on the open market. A participant in
the 2007 Plan is permitted to receive multiple grants of stock-based awards. The terms and
provisions of a type of award with respect to any recipient need not be the same with respect to
any other recipient of such award. The 2007 Plan provides that during any calendar year the maximum
number of shares of Common Stock which may be made subject to awards granted to any single
participant may not exceed 100,000.
12
Administration. The 2007 Plan provides that it shall be administered by a committee of the
Board of Directors, constituted so as to permit the 2007 Plan to comply with the non-employee
director provisions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
Exchange Act), and the outside director requirements of Section 162(m) of the Code (see
Re-approval of Section 162(m) Performance Measures below). The Board of Directors of the Company
has delegated the administration of the 2007 Plan to its Compensation Committee. The Compensation
Committee makes determinations with respect to the participation of employees, directors and
consultants in the 2007 Plan and, except as otherwise required by law or the 2007 Plan, the grant
terms of awards including vesting schedules, price, length of relevant performance, restriction or
option periods, dividend rights, post-retirement and termination rights, payment alternatives, and
such other terms and conditions as the Compensation Committee deems appropriate. Such grant terms
are set forth in a written award agreement. The Compensation Committee also has final, binding
authority to interpret and construe the provisions of the 2007 Plan and the award agreements. The
Compensation Committee may designate other persons (so long as such persons are independent) to
carry out its responsibilities under such conditions and limitations as it may set, other than its
authority with regard to awards granted to employees who are executive officers or directors of the
Company (including those individuals whose compensation is subject to the limit under Section
162(m) of the Code, as further described below in Re-approval of Section 162(m) Performance
Measures).
Awards. The following types of awards may be granted under the 2007 Plan:
Stock Options. Stock options may be granted in the form of incentive stock options
within the meaning of Section 422 of the Code or stock options not meeting such Code
definition (nonqualified stock options). The 2007 Plan permits all of the shares available
under the 2007 Plan to be awarded in the form of incentive stock options if the Compensation
Committee so determines. The exercise period for any stock option will be determined by the
Compensation Committee at the time of grant which may provide that options may be
exercisable in installments. The exercise price per share of Common Stock of any option may
not be less than the fair market value of a share of Common Stock on the date of grant. Each
stock option may be exercised in whole, at any time, or in part, from time to time, after
the grant becomes exercisable. The Compensation Committee may provide for the exercise price
to be payable in cash, in shares of already owned Common Stock, in any combination of cash
and shares, pursuant to a broker-assisted cashless exercise program, or by such methods as
the Compensation Committee may deem appropriate, including but not limited to loans by the
Company on such terms and conditions as the Compensation Committee may determine.
Stock Appreciation Rights. Stock appreciation rights (SARs) may be granted
independently of any stock option or in tandem with all or any part of a stock option
granted under the 2007 Plan, upon such terms and conditions as the Compensation Committee
may determine. Upon exercise, a SAR entitles a participant to receive the excess of the fair
market value of a share of Common Stock on the date the SAR is exercised over the fair
market value of a share of Common Stock on the date the SAR is granted. The Compensation
Committee will determine whether a SAR will be settled in cash, Common Stock or a
combination of cash and Common Stock. Upon exercise of a SAR granted in conjunction with a
stock option, the option or the portion thereof to which the SAR relates will be
surrendered.
Restricted Shares. Restricted shares are shares of Common Stock that may not be sold
or otherwise disposed of during a restricted period after grant, the duration of which will
be determined by the Compensation Committee. The Compensation Committee may provide for the
lapse of such restrictions in installments. Restricted shares may be voted by the recipient.
Dividends on the restricted shares may be payable to the recipient in cash or in additional
restricted shares. A recipient of a grant of restricted shares will generally earn
unrestricted ownership thereof only if the individual is continuously employed by the
Company or a subsidiary during the entire restricted period.
Performance Shares. Performance shares are grants of shares of Common Stock which are
earned by achievement of performance measures established for the award by the Compensation
Committee. During the applicable performance period determined by the Compensation Committee
for an award, the shares may be voted by the recipient and the recipient is also entitled to
receive dividends thereon unless the Compensation Committee determines otherwise. If the
applicable performance criteria are met, at the end of the applicable performance period,
the shares are earned and become unrestricted. The
13
Compensation Committee may provide that a certain percentage of the number of shares
originally awarded may be earned based upon the attainment of the performance measures.
Restricted and Performance Share Units. Share units are fixed or variable share or
dollar denominated units valued, at the Compensation Committees discretion, in whole or in
part by reference to, or otherwise based on, the fair market value of the Companys Common
Stock. The Compensation Committee will determine the terms and conditions applicable to
share units, including any applicable restrictions, conditions or contingencies, which may
be related to individual, corporate or other categories of performance. A share unit may be
payable in Common Stock, cash or a combination of both.
Other Incentive Awards. The Compensation Committee may grant other types of awards of
Common Stock or awards based in whole or in part by reference to Common Stock (Other
Incentive Awards). The Compensation Committee will determine the time at which grants of
such Other Incentive Awards are to be made, the size of such awards and all other conditions
of such awards, including any restrictions, deferral periods or performance requirements.
The disposition of an award in the event of the retirement, disability, death or other
termination of a participants employment or service shall be as determined by the Compensation
Committee as set forth in the award agreement.
Except to the extent permitted by the specific terms of any nonqualified stock options, no
award will be assignable or transferable except by will, the laws of descent and distribution or
the beneficiary designation procedures under the 2007 Plan.
Minimum Vesting and Restricted Period. Each award agreement will contain a requirement that
(i) no stock option award or grant of restricted shares that is not performance-based may become
fully exercisable prior to the third anniversary of the date of grant, and to the extent such an
award provides for vesting in installments over a period of no less than three years, such vesting
shall occur no more rapidly than ratably on each of the first three anniversaries of the date of
grant and (ii) no performance-based award may become fully exercisable or saleable prior to the
first anniversary of the date of grant; except that, in each case, such minimum vesting
restrictions (A) may not apply when employment terminates as a result of death, disability,
retirement, layoff or divestiture and (B) will not apply to awards for newly hired employees or
employees who subsequently retire or have plans for retirement, or awards in connection with
acquisitions or in lieu of cash bonuses.
Term of Awards. The maximum term of unvested or unexercised awards is seven years after the
initial date of grant.
Adjustments. If the number of issued shares of Common Stock increases or decreases as a
result of certain stock splits, capital adjustments, stock dividends or otherwise, without the
receipt of consideration by the Company, then the aggregate number of shares as to which awards may
be granted, the limit on the number of shares that may be awarded to a single participant each
year, the number of shares covered by each outstanding award and the price per share of Common
Stock in each such award will be adjusted proportionately. The Compensation Committee may also
adjust such amounts and make certain other changes in the event of any other reorganization,
recapitalization, merger, consolidation, spinoff, extraordinary dividend or other distribution or
similar transaction.
Change of Control. The Company will undergo a change of control in the event of certain
acquisitions of 50% or more of the Companys Common Stock, a change in the majority of the Board of
Directors, or the consummation of a reorganization, merger or consolidation (unless, among other
conditions, the Companys shareholders receive more than 50% of the stock of the surviving
company), a sale or disposition of all or substantially all of the assets of the Company, or a
complete liquidation or dissolution of the Company. With respect to awards granted prior to January
1, 2011 and, with respect to all awards, in the case of change of control events in which the
awards are not effectively assumed by the surviving or acquiring corporation or the Common Stock
does not otherwise remain outstanding, then, upon such change of control, all options and SARs
outstanding shall become immediately exercisable and remain exercisable for the remainder of their
term, all restrictions on restricted shares will lapse, all restricted share units will become
fully vested and, unless otherwise specified in a participants award agreement, all performance
measures applicable to any awards shall be deemed attained at the maximum payment
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level. In addition, the Board of Directors (as constituted before the change of control) may,
in its sole discretion, require outstanding awards, in whole or in part, to be cancelled, and to
provide for the holder to receive a cash payment (or shares in the resulting corporation or its
parent corporation) in an amount (or having a value) equal to (a) in the case of a stock option or
stock appreciation right, the number of shares then subject to the portion of such award cancelled
multiplied by the excess, if any, of the highest per share price offered to holders of Common Stock
in the change of control transaction, over the purchase price or base price per share subject to
the award and (b) in the case of restricted shares, restricted share units, performance shares,
performance share units or Other Incentive Awards, the number of shares of Common Stock or units
then subject to the portion of such award cancelled multiplied by the highest per share price
offered to holders of Common Stock in the change of control transaction.
With respect to awards granted on or after January 1, 2011, in the event of the termination of
a participants employment by the Company without cause or, to the extent permitted in the award
agreement, the termination of a participants employment by the participant for good reason, in
each case, within the 18 month period following the occurrence of a change of control in which the
outstanding awards were effectively assumed or otherwise remained outstanding, then, upon such
termination of employment, all options and SARs outstanding shall become immediately exercisable
and remain exercisable for the remainder of their term, all restrictions on restricted shares will
lapse, all restricted share units will become fully vested and, unless otherwise specified in a
participants award agreement, all performance measures applicable to any awards shall be deemed
attained at the maximum payment level.
Amendments and Termination. The Board of Directors may at any time suspend or terminate the
2007 Plan. The Board of Directors may amend the 2007 Plan at any time, subject to any requirement
of shareholder approval imposed by applicable law, rule or regulation; provided, however, that any
material amendment to the 2007 Plan will not be effective unless approved by the Companys
shareholders. For this purpose, a material amendment is any amendment that would:
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materially increase the number of shares available under the 2007 Plan or issuable
to a participant, except in connection with an event described above in Adjustments; |
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change the types of awards that may be granted under the 2007 Plan; |
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expand the class of persons eligible to receive awards or otherwise participate in
the 2007 Plan; or |
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reduce the price at which an option is exercisable either by amendment of an award
agreement or by substitution of a new option at a reduced price, except in connection
with an event described above in Adjustments. |
No amendment, suspension or termination may adversely affect in any material way any awards
previously granted thereunder without such award holders written consent. There is no set
termination date for the 2007 Plan, although no incentive stock options may be granted more than 10
years after the effective date of the 2007 Plan.
Re-approval of Section 162(m) Performance Measures
In general, Section 162(m) of the Code disallows federal income tax deductions for certain
compensation in excess of $1,000,000 per year paid to each of the Companys Chief Executive Officer
and its other three most highly compensated executive officers other than the Chief Financial
Officer. Normally, under Section 162(m), compensation that qualifies as performance-based
compensation is not subject to the $1,000,000 limit. To qualify certain incentive awards as
performance-based compensation, the following requirements must be satisfied: (i) the performance
measures are determined by a committee consisting solely of two or more outside directors, (ii)
the material terms under which the compensation is to be paid, including the performance measures,
are approved by the shareholders of the Company and (iii) if applicable, the committee certifies
that the applicable performance measures were satisfied before any payment of performance-based
compensation is made. Our shareholders are being asked to reapprove the material terms of the
performance measures for the 2007 Plan in accordance with Section 162(m) of the Code, which is
required every five years.
Eligible Employees. Employees, directors and consultants of the Company or any subsidiary are
eligible to participate in the 2007 Plan. As of March 31, 2011, there were 378 participating
employees, no participating directors, other than Mr. Wehmer who is included as a participating
employee, and 13 participating consultants.
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Award Limits. The 2007 Plan provides that during any calendar year the maximum number of
shares of Common Stock which may be made subject to awards to any single participant may not exceed
100,000.
Performance Measures. Performance criteria may be measured in absolute terms or measured
against, or in relationship to, other companies comparably, similarly or otherwise situated and may
be based on, or adjusted for, other objective goals, events, or occurrences established by the
Compensation Committee for a performance period, but must relate to one or more of the following:
earnings, earnings growth, revenues, expenses, stock price, market share, charge-offs, loan loss
reserves, reductions in non-performing assets, return on assets, return on equity, return on
investment, regulatory compliance, satisfactory internal or external audits, improvements in
financial ratings, achievement of balance sheet or income statement objectives, extraordinary
charges, losses from discontinued operations, restatements and accounting changes and other
unplanned special charges such as restructuring expenses, acquisition expenses including goodwill,
unplanned stock offerings and unplanned loan loss provisions. Such performance measures may be
particular to a line of business, subsidiary or other unit or may be based on the performance of
the Company generally.
If the shareholders approve the proposal, performance-based awards can continue to be granted
under the 2007 Plan. If the shareholders do not approve the material terms of the performance
measures for the 2007 Plan, the Compensation Committee will review our executive compensation
program and the granting of performance-based awards in light of such vote and the principles
described in the section entitled Compensation Discussion and Analysis.
Stock Option Awards under the 2007 Plan Table
The following table sets forth the number of stock options that have been granted to the
listed individuals or groups under the 2007 Plan since its inception until March 31, 2011. For
grants awarded to our named executive officers in 2010, please see Executive Compensation-2010
Grants of Plan-Based Awards Table. Any other future awards to be received by an individual or
group under the 2007 Plan are not fully determinable at this time and will depend on individual and
corporate performance and other determinations to be made by the Compensation Committee.
Stock Option Awards under the 2007 Plan Table
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Name and Position |
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Stock Options |
Edward J. Wehmer-President & Chief Executive Officer |
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9,000 |
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David A. Dykstra-Senior Executive Vice President & Chief Operating Officer |
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8,000 |
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Richard B. Murphy-Executive Vice President & Chief Credit Officer |
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6,500 |
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David L. Stoehr-Executive Vice President & Chief Financial Officer |
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Leona A. Gleason-Executive Vice President Chief Administrative Officer |
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10,000 |
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All Current Executive Officers (Including the Officers Named Above) |
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43,500 |
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All Current Directors Who Are Not Executive Officers |
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All Employees
(Other Than Current Executive Officers) |
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286,315 |
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On April 21, 2011, the closing sale price of the Companys Common Stock, as reported on
the Nasdaq Global Select Market (Nasdaq), was $34.56 per share.
16
Federal Income Tax Consequences
The following discussion briefly summarizes certain U.S. federal income tax consequences
generally arising with respect to awards under the 2007 Plan. The discussion is based upon current
interpretations of the Code, and the regulations promulgated thereunder as of such date. To the
extent a participant recognizes ordinary income in any event described below, such amount is
subject to income tax withholding if the participant is an employee.
Nonqualified Stock Options. For U.S. federal income tax purposes, no income is recognized by
a participant upon the grant of a nonqualified stock option under the 2007 Plan. Upon the exercise
of a nonqualified option, compensation taxable as ordinary income will be realized by the
participant in an amount equal to the excess of the fair market value of a share of Common Stock on
the date of such exercise over the exercise price. A subsequent sale or exchange of such shares
will result in gain or loss measured by the difference between (a) the exercise price, increased by
any compensation reported upon the participants exercise of the option and (b) the amount realized
on such sale or exchange. Such gain or loss will be capital in nature if the shares were held as a
capital asset and will be long-term if such shares were held for more than one year.
Incentive Stock Options. Except as otherwise described below, no income is recognized by a
participant upon the grant of an incentive stock option under the 2007 Plan. No taxable income is
realized by the participant pursuant to the exercise of an incentive stock option granted under the
2007 Plan, and if no disqualifying disposition of such shares is made by such participant within
two years after the date of grant or within one year after the transfer of such shares to such
participant, then (a) upon the sale of such shares, any amount realized in excess of the option
price will be taxed to such participant as a long-term capital gain and any loss sustained will be
a long-term capital loss, and (b) no deduction will be allowed to the Company for U.S. federal
income tax purposes. Upon exercise of an incentive stock option, the participant may be subject to
alternative minimum tax with respect to the excess (if any) of the fair market value of the shares
purchased (determined as of the date of exercise) over the option price.
If the shares of Common Stock acquired upon the exercise of an incentive stock option are
disposed of prior to the expiration of the holding period described above, generally (a) the
participant will realize ordinary income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of the shares at the time of exercise (or, if less, the
amount realized on the disposition of the shares) over the option price thereof, and (b) the
Company will be entitled to deduct such amount. Any further gain or loss realized will be taxed as
short-term or long-term capital gain or loss, as the case may be, and will not result in any
deduction by the Company.
If an incentive stock option is exercised at a time when it no longer qualifies as an
incentive stock option, the option is treated as a nonqualified stock option.
Stock Appreciation Rights. No taxable income is recognized by a participant upon the grant of
a SAR under the 2007 Plan. Upon the exercise of a SAR, however, compensation taxable as ordinary
income will be realized by the participant in an amount equal to the cash received upon exercise,
plus the fair market value on the date of exercise of any shares of Common Stock received upon
exercise. Shares of Common Stock received on the exercise of a SAR will be eligible for capital
gain treatment, with the capital gain holding period commencing on the day after the date of
exercise of the SAR.
Restricted and Performance Shares. A recipient of restricted shares or performance shares
generally will be subject to tax at ordinary income rates on the fair market value of the Common
Stock at the time the restricted shares or performance shares vest or are no longer subject to
forfeiture. However, a recipient who so elects under Section 83(b) of the Code within 30 days of
the date of the grant will recognize ordinary taxable income on the date of the grant equal to the
fair market value of the restricted shares or performance shares on the date of grant as if the
restricted shares were unrestricted or the performance shares were earned and could be sold
immediately. If the shares subject to such election are forfeited, the recipient will not be
entitled to any deduction, refund or loss for tax purposes with respect to the forfeited shares.
Upon sale of the restricted shares or performance shares after vesting or after the forfeiture
period has expired, the holding period to determine whether the recipient has long-term or
short-term capital gain or loss begins when the restriction period expires. However, if the
recipient timely elects to be taxed as of the date of the grant, the holding period commences on
the day after the date of the grant and the tax
17
basis will be equal to the fair market value of the shares on the date of the grant as if the
shares were then unrestricted and could be sold immediately. A participant receiving dividends with
respect to restricted shares or performance shares for which the above-described election has not
been made and prior to the time the restrictions lapse will recognize compensation taxable as
ordinary income, rather than dividend income, in an amount equal to the dividends paid.
The amount of ordinary income recognized upon the lapse of restrictions or by making the
above-described election is deductible by the Company as compensation expense, except to the extent
the deduction limits of Section 162(m) of the Code apply.
Restricted and Performance Share Units. A recipient of restricted or performance share units
will generally be subject to tax at ordinary income rates on the fair market value of any Common
Stock issued pursuant to such an award. The fair market value of any Common Stock received will
generally be included in income at the time of receipt. The capital gain or loss holding period for
any Common Stock distributed under an award will begin on the day after the date of such
distribution. The amount of ordinary income recognized is deductible by the Company as compensation
expense, except to the extent the deduction limits of Section 162(m) of the Code apply.
Other Incentive Awards. The federal income tax consequences of Other Incentive Awards will
depend on how such awards are structured. Generally, the Company will be entitled to a deduction
with respect to such awards only to the extent that the recipient realizes compensation income in
connection with such awards and only to the extent not subject to the deduction limits of Section
162(m) of the Code. It is anticipated that Other Incentive Awards will usually result in
compensation income to the recipient in some amount. However, some forms of Other Incentive Awards
may not result in any compensation income to the recipient or any income tax deduction for the
Company.
The approval of the amendment to the 2007 Plan and the re-approval of the performance measures
available under the 2007 Plan requires the affirmative vote of a majority of the shares of Common
Stock represented at the Annual Meeting, in person or by proxy, and entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE FOR
APPROVAL OF THE AMENDMENT TO THE WINTRUST FINANCIAL
CORPORATION 2007 STOCK INCENTIVE PLAN AND THE RE-APPROVAL OF THE PERFORMANCE MEASURES AVAILABLE
UNDER THE 2007 PLAN
18
PROPOSAL NO. 3 ADVISORY VOTE ON 2010 EXECUTIVE COMPENSATION
Background of the Proposal
As the Company has done in years past, we are providing shareholders with an opportunity
to vote to approve, on an advisory basis, the compensation of our named executive officers as
disclosed in this Proxy Statement. The Company believes that it is appropriate to seek the views
of shareholders on the design and effectiveness of the Companys executive compensation program.
At the 2010 annual meeting of shareholders, the advisory vote on executive compensation received
approximately 95% support from shareholders.
Executive Compensation
The Company believes that its compensation policies and procedures, which are reviewed
and approved by the Compensation Committee, encourage a culture of pay for performance and are
strongly aligned with the long-term interests of shareholders. As more fully set forth under
Executive Compensation Compensation Discussion and Analysis, the Compensation Committee has
taken a number of actions in recent years to further strengthen the Companys compensation
philosophy and objectives. As always, the Compensation Committee will continue to review all
elements of the executive compensation program and take any steps it deems necessary to continue to
fulfill the objectives of the program.
Shareholders are encouraged to carefully review the Executive Compensation section of
this Proxy Statement for a detailed discussion of the Companys executive compensation program.
As required by the Exchange Act and the guidance provided by the Securities and Exchange
Commission (the SEC), the Board of Directors has authorized a shareholder vote on the Companys
2010 executive compensation as reflected in the Compensation Discussion and Analysis, the
disclosures regarding named executive officer compensation provided in the various tables included
in this Proxy Statement, the accompanying narrative disclosures and the other compensation
information provided in this Proxy Statement. This proposal, commonly known as a Say on Pay
proposal, gives the Companys shareholders the opportunity to endorse or not endorse the Companys
executive pay program and policies through the following resolution:
Resolved, that the shareholders of Wintrust Financial Corporation approve the compensation of
executives, as disclosed pursuant to the compensation disclosure rules of the Securities and
Exchange Commission, including the compensation discussion and analysis, the compensation tables
and any related material disclosed in this Proxy Statement for the 2011 Annual Meeting of
Shareholders.
Required Vote
The approval of the advisory (non-binding) proposal on our 2010 executive compensation
described in this Proxy Statement requires the affirmative vote of a majority of the shares of
Common Stock represented at the Annual Meeting, in person or by proxy, and entitled to vote
thereon. Abstentions will have the same effect as a vote against the proposal. Because this
shareholder vote is advisory, it will not be binding on the Board of Directors. However, the
Compensation Committee will take into account the outcome of the vote when considering future
executive compensation arrangements.
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE FOR
APPROVAL OF THE ADVISORY PROPOSAL ON 2010 EXECUTIVE COMPENSATION
AS DESCRIBED IN THIS PROXY STATEMENT
19
PROPOSAL NO. 4 ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
Background of the Proposal
At least once every three years, the Company will provide shareholders with an
opportunity to vote to approve, on an advisory basis, the Say on Pay vote as described in the
previous proposal. Pursuant to recently enacted Section 14A of the Exchange Act, we are asking
shareholders whether future Say on Pay votes should be held every one, two or three years.
Frequency of Say on Pay Advisory Vote
After careful consideration, our Board of Directors recommends that shareholders vote for
holding a Say on Pay vote EVERY YEAR for a number of reasons, including the following:
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An annual Say on Pay vote will allow us to obtain shareholder input on our executive
compensation program on a more consistent basis which aligns more closely with our
objective to engage in regular dialogue with our shareholders on corporate governance
matters, including our executive compensation philosophy, policies and practices; |
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A one-year frequency provides the highest level of accountability and communication
by enabling the Say on Pay vote to correspond with the most recent executive
compensation information presented in our proxy statement for the annual meeting; |
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A longer approach may make it more difficult for the Compensation Committee to
understand and respond to the voting results because it may be unclear whether the
shareholder vote pertains to the most recent executive compensation information
presented in our proxy statement or to pay practices from the previous two years or
both; and |
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Holding Say on Pay votes annually reflects sound corporate governance principles and
is consistent with a majority of institutional investor policies. |
Shareholders are not voting to approve or disapprove of the Boards recommendation. Instead,
the proxy card provides shareholders with four choices with respect to this proposal: one year, two
years, three years or shareholders may abstain from voting on the proposal. For the reasons
discussed above, we are asking our shareholders to vote for a ONE YEAR frequency when voting in
response to the following resolution at the Annual Meeting:
Resolved, that the option of once every (1) one year, (2) two years or (3) three years that
receives the highest number of votes cast for this resolution will be determined to be the
preferred frequency with which the Company is to hold a shareholder vote to approve the
compensation of the named executive officers, as disclosed pursuant to the compensation disclosure
rules of the Securities and Exchange Commission, including the compensation discussion and
analysis, the compensation tables and any related material disclosed in the proxy statement for the
annual meeting of shareholders.
Required Vote
This vote is an advisory vote only, and therefore it will not bind the Company or our Board of
Directors. However, the Board of Directors and the Compensation Committee will consider the voting
results as appropriate when adopting a policy on the frequency of future Say on Pay votes. The
option of one year, two years or three years that receives the highest number of votes cast by
shareholders will be considered by the Board of Directors as the shareholders recommendation as to
the frequency of future Say on Pay votes. Nevertheless, the Board may decide that it is in the
best interests of our shareholders and the Company to hold Say on Pay votes more or less frequently
than the option approved by our shareholders.
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE FOR
APPROVAL OF THE ADVISORY PROPOSAL TO HOLD A SAY ON PAY VOTE EVERY YEAR.
20
BOARD OF DIRECTORS, COMMITTEES AND GOVERNANCE
Board of Directors
Overview
The Board provides oversight with respect to our overall performance, strategic direction
and key corporate policies. It approves major initiatives, advises on key financial and business
objectives, and monitors progress with respect to these matters. Members of the Board are kept
informed of our business by various reports and documents provided to them on a regular basis,
including operating and financial reports made at Board and Committee meetings by the Chief
Executive Officer and other officers. The Board has six standing committees, the principal
responsibilities of which are described below. Additionally, the independent Directors meet in
regularly scheduled executive sessions, without management present, at each meeting of the Board.
The Board met eight times in 2010. Each member of the Board attended more than 75% of the
total number of meetings of the Board and the committees on which he or she served. We encourage,
but do not require, our Board members to attend annual meetings of shareholders. All of our Board
members then in office attended our 2010 Annual Meeting of Shareholders.
Board Leadership Structure
The Board has a non-executive Chairman. This position is independent from management. The
Chairman leads the Board meetings as well as meetings of the independent directors. The Chief
Executive Officer is a member of the Board and participates in its meetings. The Board believes
that this leadership structure is appropriate for the Company at this time because it allows for
independent oversight of management, increases management accountability and encourages an
objective evaluation of managements performance relative to compensation. In addition, the Board
recognizes that acting as chairman of the Board during the current economic times is a particularly
time-intensive responsibility. Separating these roles allows the Chief Executive Officer to focus
solely on his duties, which the Board believes better serves the Company. Separation of the roles
of Chairman and Chief Executive Officer also promotes risk management, enhances the independence of
the Board from management, and mitigates potential conflicts of interest between the Board and
management.
The Boards Role in Risk Oversight
Our Board of directors has an active and ongoing role in the management of the risks of
our business. This role has two fundamental elements: (1) ensuring that management of the Company
has implemented an appropriate system to manage risks by identifying, assessing, mitigating,
monitoring and communicating about risks; and (2) providing effective risk oversight through the
Board and its committees.
The Board believes the first element of its risk oversight role is fulfilled through the
Companys extensive risk assessment and management program designed to identify, monitor, report
and control the Companys risks, which are broken down into various categories deemed relevant to
the Company and its business operations. The Enterprise Risk Management Program is administered by
the Companys Executive Vice President Risk Management who provides reports to the Board, the
Audit Committee, the Risk Management Committee and other committees of the Board as needed.
The second element of the Boards oversight role is fulfilled primarily by the full Board
regularly receiving written and oral reports from management on the status of each category of
Company risk and on the Companys overall risks, as well as any material changes or developments in
any risk profiles or experiences. The Board also periodically receives reports regarding regulatory
priorities and reviews regulatory examination reports of the Company, to remain informed on issues
and observations raised by regulatory authorities regarding the risk categories of the Company.
In addition to the full Boards direct oversight, the Boards committees provide
oversight of various risks created by the Companys operations. The Audit Committee provides oversight of monitoring of
risk, generally, and oversight of financial, reporting and regulatory risk, in particular. The Risk
Management committee monitors, among other things, credit, interest rate, liquidity, market and
legal risks. The Finance Committee provides oversight of risks related to strategic transactions
and reviews the Companys capital planning strategy and liquidity. The Nominating and Corporate
Governance Committee also provides risk oversight, particularly relating to risk relating
21
to the
Companys board and governance. Finally, the Compensation Committee provides oversight of risks
related to the Companys compensation of its employees. For more information regarding risk in the
context of compensation, see the Compensation Committee Report on page 45 of this Proxy Statement.
Director Independence
A Director is independent if the Board affirmatively determines that he or she has no
material relationship with the Company and otherwise satisfies the independence requirements of the
Nasdaq listing standards. A Director is independent under the Nasdaq listing standards if the
Board affirmatively determines that the Director has no material relationship with us directly or
as a partner, shareholder or officer of an organization that has a relationship with us. Direct or
indirect ownership of even a significant amount of our stock by a Director who is otherwise
independent will not, by itself, bar an independence finding as to such Director.
The Board has reviewed the independence of our current non-employee Directors and
nominees and found that each of them are independent under the applicable Nasdaq listing standards.
Accordingly, more than 90% of the members of the Board are independent, including the Chairman of
the Board.
Code of Ethics
The Board of Directors has adopted a Code of Ethics applicable to all officers, Directors
and employees, which is available on the Companys website at www.wintrust.com by choosing
Investor Relations and then choosing Corporate Governance. To assist in enforcement of the Code
of Ethics, we maintain Wintrusts Ethicspoint, a toll-free hotline and Internet-based service
through which confidential complaints may be made by employees regarding illegal or fraudulent
activity; questionable accounting, internal controls or auditing matters; conflicts of interest,
dishonest or unethical conduct; disclosures in the Companys reports filed with the SEC, bank
regulatory filings and other public disclosures that are not full, fair, accurate, timely or
understandable; violations of Wintrusts Code of Ethics; and/or any other violations of laws, rules
or regulations. Any complaints submitted through this process are presented to the Audit Committee
on a regular, periodic basis.
Committee Membership
The following table summarizes the current membership of the Board and each of its
committees:
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Nominating |
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and Corporate |
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Risk |
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Finance |
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Compensation |
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Governance |
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Audit |
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Management |
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Executive |
Board of Directors |
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Committee |
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Committee |
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Committee |
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Committee |
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Committee |
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Committee |
Peter D. Crist (Chair) |
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Member |
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Member |
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Chair |
Bruce K. Crowther |
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Member |
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Member |
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Joseph F. Damico |
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Member |
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Chair |
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Member |
Bert A. Getz, Jr. |
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Member |
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Member |
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H. Patrick Hackett, Jr. |
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Chair |
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Member |
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Member |
Scott K. Heitmann |
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Member |
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Charles H. James III |
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Member |
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Member |
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Albin F. Moschner |
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Chair |
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Member |
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Member |
Thomas J. Neis |
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Member |
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Member |
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Christopher J. Perry |
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Member |
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Member |
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Hollis W. Rademacher |
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Member |
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Chair |
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Member |
Ingrid S. Stafford |
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Chair |
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Member |
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Member |
Edward J. Wehmer |
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The Nominating and Corporate Governance Committee has proposed, and the Board has agreed,
that pending his re-election, Peter D. Crist will continue to serve as Chairman of the Board of
Directors following the Annual Meeting. In addition, the Nominating and Corporate Governance
Committee has proposed, and the Board has agreed, that the membership of each of the committees of
the Board, assuming that each Director nominee is elected, will remain the same following the
Annual Meeting.
22
Nominating and Corporate Governance Committee
The Board has established the Nominating and Corporate Governance Committee (the
Nominating Committee) which is responsible for:
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establishing criteria for selecting new Directors; |
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assessing, considering and recruiting candidates to fill positions on the Board; |
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recommending the Director nominees for approval by the Board and the shareholders; |
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establishing procedures for the regular ongoing reporting by Directors of any
developments that may be deemed to affect their independence status or qualification to
serve as a Director; |
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considering any resignation submitted by a Director who has retired or made a
significant change to his or her principal employment; |
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reviewing the corporate governance guidelines at least annually and recommending
modifications thereto to the Board; |
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advising the Board with respect to the charters, structure, size, operations and
membership qualifications for the various committees of the Board; |
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establishing and implementing self-evaluation procedures (including annual director
and officer questionnaires) for the Board and its committees; |
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reviewing shareholder proposals submitted for inclusion in our Proxy Statement; |
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in consultation with the Audit Committee, reviewing related-party transactions; |
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reviewing annually Director compensation and recommending modifications thereto to
the Board; |
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reviewing insurance policies and indemnification arrangements applicable to the
Directors and executive officers and recommending modifications thereto to the Board; |
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considering from time to time the overall relationship of the Board and management;
and |
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reviewing and assessing annually the adequacy of the Nominating Committee Charter
and, if appropriate, recommending changes to the Board for approval. |
The Board has adopted a Nominating Committee Charter, a copy of which is available at
www.wintrust.com by choosing Investor Relations and then choosing Corporate Governance.
The Nominating Committee consists of four Directors, and the Board has determined that
each of them is independent under the applicable Nasdaq listing standards. During 2010, the
Nominating Committee met three times.
Nomination of Directors
The Nominating Committee seeks nominees from diverse professional backgrounds who combine
a broad spectrum of experience and expertise with a reputation for integrity and, in doing so,
considers a wide range of factors in evaluating the suitability of director candidates, including
general understanding of finance and other disciplines relevant to the success of a publicly-traded
company in todays business environment, understanding of
our business and education and professional background. The following personal characteristics
are considered minimum qualifications for Board membership under the Corporate Governance
Guidelines approved by the Board: integrity and accountability, the ability to provide informed
judgments on a wide range of issues, financial literacy, a good reputation in the business
community, a talent for networking and referring business to the Company, a history of achievements
that reflects high standards for themselves and others, and willingness to raise tough questions in
a manner that encourages open discussion. In addition, no person is to be nominated for election to
the Board if he or she will attain the age of 76 before such election. Under the Corporate
Governance Guidelines adopted by the Board, Directors are expected to own Common Stock having a
value of at least three times the annual retainer fee, which amount is currently $30,000, and to
limit board service at other companies to no more than four other public company boards.
23
The Nominating Committee does not have any single method for identifying director
candidates but will consider candidates suggested by a wide range of sources.
The Nominating Committee will consider director candidates recommended by our
shareholders if such recommendations are timely received. Any such recommendation must comply with
the procedures set forth in the Companys By-Laws, which were recently amended and restated (see
Shareholder Proposals). Recommendations must be received in writing at the principal executive
offices of the Company and addressed to the Wintrust Financial Corporation Nominating and Corporate
Governance Committee, c/o Corporate Secretary, 727 North Bank Lane, Lake Forest, IL 60045. Under
the existing provisions of the By-laws, the deadline for such notice with respect to the 2012
Annual Meeting is February 26, 2012. Any such recommendation should include:
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the name and record address of the shareholder; |
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the class and number of shares of the Company beneficially held by the shareholder; |
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whether and the extent to which any derivative instrument, hedging or other
transaction or series of transactions has been entered into by or on behalf of, or any
other agreement, arrangement or understanding (including any short position or any
borrowing or lending of shares) has been made the effect or intent of any of which is
to increase or decrease economic interest in the Companys stock or manage the risk or
benefit of share price changes for, or to increase or decrease the voting power of,
such shareholder with respect to the Companys stock (which information shall be
updated by such shareholder as of the Record Date, such update to be provided not later
than 10 days after the Record Date for the meeting); |
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a representation that the shareholder intends to appear in person or by proxy at the
Annual Meeting to introduce the recommendation; |
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the name, age, principal occupation and employment, and business and residential
addresses of the candidate; |
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the qualifications of such candidate and the reason for such recommendation; |
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a description of all arrangements or understandings between the shareholder and such
candidate or between the candidate and the Company or any of its subsidiaries; |
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the candidates signed consent to serve as a director if elected and to be named in
the Proxy Statement; and |
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all other information which would be required to be included in a proxy statement
filed with the SEC if, with respect to such nomination, such shareholder were a
participant in a solicitation subject to the Exchange Act. |
Once the Nominating Committee receives the recommendation, it may request additional
information from the candidate about the candidates independence, qualifications and other
information that would assist the Nominating Committee in evaluating the candidate, as well as
certain information that must be disclosed about the candidate in our Proxy Statement, if
nominated. The Nominating Committee will apply the same standards in considering director
candidates recommended by shareholders as it applies to other candidates.
The Nominating Committee also evaluates the performance of individual Directors and
assesses the effectiveness of committees and the Board as a whole. The effectiveness of the
nomination process is evaluated by the Board each year as part of its self-evaluation process and
by the Nominating Committee as it evaluates and identifies director candidates.
Both the Board and the Nominating Committee believe that each of Wintrusts
Directors possess the outstanding characteristics and qualifications necessary for service as a
director. Accordingly, upon the nomination of the Board, in 2011, all 13 of the director nominees
are Directors standing for re-election.
24
Audit Committee
The Board has established an Audit Committee for the purpose of overseeing our
accounting and financial reporting processes and the audits of our financial statements. In
addition, the Audit Committee assists the Board in fulfilling its oversight responsibilities with
respect to:
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our compliance with legal and regulatory requirements, including our disclosure
controls and procedures; |
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the independent registered public accounting firms qualifications and independence;
and |
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the performance of our internal audit function and independent registered public
accounting firm. |
The Board has adopted an Audit Committee Charter, a copy of which is available at
www.wintrust.com by choosing Investor Relations and then choosing Corporate Governance.
The Audit Committee has established a policy to pre-approve all audit and non-audit
services provided by the independent registered public accounting firm. These services may include
audit services, audit-related services, tax services and other services. Pre-approval is generally
provided for up to one year. Once pre-approved, the services and pre-approved amounts are monitored
against actual charges incurred and modified if appropriate.
To serve on the Audit Committee, Directors must meet financial competency standards
and heightened independence standards set forth by the SEC and Nasdaq. In particular, each Audit
Committee member:
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must be financially literate; |
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must not have received any consulting, advisory, or other compensatory fees from us
(other than in his or her capacity as a Director); |
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must not be our affiliate or the affiliate of any of our subsidiaries; and |
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must not serve on the audit committee of more than two other public companies,
unless the Board determines that such simultaneous service would not impair the ability
of such Director to effectively serve on the Audit Committee. |
Furthermore, at least one member of the Audit Committee must be a financial expert.
The Audit Committee consists of six Directors, and the Board has determined that
each of them is independent under the applicable Nasdaq listing standards and meets the financial
competency and heightened independence standards set forth above. The Board has determined that Ms.
Stafford, Mr. Getz, Mr. Heitmann and Mr. Moschner qualify as financial experts. During 2010, the
Audit Committee met six times.
Compensation Committee
The Board has established a Compensation Committee which is responsible for:
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establishing the Companys general compensation philosophy and overseeing the
development and implementation of compensation programs; |
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with input from the Board, reviewing and approving corporate goals and objectives
relevant to the compensation of the Chief Executive Officer and other management,
evaluating the performance of the Chief Executive Officer and other management in light
of those goals and objectives, and setting the Chief Executive Officers and other
managements compensation levels based on this evaluation; |
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reviewing the Companys compensation programs to assess the extent to which such
practices encourage risk-taking or earnings manipulation, and taking any appropriate
remedial actions; |
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administering and interpreting all salary and incentive compensation plans for
officers, management and other key employees; |
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reviewing senior management compensation; |
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reviewing management organization, development and succession planning; |
25
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taking actions relating to employee benefit, compensation and fringe benefit plans,
programs or policies of the Company; |
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reviewing and approving severance or similar termination payments to any executive
officer of the Company; |
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preparing reports on executive compensation; |
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pre-approving all services provided by any independent compensation consultant
retained to participate in the evaluation of executive compensation, other than
services performed in connection with non-employee director compensation; |
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reviewing the results of any advisory shareholder votes on executive compensation,
and considering whether to recommend adjustments to the Companys executive
compensation policies and practices as a result of such votes; |
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recommending for approval by the Board how frequently the Company should conduct
advisory shareholder votes on executive compensation, taking into account the results
of any prior shareholder votes regarding executive compensation; |
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developing and implementing policies with respect to the recovery of clawback of
any excess compensation, including stock options, paid to any of the Companys
executive officers based on erroneous data; |
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reporting activities of the Compensation Committee to the Board on a regular basis
and reviewing issues with the Board as the Compensation Committee deems appropriate;
and |
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reviewing and assessing annually the adequacy of the Compensation Committee Charter
and, if appropriate, recommending changes to the Board for approval. |
The Compensation Committees authority is set forth in a charter adopted by our
Board, a copy of which is available at www.wintrust.com by choosing Investor Relations and then
choosing Corporate Governance.
The Compensation Committee consists of four Directors, and the Board has determined
that each of them is independent under the applicable Nasdaq listing standards. During 2010, the
Compensation Committee met six times.
Risk Management Committee
The Board has established a Risk Management Committee which is responsible for:
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developing and implementing the Companys overall asset/liability management and credit policies; |
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implementing risk management strategies and considering and approving the use of
various hedging techniques; |
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reviewing measures taken by the Company to identify, assess, monitor control and
mitigate its risks in the areas of asset/liability management and credit policies; |
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reviewing the Companys capital position, liquidity position, sensitivity of
earnings under various interest rate scenarios, the status of its securities portfolio
and trends in the economy; |
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reporting activities of the Risk Management Committee to the Board on a regular
basis and reviewing issues with the Board as the Risk Management Committee deems
appropriate; and |
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reviewing and assessing annually the adequacy of the Risk Management Committee
Charter and, if appropriate, recommending changes to the Board for approval. |
The Risk Management Committees authority is set forth in a charter adopted by our
Board, a copy of which is available at www.wintrust.com by choosing Investor Relations and then
choosing Corporate Governance.
The Risk Management Committee consists of six Directors, and the Board has
determined that each of these Directors, except for Mr. Perry, has no material relationship with us
and each is otherwise independent under the applicable Nasdaq listing standards. See Related
Party Transactions for additional information regarding
26
Mr. Perrys material relationship with the
Company. During 2010, the Risk Management Committee met four times.
Finance Committee
The Board has established a Finance Committee to provide guidance to management
regarding strategic opportunities and related financing transactions. In addition, the Finance
Committee assists the Board in fulfilling its responsibilities with respect to:
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reviewing the capital plan and cash position of the Company, and providing guidance
on the sources and uses of capital and expected returns on capital; |
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reviewing the Companys financial policies, capital structure, strategy for
obtaining financial resources, tax-planning strategies and use of cash flow; |
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reviewing and making recommendations with respect to any share repurchase programs
and dividend policy; |
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reviewing proposed mergers, acquisitions, joint ventures and divestitures involving
the Company and its subsidiaries; |
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reviewing and making recommendations with respect to issuing equity and debt
securities; |
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providing advice to management with respect to the financial aspects of transactions
by subsidiaries of the Company that require a vote by the Company, as a shareholder of
such subsidiaries; and |
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reviewing and assessing annually the adequacy of the Finance Committee Charter and,
if appropriate, recommending changes to the Board for approval. |
The Finance Committees authority is set forth in a charter adopted by our Board, a
copy of which is available at www.wintrust.com by choosing Investor Relations and then choosing
Corporate Governance.
The Finance Committee consists of four Directors, and the Board has determined that
each of these Directors, except for Mr. Perry, has no material relationship with us and each is
otherwise independent under the applicable Nasdaq listing standards. See Related Party
Transactions for additional information regarding Mr. Perrys material relationship with the
Company. During 2010, the Finance Committee met fifteen times.
Executive Committee
The Board has established an Executive Committee to provide guidance and counsel to
the Companys management team on significant matters and to take action on behalf of the Board
between meetings of the Board or when it is not feasible to take action by the full Board. The
Executive Committee may exercise all authority of the Board except as otherwise prohibited by law.
The Executive Committees authority is set forth in a charter adopted by our Board, a copy of
which is available at www.wintrust.com by choosing Investor Relations and then choosing
Corporate Governance.
The Executive Committee consists of seven Directors, and the Board has determined
that each of these Directors, except for Mr. Wehmer, is independent under the Nasdaq listing standards. During 2010,
the Executive Committee did not meet.
Shareholder Communications
Any shareholder who desires to contact the non-employee Directors or the other
members of our Board may do so by writing to: Wintrust Financial Corporation, Board of Directors,
c/o the Secretary of the Company, Wintrust Financial Corporation, 727 North Bank Lane, Lake Forest,
Illinois 60045. Copies of written communications received at this address will be provided to the
Board, the applicable committee chair or the non-employee Directors as a group unless such
communications are considered, in consultation with the non-employee Directors, to be improper for
submission to the intended recipient(s). All communications will be forwarded to the Chair of the
Nominating Committee unless the communication is specifically addressed to another member of the
Board, in which case, the communication will be forwarded to that Director. Other interested
parties may also use this procedure for communicating with the Board, individual Directors or any
group of Directors. Shareholders also may obtain a copy of any of the documents posted to the
website free of charge by calling (847) 615-4096 and requesting a copy. Information contained on
Wintrusts website is not deemed to be a part of this Proxy Statement.
27
EXECUTIVE OFFICERS OF THE COMPANY
Certain information regarding those persons serving as the Companys executive
officers is set forth below.
Edward J. Wehmer (57) President and Chief Executive Officer Mr. Wehmer serves
as the Companys President and performs the functions of the Chief Executive Officer. Accordingly,
he is responsible for overseeing the execution of the Companys day-to-day operations and strategic
initiatives. See the description above under Election of Directors for additional biographical
information.
David A. Dykstra (50) Senior Executive Vice President and Chief Operating
Officer, Secretary and Treasurer Mr. Dykstra joined the Company in 1995 and currently serves as
the Companys Chief Operating Officer overseeing all treasury, financial, audit, compliance and
human resources affairs of the Company. Prior to 2002, Mr. Dykstra served as the Companys Chief
Financial Officer. Since January 2006, Mr. Dykstra also serves as a Regional Market Head overseeing
Crystal Lake Bank, State Bank of the Lakes and Town Bank. Prior thereto, Mr. Dykstra was employed
from 1990 to 1995 by River Forest Bancorp, Inc., Chicago, Illinois, most recently holding the
position of Senior Vice President and Chief Financial Officer. Prior to his association with River
Forest Bancorp, Mr. Dykstra spent seven years with KPMG LLP, most recently holding the position of
Audit Manager in the banking practice. Mr. Dykstra is a Director of Crystal Lake Bank, First
Insurance Funding, Old Plank Trail Community Bank, State Bank of the Lakes, Town Bank, Tricom,
Wintrust Information Technology Services and Wintrust Mortgage Corporation.
James H. Bishop (67) Executive Vice President and Regional Market Head Since
January 2006, Mr. Bishop has served as a Regional Market Head overseeing Advantage Bank, Barrington
Bank and Village Bank. Mr. Bishop originally joined the Company in 1996 and served as the Chief
Executive Officer of Barrington Bank until February 2003. Prior to his association with the
Company, Mr. Bishop served as a Senior Vice President of First Chicago/NBD and was a Regional
Manager for that organizations suburban locations in the North and Northwest suburbs of Chicago.
Mr. Bishop is a Director of Advantage Bank, Barrington Bank, Village Bank, and Wintrust Information
Technology Services.
Lloyd M. Bowden (57) Executive Vice President Technology Mr. Bowden serves
as Executive Vice President Technology for the Company and as President of Wintrust Information
Technology Services. He is responsible for planning, implementing and maintaining all aspects of
the subsidiary banks internal data processing systems and technology designed to service the
subsidiary banks customer base. Mr. Bowden joined the Company in April 1996 to serve as the
Director of Technology with responsibility for implementing technological improvements to enhance
customer service capabilities. Prior thereto, he was employed by Electronic Data Systems, Inc. in
various capacities since 1982, most recently in an executive management position with the Banking
Services Division and previously in the Banking Group of the Management Consulting Division. Mr.
Bowden is a Director of Wintrust Information Technology Services.
Frank J. Burke (62) Executive Vice President and Regional Market Head Since
May 1997, Mr. Burke has served as President and Chief Executive Officer of First Insurance Funding,
and since July 2008 he is the
Regional Market Head overseeing Tricom. From February 1990 until May 1997 Mr. Burke served as Vice
President, Sales and Marketing of First Insurance Funding. Prior to joining the Company, Mr. Burke
was an executive at Whirlpool Financial Corporation, AI Credit Corporation and Humana, Inc. From
1970 until 1984, Mr. Burke was employed by Borg Warner Financial Services in various capacities,
most recently as Division Manager of its premium finance company. Mr. Burke is a Director of First
Insurance Funding, Tricom and Wintrust Information Technology Services.
Timothy S. Crane (49) Executive Vice President and Regional Market Head Mr. Crane joined
the Company in August 2008 and is the Regional Market Head overseeing Lake Forest Bank, Northbrook
Bank, North Shore Community Bank and St. Charles Bank. Prior to joining the Company, Mr. Crane
served as President and Head of Retail Banking of Harris Bank in Chicago where he was employed for
24 years. Mr. Crane is a director of Lake Forest Bank, Northbrook Bank, North Shore Community Bank,
St. Charles Bank and Wintrust Information Technology Services.
John S. Fleshood (48) Executive Vice President Risk Management Mr.
Fleshood joined the Company in August 2005 and manages the overall risk management process for the
Company including audit, business continuity and information security functions. Between January
2006 and December 2009, Mr. Fleshood served as a Regional Market Head overseeing St. Charles Bank
and Wintrust Mortgage Corporation. Previously, Mr. Fleshood served as Senior Vice President and
Chief Financial Officer of the Chicago affiliate of Fifth Third
28
Bank, an Ohio banking corporation,
a commercial bank offering a full range of banking services to consumer, business and financial
customers, from July 2001 to August 2005. Prior to that, Mr. Fleshood served as Vice President and
Manager of the Treasury Division of Fifth Third Bank, Cincinnati, Ohio. Mr. Fleshood is a Director
of Wintrust Information Technology Services.
Leona A. Gleason (61) Executive Vice President and Chief Administrative Officer
Ms. Gleason joined the Company in January 2010 and oversees certain administrative affairs of
the Company including Human Resources, Operations, Compliance, Community Reinvestment Act, Bank
Secrecy Act and Anti-Money Laundering. From 1996 to 2009, Ms. Gleason was Executive Vice President
at FBOP Corporation, a $19 billion privately held bank holding company. She had primary
responsibility for Human Resources, Training, Compliance, Community Reinvestment Act, Bank Secrecy
Act, Risk Management, Operations and Information Technology. Ms. Gleason also served as an
executive officer of certain subsidiaries of FBOP Corporation, which subsidiaries were taken into
receivership by the Federal Deposit Insurance Corporation (the FDIC) on October 30, 2009. Prior
to her association with FBOP, from 1977 to 1996, Ms. Gleason was Senior Vice President at Corus
Bankshares, Inc. where she managed Retail Banking, Operations, Information Technology, Compliance
and Human Resources and from 1972 to 1977 was Vice President at Boulevard Bank.
David L. Larson (48) Executive Vice President and Regional Market Head Mr.
Larson joined the Company in April 2010 and oversees the Purchased Asset Division of the Company.
He also serves as a Regional Market Head overseeing Wheaton Bank and Old Plank Trail Community
Bank. Mr. Larson was the President and Chief Executive Officer of Wheatland Bank from December
2009 to April 2010, when it was taken into receivership by the FDIC and acquired by the Company.
From 1995 until 2009, Mr. Larson served in various executive positions at Chicago subsidiaries of
FBOP Corporation, a $19 billion privately held bank holding company. Mr. Larson was the Chief
Credit Officer of FBOP subsidiary Park National Bank, a $5 billion community bank, which was taken
into receivership by the FDIC on October 30, 2009. Prior to his association with FBOP, Mr. Larson
served in various commercial banking positions at American National Bank from 1987 to 1995. Mr.
Larson is a director of Wheaton Bank, Old Plank Trail Community Bank and Wintrust Information
Technology Services.
Richard B. Murphy (51) Executive Vice President and Chief Credit Officer Since January
2002, Mr. Murphy has served as the Companys Chief Credit Officer and is responsible for
coordinating all the credit functions of the Company. Mr. Murphy serves as Regional Market Head
overseeing Hinsdale Bank. Mr. Murphy served as the President of Hinsdale Bank from 1996 until
December of 2005. From 1993 until his promotion to President of Hinsdale Bank, Mr. Murphy served as
the Executive Vice President and Senior Lender of Hinsdale Bank. Prior to his association with the
Company, Mr. Murphy served as President of the First State Bank of Calumet City. Mr. Murphy is a
Director of Beverly Bank, Hinsdale Bank, Old Plank Trail Community Bank and Wintrust Information
Technology Services. Mr. Murphy is married to the sister of Mr. Wehmers wife.
David L. Stoehr (51) Executive Vice President and Chief Financial Officer Mr.
Stoehr joined the Company in January 2002 and manages all financial and accounting affairs of the
Company, including internal and external financial reporting. Previously, Mr. Stoehr was Senior
Vice President/Reporting & Analysis at Firstar/U.S.
Bancorp, Director of Finance/Controller of Associated Banc-Corp with primary responsibility for
financial accounting and reporting, business unit financial management and data warehouse design
and implementation. Prior to his association with Associated Banc-Corp, Mr. Stoehr was Assistant
Vice President/Balance Sheet Management at Huntington Bancshares, Inc., Columbus, Ohio, from 1993
to 1995 and Financial Reporting Officer at Valley Bancorporation, Appleton, Wisconsin, from 1983 to
1993. Mr. Stoehr is a Director of Beverly Bank, Old Plank Trail Community Bank and Wintrust
Information Technology Services.
Thomas P. Zidar (42) Executive Vice President and Market Head of Wealth Management Services
Mr. Zidar joined the Company in 2006 and also serves as Chairman and Chief Executive Officer of
Wintrust Wealth Management. Prior to joining the Company, Mr. Zidar worked at ABN AMRO/LaSalle
Bank for nine years, most recently as Executive Vice President in the Personal Financial Services
group of LaSalle Bank, responsible for five business units. Throughout Mr. Zidars tenure with ABN
AMRO/LaSalle Bank, he served as Chairman, President and CEO of ABN AMRO Financial Services; Senior
Vice President, Integration Management; Senior Vice President/First Vice President, Acquisitions &
Corporate Capital; and Vice President, Profit Enhancement. Previously, Mr. Zidar held positions as
an Associate at A.T. Kearney, a management consulting firm, in Chicago, and as a Financial Analyst
and Associate at TTG, an investment banking firm, in New York and London. Mr. Zidar serves as a
Director of Wintrust Information Technology Services, Wintrust Capital Management, Wayne Hummer
Investments and The Chicago Trust Company.
29
EXECUTIVE COMPENSATION
Compensation Discussion & Analysis
This Compensation Discussion and Analysis section reviews our compensation program for our
five named executive officers (NEOs), which include our principal executive officer, principal
financial officer and the three other most highly-compensated executive officers.
Executive Summary
During 2010, Wintrusts executive officers continued to manage the Company through the
volatility and uncertainty which have affected the nations financial system. The Compensation
Committee of our Board of Directors (the Committee), noted that pursuant to its long-term
strategy of maintaining sound, conservative underwriting, the Company underwrote its credits in a
manner that resulted in an acceptable level of problem loans during this turbulent period. While
results for 2010 were not at the level that the Company or its shareholders would expect in an
ordinary environment, the Committee believes that, particularly when measured against the rest of
the banking industry, the Companys management performed very well during 2010.
In that regard, the Committee considered the results of managements strategic efforts
including:
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three capital raising transactions netting more than $537 million; |
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repurchase of the preferred securities sold pursuant to the United States Department
of the Treasurys Troubled Assets Relief Program (TARP) and exiting from the
Treasurys Capital Purchase Program (CPP); |
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growth in total assets by 14.4% to $14.0 billion; |
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loan growth of 18.1% to $9.9 billion; |
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growth of total deposits of 8.9% to $10.8 billion; |
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increase in net interest margin by 36 basis points to 3.37%; |
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raising tangible book value per share by 11% to $25.80; |
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successful completion and integration of three banks purchased through assisted
transactions with the FDIC; |
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purchase of an additional bank branch location; and |
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continued ability to attract talented personnel throughout the organization. |
The Committee also noted that 2010 was the Companys fourteenth consecutive year of
profitability. As a result of these accomplishments, the Committee approved, consistent with its
philosophy of paying for performance, year-end bonuses payable in cash and long-term incentive
equity awards for the Companys NEOs.
Our 2010 Compensation Program
Overview
The Committee has responsibility for developing, implementing and monitoring adherence with
the Companys compensation philosophy, including compensation of our NEOs. In doing so, the
Committee is mindful of our unique structure, culture and history as well as the growth focus of
our Company and its business. As a holding company that conducts its operations through our
subsidiaries, we are focused on providing entrepreneurial-based compensation to the chief
executives of each of our business units. As a Company with start-up and growth oriented
operations, we are cognizant that to attract and retain the managerial talent necessary to operate
and grow our businesses we often have to compensate our executives with a view to the business we
expect them to manage, rather than the size of the business they currently manage.
30
The Companys strategy has been to pay its executives competitive salaries in an effort to
attract and retain highly-qualified and well-experienced individuals. However, as the Company
continues to mature, the Committee believes that total compensation should be increasingly more at
risk and heavily weighted toward incentive components rather than base salary. This philosophy is
intended to create and foster a pay-for-performance framework within defined risk parameters that
drives shareholder value by aligning shareholder and NEO interests.
The Committee sets the compensation for all of our executive officers, including our NEOs. The
Committee also exercises the authority of the Board with respect to the Companys employee benefit
plans.
Program Design
The design of the Companys executive compensation program is based on a review conducted
during 2008 and 2009 by the Committee. The Committee conducted the review, which covered the
Companys NEOs as well as certain other members of senior management, with assistance from Towers
Perrin, an outside compensation consulting firm. Towers Perrin provided expert knowledge of
marketplace trends and best practices relating to competitive pay levels.
In providing assistance with the structuring of the Companys executive compensation program,
representatives of Towers Perrin delivered multiple presentations to the Committee regarding their
review of the Companys compensation program. The representatives compared the Companys executive
compensation program to best practices and to the executive compensation programs used by
comparable financial companies. Based on survey data and on proxy disclosures by the comparable
financial companies, Towers Perrin reported that the Companys target base salaries and target
total cash compensation were near the competitive median. Annual cash incentive payments were
described as being below the median level for senior executive positions, but above the median for
more junior executives. Towers Perrin suggested this was caused by Wintrusts use of uniform target
bonus opportunities, as a percentage of base salary, for its executive officers, and noted that
many companies offer their most senior executives higher target bonus opportunities than they offer
to junior executives. Such a compensation structure recognizes that senior executives can have a
greater effect on a companys performance, and should therefore have a greater percentage of their
total compensation be incentive-based pay. Finally, Towers Perrin reported that Wintrusts
long-term incentive payments were well below the median level, resulting in total direct
compensation that was also below the median level.
Representatives of Towers Perrin met subsequently with the Committee to present their final
recommendations regarding the Companys compensation program. Towers Perrin recommended that
Wintrust set target compensation levels within a competitive range of the median for comparable
companies, and at levels approaching the 75th percentile and above for executives who
demonstrate superior performance. Additionally, they recommended that the Company increase the
relative size of target annual bonuses for our senior executive officers
and consider referencing group performance, historical performance and investor and analyst
expectations when setting performance goals. Previously, the Companys general practice had been to
set a uniform target bonus percentage for the Companys senior management which was increased
annually by a fixed percentage.
However, the Companys participation in TARP beginning in late 2008 prevented the full
implementation of the program designed by the Committee. With guidance from Towers Perrin, the
Company adjusted its program, including salary increases for NEOs, mid-year 2009. The Committee
conducted a further review of the Companys compensation program for executive officers in response
to the issuance by Treasury, in June 2009, of regulations impacting financial institutions, like
the Company, which were participants in the CPP. Among other things, the regulations issued by
Treasury in June 2009 prohibited the Company from paying bonuses and certain other incentive
compensation to certain of our senior executive officers (including the NEOs) unless such bonuses
were paid in restricted stock and did not exceed more than one-third of annual compensation. The
Committee noted that the regulations generally had the effect of setting a ceiling upon the amount
of incentive compensation that could be paid to a NEO and, in particular, conflicted with certain
performance target opportunities set by the Committee for the Companys NEOs in connection with the
design of the 2009 compensation program. In particular, the Committee noted that its 2009
compensation program had aimed to provide bonus and long-term incentive compensation which would
represent between 50 and 60 percent of a NEOs total compensation. As a result, the Committee
concluded that if the salary component of executive compensation were left unchanged, the effect
would
31
be to substantially reduce the overall compensation of such individual and would increase the
risk of key personnel leaving the Company in favor of companies with whom we compete. To mitigate
any such risk, in August 2009 the Committee approved adjustments to the base salaries of Wintrusts
NEOs. These adjustments were not intended to increase total annual compensation for the NEOs, but
instead only to adjust the mix between fixed and variable compensation paid to them. The Committee
determined to pay one-third of the salary increase of Mr. Wehmer and Mr. Dykstra in the form of
salary shares.
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2009 TARP-Related Base |
Named Executive Officer |
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Salary Increase |
Edward J. Wehmer |
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300,000 |
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David A. Dykstra |
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225,000 |
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Richard B. Murphy |
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70,000 |
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David L. Stoehr |
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75,000 |
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Early in 2010, the Committee considered and awarded bonuses for 2009 performance. The
Companys performance significantly exceeded previously set targets, and under the Companys
previously designed bonus program would have resulted in payments far above those permitted under
the TARP-related compensation restrictions. As a result, the TARP-related compensation
restrictions prohibited the use of some of the performance-based compensation tools anticipated by
the Committee and resulted in bonus payments meaningfully below those intended by the Companys
executive compensation program.
2010 Design Adjustments
The Company was subject to the TARP-related compensation regulations in January 2010, when the
Committee established the 2010 compensation program. The Committee retained the salary structure
established in 2009. However, in designing the 2010 incentive compensation program, the Committee
assumed:
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repayment of the TARP securities; |
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exit from the CPP program; and |
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a more normalized banking environment. |
In September 2010, the Committee retained the services of Deloitte Consulting LLP (Deloitte)
as the Committees new independent compensation consultant. Deloitte reports to the Committee and
participates in Committee meetings. Deloitte undertook a clean slate review of the Companys executive
compensation program. The goal of the clean slate review and subsequent work of Deloitte was to
re-evaluate the current executive compensation program and compare it to the Companys strategic
objectives and leading practices in executive compensation in order to identify areas for further
consideration. In addition, Deloitte assessed the competitiveness of the Companys executive
compensation program in light of changes in the banking industry, the recent growth of the Company
and the anticipated exit by the Company from TARP, including the removal of TARP-related
restrictions on executive compensation.
Deloittes analysis of the Companys compensation program determined that the total direct
compensation delivered to the NEOs, based on actual annual and long-term incentives, was below the
levels targeted by the Committee for executives that demonstrate superior performance. In
particular, Deloittes analysis noted that while the Companys NEOs base salaries and target total
cash compensation, on average, were at or above the target 75th percentile level, the
NEOs long-term incentive grants were well below those provided at comparable companies. Deloitte
recognized the impact of the TARP-related compensation restrictions on these results.
32
Deloittes clean slate review included a number of other suggested best practices discussed
with and undertaken by the Committee. In particular, following conversations with Deloitte, the
Committee:
|
|
|
adopted stock ownership guidelines for the Chief Executive Officer and other NEOs; |
|
|
|
|
amended its form employment agreement for new officers to remove severance benefits
upon death or disability; |
|
|
|
|
amended the 2007 Plan to require a double trigger vesting of equity awards under
the 2007 Plan beginning with grants made in 2011; and |
|
|
|
|
upon the expiration of the TARP-related clawback policy, adopted a clawback policy
applicable to all annual and long-term incentive compensation awards made to the
Companys executive officers. |
Following the review and in consultation with Deloitte, the Committee determined to adopt
compensation philosophies as described below.
Compensation Philosophy and Objectives
The Committee designed the Companys compensation program to promote a pay-for-performance
philosophy and to be competitive with market practices in order to retain and attract talented
executives who can contribute to our long-term success and build value for our shareholders.
Accordingly, the Committee strives to create a compensation package for each NEO that is
competitive as well as reflective of the performance of both the Company and the individual
officer. The Committee recognizes that certain elements of compensation are better suited to
reflect different compensation objectives. For example, as base salaries are the only element of
compensation that is fixed in amount in advance of the year in which the compensation will be
earned, the Committee believes that it is most appropriate to determine base salaries with a focus
on the market practices for similarly situated officers at comparable companies as adjusted to
reflect the individual officers performance during the preceding year. The aspects of individual
performance that are evaluated for base salary purposes include non-financial measures such as
integrity, quality, leadership, customer satisfaction, innovation and talent management. In
contrast, annual cash bonuses and long-term incentives are better able to reflect the Companys
performance as measured by financial measures such as earnings per share, deposit growth, loan
growth, net interest margin, credit quality and return on tangible equity. In addition, annual cash
bonuses and long-term performance measures are also well suited to aid in our goal of retaining
executives and also motivating officers to increase shareholder value. The other elements of
compensation are set primarily based on market practices and are driven by the Committees
philosophy that personal benefits including retirement and health and welfare benefits should be
available to all employees on a non-discriminatory basis.
In connection with the review of the Companys compensation program, the Committee adopted the
following additional compensation philosophies and procedures, which formed the basis of the
Companys compensation program in 2010:
Our compensation program must allow us to attract first-rate entrepreneurial talent that
reflects our structure. As a result of our holding company structure, our compensation program
takes into consideration the fact that to attract and retain executive officers, whether at the
Company or at one of our subsidiaries, talented enough to enable the Company to meet its long-term
goals, we must compensate such executive officers based on the size and potential enterprise that
we expect such officer to oversee in the future.
Compensation should be performance based. Our compensation program should encourage and
reward excellent performance from the Companys management team. Accordingly, our compensation
program is designed to drive the achievement of key short-term and long-term business objectives
and is aligned with the Companys overall performance, its financial performance, the performance
of its subsidiaries and a managers attainment of his or her individual management objectives.
A significant portion of total compensation should be in the form of long-term incentives.
Long-term incentives, such as stock options, restricted stock units (RSUs) and awards under our
Cash Incentive and Retention Plan (CIRP), are an important way of aligning management and
shareholder interests because they link
33
a managers compensation levels to the performance of the
Company over a multi-year time horizon. Additionally, long-term incentives can help promote
continuity of management by tying compensation to continued service, and can help reduce incentives
to take excessive risks by ensuring that managers are incentivized to create lasting value for
shareholders.
Compensation levels should be competitive to ensure that we attract and retain a highly
qualified management team to lead and grow our Company. The successful operation of our Company
requires an experienced and talented management team. To hire and retain such managers, our
compensation program must be competitive with those of our peer firms in terms of total
compensation and for each element of compensation.
Compensation opportunities should be commensurate with an executives roles and
responsibilities. Greater levels of compensation should be offered to our executives who are most
responsible for the performance of the Company. This helps ensure that compensation levels are
perceived as fair, both internally and externally, and reduces the risk that we lose managerial
talent to our competitors.
Our compensation program for NEOs should be fair, and perceived as such, both internally and
externally. The Committee strives to create a compensation program that will be perceived as fair,
both internally and externally. It accomplishes this by comparing the compensation that is provided
to our NEOs to comparative group of companies as a means to measure external fairness and to other
senior employees of the Company, as a means to measure internal fairness. Shareholders are best
served when we can attract and retain talented executives with compensation packages that are
competitive but fair. The markets in which the Company operates are very competitive and there is
real risk of losing talented executives if our compensation is not competitive.
Total compensation expense should be reasonably predictable for the Company and reasonably
transparent to our employees. The variable components of our compensation should be structured so
that management can predict, based upon the Companys overall performance and progress toward key
metrics, the likely overall compensation expense for our executives. At the same time, based on
the Companys overall performance, progress toward key metrics, subsidiary performance where
appropriate and progress toward personal objectives, individual executives should have a reasonable
amount of transparency into their likely levels of compensation.
Compensation Procedures
Role of Management. The Committee made all 2010 compensation decisions for our NEOs. Mr.
Wehmer and Mr. Dykstra annually review the performance of each of the Companys and its
subsidiaries officers (other than Mr. Dykstra, whose performance is reviewed by Mr. Wehmer acting
alone, and Mr. Wehmer whose performance is reviewed by the Committee, and Mr. Murphy whose
performance is reviewed by the Committee due to the fact that he is Mr. Wehmers brother-in-law).
The conclusions reached and the compensation recommendations based on these reviews, including with
respect to salary adjustments and incentive award amounts, were presented to the Committee. The
Committee exercised its discretion in modifying any recommended adjustment or award.
Committee Process. During 2010, the Committee continually reviewed both the Companys
compensation philosophy and the actual compensation being paid by the Company. The Committee met,
including in executive sessions without any members of management present, to discuss, evaluate and
set executive officer compensation. As discussed above, the Committee relied on the framework
previously developed in setting 2010 target incentives. In setting compensation for each of the
NEOs, the Committee focused on the total direct compensation received by each NEO, as well as the
allocation of each element of compensation in relation to those provided by the peer companies
identified below. The Committee acted pursuant to a written charter that had been approved by our
Board.
Compensation Consultants. The Committee has the sole authority to hire and fire its own
outside compensation consultants and any other advisors it deems necessary. The role of a
compensation consultant is to assist the Committee in analyzing executive compensation packages and
to provide the Committee with information regarding market compensation levels, general
compensation trends and best practices. The Committee also periodically asks a consultant to opine
on the competitiveness of specific pay decisions and actions for the NEOs, as well as the
appropriateness of the design of the Companys executive compensation programs. The Committee
34
engaged Towers Perrin beginning in 2008 through mid-2009 to advise it on executive compensation
matters. Beginning in September 2010, the Committee hired Deloitte to advise it on executive
compensation-related issues and to provide advice relating to establishing bonus compensation for
2010 performance and setting target incentives for 2011. In addition, Deloitte is providing
guidance on best practices and updating the Companys long-term incentive compensation program.
Deloitte attends all meetings of the Committee, including executive sessions.
Peer Group Analysis
As discussed above, the Committee retained Towers Perrin in 2008 to review and make
recommendations to the Committee regarding the Companys executive compensation program. Following
consultation with Towers Perrin in 2009, the Committee identified two reference groups of peer
financial companies that it used for purposes of benchmarking its compensation practices in
connection with the development of the new executive compensation program. This peer group was used
in developing 2010 salary, annual bonus and long-term incentive opportunities. These include a
group of 15 similarly-sized national banks and a group of eleven Midwestern banks. The reference
group of similarly-sized national banks included banks with total assets between $7.4 billion and
$11.9 billion as of December 31, 2007, compared to $9.4 billion of assets for Wintrust as of such
date. The reference group of Midwestern banks included banks with total assets between $3.7 billion
and $21.6 billion as of their respective fiscal year ends. The Committee considered both the
national banks reference group and Midwestern banks reference group together as a single peer
group.
|
|
|
Similarly-Sized |
|
|
National Banks |
|
Midwestern Banks |
Reference Group |
|
Reference Group |
East West Bancorp Inc.
|
|
First Midwest Bancorp Inc. |
UCBH Holdings Inc.
|
|
MB Financial Inc. |
International Bancshares Corp.
|
|
Midwest Bank Holdings Inc. |
Whitney Holding Corp.
|
|
Private Bancorp Inc. |
Cathay General Bancorp.
|
|
Taylor Capital Group Inc. |
FirstMerit Corp.
|
|
CORUS Bankshares Inc. |
UMB Financial Corp.
|
|
Amcore Financial Inc. |
Trustmark Corp.
|
|
Associated Banc-Corp. |
Umpqua Holdings Corp.
|
|
Citizens Republic Bancorp Inc. |
United Community Banks Inc.
|
|
Old National Bancorp |
First Midwest Bancorp Inc.
|
|
TCF Financial Corp. |
United Bankshares Inc. |
|
|
Old National Bancorp. |
|
|
MB Financial Inc. |
|
|
Pacific Capital Bancorp. |
|
|
Since information regarding compensation for our NEOs other than our Chief Executive Officer
and Chief Financial Officer is not generally publicly available for these reference groups, the
Committee supplemented its review of these reference groups with additional survey data provided by
Towers Perrin. The survey data was compiled by Towers Perrin from four surveys of compensation in
the financial services industry, published by executive compensation firms during the spring of
2008. The survey data was adjusted by Towers Perrin to reflect the Companys asset size, in order
to provide an estimated distribution of compensation levels for a financial company with $10
billion in assets. In reviewing this survey data, the Committee considered only the aggregated
survey data. The identity of the companies comprising the survey data is not disclosed to, or
considered by, the Committee in its decision-making process and thus the Committee does not
consider it material. The Committee uses these sources of market data to ensure that the
compensation being paid by the Company is competitive with those of its peer companies.
In 2010, the Committee sought to target each element of compensation to an amount within a
competitive range of the median for similarly situated officers at comparable companies. The
Committee adopted a plan designed to provide actual compensation at levels approaching the
75th percentile and above in instances where the
35
Companys results and the individuals
performance exceed target levels, and compensation below the median when the executives
performance or Company results fail to reach target levels. In determining the competitive median
range appropriate for each NEO, the Committee considers the Companys unique structure and the
hybrid nature of certain managerial positions at Wintrust.
At the request of the Committee, Deloitte began work in late 2010 to review the current peer
group in light of the growth of Wintrust and the changes in many of the banks included in the
current peer group. In December 2010, Deloitte presented the Committee with information regarding
a revised peer group as well as benchmarking information regarding that peer group. Due to
anticipated exit for Wintrust from TARP and continuing shifts in many of the peer banks, the
Committee, management and Deloitte continue to work on the establishment of a new peer group, which
the Committee anticipates having in place for review of 2011 executive compensation. The Committee
intends to continue to target compensation at the same levels discussed above.
Elements of Compensation
This section describes the various elements of our compensation program for NEOs,
together with a discussion of various matters relating to those items, including why the Committee
choose to include the items in the compensation program. The principal components of compensation
for our NEOs were:
|
|
|
base salary; |
|
|
|
|
annual cash bonus; |
|
|
|
|
long-term incentives; and |
|
|
|
|
perquisites and other personal benefits. |
As a result of its review of its compensation structure, the Committee established
the following framework for NEO compensation, which it used again in 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term |
|
Perks & |
|
|
|
|
Base |
|
Annual |
|
Incentive |
|
Other |
|
Total |
Named Executive Officer |
|
Salary |
|
Bonus |
|
Compensation |
|
Benefits |
|
Compensation |
Edward J. Wehmer |
|
|
35 |
% |
|
|
30 |
% |
|
|
30 |
% |
|
|
5 |
% |
|
|
100 |
% |
David A. Dykstra |
|
|
40 |
% |
|
|
30 |
% |
|
|
25 |
% |
|
|
5 |
% |
|
|
100 |
% |
Richard B. Murphy |
|
|
40 |
% |
|
|
30 |
% |
|
|
25 |
% |
|
|
5 |
% |
|
|
100 |
% |
David L. Stoehr |
|
|
45 |
% |
|
|
30 |
% |
|
|
20 |
% |
|
|
5 |
% |
|
|
100 |
% |
Leona A. Gleason |
|
|
45 |
% |
|
|
30 |
% |
|
|
20 |
% |
|
|
5 |
% |
|
|
100 |
% |
Salary. The Company provides NEOs with base salary to compensate them for services
rendered during the fiscal year and reflect each NEOs position, specific skills, tenure,
experience, responsibility and performance. Base salary adjustments for NEOs for any given year are
generally fixed by the Committee at its meeting in January. Increases or decreases in base salary
on a year-over-year basis are dependent on the Committees assessment of the Company and individual
performance. The Committee is free to set NEO salary at any level it deems appropriate. As part of
this process, the Committee solicits the recommendations of Mr. Wehmer with respect to NEOs (other
than Mr. Wehmer and Mr. Murphy). The Committee considers market data, internal pay equity and
merit history in evaluating recommendations.
During 2010, the Committee determined to maintain the base salaries of Mr. Wehmer
and Mr. Dykstra, including the practice, adopted in 2009 in light of TARP-related compensation
restrictions, of paying a portion of their salaries in the form of salary shares. More
specifically, in the case of Mr. Wehmer and Mr. Dykstra, $100,000 and $75,000, respectively, of
base salary was paid in Wintrusts Common Stock granted under the 2007 Plan. The number of shares
of Wintrust Common Stock granted as of each payroll period end date to Mr. Wehmer and Mr. Dykstra
was determined by dividing the amount of base salary payable in stock by the average of the high
and low price of Wintrusts Common Stock on Nasdaq on the grant date or, if Nasdaq was closed on
the grant date, by the Nasdaq average of the high and low price on the immediately preceding date
on which Nasdaq was open. Mr. Wehmer and Mr. Dykstra may not sell or otherwise transfer the stock
they receive in payment of base salary until
36
the later of three years from the date of grant or
until Wintrust repays the CPP investment in Wintrust, except upon their death or permanent
disability.
Annual Bonus. The Companys performance-based annual cash bonuses for executives
is discretionary based on each NEOs overall performance. Annual cash bonuses are intended to
provide officers with an opportunity to receive additional cash compensation based on their
individual performance and Company results, including based on the achievement of specified
Company, subsidiary and individual performance goals. Performance-based cash bonuses are included
in the compensation package because they permit the Committee to incentivize our NEOs, in any
particular year, to pursue particular objectives that the Committee believes are consistent with
the overall goals and strategic direction that the Board has set for the Company.
As part of the review of our compensation program, the Committee determined to
restructure the target annual bonus levels for the NEOs beginning in 2009 so that target annual
bonus levels for the Companys senior executive officers represent a larger percentage of such
executives total compensation. As noted above, annual bonus opportunity for each of our NEOs under
this structure is 30% of their respective total compensation. The Committee believes that this
change increases the pay-for-performance nature of our compensation program.
Once the annual bonus opportunity is established, the Committee converts the target bonus
opportunity to a range of payout levels as a percentage of base salary at low, target and high
levels. Below are the low, target and high bonus award opportunities for our NEOs, expressed as a
percentage of base salary:
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer |
|
Low |
|
Target |
|
High |
Edward J. Wehmer |
|
|
60 |
% |
|
|
70 |
% |
|
|
90 |
% |
David A. Dykstra |
|
|
55 |
% |
|
|
65 |
% |
|
|
75 |
% |
Richard B. Murphy |
|
|
55 |
% |
|
|
65 |
% |
|
|
75 |
% |
David L. Stoehr |
|
|
55 |
% |
|
|
60 |
% |
|
|
65 |
% |
Leona A. Gleason |
|
|
55 |
% |
|
|
60 |
% |
|
|
65 |
% |
In determining the amount of target annual bonuses, the Committee considers several factors, including:
|
|
|
|
market practices; |
|
|
|
|
the target annual bonuses set and actual annual bonuses paid in recent years; |
|
|
|
|
the desire to ensure, as described above, that a substantial portion of total
compensation is performance-based and at-risk; and |
|
|
|
|
the relative importance, in any given year, of the long and short-term performance
goals of the Company. |
The Committee has complete discretion in determining the amount of any annual bonus
awarded to an NEO. However, to aid it in exercising that discretion, the Committee allocates the
potential annual bonus award for our NEOs between Company-level and personal objectives, as well as
retaining a discretionary factor. Company-level objectives focus on targeted consolidated net
income and personal objectives are tailored for each NEO. These performance objectives for annual
bonuses are developed through an iterative process. Based on a review of business plans, management
develops preliminary recommendations for Committee review. The Committee reviews managements
preliminary recommendations and establishes guideposts and ranges. These guideposts assist the
Committee in determining actual bonus awards and create incentives for NEO performance. The
Committee strives to ensure that the objectives are consistent with the strategic goals set by the
Board, that the goals set are sufficiently ambitious, within defined risk parameters, so as to
provide a meaningful incentive and that annual bonus payments, assuming target levels of
performance are attained, will be consistent with the overall NEO compensation program established
by the Committee.
The final determination of a NEOs actual bonus payment is based on the Committees
evaluation of Company and individual performance metrics, including consolidated net income,
personal objectives, and discretionary factors. As in years past, the final determination of the
Committee could result in no bonus being paid or a bonus in an amount more than the high bonus
opportunity or less than the low bonus opportunity.
37
Following the established structure for executive compensation, for 2010, target
annual bonuses were allocated across the Company-level objective, personal objectives and the
discretionary component as follows, expressed as a percentage of each NEOs base salary:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Eligible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Bonus at |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target as a |
|
|
Company Level |
|
Personal |
|
Discretionary |
|
Percentage of |
|
|
Objective |
|
Objectives |
|
Component |
|
Base Salary |
Edward J. Wehmer |
|
|
49.00 |
% |
|
|
17.50 |
% |
|
|
3.50 |
% |
|
|
70.00 |
% |
David A. Dykstra |
|
|
45.50 |
% |
|
|
16.25 |
% |
|
|
3.25 |
% |
|
|
65.00 |
% |
Richard B. Murphy |
|
|
45.50 |
% |
|
|
16.25 |
% |
|
|
3.25 |
% |
|
|
65.00 |
% |
David L. Stoehr |
|
|
42.00 |
% |
|
|
15.00 |
% |
|
|
3.00 |
% |
|
|
60.00 |
% |
Leona A. Gleason |
|
|
42.00 |
% |
|
|
15.00 |
% |
|
|
3.00 |
% |
|
|
60.00 |
% |
The Company-level objective for 2010 was to achieve consolidated net income of $92.6
million for 2010. Based on goals approved by the Committee in January 2010, our NEOs were provided
with the following framework for the guidelines the Committee would utilize in determining the
high, target or low portion of the annual bonus award opportunity allocated to the Company-level
objective:
|
|
|
|
|
Wintrust 2010 |
|
Performance-Weighting of |
Consolidated |
|
Company-Level |
Net Income |
|
Annual Bonus Award |
Greater than $120.3 million |
|
High |
$92.6 million to $120.3 million |
|
Target |
$74.0 million to $92.5 million |
|
Low |
Wintrusts consolidated net income for the year ended December 31, 2010 was $63.3
million. Accordingly, none of our NEOs exceeded the low amount of the Company-level objective.
In determining the actual annual bonus for each NEO associated with the achievement of
Company-level objectives, the Committee considered a number of factors, including the:
|
|
|
strategic successes of management in achieving the goals set forth for the 2010
performance year; |
|
|
|
|
growth in the Companys total assets, net interest margin and tangible book
value per share; |
|
|
|
|
success of the Companys capital-raising efforts; |
|
|
|
|
Companys exit from TARP and the CPP; |
|
|
|
|
successful completion and integration of three banks purchased through assisted
transactions with the FDIC; |
|
|
|
|
fact that the Company-level objective was set based on assumptions about the
overall banking environment which did not materialize; |
|
|
|
|
Companys achievement of 68% of the consolidated net income objective despite a
more difficult banking environment; and |
|
|
|
|
Companys comparatively low levels of charge-offs despite the failure of overall
level of charge-offs in the mortgage and commercial banking markets to normalize. |
In weighing these achievements and the fact that the level of consolidated net income fell beneath
the low level set in January 2010, the Committee focused on the percentage of the Companys
target achieved and determined to pay out the portion of annual bonuses associated with
Company-level results at 50% of the target level due to the achievement of 68% of the consolidated
net income objective.
Each of our NEOs was eligible to earn a portion of his or her target annual bonus award based
on satisfaction of certain personal objectives. Mr. Wehmers and Mr. Dykstras personal objectives
included:
38
increasing core earnings through planned, profitable growth; continuing to identify and
acquire strategic dislocated assets, asset generation platforms and bank acquisitions to compliment
the Companys strategy; repayment of TARP; and the formalization and expansion of training
programs. Mr. Murphys personal objectives included: working with acquired banks to establish
strong credit cultures; improving asset quality and operating performance; and enhancing the loan
approval process. Mr. Stoehrs personal objectives included: enhancing budgeting
forecasting systems; further improvement of reporting systems; and maximizing use of capital. Ms.
Gleasons personal objectives included: improving the structure of compliance systems; integration
of acquired subsidiaries; and further development of training initiatives.
For the portion of the annual bonus based on personal objectives, the Committee determined
that Mr. Wehmer, Mr. Dykstra and Mr. Stoehr were each eligible to receive 93% of their respective
personal objective opportunities, Mr. Murphy was eligible to receive 73% of his personal objective
opportunity and Ms. Gleason 85% of her personal objective opportunity. For the 5% target annual
bonus award allocated to discretionary factors, the Committee determined that Mr. Wehmer, Mr.
Dykstra and Mr. Murphy were each eligible to receive 200% of their discretionary opportunities, and
Mr. Stoehr and Ms. Gleason were each eligible to receive 100% of his or her discretionary
opportunities.
Once the Committee analyzed each of these portions of the annual bonus award opportunity, the
Committee considered the overall level of award indicated by adding the amounts allocated to each
component in light of:
|
|
|
its overall compensation objectives; |
|
|
|
|
its framework for portions of overall compensation; |
|
|
|
|
the Companys performance relative to peers; and |
|
|
|
|
the recommendations of Mr. Wehmer (other than for Mr. Wehmer and Mr.
Murphy). |
Based on this analysis, the Committee made a final determination of the annual bonus award for each
NEO.
The following table sets forth the total eligible annual bonus amounts at target and annual
cash bonuses actually paid to each of our NEOs.
|
|
|
|
|
|
|
|
|
|
|
Total Eligible |
|
Total Annual |
Named
Executive Officer |
|
Annual Bonus at Target |
|
Bonus Paid |
Edward J. Wehmer |
|
$ |
770,000 |
|
|
$ |
520,000 |
|
David A. Dykstra |
|
|
536,250 |
|
|
|
375,000 |
|
Richard B. Murphy |
|
|
292,500 |
|
|
|
225,000 |
|
David L. Stoehr |
|
|
222,000 |
|
|
|
135,000 |
|
Leona A. Gleason |
|
|
207,000 |
|
|
|
125,000 |
|
Long-Term Incentive Compensation. As described above, the Committee believes that a
substantial portion of each NEOs compensation should be in the form of long-term incentive
compensation in order to further align the interests of our NEOs and shareholders, and targets
long-term incentive compensation at 30% of total compensation for Mr. Wehmer, 25% of total
compensation for Mr. Dykstra and Mr. Murphy and 20% of total compensation for Mr. Stoehr and Ms.
Gleason. Long-term incentive compensation may consist of stock options, RSUs and/or awards under
the CIRP in such proportions as the Committee determines.
The grant of long-term incentive awards is completely discretionary. The Committee considers,
among other factors, the Companys return on tangible equity (ROTE), along with a number of other
factors.
In determining whether to make discretionary awards under the long-term incentive program, the
Committee considered:
|
|
|
its objective of making equity-based awards in the context of total executive
compensation; |
|
|
|
|
its objective of aligning the interests of our executives with the interests of
shareholders; |
39
|
|
|
its objective of determining equity-based awards in conjunction with its
determination of annual
cash bonus awards to ensure a balance of cash and equity compensation; |
|
|
|
|
the relative merits of cash and equity as a device for retaining and
incentivizing NEOs; |
|
|
|
|
the practices of the other companies in the peer group used that award long-term
incentive opportunities as a regular part of NEO target compensation; |
|
|
|
|
the updated information the Committee received from Deloitte regarding
compensation at companies in the Companys peer group and other companies proposed
for the 2011 peer group; |
|
|
|
|
the factors discussed above in its consideration of annual bonus awards; |
|
|
|
|
the amount of total executive compensation that the Committee determined was
appropriate in light of its assessment that the NEOs achieved 68% of the
Company-level consolidated net income objectives; and |
|
|
|
|
the Companys progress toward achieving its long-term ROTE objective of 15%. |
Following consideration of these factors, discussion with management and consultation with
Deloitte, the Committee determined to make discretionary long-term incentive awards to the NEOs in
the form of time-vested RSUs. Awards were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
|
Total Eligible Long-Term |
|
of Restricted Stock Units |
|
Approximate |
|
|
Incentive Bonus at Target |
|
Awarded as Long-Term |
|
Value of Long-Term |
Named
Executive Officer |
|
($) |
|
Incentive Bonus |
|
Incentive Bonus ($) |
Edward J. Wehmer |
|
|
942,857 |
|
|
|
18,797 |
|
|
|
630,000 |
|
David A. Dykstra |
|
|
515,625 |
|
|
|
12,680 |
|
|
|
425,000 |
|
Richard B. Murphy |
|
|
281,250 |
|
|
|
7,459 |
|
|
|
250,000 |
|
David L. Stoehr |
|
|
164,444 |
|
|
|
1,491 |
|
|
|
50,000 |
|
Leona A. Gleason |
|
|
153,333 |
|
|
|
1,491 |
|
|
|
50,000 |
|
RSUs convert into shares of our Common Stock if the recipient is still employed by
us on the date that specified restrictions lapse. RSUs granted under the incentive plans may vest
on the basis of the satisfaction of performance conditions established by the Committee or on the
basis of the passage of time and continued employment. The Committee has granted RSUs that vest on
the basis of the passage of time and continued employment with vesting periods ranging up to five
years. The RSUs granted in 2011 vest ratably over three years, beginning in January 2012.
Recipients of RSUs granted in 2011 may not vote the RSUs in shareholder votes.
In determining to award RSUs, the Committee considered the fact that RSUs help
facilitate executive stock ownership, long-term decision making and growth, and, compared to other
forms of long-term incentives, provide a higher level of retention value. The Committee also
considered the limited number of equity awards made to NEOs in the previous several years.
Cash Incentive and Retention Plan. The CIRP allows us to provide equity-like cash
compensation to our NEOs and other senior executives. Awards under the CIRP may be earned pursuant
to the achievement of performance criteria established by the Committee and/or continued
employment. The performance criteria established by the Committee must relate to one or more of the
criteria specified in the Plan, which include: earnings, earnings growth, revenues, stock price,
return on assets, return on equity, improvement of financial ratings, achievement of balance sheet
or income statement objectives and expenses. These criteria may relate to the Company, a particular
line of business or a specific subsidiary of the Company.
Awards under the CIRP are an important component of our long-term incentive
payments, as they result in less dilution to shareholders than stock options and RSUs, and may be
used when the availability of stock options and RSUs is limited.
The Company granted a CIRP award in 2010 to Ms. Gleason as an employment inducement
award upon her hire, with respect to the 2010-2014 performance cycle. Under the terms of her award,
Ms. Gleason is eligible to receive a target award of $100,000 based on the achievement of
cumulative earnings per share over the five-year performance cycle. Ms. Gleasons award also
includes a minimum payment equal to Ms. Gleasons vested percentage of her target award multiplied
by 100% plus the compound annual interest rate based on the 91-day
40
Treasury bill rate for the
period from January 1, 2010 through December 31, 2014, or if earlier, the date as of which the
minimum payment amount is being determined. Ms. Gleason annually vests in 20% increments. The
cumulative earnings per share performance targets for the 2010-2014 performance cycle are set forth
in the following table:
|
|
|
|
|
|
|
|
|
Cumulative Earnings Per Share Performance Grid (2010-2014 Performance Cycle) |
Compound |
|
Cumulative |
|
|
Annual |
|
Earnings |
|
Multiple of Target |
Growth Rate Range |
|
per Share |
|
Award (Ms. Gleason) |
20.0% or greater |
|
$22.24 or greater |
|
|
240 |
% |
17.5% - 19.99% |
|
$ |
20.73 - $22.23 |
|
|
|
210 |
% |
15.0% - 17.49% |
|
$ |
19.31 - $20.72 |
|
|
|
180 |
% |
12.5% - 14.99% |
|
$ |
17.97 - $19.30 |
|
|
|
140 |
% |
10.0% - 12.49% |
|
$ |
16.72 - $17.96 |
|
|
|
110 |
% |
<10.0% |
|
|
<$16.72 |
|
|
|
(1 |
) |
|
|
|
(1) |
|
Ms. Gleasons award in the event the Companys achievement of a
compound annual growth rate and cumulative earnings per share of
less than 10.00% and $16.72, respectively, is equal to Ms.
Gleasons vested target award multiplied by 100% plus the compound
annual interest rate based on the 91-day Treasury bill as in
effect from January 1, 2010 through the date on which the payout
amount is being determined. |
Under the terms of Ms. Gleasons CIRP award agreement, she is entitled to certain
payments in the event of termination of employment or a change in control. See the Potential
Payments Upon Termination or Change in Control section of this Proxy Statement for further
information regarding these payments.
Perquisites and Other Benefits. Our NEOs receive various perquisites provided by
or paid for by us that we believe are reasonable, competitive and consistent with the Companys
overall compensation philosophy. In 2010, these perquisites included: car allowances or
Company-owned automobiles, club dues, life insurance and supplemental long-term disability.
The Committee reviews the perquisites provided to its NEOs on a regular basis, in
an attempt to ensure that they continue to be appropriate in light of the Committees overall goal
of designing a compensation program for NEOs that maximize the interests of our shareholders.
Attributed costs of the personal benefits described above for the NEOs for the fiscal year ended
December 31, 2010 are included in column (i) of the Summary Compensation Table below.
Post-Termination Compensation
We have entered into employment agreements with each of our NEOs that provide for
post-termination compensation. These agreements provide for payments and other benefits if the
NEOs employment terminates for a qualifying event or circumstance, such as being terminated
without Cause or leaving employment for Constructive Termination, as these terms are defined in
the employment agreements. Additionally, the employment agreements provide for the payment of
severance if the NEOs employment is terminated within eighteen months of a Change-in-Control (as
defined in the agreements) of the Company. Additional information regarding the employment
agreements, including a definition of key terms and a quantification of benefits that would have
been received by our NEOs had termination occurred on December 31, 2010, is found under the heading
Potential Payments upon Termination or Change of Control on page 54 of this Proxy Statement.
The Committee believes that these employment arrangements are an important part of
overall compensation for our NEOs and will help to secure the continued employment and dedication
of our NEOs, notwithstanding any concern that they might have at such time regarding their own
continued employment, prior to or following a change of control. The Committee also believes that
these agreements are important as a recruitment and retention device, as all or nearly all of the
companies with which we compete for executive talent have similar agreements in place for their
senior employees.
41
Additional Compensation Policies
Clawback Policy. As a result of our prior participation in TARP, Wintrust adopted
a clawback policy which made bonus and incentive compensation paid to the NEOs during the period
the Treasury maintained an equity interest in the Company subject to recovery by Wintrust if the
payments were based on materially inaccurate financial statements or any other materially
inaccurate performance metric. The Emergency Economic Stabilization Act of 2008, as amended, and
regulations issued by Treasury thereunder (EESA), expanded this clawback provision to cover the
next 20 most highly compensated employees, and provides for recovery of any bonus, retention award,
or incentive compensation based on statements of earnings, revenues, gains, or other criteria that
are later found to be materially inaccurate.
In December 2010, we adopted a revised clawback policy applicable to our executive officers
that became effective upon our repayment of the Department of the Treasurys preferred stock
investment in the Company. The revised policy provides that the Company may recover any payment
made to a then current executive officer, or an individual who became a former executive officer
following the adoption of such policy, if the payment was predicated upon achieving certain
financial results that were subsequently the subject of a material negative restatement caused by
the intentional misconduct of the executive officer. In such event the Company may recover the
amount by which any annual or long-term payment or award made or granted exceeded what would have
been awarded or granted based on restated financials. In addition, the Company may recover any
profits realized on the sales of securities received by such executive officer pursuant to such
awards.
In addition, the clawback provision of the Sarbanes-Oxley Act of 2002, which provides that if
the Company is required to restate its financials as a result of misconduct, requires Mr. Wehmer
and Mr. Stoehr to reimburse the Company for bonuses or other incentive-based or equity-based
compensation and profits realized in the 12 months after the financial information was first
publicly issued or filed with the SEC.
Impact of Section 162(m). Section 162(m) of the Internal Revenue Code of 1986, as
amended, imposes a $1 million limit on the amount that a public company may deduct for compensation
paid to the certain covered employees. The covered employees generally consist of a companys
Chief Executive Officer or other NEOs (other than the Chief Financial Officer). This limitation
does not apply to compensation that meets the requirements under Section 162(m) for qualifying
performance-based compensation.
Policy Regarding Excessive or Luxury Expenditures. As required by TARP, our Board
adopted a policy designed to eliminate or prevent any excessive or luxury expenditures, including
excessive expenditures on entertainment or events, office and facility renovations, aviation or
other transportation services. Despite repayment of TARP and our exit from the CPP, the Company has
determined to continue this policy. A copy of this policy is available on our website,
www.wintrust.com.
Practices Regarding the Grant of Options. The Company has followed a practice of
making a majority of all option grants to its NEOs on a single date each year and intends to have a
practice of generally making all option grants to its NEOs on a single date each year, its
regularly scheduled meeting in January. The January meeting date has historically occurred within
two weeks following the issuance of the news release reporting our earnings for the previous fiscal
year. The Committee believes that it is appropriate that annual awards be made at a time when
material information regarding our performance for the preceding year has been disclosed. The
Company does not otherwise have any program, plan or practice to time annual option grants to its
executives in coordination with the release of material non-public information.
While the bulk of our option awards to NEOs have historically been made pursuant to
our annual grant program, the Committee retains the discretion to make additional awards to NEOs at
other times, in connection with the initial hiring of a new officer, for retention purposes or
otherwise. We refer to such grants as ad hoc awards. The Company does not have any program, plan
or practice to time ad hoc awards in coordination with the release of material non-public
information.
All equity awards made to our NEOs, or any of our other employees or Directors
(except for payment of director fees under the Directors Deferred Fee and Stock Plan (the Director
Plan)), are made pursuant to our 2007 Plan. All options under the 2007 Plan were granted with an
exercise price equal to the fair market value of our Common Stock on the date of grant. Fair market
value is defined under the 2007 Plan to be the average of the highest and the lowest quoted selling
prices on Nasdaq on the relevant valuation date or, if there were no sales on
42
the valuation date,
on the next preceding date on which such selling prices were recorded on the date of grant.
Although, for days on which Nasdaq is closed, we set exercise prices based on the prior days stock
price, we do not have any program, plan or practice of awarding options and setting the exercise
price based on the stocks price on a date other than the grant date. While the incentive plans
permit delegation of the Committees authority to grant options in certain circumstances, all
grants to NEOs were made by the Committee itself or the full Board and not pursuant to delegated
authority. Under TARP, our continuing NEOs were ineligible to receive option grants during 2010.
Ms. Gleason received an option grant as part of her employment inducement award upon her hire in
2010, at which time Ms. Gleason was not a NEO.
Prohibition on Hedging and Short Selling. The Companys executive officers and
Directors are prohibited from engaging in selling short our Common Stock or engaging in hedging or
offsetting transactions regarding our Common Stock.
Stock Ownership Policy. We strongly encourage our NEOs to acquire and own our
common shares. In order to strengthen the alignment of interests between our executive officers
and shareholders and further promote our commitment to sound corporate governance, in January 2011
we adopted stock ownership guidelines for our executive officers.
Under the stock ownership guidelines, our Chief Executive Officer and other NEOs are expected
to accumulate shares of our Common Stock to meet the applicable ownership level within five years
of the later of January 27, 2011 or their election or appointment (the Measurement Date). For
purposes of the guidelines, shares include shares owned by the executive or the executives
immediate family members residing in the same household, including shares held in Wintrusts 401(k)
plan or employee stock purchase plan, shares held in trust for the benefit of the executive or the
executives family, shares obtained through stock option exercise, and deferred shares, non-vested
shares of restricted stock and RSUs granted under the 2007 Plan. To meet the required level, the
executive must have acquired and must hold shares having a value equal to the applicable level. The
ownership guidelines are indicated in the following table.
|
|
|
Title |
|
Guideline |
Chief Executive Officer
|
|
6 times base salary |
Chief Operating Officer and Chief Credit Officer
|
|
3 times base salary |
Other Named Executive Officers
|
|
1 times base salary |
The Committee will review an executives progress toward achieving the applicable guideline
approximately two and one-half years before the executives Measurement Date. An executives
progress toward the applicable ownership requirement is expected to be approximately 20% per year.
If the Committee determines that an executive has not demonstrated sufficient progress toward
compliance with the applicable guideline, it may take appropriate action. Our Chief Executive
Officer currently owns in excess of the amount required under our stock ownership guidelines.
For our Directors, our Corporate Governance Guidelines provide that Directors should own,
within three years of becoming a Director, shares having a value of at least three times the annual
retainer fee paid to Directors. The current annual retainer fee is $30,000. Each of our Directors
is currently in compliance with these share ownership guidelines.
Additional Factors Affecting Compensation
Former Participation in the U.S. Department of the Treasurys Capital Purchase Program
In December 2008, we became a participant in TARP. Such participation ended in December 2010
upon our repayment of Treasurys preferred stock investment. However, prior to repayment we were
subject to certain compensation requirements under the EESA. The EESA imposed a number of
restrictions that affected our five most highly-compensated senior executive officers, which were
the same as our NEOs, and certain of our next most highly compensated employees. The restrictions
included the following:
43
|
|
|
we could not pay any bonus, retention award or incentive compensation, other than
restricted stock awards that do not account for more than one-third of an executives
total annual compensation, to any of our NEOs or the ten next most highly-compensated
employees; |
|
|
|
|
we could not make any severance or change of control payments to any of our NEOs or
any of the five next most highly-compensated employees, except for services performed
and benefits accrued; |
|
|
|
|
we had to structure executive compensation to exclude incentives for our NEOs to
take unnecessary and excessive risks that threatened the value of the Company; |
|
|
|
|
we had to limit the size of any deduction for compensation expenses that we claimed
under Section 162(m) of the Internal Revenue Code to $500,000 annually per NEO; |
|
|
|
|
we were prohibited from making tax gross-up payments to our NEOs and our next twenty
most highly compensated employees, except for payments made pursuant to tax
equalization agreements; |
|
|
|
|
we were required to maintain a policy requiring us to recover any bonus or incentive
compensation paid to our NEOs or next twenty most highly compensated employees based on
statements of earnings, gains or other performance criteria that were later proven to
be materially inaccurate, which we refer to as a clawback policy; |
|
|
|
|
we had to adopt a company-wide policy regarding excessive or luxury expenditures;
and |
|
|
|
|
we were required to provide our shareholders an annual non-binding vote on our
executive compensation program. |
The EESA also prohibited the use of any compensation plan that would encourage the
manipulation of our reported earnings to enhance employee compensation, and required that our Chief
Executive Officer and Chief Financial Officer provide annual certifications of our compliance with
these provisions. It also required us to
provide annual disclosure to Treasury and the Federal Reserve regarding perquisites paid by the
Company.
In compliance with Treasury regulations, the Committee met with the Companys senior risk
officers in December 2009 and September 2010 to conduct risk assessments related to the Companys
senior executive officer compensation plans and its other employee compensation plans. As discussed
in the Compensation Committee Report set forth following this Compensation Discussion and Analysis
section, in each case the Committee concluded that the Companys incentive plans did not encourage
our senior executive officers or employees to take unnecessary and excessive risks that threatened
the value of the Company, that the Companys employee compensation plans did not encourage
unnecessary risks, that there was no need to eliminate features of plans encouraging earnings
manipulation, and, more generally, that no changes to the plans were required for these purposes.
2011 Compensation Program Design
The Committee and management are working with Deloitte to revise the design of the Companys
incentive compensation programs to align the interests of the Companys executives with the
interests of shareholders, provide a compensation opportunity, foster retention and link pay to
performance. Furthermore, the Company and Deloitte will re-evaluate executive officer pay mix and
recalibrate the performance payout curve under the 2007 Plan. The Companys discussion and
analysis of compensation for 2011 will address these additional changes.
Economic Uncertainty
The economic downturn and its effects on the Company and the financial system will
make it difficult for the Committee to set appropriate Company and individual performance criteria
for compensation purposes. Additionally, continued economic volatility, and its effects on our
Companys stock price, may cause the value of stock options and RSUs that we have awarded to our
NEOs to fall below levels that the Committee deems necessary to provide appropriate performance and
retention incentives for such officers. Accordingly, the Committee will continue to exercise
discretion in determining compensation for our NEOs to ensure that we continue to meet our
compensation philosophies and objectives.
44
COMPENSATION COMMITTEE REPORT
Overview
The Compensation Committee of the Board of Directors of Wintrust Financial Corporation
oversees Wintrust Financial Corporations compensation program on behalf of the Board. In
fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the
Compensation Discussion and Analysis set forth in this Proxy Statement.
In reliance on the review and discussions referred to above, the Committee
recommended to the Board that the Compensation Discussion and Analysis be included in the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and the Companys Proxy
Statement to be filed in connection with the Companys 2011 Annual Meeting of Shareholders, each of
which will be filed with the SEC.
Risk Review
For most of 2010 the Company was a participant in the CPP portion of TARP. As required by
TARP, the Committee met with the Companys senior risk officers in December 2009 and September 2010
to conduct risk assessments related to the Companys senior executive officer (SEO) compensation
plans and its other employee compensation plans. These assessments focused on three issues: (1)
whether the compensation for the SEOs of the Company encourages them to take unnecessary and
excessive risks that threaten the value of the Company; (2) whether the Companys employee
compensation plans pose unnecessary risks to the Company; and (3) whether
there was any need to eliminate any features of these plans to the extent that they encouraged
the manipulation of reported earnings of the Company to enhance the compensation of any employee.
In connection with this review, the Companys chief risk officer, its Executive Vice President
Risk Management, met with the Committee to discuss the material features of the compensation
plans of the Companys senior risk officers and the Companys employees generally, all in the
context of risks presented by each to the Company. Among other things, the Company reviewed plans
providing for fixed and variable compensation, including commissions compensation arrangements
applicable to employees of Wintrust Wealth Management and Wintrust Mortgage Company.
For each of the incentive plans reviewed, the Committee considered, among other things, how
the level and structure of compensation compares to the peer group, if there is an appropriate
balance between fixed and variable pay, the selection of performance criteria, the relationship
between those criteria and the payouts, and the safeguards imposed by the Companys stringent
internal controls. Based on this review and analysis and input from the Companys senior risk
officers, the Committee concluded that the Companys incentive plans do not encourage our SEOs or
employees to take unnecessary and excessive risks that threaten the value of the Company, that the
Companys employee compensation plans do not encourage unnecessary risks, that there was no need to
eliminate features of plans as the Committee determined that the plans did not contain features
that encourage earnings manipulation, and, more generally, that no changes to the plans are
required for these purposes.
In June 2010 financial industry regulators adopted new incentive compensation risk management
principles. Using experience under the TARP rules, during 2010 our management developed a risk
management process to apply those new principles to the Companys incentive plans. It is expected
that in 2011 all of the Companys plans with material inherent risk and covered by the new
regulatory principles will be integrated into that new risk management process.
Senior Executive Officer Compensation Plans
The Committee and the senior risk officers reviewed the operation of the Companys 2010
executive compensation program, including the annual bonus program, the long-term incentive
compensation program and the CIRP. Following its review, the Committee and the senior risk officers
concluded that the SEO compensation plans do not encourage unnecessary and excessive risk-taking
that threatens the value of the Company or the manipulation of reported earnings. In making the
foregoing determination, the Committee and senior risk officers considered the following:
|
|
|
Balance between fixed and incentive compensation. As a result of a review
undertaken by the Committee in previous years, the 2010 compensation program placed a
greater emphasis on the long-term |
45
|
|
|
incentive portion of executive compensation and
pay-for-performance. Even with such greater emphasis, the Committee seeks to achieve a
balance between fixed, short-term and long-term compensation such that no single
component creates an incentive for the executive to jeopardize the other components by
taking unnecessary risks. For this reason the Committee determined that the balance
between fixed and long-term incentive compensation creates disincentives to executives
to take on unnecessary risks in order to achieve short-term results. |
|
|
|
|
Performance criteria. The Committee uses return on tangible equity as compared to
budget as the primary performance criteria for its long-term incentive compensation
program, net earnings for its annual bonus program and growth in earnings per share
over time for the CIRP. These and other criteria used were reviewed and recommended by
the Committees expert executive compensation consultants, Towers Perrin. The Committee
believes that this combination of criteria creates disincentives to executives to take
on unnecessary risks in order to achieve short term results, as taking unnecessary
risks to achieve short-term results could negatively impact the ability of the Company
to reach the criteria set forth for grants made under the long-term incentive program. |
|
|
|
|
Discretionary portion of incentive compensation. The Committee retains complete
negative discretion with respect to incentive compensation, despite the achievement of
goals, if a determination is made that the goals were achieved outside of the framework
of the guidelines, or if a determination is made that while the goals were achieved,
the performance fell short of that required for an incentive award. In the past, the
Committee has exercised this discretion when, in its view, overall Company performance
has not met expectations. One other reason for such a downward adjustment could be the
determination that a goal was achieved primarily due to unnecessary and excessive
risk-taking rather than core, prudent undertakings. |
|
|
|
|
Internal Control Processes. The Companys culture of ethical conduct is
supplemented by the safeguards imposed by our stringent system of financial reporting
and risk management controls, including our accounting processes, internal and external
audit functions, our internal control over the financial reporting process, our
disclosure control processes and our Corporate Code of Ethics and Senior Financial
Officer Code of Ethics. |
|
|
|
|
Limited use of incentive compensation in 2010. Due to the restrictions under TARP
prior to repayment, the Committee had a limited ability to use equity as compensation
during 2010. |
|
|
|
|
Shareholder Alignment. In order to strengthen the alignment of interests between
the SEOs and shareholders, in January 2011 the Committee adopted stock ownership
guidelines for our SEOs. See Executive CompensationAdditional Compensation
PoliciesStock Ownership Policy above. |
Based upon these factors and the ability of the Committee to use its discretion to reduce
actual incentive payments, the Committee concluded that the SEO compensation plans do not create an
incentive for SEOs to take excessive risks.
Employee Compensation Plans
In addition to the compensation plans for the SEOs, the Company maintains various other
employee compensation plans, some of which are discretionary in nature as to the amounts to be paid
thereunder and some for which the amounts to be paid thereunder is based on a formula, or a
combination of these approaches. Each of these plans was reviewed by the Committee as described
above. As a result of this review, it was determined that risk management oversight, internal
control processes, governance procedures currently in place and the discretionary nature of many of
the compensation plans collectively served to ensure that the compensation plans do not encourage
excessive risk-taking activities or the manipulation of earnings.
Certification
In accordance with the requirements of TARP, in which the Company was a participant for most
of 2010, the Committee certifies that during 2010:
|
(1) |
|
It reviewed with senior risk officers the SEO compensation plans and made all
reasonable efforts to ensure that these plans do not encourage SEOs to take unnecessary
and excessive risks that threaten the value of the Company; |
46
|
(2) |
|
It reviewed with senior risk officers the employee compensation plans and made
all reasonable efforts to limit any unnecessary risks these plans pose to the Company;
and |
|
|
(3) |
|
It reviewed the employee compensation plans to eliminate any features of these
plans that would encourage the manipulation of reported earnings of the Company to
enhance the compensation of any employee. |
COMPENSATION COMMITTEE
|
|
|
ALBIN F. MOSCHNER (Chair)
|
|
JOSEPH F. DAMICO |
BRUCE K. CROWTHER
|
|
CHARLES H. JAMES III |
47
2010 SUMMARY COMPENSATION TABLE
The following table summarizes compensation awarded to, earned by or paid to our
NEOs for 2010, 2009 and 2008. The section of this Proxy Statement entitled Compensation Discussion
and Analysis describes in greater detail the information reported in this table and the objectives
and factors considered in setting NEO compensation.
|
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|
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|
Change in |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
Pension Value |
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
and |
|
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|
|
|
|
|
|
|
|
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|
|
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|
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|
Incentive |
|
Nonqualified |
|
All |
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Option |
|
Plan |
|
Deferred |
|
Other |
|
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|
|
|
|
|
|
Salary |
|
Bonus |
|
Stock Awards |
|
Awards |
|
Compensation |
|
Compensation |
|
Compensation |
|
Total |
|
|
Year |
|
($) |
|
($)(1) |
|
($)(1)(2) |
|
($)(3) |
|
($)(4) |
|
Earnings ($) |
|
($)(5) |
|
($) |
Name and Principal Position (a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
Edward J. Wehmer |
|
|
2010 |
|
|
|
1,000,000 |
|
|
|
520,000 |
|
|
|
849,976 |
|
|
|
|
|
|
|
43,172 |
|
|
|
|
|
|
|
26,763 |
|
|
|
2,439,911 |
|
President & Chief |
|
|
2009 |
|
|
|
900,000 |
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
43,236 |
|
|
|
|
|
|
|
26,946 |
|
|
|
1,020,182 |
|
Executive Officer |
|
|
2008 |
|
|
|
791,667 |
|
|
|
|
|
|
|
|
|
|
|
102,431 |
|
|
|
44,841 |
|
|
|
|
|
|
|
21,350 |
|
|
|
960,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Dykstra |
|
|
2010 |
|
|
|
750,000 |
|
|
|
375,000 |
|
|
|
649,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,008 |
|
|
|
1,801,997 |
|
Senior Executive Vice |
|
|
2009 |
|
|
|
675,000 |
|
|
|
|
|
|
|
37,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,177 |
|
|
|
736,677 |
|
President & Chief Operating Officer |
|
|
2008 |
|
|
|
592,500 |
|
|
|
|
|
|
|
|
|
|
|
91,050 |
|
|
|
|
|
|
|
|
|
|
|
24,217 |
|
|
|
707,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard B. Murphy |
|
|
2010 |
|
|
|
450,000 |
|
|
|
225,000 |
|
|
|
224,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,693 |
|
|
|
912,672 |
|
Executive Vice |
|
|
2009 |
|
|
|
413,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,174 |
|
|
|
424,924 |
|
President & Chief Credit Officer |
|
|
2008 |
|
|
|
363,750 |
|
|
|
50,000 |
|
|
|
29,985 |
|
|
|
73,978 |
|
|
|
|
|
|
|
|
|
|
|
7,912 |
|
|
|
525,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Stoehr |
|
|
2010 |
|
|
|
368,750 |
|
|
|
135,000 |
|
|
|
164,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,115 |
|
|
|
681,847 |
|
Executive Vice |
|
|
2009 |
|
|
|
315,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,798 |
|
|
|
326,798 |
|
President & Chief Financial Officer |
|
|
2008 |
|
|
|
248,333 |
|
|
|
47,000 |
|
|
|
21,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,305 |
|
|
|
333,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leona A. Gleason |
|
|
2010 |
|
|
|
343,894 |
|
|
|
225,000 |
(6) |
|
|
153,775 |
|
|
|
146,354 |
|
|
|
20,080 |
|
|
|
|
|
|
|
12,698 |
|
|
|
901,801 |
|
Executive Vice President |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
& Chief Administrative Officer |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown in these columns for 2010 include annual bonus awards made in restricted stock in
January 2010 with respect to 2009 performance as well as cash annual bonus awards made in January 2011
with respect to 2010 performance. As required by TARP, all 2009 annual bonuses for NEOs were paid
exclusively in restricted stock. Because such payments were made in January 2010 pursuant to Section
111(b)(3)(D) of the Emergency Economic Stabilization Act of 2008, as amended (EESA), they appear in
the Summary Compensation Table attributed to 2010 in the Stock Awards column. Amounts shown in the
following table reflect cash and restricted stock annual bonus awards made to our NEOs for 2009 and
2010 performance, attributed to the year in which such annual bonus awards were earned rather than when
such annual bonus awards were made. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Total |
|
|
|
|
|
|
Salary |
|
Bonus |
|
Awards |
|
Compensation |
Named Executive Officer |
|
Year |
|
($) |
|
($) |
|
($) |
|
($) |
Edward J. Wehmer |
|
|
2010 |
|
|
|
1,000,000 |
|
|
|
520,000 |
|
|
|
100,000 |
|
|
|
1,689,935 |
|
|
|
|
2009 |
|
|
|
900,000 |
|
|
|
|
|
|
|
799,976 |
|
|
|
1,770,158 |
|
David A. Dykstra |
|
|
2010 |
|
|
|
750,000 |
|
|
|
375,000 |
|
|
|
75,000 |
|
|
|
1,227,008 |
|
|
|
|
2009 |
|
|
|
675,000 |
|
|
|
|
|
|
|
612,489 |
|
|
|
1,311,666 |
|
Richard B. Murphy |
|
|
2010 |
|
|
|
450,000 |
|
|
|
225,000 |
|
|
|
|
|
|
|
687,693 |
|
|
|
|
2009 |
|
|
|
413,750 |
|
|
|
|
|
|
|
224,979 |
|
|
|
649,903 |
|
David L. Stoehr |
|
|
2010 |
|
|
|
368,750 |
|
|
|
135,000 |
|
|
|
|
|
|
|
516,865 |
|
|
|
|
2009 |
|
|
|
315,000 |
|
|
|
|
|
|
|
164,982 |
|
|
|
491,780 |
|
Leona A. Gleason |
|
|
2010 |
|
|
|
343,894 |
|
|
|
225,000 |
|
|
|
153,775 |
|
|
|
901,801 |
|
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
|
|
(2) |
|
The amounts shown in this column constitute RSUs or salary share stock units granted under the 2007
Plan and are valued based on the aggregate grant date fair value computed in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718, Compensation Stock
Compensation (FASB ASC Topic 718). The aggregate grant date fair value of the RSU or salary share
stock unit awards represents the average of the high and low sale prices of the Companys Common Stock
on the date of grant, as reported by Nasdaq, multiplied by the number of RSUs or salary share stock
units granted to the NEOs. The 2010 amounts relate to (a) salary share stock units granted for Mr.
Wehmer and Mr. Dykstra in the amounts of $100,000 and $75,000, respectively, and (b) the awards
disclosed in note (1) above. The 2009 amounts relate to salary share stock unit awards and the 2008
amounts relate to RSU awards. |
|
(3) |
|
The amounts shown in this column constitute options granted under the 2007 Plan. Amounts shown reflect
the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for awards granted
during such fiscal year. The accounting policy and assumptions for stock-based compensation are
described in Notes 1 and 19 to the Companys Consolidated Financial Statements included in its Annual
Report on Form 10-K for the year ended December 31, 2010. |
|
(4) |
|
The amounts shown represent awards under the CIRP which have fully vested but payment has been deferred. |
|
(5) |
|
Amounts in this column include the value of the following perquisites paid to the NEOs in 2010, 2009
and 2008. Perquisites are valued at actual amounts paid to each provider of such perquisites. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Club |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
Memberships |
|
Life |
|
Supplemental |
|
401(k) Plan |
|
|
|
|
|
|
|
|
Automobile |
|
Not Exclusively |
|
Insurance |
|
Long-Term |
|
Matching |
|
|
|
|
|
|
|
|
Usage |
|
For Business Use |
|
Premiums |
|
Disability |
|
Contribution |
|
|
Named Executive Officer |
|
Year |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
Total |
Edward J. Wehmer |
|
|
2010 |
|
|
|
5,952 |
|
|
|
7,698 |
|
|
|
8,054 |
|
|
|
1,059 |
|
|
|
4,000 |
|
|
|
26,763 |
|
|
|
|
2009 |
|
|
|
6,814 |
|
|
|
7,612 |
|
|
|
7,438 |
|
|
|
1,082 |
|
|
|
4,000 |
|
|
|
26,946 |
|
|
|
|
2008 |
|
|
|
6,906 |
|
|
|
6,976 |
|
|
|
2,299 |
|
|
|
1,169 |
|
|
|
4,000 |
|
|
|
21,350 |
|
David A. Dykstra |
|
|
2010 |
|
|
|
18,473 |
|
|
|
|
|
|
|
4,535 |
|
|
|
|
|
|
|
4,000 |
|
|
|
27,008 |
|
|
|
|
2009 |
|
|
|
17,623 |
|
|
|
|
|
|
|
2,554 |
|
|
|
|
|
|
|
4,000 |
|
|
|
24,177 |
|
|
|
|
2008 |
|
|
|
19,024 |
|
|
|
|
|
|
|
1,193 |
|
|
|
|
|
|
|
4,000 |
|
|
|
24,217 |
|
Richard B. Murphy |
|
|
2010 |
|
|
|
2,699 |
|
|
|
2,047 |
|
|
|
3,947 |
|
|
|
|
|
|
|
4,000 |
|
|
|
12,693 |
|
|
|
|
2009 |
|
|
|
1,778 |
|
|
|
2,143 |
|
|
|
3,253 |
|
|
|
|
|
|
|
4,000 |
|
|
|
11,174 |
|
|
|
|
2008 |
|
|
|
1,367 |
|
|
|
1,476 |
|
|
|
1,069 |
|
|
|
|
|
|
|
4,000 |
|
|
|
7,912 |
|
David L. Stoehr |
|
|
2010 |
|
|
|
6,192 |
|
|
|
|
|
|
|
2,923 |
|
|
|
|
|
|
|
4,000 |
|
|
|
13,115 |
|
|
|
|
2009 |
|
|
|
5,991 |
|
|
|
|
|
|
|
1,807 |
|
|
|
|
|
|
|
4,000 |
|
|
|
11,798 |
|
|
|
|
2008 |
|
|
|
9,411 |
|
|
|
2,113 |
|
|
|
781 |
|
|
|
|
|
|
|
4,000 |
|
|
|
16,305 |
|
Leona A. Gleason |
|
|
2010 |
|
|
|
7,378 |
|
|
|
|
|
|
|
1,320 |
|
|
|
|
|
|
|
4,000 |
|
|
|
12,698 |
|
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) |
|
The amount shown includes the $100,000 employment inducement award paid to Ms. Gleason upon her hire. |
49
2010 GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts |
|
Estimated Future Payouts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive |
|
Under Equity Incentive Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards |
|
Awards |
|
All |
|
All |
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
Other |
|
|
|
|
|
Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
|
|
|
|
Fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Awards: |
|
Exercise |
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Number of |
|
or Base |
|
Stock and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of |
|
Securities |
|
Price of |
|
Option |
|
|
Grant |
|
Approval |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock or |
|
Underlying |
|
Option |
|
Awards |
|
|
Date |
|
Date |
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
Units (1) |
|
Options |
|
Awards |
|
($/Sh) |
Name |
|
|
|
|
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
($/Sh) |
|
(2) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
|
(k) |
|
(l) |
|
(m) |
Edward J. Wehmer |
|
|
1/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
1/28/10 |
|
|
|
1/28/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,138 |
|
|
|
|
|
|
|
|
|
|
|
749,976 |
|
|
|
|
1/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
2/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
2/28/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
3/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
3/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
4/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
4/30/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
5/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
5/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
6/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
6/30/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
7/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
7/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
8/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
8/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
9/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
9/30/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
10/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
10/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
11/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
11/30/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
12/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
12/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125 |
|
|
|
|
|
|
|
|
|
|
|
4,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Dykstra |
|
|
1/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
1/28/10 |
|
|
|
1/28/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,206 |
|
|
|
|
|
|
|
|
|
|
|
574,989 |
|
|
|
|
1/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
2/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
2/28/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
3/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
3/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
4/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
4/30/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
5/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
5/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
6/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
6/30/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
7/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
7/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts |
|
Estimated Future Payouts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive |
|
Under Equity Incentive Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards |
|
Awards |
|
All |
|
All |
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
Other |
|
|
|
|
|
Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
|
|
|
|
Fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Awards: |
|
Exercise |
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Number of |
|
or Base |
|
Stock and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of |
|
Securities |
|
Price of |
|
Option |
|
|
Grant |
|
Approval |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock or |
|
Underlying |
|
Option |
|
Awards |
|
|
Date |
|
Date |
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
Units (1) |
|
Options |
|
Awards |
|
($/Sh) |
Name |
|
|
|
|
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
($/Sh) |
|
(2) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
|
(k) |
|
(l) |
|
(m) |
|
|
|
8/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
8/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
9/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
9/30/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
10/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
10/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
11/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
11/30/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
12/15/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
12/31/10 |
|
|
|
8/14/09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93 |
|
|
|
|
|
|
|
|
|
|
|
3,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard B. Murphy |
|
|
1/28/10 |
|
|
|
1/28/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,341 |
|
|
|
|
|
|
|
|
|
|
|
224,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Stoehr |
|
|
1/28/10 |
|
|
|
1/28/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,650 |
|
|
|
|
|
|
|
|
|
|
|
164,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leona A. Gleason |
|
|
1/4/10 |
|
|
|
1/4/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
30.76 |
|
|
|
146,354 |
|
|
|
|
1/4/10 |
|
|
|
1/4/10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
|
|
|
|
153,775 |
|
|
|
|
1/4/10 |
|
|
|
1/4/10 |
|
|
|
100,000 |
(3) |
|
|
|
(3) |
|
|
240,000 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown in this column constitute RSUs or salary share
stock units granted under the 2007 Plan. The amounts relate to
(a) salary share stock units granted for Mr. Wehmer and Mr.
Dykstra in the amounts of $100,000 and $75,000, respectively, and
(b) annual bonus awards made in restricted stock to each NEO in
lieu of cash as required by TARP. |
|
(2) |
|
The aggregate grant date fair value of the RSU or salary share
stock unit awards represents the average of the high and low sale
prices of the Companys Common Stock on the date of grant, as
reported by Nasdaq, multiplied by the number of RSUs or salary
share stock units granted to the NEOs. |
|
(3) |
|
This amount represents the employment inducement award under the
CIRP paid to Ms. Gleason upon her hire. The form of award made to
Ms. Gleason under the CIRP does not provide for a target award but
does contain a minimum and maximum payout as noted in the table. |
51
2010 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
The following table sets forth information for each NEO with respect to (1) each
stock option to purchase common shares that has not been exercised and remained outstanding at
December 31, 2010 and (2) each award of RSUs that has not vested and remained outstanding at
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Market or |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
Payout |
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
Value of |
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
Number of |
|
Market |
|
Number of |
|
Unearned |
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
Shares or |
|
Value of |
|
Unearned |
|
Shares, |
|
|
Number of |
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
units of |
|
Shares or |
|
Shares, |
|
Units or |
|
|
Securities |
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
Stock |
|
Units of |
|
Units or |
|
Other |
|
|
Underlying |
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
That |
|
Stock |
|
Other |
|
Rights |
|
|
Unexercised |
|
Unexercised |
|
Unexercised |
|
Option |
|
Option |
|
Have Not |
|
That |
|
Rights That |
|
That |
|
|
Options |
|
Options |
|
Unearned |
|
Exercise |
|
Expiration |
|
Vested |
|
Have Not |
|
Have Not |
|
Have Not |
Name |
|
(#)(1) |
|
(#) |
|
Options |
|
Price |
|
Date |
|
(#) (2) |
|
Vested |
|
Vested |
|
Vested |
(a) |
|
Exercisable (b) |
|
(c) |
|
(#)(d) |
|
($)(e) |
|
(f) |
|
(g) |
|
($)(h) |
|
(#)(i) |
|
($)(j) |
Edward J. Wehmer |
|
|
180,000 |
|
|
|
|
|
|
|
|
|
|
|
18.81 |
|
|
|
1/22/12 |
|
|
|
21,138 |
|
|
|
698,188 |
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
45.46 |
|
|
|
12/22/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,600 |
|
|
|
5,400 |
|
|
|
|
|
|
|
33.06 |
|
|
|
1/24/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Dykstra |
|
|
21,000 |
|
|
|
|
|
|
|
|
|
|
|
18.81 |
|
|
|
1/22/12 |
|
|
|
16,206 |
|
|
|
535,284 |
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
|
|
|
|
|
|
|
|
45.46 |
|
|
|
12/22/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
|
|
|
|
|
|
|
|
|
54.92 |
|
|
|
1/25/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,200 |
|
|
|
4,800 |
|
|
|
|
|
|
|
33.06 |
|
|
|
1/24/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard B. Murphy |
|
|
4,999 |
|
|
|
|
|
|
|
|
|
|
|
18.81 |
|
|
|
1/22/12 |
|
|
|
10,000 |
|
|
|
330,300 |
|
|
|
|
|
|
|
|
|
|
|
|
42,000 |
|
|
|
|
|
|
|
|
|
|
|
43.20 |
|
|
|
10/30/13 |
|
|
|
6,341 |
|
|
|
209,443 |
|
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
45.46 |
|
|
|
12/22/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,600 |
|
|
|
3,900 |
|
|
|
|
|
|
|
33.06 |
|
|
|
1/24/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Stoehr |
|
|
12,750 |
|
|
|
|
|
|
|
|
|
|
|
18.81 |
|
|
|
1/22/12 |
|
|
|
4,650 |
|
|
|
153,590 |
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
30.57 |
|
|
|
10/24/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
45.46 |
|
|
|
12/22/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leona A. Gleason |
|
|
|
|
|
|
10,000 |
|
|
|
|
|
|
|
30.76 |
|
|
|
1/4/17 |
|
|
|
5,000 |
|
|
|
165,150 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The following table provides information with respect to the vesting of each NEOs
outstanding non-equity incentive plan options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Award Type |
|
1/4/11 |
|
1/24/11 |
|
1/4/12 |
|
1/24/12 |
|
1/4/13 |
|
1/24/13 |
|
1/4/14 |
|
1/4/15 |
Edward J. Wehmer |
|
Stock Options |
|
|
|
|
|
|
1,800 |
|
|
|
|
|
|
|
1,800 |
|
|
|
|
|
|
|
1,800 |
|
|
|
|
|
|
|
|
|
David A. Dykstra |
|
Stock Options |
|
|
|
|
|
|
1,600 |
|
|
|
|
|
|
|
1,600 |
|
|
|
|
|
|
|
1,600 |
|
|
|
|
|
|
|
|
|
Richard B. Murphy |
|
Stock Options |
|
|
|
|
|
|
1,300 |
|
|
|
|
|
|
|
1,300 |
|
|
|
|
|
|
|
1,300 |
|
|
|
|
|
|
|
|
|
David L. Stoehr |
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leona A. Gleason |
|
Stock Options |
|
|
2,000 |
|
|
|
|
|
|
|
2,000 |
|
|
|
|
|
|
|
2,000 |
|
|
|
|
|
|
|
2,000 |
|
|
|
2,000 |
|
|
|
|
(2) |
|
The following table provides information with respect to the vesting of each NEOs
outstanding shares of RSUs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Award Type |
|
1/4/11 |
|
7/25/11 |
|
1/4/12 |
|
1/28/12 |
|
7/25/12 |
|
1/4/13 |
Edward J. Wehmer |
|
Restricted Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,138 |
|
|
|
|
|
|
|
|
|
David A. Dykstra |
|
Restricted Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,206 |
|
|
|
|
|
|
|
|
|
Richard B. Murphy |
|
Restricted Stock Units |
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
6,341 |
|
|
|
5,000 |
|
|
|
|
|
David L. Stoehr |
|
Restricted Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,650 |
|
|
|
|
|
|
|
|
|
Leona A. Gleason |
|
Restricted Stock Units |
|
|
1,667 |
|
|
|
|
|
|
|
1,667 |
|
|
|
|
|
|
|
|
|
|
|
1,666 |
|
52
2010 OPTION EXERCISES AND STOCK VESTED TABLE
The following table sets forth information for each NEO with respect to exercises
of stock options and the vesting of stock awards during 2010, and the value realized upon such
exercise or vesting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
|
|
|
|
Number of Shares |
|
|
|
|
Shares |
|
Value Realized |
|
Acquired on |
|
Value Realized |
|
|
Acquired on |
|
on |
|
Vesting |
|
on Vesting |
Name |
|
Exercise (#) |
|
Exercise ($) |
|
(1)(#) |
|
(2)($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
Edward J. Wehmer |
|
|
|
|
|
|
|
|
|
|
63,017 |
|
|
|
2,252,827 |
|
David A. Dykstra |
|
|
|
|
|
|
|
|
|
|
44,262 |
|
|
|
1,558,528 |
|
Richard B. Murphy |
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
195,250 |
|
David L. Stoehr |
|
|
|
|
|
|
|
|
|
|
333 |
|
|
|
11,598 |
|
Leona A. Gleason |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the vesting of RSUs under the Companys 1997 Stock Incentive Plan and 2007 Plan
and the award of fully vested salary share stock units under the Companys 2007 Plan. |
|
(2) |
|
The value realized on the vesting of RSUs and salary share stock units represents the average
of the high and low market price of the Common Stock on the date of vesting, as reported by
Nasdaq, multiplied by the number of RSUs or salary share stock units, as applicable, that
vested. |
2010 NONQUALIFIED DEFERRED COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate |
|
|
|
|
|
|
|
|
|
|
Aggregate |
|
|
|
|
|
Balance |
|
|
Executive |
|
Registrant |
|
Earnings |
|
Aggregate |
|
at Last |
|
|
Contributions |
|
Contributions |
|
in Last |
|
Withdrawals / |
|
Fiscal |
|
|
in Last Fiscal |
|
in Last Fiscal |
|
Fiscal |
|
Distributions |
|
Year End |
Name |
|
Year ($) |
|
Year ($) |
|
Year ($) |
|
($) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
Edward J. Wehmer |
|
|
|
|
|
|
43,000 |
(1) |
|
|
172 |
|
|
|
|
|
|
|
131,249 |
|
|
|
|
|
|
|
|
1,627,425 |
(2) |
|
|
(141,075 |
) |
|
|
|
|
|
|
1,486,350 |
|
|
|
|
|
|
|
|
177,103 |
(2) |
|
|
(11,953 |
) |
|
|
|
|
|
|
165,150 |
|
David A. Dykstra |
|
|
|
|
|
|
1,239,718 |
(2) |
|
|
(83,668 |
) |
|
|
|
|
|
|
1,156,050 |
|
Richard B. Murphy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Stoehr |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leona A. Gleason |
|
|
|
|
|
|
20,000 |
(1) |
|
|
80 |
|
|
|
|
|
|
|
20,080 |
|
|
|
|
(1) |
|
These amounts represent awards under the CIRP which have fully vested but payment has been
deferred. |
|
(2) |
|
These amounts represent RSU awards which have vested but are not issuable. |
53
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
As noted under Compensation Discussion and Analysis Post-Termination Compensation on
page 41 of this Proxy Statement, we have entered into employment agreements with each of our NEOs
that provide for payments in connection with such NEOs termination, whether upon a change of
control or otherwise. The benefits to be provided to the NEOs under the employment agreements in
each of those situations are described below, including a summary of payments that would have been
required had a termination taken place on December 31, 2010, the last day of our most recent fiscal
year.
Payments Made upon Termination
The employment agreements provide for payments of certain benefits, as described below,
upon the termination of the employment of an NEO. The NEOs rights upon a termination of his or her
employment depend upon the circumstances of the termination. Central to an understanding of the
rights of each NEO under the employment agreements is an understanding of the definitions of
Cause and Constructive Termination that are used in those agreements. For purposes of the
employment agreements:
|
|
|
We have Cause to terminate the NEO if the NEO has engaged in any of a list of
specified activities, including refusing to perform duties consistent with the scope
and nature of his or her position, committing an act of gross negligence or willful
misconduct resulting in or potentially resulting in economic loss or damage to the
Companys reputation, conviction of a felony or other actions specified in the
definition. |
|
|
|
|
The NEO is said to have been Constructively Terminated (and thereby gain access to
the benefits described below) if we (i) materially reduce the NEOs duties and
responsibilities, or (ii) reduce the NEOs adjusted total compensation (as defined in
the agreements) to an amount less than (x) 75% of his or her adjusted total
compensation for the prior 12 months or (y) 75% of his or her adjusted total
compensation for the 12 months preceding the date of such NEOs employment agreement,
whichever is greater. In addition, in the case of Messrs. Wehmer, Dykstra and Murphy,
the NEO is said to have been Constructively Terminated if we reduce, or assign such NEO
duties substantively inconsistent with, his position, authority, duties or
responsibilities, including reductions occurring solely as a result of Wintrusts
ceasing to be a publicly traded entity or becoming a wholly owned subsidiary of another
entity. |
The employment agreements require, as a precondition to the receipt of these payments,
that the NEO sign a standard form of release in which he or she waives all claims that he or she
might have against us and certain associated individuals and entities. The employment agreements
also include noncompete and nonsolicit provisions and confidentiality provisions that would apply
for three years following the termination of employment of Messrs. Wehmer, Dykstra, Murphy and
Stoehr, or two years following the termination of employment of Ms. Gleason.
Payment Obligations for Termination with Cause
If a NEO is terminated for Cause, he or she is entitled to receive amounts earned during
the terms of employment. Such amounts include:
|
|
|
unpaid base salary through the date of termination; |
|
|
|
|
accrued but unused vacation or paid leave; |
|
|
|
|
earned but unpaid annual incentive compensation; and |
|
|
|
|
reimbursements. |
54
Payment Obligations Upon Death or Permanent Disability
In the event of death or permanent disability of a NEO, in addition to the items above:
|
|
|
Messrs. Wehmer, Dykstra, Murphy and Stoehr will be entitled to a payment equal to
three times the sum of his base salary in effect at the time of his death or disability
and the target cash and stock bonus awards to such NEO in the year of his death or
disability, with such payments to be made, (i) in the case of death, in a lump sum
within 30 days of the NEOs death or (ii), in the case of permanent disability, ratably
over 36 months, with any such payment benefit reduced by the proceeds from any life or
disability insurance policies maintained by the Company; |
|
|
|
|
Ms. Gleason will be entitled to a payment equal to two times the sum of her base
salary in effect at the time of her death or disability and the cash and stock bonus
amount paid out or awarded to Ms. Gleason during the twelve-month period prior to her
death or disability, with such payments to be made, (i) in the case of death, in a lump
sum within 30 days of Ms. Gleasons death or (ii), in the case of permanent disability,
ratably over 24 months, with any such payment benefit reduced by the proceeds from any
life or disability insurance policies maintained by the Company; and |
|
|
|
|
he or she will immediately vest in all outstanding awards under the Incentive Plans. |
Additionally, in the event of termination due to permanent disability:
|
|
|
Messrs. Wehmer, Dykstra and Murphy and Ms. Gleason will continue to receive health
insurance, including for qualified dependents, either under the then current Company
plan or under an independent policy having similar coverage to that maintained by the
Company, until the earlier of (a) the date he or she becomes eligible for any
comparable medical, dental, or vision coverage provided by any other employer or (b)
the date he or she becomes eligible for Medicare benefits; and |
|
|
|
|
Mr. Stoehr will continue to receive health insurance, including for qualified
dependents, under the then current Company plan until the end of the 36-month period
over which the severance payments described in the first bullet point of this
subsection are made. |
Payment Obligations for Constructive Termination or Termination Without Cause
In the event of constructive termination or termination without cause of a NEO, such NEO
is entitled to the items listed above under Payment Obligations for Termination with Cause and
Payment Obligations Upon Death or Permanent Disability, except that:
|
|
|
the payment to Messrs. Wehmer, Dykstra, Murphy and Stoehr described in the first
bullet point under Payment Obligations Upon Death or Permanent Disability will not be
made in a lump sum, but rather be made ratably over the 36-month period; |
|
|
|
|
the payment to Ms. Gleason described in the second bullet point under Payment
Obligations Upon Death or Permanent Disability will not be made in a lump sum, but
rather be made ratably over the 24-month period; |
|
|
|
|
outstanding option awards under the Incentive Plans will not immediately vest, but
rather will remain exercisable until the earlier of (i) three months or (ii) the life
of the award; |
|
|
|
|
unvested RSU awards will immediately be forfeited, with the exception of Mr.
Murphys July 2007 and Ms. Gleasons January 2010 RSU awards, which fully vest; |
|
|
|
|
Messr. Wehmer, Dykstra and Murphy and Ms. Gleason and their respective dependents
will be entitled to continued health benefits until the earliest of (a) the date he or
she becomes eligible for another group health insurance plan with no pre-existing
condition limitation or exclusion or (b) the date he or she becomes eligible for
Medicare benefits; and |
|
|
|
|
Mr. Stoehr and his respective dependents will be entitled to continued health
benefits until the earliest of (a) the date he becomes eligible for another group
health insurance plan with no pre-existing condition limitation or exclusion, (b) the
expiration of the maximum coverage period under COBRA or (c) the date he becomes
eligible for Medicare benefits. |
55
Payment Obligations for Termination Without Cause or Constructive Termination Following a
Change of Control
In the event of the constructive termination or termination without cause of a NEO within
eighteen months of a change of control, which is defined below, such NEO shall be entitled to the
same payments and items described above under Payment Obligations for Constructive Termination or
Termination Without Cause, however, such payments shall be made in a lump sum within 30 days of
such termination. Additionally:
|
|
|
Pursuant to our Incentive Plans, the NEO will be entitled to immediate vesting and
lapsing of restrictions on all outstanding awards; |
|
|
|
|
Messrs. Wehmer, Dykstra and Murphy will be entitled to an additional cash payment
equal to an amount that would offset any excise taxes charged to the NEO as a result of
the receipt of any change of control payment and such offset payment, within 30 days of
the determination that such excise tax is due; and |
|
|
|
|
In the case of Mr. Stoehr and Ms. Gleason, such payment may be subject to reduction
to the extent it would cause such NEO to receive an excess parachute payment (as
defined in the Code). |
On May 20, 2009, the Company adopted a policy that it will not enter into any new or
materially amended agreements with NEOs that include any excise tax gross-up provisions with
respect to payments contingent upon a change in control. This policy does not apply to the
employment agreements with Messrs. Wehmer, Dykstra and Murphy in effect at the time of adoption of
such policy.
For purposes of a change of control, the NEO is said to have been Constructively Terminated
(and thereby gain access to the benefits described below) if we (i) materially reduce the NEOs
duties and responsibilities, (ii) reduce the NEOs adjusted total compensation to an amount less
than (x) 100% of his or her adjusted total compensation for the prior 12 months or (y) 100% of his
or her adjusted total compensation for the 12 months preceding the date of such NEOs employment
agreement, whichever is greater, or (iii) following the change of control, deliver notice to such
NEO he or she will continue to be employed but his or her employment agreement will be rejected.
In addition, in the case of Messrs. Wehmer, Dykstra and Murphy, the NEO is said to have been
Constructively Terminated if we reduce, or assign such NEO duties substantively inconsistent with,
his position, authority, duties or responsibilities, including reductions occurring solely as a
result of Wintrusts ceasing to be a publicly traded entity or becoming a wholly owned subsidiary
of another entity.
Change of control is defined in the NEOs employment agreements by reference to the
2007 Plan, which defines change of control as any of the following events:
|
|
|
if any person acquires 50% or more of the Companys outstanding Common Stock or of
the combined voting power of the Companys outstanding voting securities (other than
securities acquired directly from the Company); |
|
|
|
|
if the Companys incumbent Directors (and director nominees approved by such
Directors) cease to constitute a majority of the Board; |
|
|
|
|
the consummation of a reorganization, merger or consolidation in which our
shareholders immediately prior to such transaction do not, following such transaction,
beneficially own more than 50% of the outstanding common stock or of the combined
voting power of the corporation resulting from such transaction; or |
|
|
|
|
the approval of our shareholders of a complete liquidation or dissolution of the
Company or of the sale or other disposition of all or substantially all of the assets
of the Company. |
Payment Obligations Under the Cash Incentive and Retention Plan
In 2008, the Company made awards under the CIRP to Mr. Wehmer, Mr. Dykstra and Mr. Murphy
with respect to the 2008-2012 performance cycle. In 2010, the Company made an award under the CIRP
to Ms. Gleason with respect to the 2010-2014 performance cycle. Under the terms of their awards,
Mr. Wehmer, Mr. Dykstra, Mr. Murphy and Ms. Gleason are entitled to certain payments upon various
termination scenarios and a change in control of the Company.
56
Under the terms of Mr. Wehmers CIRP award agreement, he is entitled to a prorated CIRP
award in the event of termination of his employment during the performance cycle as a result of
disability or death. The prorated award is determined based on the Companys compound annual growth
rate of earnings per share through the year that coincides with or immediately precedes the date on
which termination occurs multiplied by Mr. Wehmers vested percentage in the award. In the event of
Mr. Wehmers termination not for cause, resignation from the Company or retirement, Mr. Wehmer is
entitled to an amount equal to his minimum CIRP award. Mr. Wehmers minimum CIRP award is equal to
Mr. Wehmers vested percentage of his target award multiplied by 100% plus the compound annual
interest rate based on the 91-day Treasury bill rate for the period from January 1, 2008 through
December 31, 2012, or if earlier, the date as of which the minimum CIRP award is being determined.
In the event of Mr. Wehmers termination due to retirement, Mr. Wehmer is also entitled to an
additional amount equal to the amount of the CIRP award that Mr. Wehmer would have earned at the
end of the five-year performance cycle based on the Companys actual performance multiplied by his
vested percentage in the award. Mr. Wehmer is not entitled to any award under the CIRP in the event
of his termination for cause. Mr. Wehmer annually vests in 20% increments.
Under the terms of Mr. Dykstras and Mr. Murphys CIRP award agreements, such NEO is
entitled to a prorated CIRP award in the event of termination of his employment during the
performance cycle as a result of disability, death, termination not for cause or resignation. The
prorated award is determined based on the Companys compound annual growth rate of earnings per
share through the year that coincides with or immediately precedes the date on which termination
occurs multiplied by such NEOs vested percentage in the award. In the event of Mr. Dykstras or
Mr. Murphys termination due to retirement, such NEO is entitled to a prorated award as well as an
additional amount equal to the amount of the CIRP award that he would have earned at the end of the
five-year performance cycle based on the Companys actual performance multiplied by his vested
percentage in the award. Such NEO is not entitled to any award under the CIRP in the event of his
termination for cause. Mr. Dykstra and Mr. Murphy annually vest in 20% increments.
Under the terms of Ms. Gleasons CIRP award agreement, she is entitled to a prorated CIRP
award in the event of termination of her employment during the performance cycle as a result of
disability or death. The prorated award is determined based on the Companys compound annual growth
rate of earnings per share through the year that coincides with or immediately precedes the date on
which termination occurs multiplied by Ms. Gleasons vested percentage in the award. In the event
of Ms. Gleasons termination not for cause, resignation from the Company or retirement, Ms. Gleason
is entitled to an amount equal to her minimum CIRP award. Ms. Gleasons minimum CIRP award is equal
to Ms. Gleasons vested percentage of her target award multiplied by 100% plus the compound annual
interest rate based on the 91-day Treasury bill rate for the period from January 1, 2010 through
December 31, 2014, or if earlier, the date as of which the minimum CIRP award is being determined.
In the event of Ms. Gleasons termination due to retirement, Ms. Gleason is also entitled to an
additional amount equal to the amount of the CIRP award that Ms. Gleason would have earned at the
end of the five-year performance cycle based on the Companys actual performance multiplied by her
vested percentage in the award. Ms. Gleason is not entitled to any award under the CIRP in the
event of her termination for cause. Ms. Gleason annually vests in 20% increments.
In the event of a change in control of the Company, each of Mr. Wehmer, Mr. Dykstra, Mr.
Murphy and Ms. Gleason are entitled to an award equal to an amount determined based on the
Companys compound annual growth rate of earnings per share through the year that coincides with or
immediately precedes the date on which the change in control occurs.
The table below shows potential payments to the NEOs if terminated upon death or permanent
disability, for Constructive Termination or without Cause, in connection with a Change in Control
and retirement. The amounts shown assume that termination was effective as of December 31, 2010,
and are estimates of the amounts that would be paid to the executives upon termination. All equity
awards have been calculated using the closing stock price of the Companys Common Stock on December
31, 2010 of $33.03, as reported on Nasdaq. The actual amounts to be paid can only be determined at
the actual time of an executives termination.
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constructive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent |
|
|
Without |
|
|
Change in |
|
|
|
|
|
|
|
|
Death |
|
|
Disability |
|
|
Cause |
|
|
Control |
|
|
Retirement |
|
Name |
|
Type of Payment |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Edward J. Wehmer (1) |
|
Cash Severance Benefit (2) |
|
|
5,610,000 |
|
|
|
5,610,000 |
|
|
|
5,610,000 |
|
|
|
5,610,000 |
|
|
|
|
|
|
|
Value of
Unvested and Accelerated Equity(3) |
|
|
698,188 |
|
|
|
698,188 |
|
|
|
|
|
|
|
698,188 |
|
|
|
|
|
|
|
Value of
Cash Incentive and Retention Award(4) |
|
|
133,419 |
|
|
|
133,419 |
|
|
|
133,419 |
|
|
|
222,364 |
|
|
|
133,419 |
|
|
|
Benefit Continuation(5) |
|
|
|
|
|
|
153,256 |
|
|
|
153,256 |
|
|
|
153,256 |
|
|
|
|
|
|
|
Less Life Insurance Proceeds(6) |
|
|
(2,700,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Disability Insurance Proceeds(7) |
|
|
|
|
|
|
(720,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax Gross-Up Payment(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,136,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
3,741,607 |
|
|
|
5,874,863 |
|
|
|
5,896,675 |
|
|
|
8,820,555 |
|
|
|
133,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Dykstra (1) |
|
Cash Severance Benefit (2) |
|
|
4,083,750 |
|
|
|
4,083,750 |
|
|
|
4,083,750 |
|
|
|
4,083,750 |
|
|
|
|
|
|
|
Value of
Unvested and Accelerated Equity(3) |
|
|
535,284 |
|
|
|
535,284 |
|
|
|
|
|
|
|
535,284 |
|
|
|
|
|
|
|
Value of Cash Incentive and Retention Award |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit Continuation(5) |
|
|
|
|
|
|
97,430 |
|
|
|
97,430 |
|
|
|
97,430 |
|
|
|
|
|
|
|
Less Life Insurance Proceeds(6) |
|
|
(2,700,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Disability Insurance Proceeds(7) |
|
|
|
|
|
|
(720,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax Gross-Up Payment(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,531,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
1,919,034 |
|
|
|
3,996,464 |
|
|
|
4,181,180 |
|
|
|
6,247,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard B. Murphy (1) |
|
Cash Severance Benefit (2) |
|
|
2,227,500 |
|
|
|
2,227,500 |
|
|
|
2,227,500 |
|
|
|
2,227,500 |
|
|
|
|
|
|
|
Value of
Unvested and Accelerated Equity(3) |
|
|
539,743 |
|
|
|
539,743 |
|
|
|
330,300 |
|
|
|
539,743 |
|
|
|
|
|
|
|
Value of Cash Incentive and Retention Award |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit Continuation(5) |
|
|
|
|
|
|
248,651 |
|
|
|
248,651 |
|
|
|
248,651 |
|
|
|
|
|
|
|
Less Life Insurance Proceeds(6) |
|
|
(2,025,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Disability Insurance Proceeds(7) |
|
|
|
|
|
|
(720,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excise Tax Gross-Up Payment(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
909,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
742,243 |
|
|
|
2,295,894 |
|
|
|
2,806,451 |
|
|
|
3,925,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David L. Stoehr (1) |
|
Cash Severance Benefit (2) |
|
|
1,776,000 |
|
|
|
1,776,000 |
|
|
|
1,776,000 |
|
|
|
1,776,000 |
|
|
|
|
|
|
|
Value of
Unvested and Accelerated Benefit(3) |
|
|
153,590 |
|
|
|
153,590 |
|
|
|
|
|
|
|
153,590 |
|
|
|
|
|
|
|
Continuation(5) |
|
|
|
|
|
|
56,298 |
|
|
|
28,149 |
|
|
|
28,149 |
|
|
|
|
|
|
|
Less Life Insurance Proceeds(6) |
|
|
(1,575,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Disability Insurance Proceeds(7) |
|
|
|
|
|
|
(720,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scaleback Adjustment(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
354,590 |
|
|
|
1,265,888 |
|
|
|
1,804,149 |
|
|
|
1,957,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constructive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent |
|
|
Without |
|
|
Change in |
|
|
|
|
|
|
|
|
Death |
|
|
Disability |
|
|
Cause |
|
|
Control |
|
|
Retirement |
|
Name |
|
Type of Payment |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Leona A. Gleason (1) |
|
Cash Severance Benefit (2) |
|
|
690,000 |
|
|
|
690,000 |
|
|
|
690,000 |
|
|
|
690,000 |
|
|
|
|
|
|
|
Value of
Unvested and Accelerated Equity(3) |
|
|
187,900 |
|
|
|
187,900 |
|
|
|
165,150 |
|
|
|
187,900 |
|
|
|
|
|
|
|
Value of Cash Incentive and Retention Award |
|
|
20,016 |
|
|
|
20,016 |
|
|
|
20,016 |
|
|
|
100,080 |
|
|
|
|
|
|
|
Benefit Continuation(5) |
|
|
|
|
|
|
47,782 |
|
|
|
47,782 |
|
|
|
47,782 |
|
|
|
|
|
|
|
Less Life Insurance Proceeds(6) |
|
|
(710,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Disability Insurance Proceeds(7) |
|
|
|
|
|
|
(480,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scaleback Adjustment(9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
187,916 |
|
|
|
465,698 |
|
|
|
922,948 |
|
|
|
1,025,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In the event of termination with cause, each NEO would only be entitled to earned but unpaid base salary through the termination date, accrued but unused vacation or paid leave, earned but unpaid annual
incentive compensation and reimbursement of miscellaneous company incurred expenses. For each NEO, this amount was zero as of December 31, 2010. |
|
(2) |
|
Upon termination due to death, disability, termination without cause, constructive termination, or change of control, each NEO, with the exception of Ms. Gleason, is entitled to receive an amount equal to
three times (3x) the sum of (i) the NEOs base salary in effect at the time of termination plus (ii) an amount equal to the NEOs target cash bonus and the NEOs target stock bonus in the year in which the
termination occurs. Ms. Gleason is entitled to receive an amount equal to two times (2x) the sum of her (i) base salary in effect at the time of termination plus (ii) an amount equal to any cash bonus paid
to her during the 12-month period prior to termination and any stock bonus amounts awarded or granted to her in the 12-month period prior to termination. |
|
(3) |
|
In the event of a constructive termination or termination without cause, (i) outstanding stock option awards will not immediately vest but will remain exercisable until the earlier of three months or the life
of the award, and (ii) outstanding RSUs will immediately be forfeited, with the exception of Mr. Murphys July 2007 and Ms. Gleasons January 2010 RSU awards, which fully vest. In the event of death,
permanent disability, or termination in connection with a change in control, all outstanding equity awards immediately vest. The exercise price of all outstanding stock option awards held by Mr. Wehmer and
Mr. Dykstra exceed the closing stock price of the Companys Common Stock on December 31, 2010 of $33.03, as reported on Nasdaq; therefore, they do not impact the total value of the termination benefits. Mr.
Stoehr does not currently hold any outstanding stock option awards. |
|
(4) |
|
As Mr. Wehmer is early retirement eligible, he would also be entitled to an additional amount equal to the amount of the CIRP award that he would have received if he would have remained employed through the
end of the performance period (December 31, 2012), if he remains retired from the industry. This additional amount is not included in the total value of his termination benefits. |
|
(5) |
|
We have assumed benefit continuation for Messrs. Wehmer, Dykstra and Murphy and Ms. Gleason through the age of 65, the time at which the NEO will be eligible for Medicare. We have assumed benefit
continuation for 36 months in the event of permanent disability and 18 months in the event termination in connection with a change in control, termination without cause or constructive termination for Mr.
Stoehr, per current COBRA guidelines. |
|
(6) |
|
In the event of termination in connection with death, the amount of benefits to be paid to the NEO pursuant to his or her employment agreement shall be reduced by the amount of any life insurance benefit
payments paid or payable to the NEO from policies of insurance maintained and/or paid for by the Company; provided that in the event the life insurance benefits exceed the amount to be paid to the NEO, the
NEO shall remain entitled to receive the excess life insurance payments. |
|
(7) |
|
In the event of termination in connection with permanent disability, the amount of benefits to be paid to the NEO pursuant to his or her employment agreement shall be reduced by the amount of any long-term
disability insurance benefit payments paid or payable to the NEO during the payment period from policies of insurance maintained and/or paid for by the Company; |
59
|
|
|
|
|
provided that in the event the long-term
disability insurance benefits exceed the amount to be paid to the NEO, the NEO shall remain entitled to receive the excess insurance payments. |
|
(8) |
|
In the event of a termination in connection with a change in control, Messrs. Wehmer, Dykstra and Murphy are entitled to an excise tax gross-up payment to be paid by the Company if the present value of the
NEOs parachute payments exceeds his safe harbor. Effective May 20, 2009, the Company adopted a policy that it will not enter into any new or materially amended agreements with NEOs that include any excise
tax gross-up provisions with respect to payments contingent upon a change in control. |
|
(9) |
|
The employment agreements for Mr. Stoehr and Ms. Gleason provide that in the event the potential payments would constitute excess parachute payments within the meaning of Section 280G of the Internal
Revenue Code, or any interest or penalties with respect to such excise tax, then the amount of the payout would be automatically reduced to an amount equal to $1.00 less than three times (3x) the base
amount as defined in Section 280G(3) of the Internal Revenue Code (the Reduced Payment). The preceding sentence shall not apply if the sum of the amount of severance pay less the amount of excise tax
payable by the NEO is greater than the Reduced Payment. |
DIRECTOR COMPENSATION
The Company seeks to compensate its non-employee Directors in a manner that attracts and
retains qualified candidates to serve on the Board of Directors. To strengthen the alignment of
interests between Directors and shareholders, the Board has adopted a minimum stock ownership
guideline for Directors. Within three years of joining the Board, each Director should own Common
Stock (or common stock equivalents) having a value of at least three times the annual retainer fee
paid to Directors. All of the Companys Directors own a number of shares which exceeds this
minimum stock ownership guideline.
Compensation for Non-employee Directors
For their service to the Company, non-employee Directors are entitled to an annual
retainer, attendance fees for Board and committee meetings, and a payment for service as a chairman
of the Board or of certain committees. Additionally, non-employee Directors who serve as a director
of any of the Companys subsidiaries are entitled to compensation for such service. Directors who
are employees of the Company receive no additional compensation for their service on the Board of
Directors.
Retainer Fees. The Company pays non-employee Directors an annual retainer of $30,000. As
explained further below, this amount may be paid in cash or in shares of the Companys Common
Stock.
Attendance Fees. Non-employee Directors receive $3,250 for each Board of Directors
meeting they attend. For service on a committee of the Board of Directors, non-employee Directors
receive an attendance fee of $1,700 per committee meeting, except for Audit Committee members, who
receive a $2,000 attendance fee.
Chairmanships. The Chairman of the Board, the Chair of the Risk Management Committee,
the Chair of the Audit Committee, the Chair of the Compensation Committee, the Chair of the
Nominating Committee and the Chair of the Finance Committee are entitled to an additional fee of
$55,000, $35,000, $20,000, $10,000, $10,000 and $10,000, respectively.
Subsidiary Directorships. Non-employee Directors who serve on the Boards of Directors of
our
Subsidiaries are entitled to compensation for such service. No independent member of the Companys
Board of Directors serves on more than one subsidiary board other than Messrs. Getz, Heitmann and
Rademacher. See the description above under Election of Directors for additional biographical
information.
Directors Deferred Fee and Stock Plan
The Director Plan is a program that allows non-employee Directors to receive their
Director fees in either cash or Common Stock. Under the Director Plan, Directors may also choose to
defer the receipt of their Director fees. Each of these options is described in greater detail
below.
60
Fees Paid in Stock. In April 2011, the Board of Directors amended the Director Plan to
allow a Director to elect to receive his or her retainer fee in cash or in shares of the Companys
Common Stock. A Director will receive all fees in cash unless he or she elects to receive such
fees in shares of the Companys Common Stock. The number of shares of Common Stock to be issued
will be determined by dividing the fees earned during a calendar quarter by the fair market value
(as defined in the Director Plan) of the Common Stock on the last trading day of the preceding
quarter. The shares of Common Stock to be paid will be issued once a year before January 15th or
more frequently if so determined by the administrator. Once issued, the shares will be entitled to
full dividend and voting rights. In the event of an adjustment in the Companys capitalization or a
merger or other transaction that results in a conversion of the Common Stock, corresponding
adjustments will be made to Common Stock received by a Director. The Company does not match or
apply any premium to Director fees paid in shares of the Companys Common Stock.
Deferral of Common Stock. If a Director elects to defer receipt of shares of Common
Stock, the Company will maintain on its books deferred stock units (Units) representing an
obligation to issue shares of Common Stock to the Director. The number of Units credited will be
equal to the number of shares that would have been issued but for the deferral election. Additional
Units will be credited at the time dividends are paid on the Common Stock. The number of additional
Units to be credited each quarter will be computed by dividing the amount of the dividends that
would have been received if the Units were outstanding shares by the fair market value of the
Common Stock on the last trading day of the preceding quarter. Because Units represent a right to
receive Common Stock in the future, and not actual shares, there are no voting rights associated
with them. In the event of an adjustment in the Companys capitalization or a merger or other
transaction that results in a conversion of the Common Stock, corresponding adjustments will be
made to the Units. The Director will be a general unsecured creditor of the Company for purposes of
the Common Stock to be paid in the future. The shares of Common Stock represented by the Units will
be issued before January 15th of the year following the date specified by the Director in his or
her deferral election, which may be either the date on which he or she ceases to be a Director of
the Company, or the 1st, 2nd, 3rd, 4th or 5th anniversary of such date. A Director may elect to
change the date on which the Common Stock represented by the Units will be issued, but such
election will not be effective for 12 months and must specify a date that is at least five years
after the date on which the originally scheduled distribution would have been made.
Deferral of Cash. If a Director elects to defer receipt of Directors fees in cash, the
Company will maintain on its books a deferred compensation account representing an obligation to
pay the Director cash in the future. The amount of the Directors fees will be credited to this
account as of the date such fees otherwise would be payable to the Director. All amounts credited
to a Directors deferred compensation account will accrue interest based on the 91-day Treasury
Bill discount rate, adjusted quarterly, until paid. Accrued interest will be credited at the end of
each calendar quarter. No funds will actually be set aside for payment to the Director and the
Director will be a general unsecured creditor of the Company for purposes of the amount in his
deferred compensation account. The amount in the deferred compensation account will be paid to the
Director before January 15th of the year following the date specified by the Director in his or her
deferral election, which may be either the date on which he or she ceases to be a Director of the
Company, or the 1st, 2nd, 3rd, 4th or 5th anniversary of such date. A Director may elect to change
the date on which the amount in the deferred compensation account will be paid, but such election
will not be effective for 12 months and must specify a date that is at least five years after the
date on which the originally scheduled payment would have been made.
Director Summary Compensation Table
The table below summarizes the compensation paid by the Company to non-employee Directors
for the fiscal year ended December 31, 2010.
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and |
|
|
|
|
|
|
(b) |
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
Fees |
|
(c) |
|
(d) |
|
Deferred |
|
(f) |
|
|
|
|
Earned or |
|
Stock |
|
Option |
|
Compensation |
|
All Other |
|
(g) |
(a) |
|
Paid in Cash |
|
Awards |
|
Awards |
|
Earnings |
|
Compensation |
|
Total |
Name |
|
($)(1) |
|
($)(2) |
|
($) |
|
($) |
|
($)(3) |
|
($) |
Peter D. Crist |
|
|
|
|
|
|
150,100 |
|
|
|
|
|
|
|
|
|
|
|
10,842 |
|
|
|
160,942 |
|
Bruce K. Crowther |
|
|
|
|
|
|
88,300 |
|
|
|
|
|
|
|
|
|
|
|
14,033 |
|
|
|
102,333 |
|
Joseph F. Damico |
|
|
43,100 |
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,100 |
|
Bert A. Getz, Jr. |
|
|
|
|
|
|
67,550 |
|
|
|
|
|
|
|
|
|
|
|
17,838 |
|
|
|
85,388 |
|
H. Patrick Hackett, Jr. |
|
|
68,300 |
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
24,644 |
|
|
|
122,944 |
|
Scott K. Heitmann |
|
|
42,800 |
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
34,894 |
|
|
|
107,694 |
|
Charles H. James III |
|
|
46,500 |
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
7,800 |
|
|
|
84,300 |
|
Albin F. Moschner |
|
|
|
|
|
|
84,950 |
|
|
|
|
|
|
|
|
|
|
|
713 |
|
|
|
85,663 |
|
Thomas J. Neis |
|
|
44,800 |
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
10,454 |
|
|
|
85,254 |
|
Christopher J. Perry(4) |
|
|
|
|
|
|
85,050 |
|
|
|
|
|
|
|
|
|
|
|
477 |
|
|
|
85,527 |
|
Hollis W. Rademacher |
|
|
64,850 |
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
125,625 |
|
|
|
220,475 |
|
Ingrid S. Stafford |
|
|
66,500 |
|
|
|
30,000 |
|
|
|
|
|
|
|
|
|
|
|
25,767 |
|
|
|
122,267 |
|
|
|
|
(1) |
|
Includes fees paid in cash, both paid out and deferred, for services as Directors of the Company. |
|
(2) |
|
Includes fees paid in stock, both distributed and deferred, for services as Directors of the Company. |
|
(3) |
|
Includes fees paid in cash and stock, both paid out and deferred, for services as directors of the
Companys subsidiaries. Also includes interest earned on fees deferred in accordance with Deferral
of Cash option described above and dividends earned on fees deferred in accordance with Deferral
of Common Stock option described above. |
|
(4) |
|
Pursuant to Mr. Perrys request, director fees payable to him are paid directly to CIVC Partners, LP. |
62
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock as of the
Record Date, with respect to (i) each Director and each NEO (as defined herein) of the Company;
(ii) all Directors and executive officers of the Company as a group and (iii) significant
shareholders known to the Company that beneficially own in excess of 5% of the Common Stock.
Unless otherwise indicated, the listed person has sole voting and dispositive power. Except as
indicated in the footnotes to the table below, the business address of the persons listed below is
the address of our principal executive office, 727 North Bank Lane, Lake Forest, Illinois 60045.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options & |
|
|
|
|
|
|
Amount of |
|
|
|
|
|
Warrants |
|
Total |
|
|
|
|
Common Shares |
|
Restricted |
|
Exercisable |
|
Amount of |
|
|
|
|
Beneficially |
|
Stock |
|
Within |
|
Beneficial |
|
Total Percentage |
|
|
Owned (1) |
|
Units (1) |
|
60 Days (1) |
|
Ownership (1) |
|
Ownership (1) |
Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter D. Crist |
|
|
72,149 |
|
|
|
|
|
|
|
|
|
|
|
72,149 |
|
|
|
* |
|
Bruce K. Crowther |
|
|
17,996 |
|
|
|
|
|
|
|
|
|
|
|
17,996 |
|
|
|
* |
|
Joseph F. Damico |
|
|
10,177 |
|
|
|
|
|
|
|
|
|
|
|
10,177 |
|
|
|
* |
|
Bert A. Getz, Jr. |
|
|
23,007 |
|
|
|
|
|
|
|
|
|
|
|
23,007 |
|
|
|
* |
|
H. Patrick Hackett, Jr. |
|
|
23,475 |
|
|
|
|
|
|
|
|
|
|
|
23,475 |
|
|
|
* |
|
Scott K. Heitmann |
|
|
12,588 |
|
|
|
|
|
|
|
|
|
|
|
12,588 |
|
|
|
* |
|
Charles H. James III |
|
|
3,757 |
|
|
|
|
|
|
|
|
|
|
|
3,757 |
|
|
|
* |
|
Albin F. Moschner(2) |
|
|
40,998 |
|
|
|
|
|
|
|
|
|
|
|
40,998 |
|
|
|
* |
|
Thomas J. Neis |
|
|
15,703 |
|
|
|
|
|
|
|
|
|
|
|
15,703 |
|
|
|
* |
|
Christopher J. Perry |
|
|
35,750 |
|
|
|
|
|
|
|
|
|
|
|
35,750 |
|
|
|
* |
|
Hollis W. Rademacher |
|
|
93,874 |
|
|
|
|
|
|
|
|
|
|
|
93,874 |
|
|
|
* |
|
Ingrid S. Stafford |
|
|
14,895 |
|
|
|
|
|
|
|
|
|
|
|
14,895 |
|
|
|
* |
|
Edward J. Wehmer(3)** |
|
|
171,922 |
|
|
|
89,935 |
(12) |
|
|
235,400 |
|
|
|
497,257 |
|
|
|
1.41 |
% |
Other Named Executive Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Dykstra |
|
|
113,251 |
|
|
|
63,886 |
(12) |
|
|
100,800 |
|
|
|
277,937 |
|
|
|
* |
|
Richard B. Murphy(4) |
|
|
33,579 |
|
|
|
23,800 |
(13) |
|
|
51,899 |
|
|
|
109,278 |
|
|
|
* |
|
David L. Stoehr(5) |
|
|
5,592 |
|
|
|
6,141 |
(12) |
|
|
23,750 |
|
|
|
35,483 |
|
|
|
* |
|
Leona A. Gleason |
|
|
1,173 |
|
|
|
4,824 |
(12) |
|
|
2,000 |
|
|
|
7,997 |
|
|
|
* |
|
Total Existing Directors & Executive Officers (24 persons)(6) |
|
|
814,727 |
|
|
|
227,990 |
|
|
|
543,718 |
|
|
|
1,586,435 |
|
|
|
4.44 |
% |
Other Significant Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP(7) |
|
|
1,817,333 |
|
|
|
|
|
|
|
|
|
|
|
1,817,333 |
|
|
|
5.22 |
% |
T. Rowe Price Associates, Inc.(8) |
|
|
2,402,350 |
|
|
|
|
|
|
|
|
|
|
|
2,402,350 |
|
|
|
6.90 |
% |
BlackRock, Inc.(9) |
|
|
2,684,057 |
|
|
|
|
|
|
|
|
|
|
|
2,684,057 |
|
|
|
7.70 |
% |
Wellington Management Company, LLP(10) |
|
|
3,448,716 |
|
|
|
|
|
|
|
|
|
|
|
3,448,716 |
|
|
|
9.90 |
% |
CIVC-WTFC LLC(11) |
|
|
1,944,000 |
|
|
|
|
|
|
|
|
|
|
|
1,944,000 |
|
|
|
5.27 |
% |
|
|
|
* |
|
Less than 1% |
|
** |
|
Mr. Wehmer is also an executive officer. |
|
(1) |
|
Beneficial ownership and percentages are calculated in accordance with SEC Rule 13d-3 promulgated under the Securities Exchange Act of 1934. |
|
(2) |
|
Of the shares beneficially owned by Mr. Moschner, 27,000 are pledged as security to a financial institution. |
|
(3) |
|
Of the shares beneficially owned by Mr. Wehmer, 60,000 are pledged as security to a financial institution. |
63
|
|
|
(4) |
|
Of the shares beneficially owned by Mr. Murphy, 22,643 are pledged as security to a financial institution. |
|
(5) |
|
Of the shares beneficially owned by Mr. Stoehr, 4,744 are pledged as security to a financial institution. |
|
(6) |
|
In addition to the pledged shares disclosed in footnotes 2-5, an additional 27,524 shares are pledged as security to a financial institution by an executive officer other
than a NEO. |
|
(7) |
|
Based on information obtained from Schedule 13G/A filed by Dimensional Fund Advisors LP (Dimensional) with
the SEC on February 11, 2011. According to this report, Dimensionals business address is Palisades West,
Building One, 6300 Bee Cave Road, Austin, Texas 78746. Dimensional has informed the Company that these
securities are owned by various investment companies, commingled group trusts and separate accounts (the
Funds). Dimensional serves as investment manager with power to direct investments and/or sole power to vote
the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Dimensional
is deemed to be a beneficial owner of such securities; however, Dimensional expressly disclaims that it is, in
fact, the beneficial owner of such securities. Dimensional has sole voting power with respect to 1,769,536 of
these shares and sole dispositive power with respect to 1,817,333 of these shares. |
|
(8) |
|
Based on information obtained from Schedule 13G/A filed by T. Rowe Price Associates, Inc. (Price Associates)
with the SEC on February 10, 2011. According to this report, Price Associates business address is 100 E.
Pratt Street, Baltimore, Maryland 21202. Price Associates has informed the Company via letter that these
securities are owned by various individual and institutional investors, including T. Rowe Price Small-Cap
Value Fund, Inc. (which owns 1,755,000 of these shares, representing 5.1% of the shares outstanding). Price
Associates serves as investment advisor with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities. Price Associates has sole voting
power with respect to 626,250 of these shares and T. Rowe Price Small-Cap Value Fund, Inc. has sole voting
power with respect to 1,755,000 of these shares. |
|
(9) |
|
Based on information obtained from Schedule 13G/A filed by BlackRock, Inc. with the SEC on February 9, 2011.
According to this report, BlackRock, Inc.s business address is 40 East 52nd Street, New York, New York 10022. |
|
(10) |
|
Based on information obtained from Schedule 13G filed by Wellington Management Company, LLP (Wellington)
with the SEC on February 14, 2011. According to this report, Wellingtons business address is 280 Congress
Street, Boston, Massachusetts 02210. Wellington has shared voting power with respect to 3,381,316 of these
shares and shared dispositive power with respect to 3,448,716 of these shares. |
|
(11) |
|
CIVC Partners LLC owns 50,000 shares of our 8.00% Non-Cumulative Perpetual Convertible Preferred Stock, Series
A, which are convertible into shares of our Common Stock at $25.72 per share of Common Stock. |
|
(12) |
|
Shares vest at various dates between 2012 and 2014, and are subject to forfeiture until such time as they vest. |
|
(13) |
|
Shares vest at various dates between 2011 and 2014, and are subject to forfeiture until such time as they vest. |
RELATED PARTY TRANSACTIONS
We or one or our subsidiaries may occasionally enter into transactions with certain
related persons. Related persons include our executive officers, directors, 5% or more beneficial
owners of our Common Stock, immediate family members of these persons and entities in which one of
these persons has a direct or indirect
64
material interest. We refer to transactions with these
related persons as related party transactions. The Audit Committee and the Nominating Committee
are jointly responsible for the review and approval of each related party transaction exceeding
$120,000. Such committees consider all relevant factors when determining whether to approve a
related party transaction including, without limitation, whether the terms of the proposed
transaction are at least as favorable to us as those that might be achieved with an unaffiliated
third party. Among other relevant factors, the Audit Committee and the Nominating Committee
consider the following:
|
|
|
the size of the transaction and the amount of consideration payable to a related
person; |
|
|
|
|
the nature of the interest of the applicable executive officer, director or 5%
shareholder in the transaction; |
|
|
|
|
whether the transaction may involve a conflict of interest; |
|
|
|
|
whether the transaction involves the provision of goods or services to us that are
available from unaffiliated third parties; and |
|
|
|
|
whether the proposed transaction is on terms and made under circumstances that are
at least as favorable to us as would be available in comparable transactions with or
involving unaffiliated third parties. |
One of our directors, Christopher J. Perry, is a partner of CIVC Partners LLC, whose
affiliate purchased all 50,000 shares of our 8.00% Non-Cumulative Perpetual Convertible Preferred
Stock, Series A (the Series A Preferred), for $50 million in August 2008. Shares of the Series A
Preferred are convertible into shares of our Common Stock at $25.72 per share of Common Stock,
subject to adjustment, and would represent approximately 5% of our outstanding Common Stock if
converted on March 31, 2011.
Some of the executive officers and directors of the Company are, and have been during the
preceding year, customers of the Companys banking subsidiaries (the Banks), and some of the
officers and directors of the Company are direct or indirect owners of 10% or more of the stock of
corporations which are, or have been in the past, customers of the Banks. Extensions of credit by
the Company and its banking subsidiaries to insiders of the Company and its subsidiaries are also
regulated by Regulation O adopted under the Federal Reserve Act and the Federal Deposit Insurance
Corporation Improvement Act. It is the Companys policy that any transactions with persons whom
Regulation O defines as insiders (i.e., executive officers, directors, principal shareholders and
their related interests) are engaged in the same manner as transactions conducted with all members
of the public. As such customers, they have had transactions in the ordinary course of business of
the Banks, including borrowings, all of which transactions are or were on substantially the same
terms (including interest rates and collateral on loans) as those prevailing at the time for
comparable transactions with nonaffiliated persons. In the opinion of management of the Company,
none of the transactions involved more than the normal risk of collectability or presented any
other unfavorable features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act of requires the Companys Directors and executive
officers and any person who owns greater than 10% of the Companys Common Stock to file reports of
holdings and transactions in the Companys Common Stock with the SEC.
Based solely on a review of the Section 16(a) reports furnished to us with respect to
2010 and written representations from our executive officers and Directors, we believe that all
Section 16(a) filing requirements applicable to each covered person were satisfied during 2010,
except that the Company was inadvertently late in the filing of two Forms 4 reporting grants of
salary shares to Mr. Wehmer and two Forms 4 reporting grants of salary shares to Mr. Dykstra, and a
Form 5 for Mr. Murphy reporting two gifts made of shares of the Companys Common Stock.
65
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of the Company oversees the Companys
financial reporting process on behalf of the Board. Management has the primary responsibility for
the consolidated financial statements and the reporting process, including the systems of internal
controls.
In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed
the audited consolidated financial statements of the Company set forth in the Companys 2010 Annual
Report to Shareholders and the Companys Annual Report on Form 10-K for the year ended December 31,
2010 with management of the Company. The Audit Committee also discussed with Ernst & Young LLP,
independent registered public accounting firm for the Company, who are responsible for expressing
an opinion on the conformity of those audited consolidated financial statements with United States
generally accepted accounting principles, the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, as amended.
The Audit Committee has received the written communication from Ernst & Young LLP
required by Independence Standards Board Standard No. 1, has considered the compatibility of
non-audit services with the auditors independence, and has discussed with Ernst & Young LLP their
independence from the Company.
In reliance on the review and discussions referred to above, the Audit Committee
recommended to the Board that the audited consolidated financial statements be included in the
Companys Annual Report on Form 10-K for 2010 for filing with the Securities and Exchange
Commission.
AUDIT COMMITTEE
|
|
|
INGRID S. STAFFORD (Chair)
|
|
CHARLES H. JAMES III |
BERT A. GETZ, JR.
|
|
ALBIN F. MOSCHNER |
SCOTT K. HEITMANN
|
|
THOMAS J. NEIS |
66
PROPOSAL NO. 5 RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP, independent registered public
accounting firm, as auditors for the Company and its subsidiaries for the fiscal year ended
December 31, 2011. The Board of Directors and the Audit Committee recommend that shareholders
ratify the appointment of Ernst & Young LLP as independent auditors for the Company and its
subsidiaries. If shareholders do not ratify the appointment, the Audit Committee will reconsider
its selection. Ernst & Young LLP has served as independent registered public accounting firm for
the Company since 1999 and is considered by the Board of Directors and the Audit Committee to be
well qualified. One or more representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and afforded an opportunity to make a statement, if they desire to do so, and to
respond to questions from shareholders.
Required Vote
Ratification of the appointment of Ernst & Young LLP as the Companys independent
registered public accounting firm for the fiscal year ending December 31, 2011 requires the
affirmative vote of a majority of the shares of Common Stock represented at the Annual Meeting, in
person or by proxy, and entitled to vote thereon. Abstentions will have the same effect as a vote
against ratification.
THE BOARD OF DIRECTORS AND AUDIT COMMITTEE UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS THE INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE YEAR 2011.
AUDIT AND NON-AUDIT FEES PAID
The Companys independent auditors for the fiscal year ended December 31, 2010 were Ernst
& Young LLP. The Companys Audit Committee has appointed Ernst & Young LLP as the Companys
independent auditors for 2011. Under its charter, the Audit Committee is solely responsible for
reviewing the qualifications of the Companys independent auditors and selecting the independent
auditors for the current fiscal year.
The following is a description of the fees billed to the Company by Ernst & Young LLP for
the years ended December 31, 2010 and December 31, 2009:
Audit Fees: Audit fees include fees billed by Ernst & Young LLP for the review and audit
of the Companys annual financial statements and review of financial statements included in the
Companys quarterly reports filed with the SEC, as well as services normally provided by an
independent auditor in connection with statutory and regulatory filings or engagements. Aggregate
fees for audit services were $1,379,578 in 2010 and $1,171,329 in 2009.
Audit-Related Fees: Audit-related fees include fees for assurance and related services
that are reasonably related to the performance of the audit or review of the financial statements.
Aggregate fees for audit-related services were $25,000 in 2010 and $176,590 in 2009.
Tax Fees: Tax fees include fees for tax compliance, tax return preparation advice and
tax planning services. Aggregate fees for tax services were $140,265 in 2010 and $109,630 in 2009.
All Other Fees: This category comprises all fees billed by Ernst & Young LLP to the
Company not included in the previous three categories, which includes services provided for on-line
accounting and auditing standards and interpretive guidance. Aggregate fees for other services were
$1,995 in 2010 and $1,995 in 2009.
The Audit Committee pre-approves all services, including both audit and non-audit
services, provided by the Companys independent auditor. For audit services, the independent
auditor provides the Audit Committee with an engagement letter outlining the scope of the audit
services proposed to be performed during the year and the fees to be charged, which must be
formally accepted by the Audit Committee before the audit commences.
Management also submits to the Audit Committee a list of non-audit services that it
recommends the independent auditor be engaged to provide and an estimate of the fees to be paid for
each. The Audit Committee considers whether the provision of non-audit services by the Companys
independent auditor is compatible with
67
maintaining the auditors independence. The Audit Committee
must approve the list of non-audit services and the estimated fees for each such service before the
commencement of the work.
To ensure prompt handling of unexpected matters, the Audit Committee has delegated the
authority to amend and modify the list of approved permissible non-audit services and fees to the
Audit Committee Chair. If the Chair exercises this delegation of authority, she reports the action
taken to the Audit Committee at its next regular meeting.
All audit and permissible non-audit services provided by Ernst & Young LLP to the Company
for 2010 were pre-approved by the Audit Committee in accordance with these procedures.
SHAREHOLDER PROPOSALS
Shareholders proposals intended to be presented at the Companys 2012 Annual Meeting of
Shareholders must be received in writing by the Secretary of the Company no later than December 30,
2011 in order to be considered for inclusion in the proxy material for that meeting. Any such
proposals shall be subject to the requirements of the proxy rules adopted under the Exchange Act.
Furthermore, in order for any shareholder to properly propose any business for consideration at the
2012 Annual Meeting, including the nomination of any person for election as a Director, or any
other matter raised other than pursuant to Rule 14a-8 of the proxy rules adopted under the Exchange
Act, written notice of the shareholders intention to make such proposal must be furnished to the
Company in accordance with the By-laws. Under the existing provisions of the By-laws, which were
recently amended and restated, if the 2012 Annual Meeting is held on May 24, 2012, the deadline for
such notice is February 26, 2012.
OTHER BUSINESS
The Company is unaware of any other matter to be acted upon at the Annual Meeting for
shareholder vote. In case of any matter properly coming before the Annual Meeting for shareholder
vote, unless discretionary authority has been denied the proxy holders named in the proxy
accompanying this statement shall vote them in accordance with their best judgment.
BY ORDER OF THE BOARD OF
DIRECTORS
David A. Dykstra
Secretary
68
Annex A
WINTRUST FINANCIAL CORPORATION
2007 STOCK INCENTIVE PLAN
1. Purpose; Effect on Predecessor Plan. The purpose of the Wintrust Financial
Corporation 2007 Stock Incentive Plan is to benefit the Corporation and its Subsidiaries by
enabling the Corporation to offer certain present and future officers, employees, directors and
consultants stock-based incentives and other equity interests in the Corporation, thereby providing
them a stake in the growth of the Corporation and encouraging them to continue in the service of
the Corporation and its Subsidiaries.
This Plan replaces the Predecessor Plan. As of the Effective Date, no further awards shall be
granted under the Predecessor Plan. The Plan is amended and restated, as set forth herein,
effective as of the Restatement Date; provided, however, that if the Plan, as amended and restated,
is not approved by the shareholders of the Corporation, the Plan shall remain in effect in
accordance with its terms as previously amended and restated as of May 28, 2009.
2. Definitions.
(a) Award includes, without limitation, stock options (including incentive stock options
under Section 422 of the Code), stock appreciation rights, performance share or unit awards, stock
awards, restricted share or unit awards, or other awards that are valued in whole or in part by
reference to, or are otherwise based on, the Corporations Common Stock (Other Incentive Awards),
all on a stand alone, combination or tandem basis, as described in or granted under this Plan.
(b) Award Agreement means a writing provided by the Corporation to each Participant setting
forth the terms and conditions of each Award made under this Plan.
(c) Board means the Board of Directors of the Corporation.
(d) Code means the Internal Revenue Code of 1986, as amended from time to time.
(e) Committee means the Compensation Committee of the Board or such other committee of the
Board as may be designated by the Board from time to time to administer this Plan and which also
shall be entirely comprised of independent directors meeting the disinterested administration
requirements of Rule 16b-3 under the Exchange Act and the outside director requirement of Section
162(m) of the Code.
(f) Common Stock means the Common Stock, no par value, of the Corporation.
(g) Corporation means Wintrust Financial Corporation, an Illinois corporation.
(h) Director means a director of the Corporation or a Subsidiary.
(i) Effective Date means January 9, 2007, the date of the approval of the Plan by the
shareholders of the Corporation.
(j) Employee means an employee of the Corporation or a Subsidiary.
(k) Exchange Act means the Securities Exchange Act of 1934, as amended.
(l) Fair Market Value means the average of the highest and the lowest quoted selling prices
on the Nasdaq Global Select Market on the relevant valuation date or, if there were no sales on the
valuation date, on the next preceding date on which such selling prices were recorded; provided,
however, that, the Committee may modify the definition of Fair Market Value to mean the closing
selling price on the Nasdaq Global Select Market on the relevant valuation date or, if there were
no sales on the valuation date, on the next preceding date on which such closing selling prices
were recorded.
(m) Participant means an Employee, Director or a consultant who has been granted an Award
under the Plan.
A-1
(n) Plan means this Wintrust Financial Corporation 2007 Stock Incentive Plan.
(o) Plan Year means a twelve-month period beginning with January 1 of each year.
(p) Predecessor Plan means the Wintrust Financial Corporation 1997 Stock Incentive Plan,
which incorporated the Crabtree Capital Corporation 1987 Stock Option Plan, The Credit Life
Companies, Incorporated 1987 Stock Option Plan, the Crabtree Capital Corporation 1990 Stock
Purchase Plan, the First Premium Services, Incorporated 1992 Stock Option Plan, the Lake Forest
Bancorp, Inc. 1991 Stock Option Plan, the Lake Forest Bancorp, Inc. 1993 Stock Option Plan, the
Hinsdale Bancorp, Inc. 1993 Stock Option Plan, the North Shore Community Bancorp, Inc. 1993 Stock
Rights Plan, the North Shore Community Bancorp, Inc. 1994 Stock Option Plan, the Libertyville
Bancorp, Inc. 1995 Stock Option Plan and the Wolfhoya Investments, Inc. 1995 Stock Option Plan, the
Advantage National Bancorp, Inc. 2002 Stock Incentive Plan, the Village Bancorp, Inc. 1998 Omnibus
Stock Incentive Plan, the Town Bankshares, Ltd. 1997 Stock Incentive Plan, the Northview Financial
Corporation 1993 Incentive Stock Program, the First Northwest Bancorp, Inc. 1998 Stock Option Plan,
the First Northwest Bancorp, Inc. 2002 Stock Option Plan and the Hinsbrook Bancshares, Inc. 1992
Employee Stock Option Plan, as amended, each a stock option or stock purchase plan maintained by a
predecessor to the Corporation.
(q) Restatement Date means May 26, 2011, the date of the approval of the Plan, as amended
and restated, by the shareholders of the Corporation.
(r) Subsidiary means any corporation or other entity, whether domestic or foreign, in which
the Corporation has or obtains, directly or indirectly, a proprietary interest of at least 50% (or
20%, if providing an Award to an Employee, Director or consultant of such Subsidiary is based upon
legitimate business criteria, as defined in Section 409A of the Code and the regulations
promulgated thereunder) by reason of stock ownership or otherwise.
3. Eligibility. Any Employee, Director or consultant selected by the Committee is
eligible to receive an Award. In addition, the Committee may select former Employees and Directors
who have a consulting arrangement with the Corporation or a Subsidiary whom the Committee
determines have a significant responsibility for the success and future growth and profitability of
the Corporation.
4. Plan Administration.
(a) Except as otherwise determined by the Board, the Plan shall be administered by the
Committee. The Committee shall make determinations with respect to the participation of Employees,
Directors and consultants in the Plan and, except as otherwise required by law or this Plan, the
terms of Awards, including vesting schedules, price, length of relevant performance, restriction or
option periods, post-retirement and termination rights, payment alternatives such as cash, stock,
contingent awards or other means of payment consistent with the purposes of this Plan, and such
other terms and conditions as the Committee deems appropriate.
(b) No Award that contemplates exercise or conversion may be exercised or converted to any
extent, and no other Award that defers vesting, shall remain outstanding and unexercised,
unconverted or unvested more than seven (7) years after the date the Award was initially granted.
(c) The Committee, by majority action thereof (whether taken during a meeting or by written
consent), shall have authority to interpret and construe the provisions of the Plan and the Award
Agreements and make determinations pursuant to any Plan provision or Award Agreement which shall be
final and binding on all persons. To the extent deemed necessary or advisable for purposes of
Section 16 of the Exchange Act or Section 162(m) of the Code, a member or members of the Committee
may recuse himself or themselves from any action, in which case action taken by the majority of the
remaining members shall constitute action by the Committee. No member of the Committee shall be
liable for any action or determination made in good faith, and the members of the Committee shall
be entitled to indemnification and reimbursement in the manner provided in the Corporations
Articles of Incorporation and By-Laws, as may be amended from time to time.
A-2
(d) The Committee may designate persons other than its members to carry out its
responsibilities under such conditions or limitations as it may set, other than its authority with
regard to Awards granted to Participants who are officers or directors of the Corporation for
purposes of Section 16 of the Exchange Act or Section 162(m) of the Code. To the extent deemed
necessary or advisable, including for purposes of Section 16 of the Exchange Act, the independent
members of the Board may act as the Committee hereunder.
(e) It is the intent of the Company that no Award under the Plan be subject to taxation under
Section 409A(a)(1) of the Code. Accordingly, if the Committee determines that an Award granted
under the Plan is subject to Section 409A of the Code, such Award shall be interpreted and
administered to meet the requirements of Sections 409A(a)(2), (3) and (4) of the Code and thus to
be exempt from taxation under Section 409A(a)(1) of the Code.
5. Stock Subject to the Provisions of this Plan. The stock subject to the provisions
of this Plan shall be made available from shares of authorized but unissued Common Stock, shares of
authorized and issued Common Stock reacquired and held as treasury shares or otherwise, or a
combination thereof. Subject to adjustment in accordance with the provisions of Section 10, the
total number of shares of Common Stock which may be issued under the Plan or with respect to which
all Awards may be granted shall not exceed the sum of (i) 2,860,000 shares plus (ii) the number of
shares available under the Plan as of the Restatement Date, and the total number of such shares
with respect to which Stock Awards may be granted on or after October 22, 2007 pursuant to Section
6(f) of the Plan shall not exceed 25,000 shares. For purposes of these limits, (i) each share of
Common Stock with respect to a stock option or stock appreciation right (or an Award granted prior
to May 28, 2009 which is not a stock option or stock appreciation right) shall be counted as one
share of Common Stock, (ii) each share of Common Stock with respect to an Award granted on or
subsequent to May 28, 2009 which is not a stock option or stock appreciation right shall be deemed
to equal 1.73 shares of Common Stock and (iii) each share of Common Stock with respect to an Award
granted on or subsequent to May 26, 2011 which is not a stock option or stock appreciation right
shall be deemed to equal 2.21 shares of Common Stock. Upon:
(a) a payout of an Award in the form of cash; or
(b) a cancellation, termination, forfeiture, or lapse for any reason (with the exception of
the termination of a tandem Award upon exercise of the related Award, or the termination of a
related Award upon exercise of the corresponding tandem Award) of any Award or any award granted
under the Predecessor Plan, then the number of shares of Common Stock underlying any such award
which were not issued as a result of any of the foregoing actions shall again be available for the
purposes of Awards under the Plan, and such number of shares shall be calculated in accordance with
the previous sentence. Notwithstanding anything to the contrary contained herein: (A) shares
tendered in payment of the exercise price of a stock or incentive option shall not be added to the
aggregate plan limit described above; (B) shares withheld by the Company to satisfy tax withholding
obligations shall not be added to the aggregate plan limit described above; (C) shares that are
repurchased by the Company with proceeds received from payment of the exercise price of a stock or
incentive option shall not be added to the aggregate plan limit described above; and (D) the full
number of shares covered by an award made under Section 6(c) (stock appreciation rights), to the
extent that it is exercised and settled in Common Stock, and whether or not shares are actually
issued to the participant upon exercise of the right, shall be considered issued or transferred
pursuant to the Plan.
6. Awards under this Plan. As the Board or Committee may determine, the following
types of Awards may be granted under this Plan on a stand-alone, combination or tandem basis:
(a) Stock Option. A right to buy a specified number of shares of Common Stock at a fixed
exercise price during a specified time, all as the Committee may determine; provided that the
exercise price of any option shall not be less than 100% of the Fair Market Value of the Common
Stock on the date of grant of such Award.
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(b) Incentive Stock Option. An Award in the form of a stock option which shall comply with
the requirements of Section 422 of the Code or any successor section of the Code as it may be
amended from time to time.
(c) Stock Appreciation Right. A right to receive the excess of the Fair Market Value of a
share of Common Stock on the date the stock appreciation right is exercised over the Fair Market
Value of a share of Common Stock on the date the stock appreciation right was granted. The exercise
price of any stock appreciation right shall not be less than 100% of the Fair Market Value of the
Common Stock on the date of grant of such Award.
(d) Restricted and Performance Shares. A transfer of Common Stock to a Participant, subject
to such restrictions on transfer or other incidents of ownership, or subject to specified
performance standards, for such periods of time as the Committee may determine.
(e) Restricted and Performance Share Unit. A fixed or variable share or dollar denominated
unit subject to such conditions of vesting, performance and time of payment as the Committee may
determine, which are valued at the Committees discretion in whole or in part by reference to, or
otherwise based on, the Fair Market Value of Common Stock and which may be paid in Common Stock,
cash or a combination of both.
(f) Stock Award. An unrestricted transfer of ownership of Common Stock.
(g) Other Incentive Awards. Other Incentive Awards which are related to or serve a similar
function to those Awards set forth in this Section 6, including, but not limited to, Other
Incentive Awards related to the establishment or acquisition by the Corporation or any Subsidiary
of a new or start-up business or facility.
Notwithstanding the foregoing, the maximum number of shares of Common Stock which may be made
subject to Awards granted under the Plan in any Plan Year (taking into account any stock option
granted in tandem with any stock appreciation right as an Award with respect to shares subject to
the stock option and any restricted and performance shares or restricted and performance units as
an Award based upon the maximum number of shares to which the Award relates) to any single
Participant may not exceed 100,000. The Committee may from time to time, establish performance
criteria with respect to an Award. The performance criteria or standards shall be determined by
the Committee in writing and may be absolute in their terms or measured against or in relationship
to other companies comparably, similarly or otherwise situated and may be based on or adjusted for
any other objective goals, events, or occurrences established by the Committee, provided that such
criteria or standards relate to one or more of the following: earnings, earnings growth, revenues,
expenses, stock price, market share, charge-offs, loan loss reserves, reductions in non-performing
assets, return on assets, return on equity, return on investment, regulatory compliance,
satisfactory internal or external audits, improvements in financial ratings, achievement of balance
sheet or income statement objectives, extraordinary charges, losses from discontinued operations,
restatements and accounting changes and other unplanned special charges such as restructuring
expenses, acquisition expenses including goodwill, unplanned stock offerings and strategic loan
loss provisions. Such performance standards may be particular to a line of business, Subsidiary or
other unit or may be based on the performance of the Corporation generally.
7. Award Agreements.
(a) Each Award under the Plan shall be evidenced by an Award Agreement. Delivery of an Award
Agreement to each Participant shall constitute an agreement, subject to Section 9 hereof, between
the Corporation and the Participant as to the terms and conditions of the Award.
(b) The Committee shall include a provision providing for a minimum vesting schedule for an
Award pursuant to which:
(i) no stock option Award may become fully exercisable prior to the third anniversary
of the date of grant, and to the extent such an Award provides for vesting in installments
over a period of no less than three years, such vesting shall occur no more rapidly than
ratably on each of the first three anniversaries of the date of grant;
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(ii) no Award other than stock options or stock appreciation rights may become fully
exercisable or saleable prior to the third anniversary of the date of grant and to the
extent such an Award
provides for vesting or saleability in installments over a period of no less than three
years, such vesting shall occur no more rapidly than ratably on each of the first three
anniversaries of the date of grant and requiring the forfeiture of unvested or nonsaleable
shares subject to such Award at the time a participant is no longer an Employee;
(iii) no performance-based Award may become fully exercisable or saleable prior to the
first anniversary of the date of grant;
provided, that, such restrictions shall not apply to (w) Awards to newly hired Employees,
(x) Awards to Employees in connection with acquisitions (whether by asset purchase, merger
or otherwise); (y) Awards to Employees who subsequently retire or have plans for retirement
from the Company or one of its Subsidiaries or (z) Awards made in lieu of a cash bonus.
Notwithstanding the foregoing, (i) any Award Agreement may provide for any additional
vesting requirements, including but not limited to longer periods of required employment or
the achievement of performance goals; (ii) any Award Agreement may provide that all or a
portion of the shares subject to such Award vest immediately or, alternatively, vest in
accordance with the vesting schedule but without regard to the requirement for continued
employment in the case of termination of employment due to death, disability, layoff,
retirement or divestiture, or in the case of a vesting period longer than three years, vest
and become exercisable or fail to be forfeited and continue to vest in accordance with the
schedule in the Award Agreement prior to the expiration of any period longer than three
years for any reason designated by the Committee.
8. Other Terms and Conditions.
(a) No Assignment; Limited Transferability of Options. Except as provided below, no Award
granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise then by will or by the laws of descent and distribution. Notwithstanding
the foregoing, the Committee may, in its discretion, authorize all or a portion of the stock
options (other than incentive stock options) granted to a Participant to be on terms which permit
transfer by such Participant to:
(i) the spouse, children or grandchildren of the Participant (Immediate Family
Members);
(ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, or;
(iii) a partnership in which such Immediate Family Members are the only partners,
provided that:
(A) there may be no consideration for any such transfer;
(B) the Award Agreement pursuant to which such stock options are granted
expressly provides for transferability in a manner consistent with this Section
8(a); and
(C) subsequent transfers of transferred options shall be prohibited except
those in accordance with Section 8(b).
Following transfer, any such options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that for purposes of Section
8(b) hereof the term Participant shall be deemed to refer to the transferee. The provisions of
the stock option relating to the period of exercisability and expiration of the stock option shall
continue to be applied with respect to the original Participant, and the stock options shall be
exercisable by the transferee only to the extent, and for the periods, set forth in said stock
option.
(b) Beneficiary Designation. Each Participant under the Plan may name, from time to time, any
beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit
under the Plan is to be paid in case of his death before he receives any or all of such benefit.
Each designation will revoke all prior designations by
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the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when filed by the
Participant in writing with the Committee during his lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participants death shall be paid to his estate.
(c) Termination of Employment. The termination of each Award in the event of the retirement,
disability, death or other termination of a Participants employment or service, shall be as
determined by the Committee and set forth in the Award Agreement.
(d) Rights as a Shareholder. A Participant shall have no rights as a shareholder with respect
to shares covered by an Award until the date the Participant or his nominee, guardian or legal
representative is the holder of record. No adjustment will be made for dividends or other rights
for which the record date is prior to such date.
(e) Payments by Participants. The Committee may determine that Awards for which a payment is
due from a Participant may be payable: (i) in cash by personal check, bank draft or money order
payable to the order of the Corporation, by money transfers or direct account debits; (ii) through
the delivery or deemed delivery based on attestation to the ownership of previously acquired shares
of Common Stock with a Fair Market Value equal to the total payment due from the Participant; (iii)
by a combination of the methods described in (i) and (ii) above; (iv) except as may be prohibited
by applicable law, in cash by a broker-dealer acceptable to the Corporation to whom the Participant
has submitted an irrevocable notice of exercise; or (v) by such other methods as the Committee may
deem appropriate, including, but not limited to loans by the Corporation on such terms and
conditions as the Committee shall determine to the extent permitted by applicable law.
(f) Withholding. Except as otherwise provided by the Committee in the Award Agreement or
otherwise (i) the deduction of withholding and any other taxes required by law will be made from
all amounts paid in cash, and (ii) in the case of the exercise of options or payments of Awards in
shares of Common Stock, the Participant shall be required to pay or have paid by a broker-dealer
acceptable to the Corporation to whom the Participant has submitted an irrevocable notice of
exercise the amount of any taxes required to be withheld in cash prior to receipt of such stock, or
alternatively, to elect to have a number of shares the Fair Market Value of which equals the amount
required to be withheld deducted from the shares to be received upon such exercise or payment or
deliver such number of previously-acquired shares of Common Stock.
(g) Deferral. The receipt of payment of cash or delivery of shares of Common Stock that would
otherwise be due to a Participant under any Award other than a stock option (including an incentive
stock option) or stock appreciation right may be deferred to the extent permitted by an applicable
deferral plan established by the Corporation or a Subsidiary. The Committee shall establish rules
and procedures relating to any such deferrals and the payment of any tax withholding with respect
thereto.
(h) No Repricing or Cancellation for Cash. Notwithstanding anything in this Plan to the
contrary and subject to Sections 10 and 12, without the approval of the shareholders of the
Corporation, neither the Board nor the Committee will amend any previously granted Award to (i)
reduce the exercise price of an outstanding stock option, incentive stock option or stock
appreciation right or (ii) cancel an outstanding stock option, incentive stock option or stock
appreciation right in exchange for cash or other Awards with a lower exercise price.
9. Amendments, Modification and Termination. The Board may at any time and from time
to time, terminate, suspend or discontinue this Plan. The Board of Directors may at any time and
from time to time, alter or amend this Plan, subject to any requirement of shareholder approval
imposed by applicable law, rule or regulation, provided that any material amendment to the Plan
will not be effective unless approved by the Companys shareholders. For this purpose, a material
amendment is any amendment that would (i) materially increase the number of shares available under
the Plan or issuable to a participant (other than a change in the number of shares made pursuant to
Section 10); (ii) change the types of awards that may be granted under the Plan; (iii) expand the
class of persons eligible to receive awards or otherwise participate in the Plan; or (iv) reduce
the price at which an option is exercisable either by amendment of an Award Agreement or by
substitution of a new option at a reduced price
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(other than as permitted in Section 10). No
termination, amendment, or modification of the Plan shall adversely
affect in any material way any Award previously granted under the Plan, without the written
consent of the Participant holding such Award.
10. Recapitalization. The aggregate number of shares of Common Stock as to which
Awards may be granted to Participants, the limitations on the maximum number of shares of Common
Stock which may be made subject to Awards granted to a Participant during a Plan Year, the number
of shares of Common Stock covered by each outstanding Award, and the price per share of Common
Stock in each such Award, shall all be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a subdivision or consolidation of shares or
other capital adjustment, or the payment of a stock dividend or other increase or decrease in such
shares, effected without receipt of consideration by the Corporation, or other change in corporate
or capital structure; provided, however, that any fractional shares resulting from any such
adjustment shall be eliminated. The Committee may also make the foregoing changes and any other
changes, including changes in the classes of securities available, to the extent it is deemed
necessary or desirable to preserve the intended benefits of the Plan for the Corporation and the
Participants in the event of any other reorganization, recapitalization, merger, consolidation,
spinoff, extraordinary dividend or other distribution or similar transaction. Pursuant to this
Section 10, the Committee may require that shares of stock of the corporation resulting from any
such transaction, or a parent corporation thereof, be substituted for some or all of the shares of
Common Stock subject to an outstanding Award, with an appropriate and equitable adjustment to such
Award.
11. Rights as Employees, Directors or Consultants. No person shall have any claim or
right to be granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of or as a Director of or as a consultant to the
Corporation or a Subsidiary. Further, the Corporation and each Subsidiary expressly reserve the
right at any time to dismiss a Participant free from any liability, or any claim under the Plan,
except as provided herein or in any Award Agreement issued hereunder.
12. Change of Control.
(a) Notwithstanding anything contained in this Plan or any Award Agreement to the contrary,
(i) effective for awards granted prior to January 1, 2011 or (ii) in the event of a Change of
Control (as defined below) pursuant to which the outstanding Awards are not effectively assumed by
the surviving or acquiring corporation in a Change of Control (with an appropriate equitable
adjustment to the Awards as shall be determined by the Board or the Committee in accordance with
Section 10) or otherwise remain outstanding, the following shall occur upon a Change in Control
with respect to any such Awards outstanding as of such Change of Control:
(i) any and all options and stock appreciation rights granted hereunder shall become
immediately exercisable, and shall remain exercisable for the remainder of their term,
subject to any limitations on such term provided in the Award Agreement or pursuant to
Section 8(c) hereof;
(ii) any restrictions imposed on restricted shares shall lapse and all restricted share
units shall become fully vested;
(iii) unless otherwise specified in a Participants Award Agreement at time of grant,
the maximum payout opportunities attainable under all outstanding Awards of performance
units, performance shares and Other Incentive Awards shall be deemed to have been fully
earned at the maximum level for the entire performance period(s) as of the effective date of
the Change of Control, and the vesting of all such Awards shall be accelerated as of the
effective date of the Change of Control; and
(iv) the Board (as constituted prior to such Change of Control) may, in its discretion,
require outstanding Awards, in whole or in part, to be surrendered to the Corporation by the
holder, and to be immediately cancelled by the Corporation, and to provide for the holder to
receive (1) a cash payment in an amount equal to (a) in the case of a stock option,
incentive stock option or stock appreciation right, the number of shares of Common Stock
then subject to the portion of such Award surrendered multiplied by
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the excess, if any, of
the highest per share price offered to holders of Common Stock in any transaction
whereby the Change of Control takes place, over the purchase price or base price per share
of Common Stock subject to such Award and (b) in the case of restricted shares, restricted
share units, performance shares, performance share units or Other Incentive Awards, the
number of shares of Common Stock or units then subject to the portion of such Award
surrendered multiplied by the highest per share price offered to holders of Common Stock in
any transaction whereby the Change of Control takes place; (2) shares of capital stock of
the corporation resulting from such Change of Control, or a parent corporation thereof,
having a fair market value not less than the amount determined under clause (1) above; or
(3) a combination of the payment of cash pursuant to clause (1) above and the issuance of
shares pursuant to clause (2) above.
(b) Except as otherwise provided for in Section 12(a), notwithstanding anything contained in
this Plan or any Award Agreement to the contrary, in the event of the termination of a
Participants employment by the Company without cause (as defined the Award Agreement) or, to the
extent permitted in the Award Agreement, the termination of a Participants employment by the
Participant for good reason (as defined in the Award Agreement), in each case, within the 18-month
period following the occurrence of a Change of Control, then the following shall occur with respect
to any and all Awards held by the Participant as of such termination of employment:
(i) any and all options and stock appreciation rights shall become immediately
exercisable, and shall remain exercisable for the remainder of their term, subject to any
limitations on such term provided in the Award Agreement or pursuant to Section 8(c) hereof;
(ii) any restrictions imposed on restricted shares shall lapse and all restricted share
units shall become fully vested; and
(iii) unless otherwise specified in a Participants Award Agreement at time of grant,
the maximum payout opportunities attainable under all outstanding Awards of performance
units, performance shares and Other Incentive Awards shall be deemed to have been fully
earned at the maximum level for the entire performance period(s) as of the effective date of
such termination of employment, and the vesting of all such Awards shall be accelerated as
of the effective date of such termination of employment.
(c) A Change of Control of the Corporation shall be deemed to have occurred upon the
happening of any of the following events:
(i) The acquisition, other than from the Corporation, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of either the then outstanding shares of Common Stock of the Corporation or the
combined voting power of the then outstanding voting securities of the Corporation entitled
to vote generally in the election of directors, but excluding, for this purpose, any such
acquisition by the Corporation or any of its Subsidiaries, or any employee benefit plan (or
related trust) of the Corporation or its Subsidiaries, or any corporation with respect to
which, following such acquisition, more than 50% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in the election
of all or substantially all directors is then beneficially owned, directly or indirectly, by
the individuals and entities who were the beneficial owners, respectively, of the Common
Stock and voting securities of the Corporation immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately prior to such acquisition,
of the then outstanding shares of Common Stock of the Corporation or the combined voting
power of the then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors, as the case may be; or
A-8
(ii) Individuals who, as of the date hereof, constitute the Board (as of the date
hereof the Incumbent Board) cease for any reason to constitute at least a majority of the
Board, provided that any
individual becoming a director subsequent to the date hereof whose election, or nomination
for election by the Corporations shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of the Corporation (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act); or
(iii) The consummation of a reorganization, merger or consolidation of the Corporation,
in each case, with respect to which all or substantially all of the individuals and entities
who were the respective beneficial owners of the Common Stock and voting securities of the
Corporation immediately prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of Common Stock and
the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting
from such reorganization, merger or consolidation, or a complete liquidation or dissolution
of the Corporation or of the sale or other disposition of all or substantially all of the
assets of the Corporation.
13. Governing Law. To the extent that federal laws do not otherwise control, the Plan
and all Award Agreements hereunder shall be construed in accordance with and governed by the law of
the State of Illinois, provided, however, that in the event the Corporations state of
incorporation shall be changed, then the law of the new state of incorporation shall govern.
14. Savings Clause. This Plan is intended to comply in all aspects with applicable
law and regulation, including, with respect to those Employees who are officers or directors for
purposes of Section 16 of the Exchange Act, Rule 16b-3 of the Securities and Exchange Commission.
In case any one or more of the provisions of this Plan shall be held invalid, illegal or
unenforceable in any respect under applicable law and regulation (including Rule 16b-3), the
validity, legality and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby and the invalid, illegal or unenforceable provision shall be deemed null and
void; however, to the extent permissible by law, any provision which could be deemed null and void
shall first be construed, interpreted or revised retroactively to permit this Plan to be construed
in compliance with all applicable laws (including Rule 16b-3) so as to foster the intent of this
Plan.
15. Effective Date and Term. The Plan, as amended and restated as set forth herein, shall
be effective as of the Restatement Date, subject to approval by the shareholders of the Corporation
at the 2011 annual meeting of the Corporation. The Plan shall remain in effect until terminated by
the Board, provided, however, that no incentive stock option shall be granted under this Plan on or
after the ten year anniversary of the Effective Date.
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The Directors and Officers of Wintrust Financial Corporation cordially invite you to attend
our 2011 Annual Meeting of Shareholders Thursday, May 26, 2011, 10:00 a.m. Deer Path Inn 255 East
Illinois Road, Lake Forest, Illinois You can vote in one of three ways: 1) By Mail, 2) By Internet,
3) By Telephone. IF YOU ARE NOT VOTING BY INTERNET OR TELEPHONE, COMPLETE BOTH SIDES OF PROXY CARD,
DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO: Illinois Stock Transfer Co. 209 West Jackson
Boulevard, Suite 903 Chicago, Illinois 60606IMPORTANT Please complete both sides of the PROXY CARD,
sign, date, detach and return in the enclosed envelope. If you personally plan to attend the Annual
Meeting of Shareholders, please check the box below and list names of attendees on reverse side.
I/We do plan to attend the 2011 Annual Meeting. immediately submitted. Just follow these easy
steps: 1. Read the accompanying Proxy Statement. 2. Visit our Internet voting site at
proxy.ilstk.com, enter your Voter Control Number and the last four digits of your Tax
Identification Number that is associated with the account you are voting in the designated fields.
Your Voter Control Number is shown above. Please note that all votes cast by Internet must be
completed and submitted prior to Tuesday, May 24, 2011 at 11:59 p.m. Central Time. Your Internet
vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed,
dated and returned the proxy card. This is a secured web page site. Your software and/or Internet
provider must be enabled to access this site. Please call your software or Internet provider for
further information if needed. Your telephone vote is quick, confidential and immediate. Just
follow these easy steps: 1. Read the accompanying Proxy Statement. 2. Using a Touch-Tone telephone,
call Toll Free 1-800-555-8140 and follow the instructions. 3. When asked for your Voter Control
Number, enter the number printed above. Please note that all votes cast by telephone must be
completed and submitted prior to Tuesday, May 24, 2011 at 11:59 p.m. Central Time. Your telephone
vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed,
dated and returned the proxy card. To vote by mail, complete both sides of the proxy card, sign and
date on the reverse side, detach and return the card in the envelope provided. |
WINTRUST FINANCIAL CORPORATION ATTENTION SHAREHOLDERS INTERNET VOTING You can now submit your Proxy
via the Internet and have your vote recorded. Why use the Internet Internet Voting is
timelier. It saves the Company the ever-rising costs of business reply postage. You can
change your vote by re-voting at any time. It is simple and easy to use. Instructions for
Internet Voting can be found on the reverse side. The Internet Voting Website is: proxy.ilstk.com
SIGNATURE DATE SIGNATURE DATE This proxy is solicited on behalf of the Board of Directors. If not
otherwise specified, this proxy will be voted FOR Proposals 1, 2, 3 and 5 and for every one year
for Proposal 4. The undersigned revokes all proxies heretofore given to vote at such meeting and
all adjournments or postponements. Please sign your name exactly as it appears above. If executed
by a corporation, a duly authorized officer should sign. Executors, administrators, attorneys,
guardians and trustees should so indicate when signing. If shares are held jointly, all holders
must sign. REVOCABLE PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The
undersigned hereby appoints Peter D. Crist and Edward J. Wehmer and either of them as Proxies, each
with the power to appoint his substitute, and hereby authorizes each of them to represent and to
vote, as designated below, all the shares of Common Stock of Wintrust Financial Corporation which
the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held on May 26,
2011 or any adjournment thereof. If any other business is presented at the Annual Meeting,
including whether or not to adjourn the meeting, this proxy will be voted, to the extent legally
permissible, by those named in this proxy in their best judgment. Proposal 1 Election of the
following Directors with a term ending during 2012 For Withhold 01 Peter D. Crist 02 Bruce K.
Crowther 03 Joseph F. Damico 04 Bert A. Getz, Jr. 05 H. Patrick Hackett, Jr. 06 Scott K. Heitmann
07 Charles H. James III For Withhold 08 Albin F. Moschner 09 Thomas J. Neis 10 Christopher J. Perry
11 Hollis W. Rademacher 12 Ingrid S. Stafford 13 Edward J. Wehmer Proposal 2 Amendment to the
2007 Stock Incentive Plan and reapproval of the material terms of the performance measures for the
2007 Stock Incentive Plan, each as described in the accompanying Proxy Statement [ ] For [ ]
Against [ ] Abstain Proposal 3 Advisory vote to approve the Companys 2010 executive compensation
[ ] For [ ] Against [ ] Abstain Proposal 4 Advisory vote to determine whether the shareholder
advisory vote to approve executive compensation should occur every one, two or three years [ ]
Every one year [ ] Every two years [ ] Every three years [ ] Abstain Proposal 5 Ratification of
the appointment of Ernst & Young LLP as the independent registered public accounting firm for the
Company for the year 2011 [ ] For [ ] Against [ ] Abstain PLEASE LIST NAMES OF PERSONS ATTENDING |