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OMB APPROVAL |
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3235-0059 |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
QCR HOLDINGS INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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2) Aggregate number of securities to which transaction applies: |
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (02-02) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
March 21, 2007
Dear Fellow Stockholder:
On behalf of the board of directors and management of QCR Holdings, Inc., we cordially invite you
to attend the annual meeting of stockholders of QCR Holdings, Inc. to be held at 10:00 a.m. on May
2, 2007, at The MARK of the Quad Cities located at 1201 River Drive, Moline, Illinois. The
accompanying notice of annual meeting of stockholders and proxy statement discuss the business to
be conducted at the meeting. We have also enclosed copies of our 2006 Annual Report to
Stockholders for your review. At the meeting, we will report on our operations and the outlook for
the year ahead.
The annual meeting will be held for the purposes of electing four persons to serve as Class II
directors and transacting such other business as may properly come before the meeting. We
recommend that you vote your shares for the director nominees.
We encourage you to attend the meeting in person. Regardless of whether you plan to attend the
meeting, please COMPLETE, DATE, SIGN and RETURN THE ENCLOSED PROXY CARD in the enclosed envelope or
vote by telephone or internet by following the preprinted instructions on the enclosed proxy card.
This will assure that your shares are represented at the meeting.
We look forward to seeing you and visiting with you at the meeting.
Very truly yours,
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Douglas M. Hultquist |
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Chairman of the Board
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President |
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3551-7th Street, Suite 204 n Moline, IL 61265
Phone (309) 736-3580 n Fax (309) 736-3149
TABLE OF CONTENTS
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 2, 2007
To the stockholders of QCR HOLDINGS, INC.:
The annual meeting of stockholders of QCR Holdings, Inc., a Delaware corporation, will be held at
The MARK of the Quad Cities, 1201 River Drive, Moline, Illinois on Wednesday, May 2, 2007, at 10:00
a.m., local time, for the following purposes:
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to elect four Class II directors for a term of three years and |
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to transact such other business as may properly be brought before the meeting and any
adjournments or postponements of the meeting. |
The board of directors has fixed the close of business on March 14, 2007, as the record date for
the determination of stockholders entitled to notice of, and to vote at, the meeting. In the event
there is an insufficient number of votes for a quorum or to approve any of the proposals at the
time of the annual meeting, the meeting may be adjourned or postponed in order to permit the
further solicitation of proxies.
By order of the Board of Directors
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Todd A. Gipple
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Executive Vice President, |
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Chief Financial Officer and
Secretary |
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Moline, Illinois
March 21, 2007
3551-7th Street, Suite 204 n Moline, IL 61265
Phone (309) 736-3580 n Fax (309) 736-3149
PROXY STATEMENT
QCR Holdings, Inc., a Delaware corporation, is the holding company for Quad City Bank and
Trust Company, Cedar Rapids Bank and Trust Company, Rockford Bank and Trust Company and First
Wisconsin Bank and Trust Company. Quad City Bank & Trust is an Iowa banking association located in
Bettendorf, Iowa, with banking locations in Bettendorf and Davenport, Iowa and in Moline, Illinois.
In August 2005, Quad City Bank & Trust acquired 80% of the equity interests of M2 Lease Funds,
LLC, a Wisconsin limited liability company based in Milwaukee that is engaged in the business of
leasing machinery and equipment to businesses under direct financing lease contracts. Cedar Rapids
Bank & Trust is also an Iowa banking association located in Cedar Rapids, Iowa. Rockford Bank &
Trust is an Illinois state bank located in Rockford, Illinois. In February 2007, First Wisconsin
Bank & Trust opened as our fourth bank charter. It is a Wisconsin chartered commercial bank
located in Pewaukee, Wisconsin. Quad City Bancard, Inc. is a wholly owned subsidiary of QCR
Holdings, which functions as a credit card center that provides cardholder and merchant credit card
processing services. QCR Holdings also owns all of the common stock of five business trust
subsidiaries that we created to issue trust preferred securities. When we refer to our
subsidiaries in this proxy statement, we are collectively referring to Quad City Bank & Trust,
Cedar Rapids Bank & Trust, Rockford Bank & Trust, First Wisconsin Bank & Trust, Quad City Bancard
and the business trusts.
This proxy statement is furnished in connection with the solicitation by the board of
directors of QCR Holdings of proxies to be voted at the annual meeting of stockholders to be held
at The MARK of the Quad Cities, 1201 River Drive, Moline, Illinois, on May 2, 2007, at 10:00 a.m.,
local time, and at any adjournments or postponements of the meeting. We have enclosed our 2006
annual report, which includes consolidated financial statements of QCR Holdings and our
subsidiaries. This proxy statement and related materials are first being mailed to stockholders of
QCR Holdings on or about March 21, 2007.
The following is information regarding the meeting and the voting process, and is presented in a
question and answer format.
Why am I receiving this proxy statement and proxy card?
You are receiving a proxy statement and proxy card from us because on March 14, 2007, the
record date for the annual meeting, you owned shares of QCR Holdings common stock. This proxy
statement describes the matters that will be presented for consideration by the stockholders at the
annual meeting. It also gives you information concerning those matters to assist you in making an
informed decision.
When you sign the enclosed proxy card, you appoint the proxy holder as your representative at
the meeting. The proxy holder will vote your shares as you have instructed in the proxy card,
thereby ensuring that your shares will be voted whether or not you attend the meeting. Even if you
plan to attend the meeting, you should complete, sign and return your proxy card in advance of the
meeting just in case your plans change.
If you have signed and returned the proxy card and an issue comes up for a vote at the meeting
that is not identified on the card, the proxy holder will vote your shares, pursuant to your proxy,
in accordance with his or her judgment.
What matters will be voted on at the meeting?
You are being asked to vote on the election of four Class II directors for a term expiring in
2010. This matter is more fully described in this proxy statement.
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If I am the record holder of my shares, how do I vote?
You may vote by mail, by telephone, by internet or in person at the meeting. To vote by mail,
complete and sign the enclosed proxy card and mail it in the enclosed pre-addressed envelope. No
postage is required if mailed in the United States. If you mark your proxy card to indicate how
you want your shares voted, your shares will be voted as you instruct.
If you sign and return your proxy card but do not mark the card to provide voting
instructions, the shares represented by your proxy card will be voted for all nominees named in
this proxy statement.
Although you may vote by mail, we ask that you vote instead by internet or telephone, which
saves us postage and processing costs. You may vote by telephone by calling the toll-free number
specified on your proxy card or by accessing the internet website specified on your proxy card and
by following the preprinted instructions on the proxy card. Votes submitted by telephone or
internet must be received by midnight CDT on Monday, April 30, 2007. The giving of a proxy by
either of these means will not affect your right to vote in person if you decide to attend the
meeting.
If you want to vote in person, please come to the meeting. We will distribute written ballots
to anyone who wants to vote at the meeting. Please note, however, that if your shares are held in
the name of a broker or other fiduciary (or in what is usually referred to as street name), you
will need to arrange to obtain a legal proxy from that person or entity in order to vote in person
at the meeting. Even if you plan to attend the meeting, you should complete, sign and return your
proxy card in advance of the meeting just in case your plans change.
If I hold shares in the name of a broker or fiduciary, who votes my shares?
If you received this proxy statement from your broker or other fiduciary, your broker or
fiduciary should have given you instructions for directing how that person or entity should vote
your shares. It will then be your broker or fiduciarys responsibility to vote your shares for you
in the manner you direct. Please complete, execute and return the proxy card in the envelope
provided by your broker.
Under the rules of various national and regional securities exchanges, brokers and other
fiduciaries may generally vote on routine matters, such as the election of directors but cannot
vote on non-routine matters, such as the adoption or amendment of a stock incentive plan or an
amendment to our Certificate of Incorporation, unless they have received voting instructions from
the person for whom they are holding shares. If there is a non-routine matter presented to
stockholders at a meeting and your broker or fiduciary does not receive instructions from you on
how to vote on that matter, your broker or fiduciary will return the proxy card to us, indicating
that he or she does not have the authority to vote on that matter. This is generally referred to
as a broker non-vote and may affect the outcome of the voting on those matters. We encourage you
to provide directions to your broker or fiduciary as to how you want your shares voted on all
matters to be brought before the meeting. You should do this by carefully following the
instructions your broker or fiduciary gives you concerning its procedures. This ensures that your
shares will be voted at the meeting.
A number of banks and brokerage firms participate in a program that also permits stockholders
to direct their vote by telephone or internet. If your shares are held in an account at such a
bank or brokerage firm, you may vote your shares by telephone or internet by following the
instructions on their enclosed voting form. Votes made by telephone or internet through such a
program must be received by 11:59 p.m. EDT on Tuesday, May 1, 2007. Voting your shares in this
manner will not affect your right to vote in person if you decide to attend the meeting, however,
you must first request a legal proxy either on the internet or the enclosed proxy card. Requesting
a legal proxy prior to the deadline stated above will
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automatically cancel any voting directions
you have previously given by internet or by telephone with respect to your shares.
The internet and telephone proxy procedures are designed to authenticate stockholders
identities, to allow stockholders to give their proxy instructions and to confirm that those
instructions have been properly recorded. Stockholders authorizing proxies or directing the voting
of shares by internet should understand that there may be costs associated with electronic access,
such as usage charges from internet access providers and telephone companies. These costs, if any,
will be borne by the stockholder.
What does it mean if I receive more than one proxy card?
It means that you have multiple holdings reflected in our stock transfer records and/or in
accounts with brokers. Please sign and return ALL proxy forms to ensure that all your shares are
voted. If you received more than one proxy card but only one copy of the proxy statement and
annual and transitional reports, you may request additional copies from us at any time.
What if I change my mind after I return my proxy?
If you hold your shares in your own name, you may revoke your proxy and change your vote at
any time before the polls close at the meeting. You may do this by:
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signing another proxy with a later date and returning that proxy to us; |
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timely submitting another proxy via the telephone or internet; |
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sending notice to us that you are revoking your proxy; or |
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voting in person at the meeting. |
If you hold your shares in the name of your broker or through a fiduciary and desire to revoke
your proxy, you will need to contact that person or entity to revoke your proxy.
How many votes do we need to hold the annual meeting?
A majority of the shares that are outstanding and entitled to vote as of the record date must
be present in person or by proxy at the meeting in order to hold the meeting and conduct business.
Shares are counted as present at the meeting if the stockholder either:
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is present in person at the meeting; or |
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has properly submitted a signed proxy card or other proxy. |
On March 14, 2007, the record date, there were 4,565,158 shares of common stock outstanding.
Therefore, at least 2,282,580 shares need to be present in person or by proxy at the annual meeting
in order to hold the meeting and conduct business.
What happens if a nominee is unable to stand for re-election?
The board may, by resolution, provide for a lesser number of directors or designate a
substitute nominee. In the latter case, shares represented by proxies may be voted for a
substitute nominee. Proxies cannot be voted for more than the number of nominees presented for
election at the meeting. The board has no reason to believe any nominee will be unable to stand
for re-election.
What options do I have in voting on each of the proposals?
You may vote for or withhold authority to vote for each nominee for director. You may
vote for, against or abstain on any other proposal that may properly be brought before the
meeting.
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How many votes may I cast?
Generally, you are entitled to cast one vote for each share of stock you owned on the record
date. The proxy card included with this proxy statement indicates the number of shares owned by an
account attributable to you.
How many votes are needed for each proposal?
Our directors are elected by a plurality and the four individuals receiving the highest number
of votes cast for their election will be elected as Class II directors of QCR Holdings. Broker
non-votes and abstentions will not be counted in tabulating the vote on the election of directors,
but will count for purposes of determining whether or not a quorum is present on the matter.
The approval of all other proposals must receive the affirmative vote of a majority of the
shares present in person or by proxy at the meeting and entitled to vote. Broker non-votes and
abstentions will not be counted in tabulating the vote on such proposals, but will count for
purposes of determining whether or not a quorum is present on the matter.
Where do I find the voting results of the meeting?
If available, we will announce voting results at the meeting. The voting results will also be
disclosed in our Form 10-Q for the quarter ending June 30, 2007.
Who bears the cost of soliciting proxies?
We will bear the cost of soliciting proxies. In addition to solicitations by mail, officers,
directors or employees of QCR Holdings or of our subsidiaries may solicit proxies in person or by
telephone. These persons will not receive any special or additional compensation for soliciting
proxies. We may reimburse brokerage houses and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders.
ELECTION OF DIRECTORS
Our directors are divided into three classes having staggered terms of three years.
Stockholders will be entitled to elect four Class II directors for a term expiring in 2010. The
board has nominated Larry J. Helling, Douglas M. Hultquist, Mark C. Kilmer and Charles M. Peters to
serve as Class II directors.
We have no knowledge that any of the nominees will refuse or be unable to serve, but if any of
the nominees becomes unavailable for election, the holders of the proxies reserve the right to
substitute another person of their choice as a nominee when voting at the meeting. Set forth below
is information concerning the nominees for election and for each of the other persons whose terms
of office will continue after the meeting, including age, year first elected a director and
business experience during the previous five years. The nominees, if elected at the annual meeting
of stockholders, will serve as Class II directors for three-year terms expiring in 2010.
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Directors are elected by a plurality and the four individuals receiving the highest number of
votes cast for their election will be elected as Class II directors. Our board of directors
unanimously recommends that stockholders vote FOR all of the nominees for directors.
NOMINESS
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Name |
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Director |
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Positions with QCR Holdings and subsidiaries |
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CLASS II |
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(Term Expires 2010) |
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Larry J. Helling
(Age 51)
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2001 |
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Director of QCR Holdings; President, Chief Executive Officer and
Director of Cedar Rapids Bank & Trust; Director of Quad City Bank
& Trust; Director of M2 Lease Funds |
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Douglas M. Hultquist
(Age 51)
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1993 |
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President, Chief Executive Officer and Director of QCR Holdings;
Director of Quad City Bank & Trust; Director of Cedar Rapids Bank
& Trust; Director of Rockford Bank & Trust; Director of First
Wisconsin Bank & Trust; Director of Quad City Bancard; Director
of M2 Lease Funds |
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Mark C. Kilmer
(Age 48)
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2004 |
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Director of QCR Holdings; Chairman of the Board and Director of
Quad City Bank & Trust |
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Charles M. Peters
(Age 53)
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Nominee for Director of QCR Holdings; Chairman of the Board and
Director of Cedar Rapids Bank & Trust |
CONTINUING DIRECTORS
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Since |
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Positions with QCR Holdings and subsidiaries |
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CLASS III |
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(Term Expires 2008) |
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Patrick S. Baird
(Age 53)
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2002 |
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Director of QCR Holdings; Director of Cedar Rapids Bank & Trust |
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John K. Lawson
(Age 67)
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2000 |
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Director of QCR Holdings; Director of Quad City Bank & Trust |
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Ronald G. Peterson
(Age 63)
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1993 |
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Director of QCR Holdings; Director of Quad City Bank & Trust |
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CLASS I |
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(Term Expires 2009) |
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Michael A. Bauer
(Age 58)
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1993 |
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Director of QCR Holdings; President, Chief Executive Officer
(until May 2007) and Director of Quad City Bank & Trust; Director
of Cedar Rapids Bank & Trust; Director of Rockford Bank & Trust;
Chairman of the Board and Director of Quad City Bancard |
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James J. Brownson
(Age 61)
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1997 |
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Chairman of the Board and Director of QCR Holdings; Director of
Quad City Bank & Trust |
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John A. Rife
(Age 64)
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2006 |
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Director of QCR Holdings; Director of Cedar Rapids Bank & Trust |
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All of our continuing directors and nominees will hold office for the terms indicated, or
until their earlier death, resignation, removal or disqualification, and until their respective
successors are duly elected and qualified. All of our executive officers hold office for a term of
one year. There are no arrangements or understandings between any of the directors, executive
officers or any other person pursuant to which any of our directors or executive officers have been
selected for their respective positions. Mr. Rife is also a director of United Fire & Casualty
Company, a company registered under the Securities Exchange Act.
The business experience of each of the nominees and continuing directors for the past five
years is as follows:
Patrick S. Baird is President and Chief Executive Officer of AEGON USA, Inc., the U.S.
subsidiary of the AEGON Insurance Group, a leading multinational insurance organization. Mr. Baird
joined the AEGON USA companies in 1976. He was appointed to his current position in March 2002,
having previously served as Executive Vice President and Chief Operating Officer, Chief Financial
Officer and Director of Tax. Mr. Baird is a member of the Financial Services Roundtable and
currently serves on the boards of the Institute for Legal Reform, the American Council of Life
Insurance, Kirkwood Community College Foundation, Priority One, an economic development division of
the Cedar Rapids Area Chamber of Commerce and Waypoint (formerly YWCA). Mr. Baird has been a
director of Cedar Rapids Bank & Trust since its formation in 2001.
Michael A. Bauer, prior to co-founding QCR Holdings, was employed from 1971 to 1992 by
Davenport Bank and Trust Company located in Davenport, Iowa with assets of approximately $1.8
billion, as of December 31, 1992. In January 1992 he was named President and Chief Operating
Officer, while from 1989 to 1992 he served as Senior Vice President in charge of all lending. Mr.
Bauer currently serves as a director of St. Ambrose University, Kahl Home for the Aged, Davenport
ONE, Friendly House Foundation and the Finance Council of the Diocese of Davenport. Along with Mr.
Hultquist, Mr. Bauer received the 1998 Ernst & Young Entrepreneur of the Year award for the Iowa
and Nebraska region and was inducted into the Quad Cities Area Junior Achievement Business Hall of
Fame in 2003.
James J. Brownson is President of W.E. Brownson Co., a manufacturers representative agency
located in Davenport, Iowa involved in the sale of custom engineered products to OEM manufacturers
in the Midwest, and has been in that position since 1978. Mr. Brownson is a graduate of St.
Ambrose University, Davenport, Iowa and the Graduate School of Banking, University of Wisconsin,
Madison, Wisconsin. He began his career in 1967 as a member of the audit staff at Arthur Young &
Co., in Chicago, Illinois. From 1969 until 1978, Mr. Brownson was employed by Davenport Bank and
Trust Company, where he left as Senior Vice President and Cashier. He is a past member of the
National Sales Representative Council of Crane Plastics, Columbus, Ohio, and Dayton Rogers
Manufacturing Co., Minneapolis, Minnesota. Mr. Brownson has served on the board of directors of
the United Way of the Quad Cities, Junior Achievement of the Quad Cities, St. Ambrose University
Alumni Association and United Cerebral Palsy of the Quad Cities. Mr. Brownson has been a director
of Quad City Bank & Trust since its formation in October 1993.
Larry J. Helling was previously the Executive Vice President and Regional Commercial Banking
Manager of Firstar Bank in Cedar Rapids with a focus on the Cedar Rapids metropolitan area and the
Eastern Iowa region. Prior to his six years with Firstar, Mr. Helling spent twelve years with Omaha
National Bank. Mr. Helling is a graduate of the Cedar Rapids Leadership for Five Seasons program
and currently serves on the board of directors and is chair of the Finance Committee of the United
Way of East Central Iowa, a member of the board of trustees of Big Brothers/Big Sisters and the
board of trustees of Junior Achievement. He is past President and on the Board of the Rotary Club
of Cedar Rapids, Chairman of the Board of the Entrepreneurial Development Center, on the Board of
the Cedar Rapids
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Museum of Art, the Downtown Cedar Rapids SSMID and the Cedar Rapids Area Chamber of Commerce.
In addition, he is actively involved in numerous school and church related activities, in addition
to various committees within the community.
Douglas M. Hultquist is a certified public accountant and previously served as a tax partner
with two major accounting firms. He began his career with KPMG Peat Marwick in 1977 and was named
a partner in 1987. In 1991, the Quad Cities office of KPMG Peat Marwick merged with McGladrey &
Pullen. Mr. Hultquist served as a tax partner in the Illinois Quad Cities office of McGladrey &
Pullen from 1991 until co-founding QCR Holdings in 1993. During his public accounting career, Mr.
Hultquist specialized in bank taxation, taxable of closely held businesses, and mergers and
acquisitions. Mr. Hultquist served on the board of directors of the PGA TOUR John Deere Classic
and was its Chairman for the July 2001 tournament. Mr. Hultquist serves on the board of Illinois
Casualty Company, the board of Illinois Bankers Association, and is Chairman of the Augustana
College Board of Trustees, as well as serving on its Planned Giving Council. He also serves on the
board of the TPC at Deere Run and as Finance Chairman of the William Butterworth Memorial Trust.
Mr. Hultquist is a member of the Unified Growth Strategy-Policy Committee of the Illinois Quad City
Chamber of Commerce. He is also a member of the American Institute of CPAs and the Iowa Society of
CPAs. Along with Mr. Bauer, Mr. Hultquist received the 1998 Ernst & Young Entrepreneur of the
Year award for the Iowa and Nebraska region and was inducted into the Quad Cities Area Junior
Achievement Business Hall of Fame in 2003.
Mark C. Kilmer is President of The Republic Companies, a 91-year old family-owned group of
businesses headquartered in Davenport, Iowa involved in the wholesale equipment and supplies
distribution of electrical, refrigeration, heating, air-conditioning and sign support systems.
Prior to joining Republic in 1984, Mr. Kilmer worked in the Management Information Systems
Department of Standard Oil of California (Chevron) in San Francisco. Mr. Kilmer currently is a
board member of The Genesis Health System and serves on the board of directors of IMARK Group,
Inc., a national member-owned purchasing cooperative of electric supplies and equipment
distributors. He is the two-term past Chairman of the PGA TOUR John Deere Classic and the past
Chairman of the Scott County YMCAs board of directors. Mr. Kilmer is the immediate past Chairman
of the Board of Genesis Medical Center, and has served on the board of directors of The Genesis
Heart Institute, St. Lukes Hospital, Rejuvenate Davenport, The Vera French Foundation and Trinity
Lutheran Church. He was a four-time Project Business consultant for Junior Achievement. Mr.
Kilmer has been a director of Quad City Bank & Trust since February 1996. Prior to joining the
board of Quad City Bank and Trust, Mr. Kilmer served on the board of Citizens Federal Savings Bank
in Davenport, Iowa.
John K. Lawson began his career with Deere & Company in 1958 as an engineering co-op trainee
and retired in 2002. He received his mechanical engineering degree in 1962, and by the mid 1960s,
he was assigned to the Deere & Company European Office in Heidelberg, Germany. His
responsibilities included working with the manufacturing engineering operations in eight European
and African countries. He returned to the United States in 1968, and held positions in several
manufacturing operations, including General Manager in Dubuque and Davenport. In 1985, Mr. Lawson
was named Vice President, Manufacturing, Agricultural Equipment Division. In 1992, he became
President, Lawn and Grounds Care Division. In his final position with Deere & Company as Senior
Vice President, Technology and Engineering for Deere & Company, Mr. Lawson was responsible for the
companys engineering, business computer systems, quality, supply management and communications
areas. He is a member of the board of governors of the Iowa State University Foundation, and the
board of directors of Junior Achievement of the Heartland Foundation, Moline Foundation Finance
Committee and the Trinity Healthcare Foundation. Mr. Lawson also serves as a board member for
Muscatine Foods, Inc., located in Muscatine, Iowa. Mr. Lawson has been director of Quad City Bank
& Trust since July 1997.
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Charles M. Peters is the President and Chief Executive Officer of The Gazette Company, a media
company located in Cedar Rapids, Iowa consisting of three operating companies: Gazette
Communications, Cedar Rapids Television Company and Decisionmark. Gazette Communications publishes
The Gazette newspaper, local shoppers, has numerous online sites and provides direct marketing and
commercial printing services. Cedar Rapids Television Company broadcasts KCRG TV9, an ABC
affiliate. Decisionmark is a provider of services to the broadcasting industry. Mr. Peters is a
lawyer by training, but he spent a decade in the appliance business, five years as President of
Amana Refrigeration and until 1998 as Vice President Administration of Maytag. He was the Chief
Executive Officer of Breakthrough, an Iowa City start-up software and consulting company engaged in
developing effective early literacy programs for school systems. Mr. Peters is a current director
of Swift Newspapers, Inc. Mr. Peters is also a trustee of Coe College and is active in many civic
and charitable organizations. Mr. Peters has been a director of Cedar Rapids Bank & Trust since
its formation in October 2001, and was named its Chairman in 2006.
Ronald G. Peterson is President and Chief Executive Officer of the First State Bank of Western
Illinois, located in La Harpe, Illinois, and has served in that position since 1982. Mr. Peterson
is also President of that banks holding company, Lamoine Bancorp, Inc. He currently serves as
President of the LaHarpe Educational Foundation, Treasurer of the Western Illinois University
Foundation, a Co-Chairman of the McDonough District Hospital Development Council and is a member of
the Strategic Planning Committee for the Illinois Bankers Association and a member of the Macomb
Rotary Club. In 2005, Mr. Peterson was named Banker of the Year by the Illinois Bankers
Association. Mr. Peterson has been a director of Quad City Bank & Trust since its formation in
October 1993.
John A. Rife is President and Chief Executive Officer of United Fire Group. He provides
leadership for the companys 650 employees, establishing corporate goals, maintaining policies and
procedures, and directing the overall performance of the company. He joined United Fire in 1976 as
a marketing representative for the life insurance subsidiary, United Life Insurance Company. Over
the next eight years, he was named assistant vice president and marketing manager and vice
president of marketing for United Life. He was named president of United Life in 1984, president of
United Fire & Casualty Company in 1997, and president of American Indemnity Companies in 1999. He
was appointed Chief Executive Officer of the company in 2000. Mr. Rife holds a B.A. degree from the
University of Iowa and the Chartered Life Underwriter professional insurance designation from
American College. He serves on the boards of directors of United Fire & Casualty Company and its
subsidiaries. He also serves on the boards of trustees of United Way of East Central Iowa, Mercy
Medical Center and Priority One, an economic development division of the Cedar Rapids Area Chamber
of Commerce. Mr. Rife has been a director of Cedar Rapids Bank & Trust since its formation in
2001.
CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
General. Currently, there are nine members of the board of directors of QCR Holdings and,
immediately prior to the annual meeting of stockholders, the number will be increased to ten to
accommodate the election of four Class II directors this year. Generally, the board oversees our
business and monitors the performance of our management. In accordance with our corporate
governance procedures, the board does not involve itself in the day-to-day operations of QCR
Holdings, which is monitored by our executive officers and management. Our directors fulfill their
duties and responsibilities by attending regular meetings of the full board, which are held no less
frequently than quarterly. Additionally, the Executive Committee, which is comprised of directors
who are deemed to be independent pursuant to the listing requirements of the Nasdaq Stock Market,
LLC, also meets at least quarterly and has the authority to carry out many of the oversight
functions of the full board. Our directors also discuss business and other matters with
Mr. Hultquist, our Chief Executive
Officer, other key executives and our principal external advisers (legal counsel, auditors and
other consultants).
8
Incumbent directors Baird, Brownson, Kilmer, Lawson, Peterson and Rife are deemed to be
independent as that term is defined by Nasdaq. Additionally, Mr. Peters, who has been nominated
by the board to serve as a Class II director, will also satisfy the independence standards of
Nasdaq. Directors Bauer, Helling and Hultquist are not considered to be independent because they
also serve as executive officers of either QCR Holdings or one of our subsidiaries. The board of
directors has established an Audit Committee, an Executive Committee, a Compensation and Benefits
Committee and a Technology Committee. The current charters of the Audit and the Executive
Committee are available on our website at www.qcrh.com, as well as on our banking subsidiaries
websites at www.qcbt.com, www.crbt.com, www.rkfdbank.com and www.firstwisconsinbank.com. Also
posted on the websites is general information regarding QCR Holdings and our common stock, many of
our corporate polices, and links to our filings with the Securities and Exchange Commission.
A total of six regularly scheduled and special meetings were held by the board of directors of
QCR Holdings in 2006. In 2006, all directors attended at least 75 percent of the meetings of the
board and the committees on which they served during the period they served on the board. Although
we do not have a formal policy regarding director attendance at the annual meeting, we encourage
our directors to attend. Last year, all of the directors were present at the annual meeting.
Audit Committee. The Audit Committee consists of directors Baird, Brownson, Kilmer and
Lawson. Each of the members is considered independent according to the Nasdaq listing
requirements and the regulations of the Securities and Exchange Commission. The board of directors
has determined that Mr. Baird qualifies as an Audit Committee Financial Expert under the
regulations of the Securities and Exchange Commission. The board based this decision on Mr.
Bairds educational and professional experience.
The functions performed by the Audit Committee include, but are not limited to, the following:
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selecting our independent auditors and pre-approving all engagements and fee
arrangements; |
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reviewing the independence of the independent auditors; |
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reviewing actions by management on recommendations of the independent auditors and
internal auditors; |
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meeting with management, the internal auditors and the independent auditors to
review the effectiveness of our system of internal control and internal audit
procedures; |
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reviewing our earnings releases and reports filed with the Securities and Exchange
Commission; and |
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reviewing reports of bank regulatory agencies and monitoring managements
compliance with recommendations contained in those reports. |
To promote independence of the audit function, the Audit Committee consults separately and
jointly with the independent auditors, the internal auditors and management. The Audit Committee
has adopted a written charter, which sets forth the committees duties and responsibilities. Our
current charter is available on our website at www.qcrh.com, as well as on our banking
subsidiaries websites at www.qcbt.com, www.crbt.com, www.rkfdbank.com and
www.firstwisconsinbank.com. The Audit Committee met four times in 2006.
Executive Committee. From January 1, 2006 to May 3, 2006, the Committee was comprised of
directors Baird, Brownson, Kilmer, Lawson, Peterson and Royer. Mr. Royer retired from the board of
directors on May 3, 2006 and Mr. Rife replaced him as a Committee member. If elected, nominee
Peters
9
will be assigned to this committee. Each of these directors is considered to be:
independent according to the Nasdaq listing requirements, outside as discussed under Section
162(m) of the Internal Revenue Code of 1986, and a non-employee pursuant to Section 16 of the
Securities Exchange Act of 1934. Mr. Brownson serves as Chairman of the Executive Committee. The
committee is charged with overseeing our corporate governance programs, board policies, committee
structure and membership, reviewing and recommending the nominees for election to the board of
directors, and reviewing and establishing the salaries and compensation of our executive officers.
In carrying out the nominating function, the committee is charged with identifying and nominating
individuals to be presented to our stockholders for election or re-election to the board of
directors. The committee is further charged with the responsibility of working with management to
maintain a company-wide succession plan to ensure the success of leadership succession at QCR
Holdings and our subsidiaries. The committee also reviews and monitors our policies, procedures
and structure as they relate to corporate governance. The committees responsibilities and
functions are further described in its charter, which is available on our website at www.qcrh.com,
as well as our banking subsidiaries websites at www.qcbt.com, www.crbt.com, www.rkfdbank.com and
www.firstwisconsinbank.com. The Executive Committee met seven times during 2006.
Director Nominations and Qualifications. In carrying out its nominating function, the
Executive Committee evaluates all potential nominees for election, including incumbent directors,
board nominees and those stockholder nominees included in the proxy statement, in the same manner.
Generally, the committee believes that directors should possess certain qualities, including the
highest personal and professional ethics and integrity, a sufficient educational and professional
background, demonstrated leadership skills, sound judgment, a strong sense of service to the
communities which we serve and an ability to meet the standards and duties set forth in our code of
business conduct and ethics. The committee also evaluates potential nominees to determine if they
have any conflicts of interest that may interfere with their ability to serve as effective board
members, to determine if they meet QCR Holdings age eligibility requirements (a person who has
reached age 72 before the date of the annual meeting is not eligible for election to the board) and
to determine whether they are independent in accordance with Nasdaq requirements (to ensure that
at least a majority of the directors will, at all times, be independent). The committee has not,
in the past, retained any third party to assist it in identifying candidates, but it has the
authority to retain a third party firm or professional for the purpose of identifying candidates.
The committee determined that the number of directors should be expanded in 2007, due to the
continued significant growth of QCR Holdings and the resultant need for additional board and board
committee resources. As a result, the committee, in its role of recommending nominees for board
membership, considered several candidates to serve as a Class II director. The committee
considered candidates from the existing boards of directors of QCR Holdings subsidiaries, as well
as individuals from outside the Company. Utilizing the qualification criteria described above, and
considering the experience, credentials and skills of the list of potential candidates, the
committee determined that Mr. Charles M. Peters, a current director of Cedar Rapids Bank & Trust
and the Chairman of the Board, should be nominated as a Class II director, along with Messers.
Helling, Hultquist and Kilmer, all incumbent directors. The Board did not receive any stockholder
nominations for director for the 2007 annual meeting.
Independent Director Sessions. Consistent with the Nasdaq listing requirements, the
independent directors regularly have the opportunity to meet without Messrs. Bauer, Helling or
Hultquist in attendance. In 2003, the board of directors created the position of a lead independent
director and appointed Mr. Brownson to serve in this position. The lead independent director
assists the board in assuring effective corporate governance and serves as chairperson of the
independent director sessions.
10
Compensation and Benefits Committee. The Compensation and Benefits Committee consists of
directors Bauer, Hultquist, Helling, and Lawson, as well as Todd A. Gipple, Executive Vice
President & Chief Financial Officer of QCR Holdings, John D. Whitcher, director of Rockford Bank &
Trust, James A. Tinker, director of Cedar Rapids Bank & Trust and Joyce E. Bawden, John H. Harris,
and Cathie S. Whiteside, directors of Quad City Bank & Trust. The Compensation and Benefits
Committee has authority to perform policy reviews and to oversee and direct the compensation and
personnel functions of the employees, with the exception of our executive officers, which is done
by the Executive Committee. The Compensation and Benefits Committee met three times during 2006.
Technology Committee. The Technology Committee consists of directors Bauer, Helling and
Hultquist, as well as Todd A. Gipple, Executive Vice President & Chief Financial Officer of QCR
Holdings, nominee Peters, Monica B. Glenny, director of Rockford Bank & Trust, Ann M. Lipsky,
director of Cedar Rapids Bank & Trust and John H. Harris and Cathie S. Whiteside, directors of Quad
City Bank & Trust. The Technology Committee reviews the technology plans of QCR Holdings and our
subsidiaries for the future. The Technology Committee met four times during 2006.
Code of Business Conduct and Ethics. We have a code of business conduct and ethics in place
that applies to all of our directors and employees. The code sets forth the standard of ethics
that we expect all of our directors and employees to follow, including our Chief Executive Officer
and Chief Financial Officer. The code is posted on our website at www.qcrh.com, as well as on our
banking subsidiaries websites at www.qcbt.com, www.crbt.com, www.rkfdbank.com and
www.firstwisconsinbank.com. We have satisfied and intend to continue to satisfy the disclosure
requirements under Item 5.05 of Form 8-K regarding any amendment to or waiver of the code with
respect to our Chief Executive Officer and Chief Financial Officer, and persons performing similar
functions, by posting such information on our websites.
Stockholder Communication with the Board, Nomination and Proposal Procedures.
General Communications with the Board. Stockholders may contact QCR Holdings board of
directors by contacting Todd A. Gipple, Corporate Secretary, at QCR Holdings, Inc.,
3551-7th Street, Suite 204, Moline, Illinois 61265 or (309) 743-7745. All comments will
be forwarded directly to the Chairman of the Board and lead independent director, James J.
Brownson.
Nominations of Directors. In order for a stockholder nominee to be considered by the
Executive Committee to be its nominee and included in our proxy statement, the nominating
stockholder must file a written notice of the proposed director nomination with our Corporate
Secretary, at the above address, at least 120 days prior to the anniversary of the date the
previous years proxy statement was mailed to stockholders. Nominations must include the full name
and address of the proposed nominee and a brief description of the proposed nominees business
experience for at least the previous five years. All submissions must be accompanied by the
written consent of the proposed nominee to be named as a nominee and to serve as a director if
elected. The committee may request additional information in order to make a determination as to
whether to nominate the person for director.
In accordance with our bylaws, a stockholder may otherwise nominate a director for election at
an annual meeting of stockholders by delivering written notice of the nomination to our Corporate
Secretary, at the above address, not less than 30 days nor more than 75 days prior to the date of
the annual meeting, provided, however, that if less than 40 days notice of the meeting is given,
notice by the stockholder, to be timely, must be delivered no later than 10 days from the date on which
notice of the meeting was mailed. The stockholders notice of intention to nominate a director
must include (i) the name and address of record of the nominating stockholder; (ii) a
representation that the stockholder is a record holder entitled to vote at the meeting and intends
to appear in person or by proxy at the meeting to
11
nominate the person or persons specified in the
notice; (iii) the name, age, business and residence addresses, and principal occupation or
employment of each nominee; (iv) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the stockholder; (v) any other
information regarding each proposed nominee as would be required to comply with the rules and
regulations set forth by the Securities and Exchange Commission; and (vi) the consent of each
nominee to serve as a director of the corporation if so elected. We may request additional
information after receiving the notification for the purpose of determining the proposed nominees
eligibility to serve as a director. Persons nominated for election to the board pursuant to this
paragraph will not be included in our proxy statement.
Other Stockholder Proposals. To be considered for inclusion in our proxy statement and form
of proxy for our 2008 annual meeting of stockholders, stockholder proposals must be received by our
Corporate Secretary, at the above address, no later than November 23, 2007, and must otherwise
comply with the notice and other provisions of our bylaws, as well as Securities and Exchange
Commission rules and regulations.
For proposals to be otherwise brought by a stockholder at an annual meeting, the stockholder
must file a written notice of the proposal to our Corporate Secretary not less than 30 days nor
more than 75 days prior to the date of the annual meeting, provided, however, that if less than 40
days notice of the meeting is given, notice by the stockholder, to be timely, must be delivered no
later than 10 days from the date on which notice of the meeting was mailed. The notice must set
forth: (i) a brief description of the proposal and the reasons for conducting such business at the
meeting; (ii) the name and address of the proposing stockholder; (iii) the number of shares of the
corporations common stock beneficially owned by the stockholder on the date of the notice; and
(iv) any financial or other interest of the stockholder in the proposal. Stockholder proposals
brought under this paragraph will not be included in our proxy statement.
COMPENSATION DISCUSSION & ANALYSIS
This Compensation Discussion and Analysis (CD&A) describes QCR Holdings compensation
philosophy and policies for 2006 as applicable to QCR Holdings executives, including the Named
Executive Officers (NEOs) whose detailed compensation is set forth in the Executive Compensation
section of this proxy statement. The CD&A explains the structure and rationale associated with
each material element of the NEOs total compensation, and it provides important context for the
more detailed disclosure tables and specific compensation amounts provided following the CD&A. In
this CD&A section, the term the Committee refers to the Executive Committee of QCR Holdings
Board of Directors.
Compensation Philosophy and Objectives.
All of the compensation programs are designed to attract and retain key employees, motivating
them to achieve and rewarding them for superior performance, as well as having significant risk to
not reward substandard performance. Different programs are geared to short and long-term
performance with the goal of increasing stockholder value over the long term. Executive
compensation programs impact all employees by setting general levels of compensation and helping to
create an environment of
goals, rewards and expectations. We believe the performance of every employee is important to
the success of QCR Holdings; therefore, we are mindful of the effect of executive compensation and
incentive programs on all of the employees.
12
We believe that the compensation of the executives should reflect their success as a
management team, rather than individuals, in attaining key operating objectives, such as growth of
loans, deposits and total assets, and growth of earnings and earnings per share and ultimately, in
attaining an increased market price for our stock. We believe that the performance of the
executives in managing our company, considered in light of general economic and specific company,
industry and competitive conditions, should be the basis for determining their overall
compensation. We also believe that their compensation should not be based on the short-term
performance of our stock, whether favorable or unfavorable, but rather that the price of our stock
will, in the long-term, reflect our operating performance, and ultimately, the management of the
company by the executives. We seek to have the long-term performance of our stock reflected in
executive compensation through our stock option and other equity incentive programs.
QCR Holdings seeks to achieve these objectives through the following elements: salary, annual
cash incentive (bonus), long-term equity incentives, primarily through stock option awards, and
other perquisites.
Role of the Executive Committee in the Executive Compensation Process
Overview. One of the main responsibilities of the Executive Committee is to review and
establish the salaries and compensation of the executive officers whose compensation is disclosed
in the Summary Compensation Table on page 25 of this proxy statement. In this regard, the
Committee uses outside consultants and experts. The Committee also works with management to
develop and maintain a company-wide succession plan. In 2006, a specific succession plan
surrounding the retirement of Mr. Bauer was implemented (as discussed on page 29 of this proxy
statement).
Use of Consultants. The Committee uses compensation consultants from Clark Consulting to
provide input on the competitive marketplace for executive compensation. The Committee has
utilized Clark Consulting for annual executive compensation reviews since 2003. Clark Consulting
specifically focuses on the banking industry, and has provided us with assistance surrounding
various elements of the total executive compensation package. These reviews have focused on
salaries, annual incentives, long-term incentives and executive benefits. Clark Consulting is an
independent third party provider and reports directly to the Chairman of the Executive Committee,
Mr. James J. Brownson.
The primary data source used in setting competitive market levels for the executive officers
is the information publicly disclosed by a 2006 Peer Group of the 20 companies listed below,
which will be reviewed annually and may change from year-to-year. These companies, which have been
carefully considered by the Committee for inclusion in the 2006 Peer Group, include bank holding
companies of similar size, location, and business strategy (i.e., those with a commercial lending
focus).
2006 PEER GROUP
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Company Name (Ticker) |
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Company Name (Ticker) |
Ames National Corporation (ATLO)
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Main Street Trust, Inc. (MSTI) |
Baylake Corp. (BYLK)
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MainSource Financial Group, Inc. (MSFG) |
CoBiz Inc. (COBZ)
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Mercantile Bancorp, Inc. (MBR) |
Enterprise Financial Services Corp (EFSC)
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Mercantile Bank Corporation (MBWM) |
First Busey Corporation (BUSE)
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Merchants and Manufacturers (MMBI) |
Heartland Financial USA, Inc. (HTLF)
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Oak Hill Financial, Inc. (OAKF) |
Hills Bancorporation (HBIA)
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Old Second Bancorp, Inc. (OSBC) |
Horizon Bancorp (HBNC)
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Pinnacle Financial Partners, Inc. (PNFP) |
Lakeland Financial Corporation (LKFN)
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Southwest Bancorp, Inc. (OKSB) |
Macatawa Bank Corporation (MCBC)
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West Bancorporation, Inc. (WTBA) |
13
Role of Executives in Executive Committee Meetings. The Executive Committee has requested in
the past that Mr. Bauer and Mr. Hultquist be present at portions of selected Committee meetings to
discuss executive compensation and evaluate QCR Holdings and individual performance. Mr. Bauer and
Mr. Hultquist may provide their insights and suggestions, but the final decisions regarding pay are
made by the Committee members alone. The Committee discusses Mr. Hultquist and Mr. Bauers
compensation with them, but final deliberations and all decisions regarding compensation are made
without the officers present. The Committee also determines the compensation for other NEOs, based
on Mr. Hultquists recommendations and input from Clark Consulting.
Executive Committee Activity. In 2006, the Executive Committee met seven times. During those
meetings and at the January 2007 meeting they took the actions listed below. The specific
recommendations and compensation changes are discussed later in the CD&A.
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Benchmarked the current total compensation packages for the NEOs to determine market
competitiveness. |
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Reviewed peer performance data versus QCR Holdings and discussed performance goals for
2007 and beyond. |
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Approved annual salary adjustments for 2007 and annual cash incentive (bonus) amounts
for 2006. |
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Approved performance goals for the annual cash incentive (bonus) and annual equity
programs for 2007. |
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Reviewed and approved the executive retirement package for Mr. Bauer. |
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Put in place a succession plan for Mr. Hultquist to become the single Chief Executive
Officer for QCR Holdings. |
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Benchmarked director compensation to the peer group at the 50th percentile. |
Compensation Framework
The compensation framework for the NEOs is discussed in this section and is broken down into
the following three aspects of our executive compensation policies and programs:
Pay components a discussion of each element of total compensation, including the rationale
for each and how each component relates to the total compensation structure.
Pay level the factors used to determine the compensation opportunity, or potential payment
amount at different performance levels, for each pay component.
Relationship to performance how the Committee determines appropriate performance measures
and goals for incentive plan purposes, as well as how pay levels change as a function of
performance.
Pay Components Overview
The executive compensation program for the NEOs includes the following components:
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Salary this is the fixed amount of annual cash pay that reflects each executives
position, and is made based on the qualifications, experience and performance of the
individual executive. |
14
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Annual Cash Incentive (Bonus) this is an annual cash payout that varies by executive
and is based on performance. Rewarding the executives who are directly responsible for the
performance of QCR Holdings is the goal of the annual cash incentive (bonus) program. The
Committee believes a meaningful portion of each executives total compensation opportunity
should be tied to QCR Holdings results and, in most cases, individual performance. The
Committee determines and communicates the performance metrics, goals, and award
opportunities (expressed as a percentage of salary) to the executives at the beginning of
each year. Payouts occur following the determination of actual performance subsequent to
the end of the year. |
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Long-Term Incentives (Equity) this has historically consisted of equity-based awards
in the form of stock options. We currently utilize the 2004 Stock Incentive Plan for
long-term incentive awards. |
It is also our intention to assist the executives with meeting their retirement income, health
care, survivor income, disability income, time-off and other needs through competitive,
cost-effective, company-sponsored programs. The Committee will provide the executive officers with
competitive compensation programs to prepare for retirement and assist in wealth accumulation.
These programs will vary by executive and will often be influenced by individual tenure,
performance and position. The goal of the Committee is to provide executives with a total
compensation package that is competitive with the market, and encourages executives to remain with
the organization and help continue to drive QCR Holdings to high levels of performance. These
programs currently consist of the following:
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401(k) / Profit Sharing Plan this is a qualified, tax-exempt profit sharing plan in
which all employees are eligible to participate. |
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Executive Retirement Benefits this consists of Non-qualified Supplemental Executive
Retirement Programs (SERP) and Deferred Compensation Plans (DCP). These plans are
intended to provide additional retirement income for the NEOs of QCR Holdings. |
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Long-Term Deferred Incentive Compensation Program and Deferred Income Plans this
consists of programs entered into with certain key senior officers, the 1997 Deferred
Income Plan and the 2005 Deferred Income Plan. These plans are intended to provide
additional retirement income for the NEOs of QCR Holdings. |
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Other Compensation this includes perquisites as well as broad-based employee benefits
such as medical, dental, disability, and life insurance coverage. The executives receive
perquisites in the form of country club dues and automobile allowances, which are similar
to other bank holding companies within the industry. |
Decisions regarding total compensation program design, as well as individual pay decisions and
adjustments will be made in the context of our Executive Compensation Philosophy. The following is
a more detailed discussion of the pay components of the executive compensation program.
Salary. Cash salaries are intended to be competitive with the market, and take into
account the individuals experience, performance, responsibilities, and past and potential
contribution to QCR Holdings. The salaries should offer each executive security and should allow QCR Holdings to
maintain a stable management team and environment. The Committee reviews the salaries of the
executives on an annual basis. In January 2004, QCR Holdings entered into new employment contracts
with each of the NEOs, and the salaries provided in those agreements may be increased to reflect
performance of the individual and QCR Holdings. On March 21, 2006 and again on December 14, 2006,
QCR Holdings entered into an amended and restated employment agreement with Mr. Bauer as a part of
our succession
15
plan, as described on page 29 of this proxy statement. The Committee uses its own
judgment and expertise when determining the positioning of the executive salary compared to the
competitive marketplace. Examples of the determining factors include the executives level of
responsibility, prior experience, length of time with QCR Holdings, breadth of knowledge and
internal performance. There is no specific weighting of the above-mentioned items.
In years prior to 2006, the Committee has benchmarked executive salaries at both the 50th and
the 65th percentile of the competitive market. Given recent performance, the Committee has
targeted executive salaries at the 50th percentile of the competitive market. Historically,
targeted salaries have been at a lower competitive position than target total compensation
including targeted incentives, as the Committee prefers to have a significant portion of each
executives total compensation to be considered at risk and linked directly to performance.
On January 25, 2007, based on recommendations from the Committee, QCR Holdings board approved
the salaries for all NEOs for 2007, effective January 1, 2007. The board approved the following
executive officer salaries:
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Executive |
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2006 Salary |
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2007 Salary |
Douglas M. Hultquist |
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$ |
220,500 |
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$ |
205,500 |
(1) |
Michael A. Bauer |
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$ |
220,500 |
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$ |
220,500 |
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Todd A. Gipple |
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$ |
178,500 |
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$ |
182,500 |
(2) |
Larry J. Helling |
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$ |
200,000 |
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$ |
200,000 |
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(1) |
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Mr. Hultquist voluntarily reduced his salary by $15,000, based on QCR Holdings
financial performance in 2006. |
(2) |
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Mr. Gipples base salary was increased by $4,000 to recognize the additional
responsibility of President and Chief Executive Officer of Quad City Bancard effective January
1, 2007. |
In setting these base salaries, the Committee considered the compensation philosophy and
guiding principles described in this section; the experience and industry knowledge of the NEO and
the quality and effectiveness of their leadership, the mix of performance pay to total compensation
and the base salary paid to the officers in comparable positions in the peer groups, using the 50th
percentile as our point of reference.
Annual Cash Incentive (Bonus). The Committee uses annual cash incentives (bonuses) to reward
the executives for achieving short-term corporate and individual performance objectives.
Specifically, each executive has measurable goals that are determined by the Committee and focus on
earnings per share, return on equity, asset growth, and other financial performance. The Committee
believes the executive officers should have a significant portion of their total compensation
package at risk and available through an annual cash incentive program.
In 2006, the Committee defined specific threshold, target, and maximum award opportunities as
a percentage of salary for each executive. The specific percentages are based on the individual
executives position and competitive market data for similar positions. The annual incentive
opportunities when combined with salaries are designed to position total cash compensation at
approximately the 50th percentile for target-level performance, and the 65th percentile for
maximum-level performance. The 2006 awards were contingent primarily on performance relative to
goals for EPS, return on equity, and asset growth, which are objectives that are aligned with those
of QCR Holdings stockholders. The
16
performance criteria were weighted to reflect QCR Holdings
2006 strategic objectives. In addition, certain executives also had individual performance goals
that were consistent with QCR Holdings 2006 strategic objectives and more closely aligned with
their specific role with QCR Holdings, as well as a subjective component scored by the Committee.
After taking into account the weighting of all criteria and the resulting performance of QCR
Holdings and the executive officers, the Committee determined that the actual annual cash incentive
(bonus) for 2006 were calculated as shown in the table below. The table indicates the award
opportunities for 2006 at target, as well as each executives actual award, both presented as a
percentage of salary.
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Target |
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Executive |
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Award |
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Actual Award |
Douglas M. Hultquist |
|
|
65.0 |
% |
|
|
25.0 |
% |
Michael A. Bauer |
|
|
65.0 |
% |
|
|
29.2 |
% |
Todd A. Gipple |
|
|
45.0 |
% |
|
|
27.8 |
% |
Larry J. Helling |
|
|
40.0 |
% |
|
|
33.6 |
% |
Cash Compensation. The combination of salary plus the annual cash incentive (bonus) makes
up cash compensation. Given recent performance the Committee has targeted cash compensation
between the 50th and 65th percentile with the higher level attainable when it is warranted by
performance.
Long-Term Incentives (LTI). The Committee believes executive officers should have a
meaningful portion of their total compensation opportunity linked to increasing shareholder value.
The Committee also believes it is appropriate to provide executive officers with the opportunity to
receive annual stock-based awards that are contingent upon individual performance and QCR Holdings
results. Long-term incentives, typically in the form of equity grants, are used to encourage
ownership, increase proprietary interest in the success of QCR Holdings, and encourage retention
of the executive officers. The Committee believes the long-term incentive awards promote tax
efficiency and replace some of the benefit opportunities the executives lose due to regulatory
limitations. The Committee has granted stock options in the past through the 1993 Stock Option
Plan, the 1997 Stock Incentive Plan, and the 2004 Stock Incentive Plan. Stock options have been
used to reinforce QCR Holdings long-term goals and retain its valued executives. To support that
objective, the Committee has implemented an annual equity granting methodology and has provided
annual grants to the NEOs in both 2006 and 2005. The Committee has implemented a performance-based
equity granting methodology for future equity grants. The performance-based award opportunities
will be determined as a percentage of the executive salary in a similar fashion to an annual
incentive plan. The Committee is also exploring alternative equity vehicles to stock options and
the 2004 Stock Incentive Plan provides us with the ability to grant restricted stock and stock
appreciation rights in addition to stock options.
For Messrs. Hultquist, Gipple and Helling, the long-term incentive awards are contingent on
achieving the same financial performance goals that are used to measure executive officer
performance for purposes of current year cash incentive awards. If QCR Holdings does not meet the
threshold level of performance the executives will not receive the annual equity awards. The 2007
long-term incentive award opportunities, and the related financial performance measures were
communicated to the executives in January 2007. For Mr. Bauer, the long-term incentive awards are
contingent on the success
17
of the overall transition and execution of the succession plan. In 2006,
the stock option grants were granted on a discretionary basis.
Summary of LTI Opportunities for 2007 performance-based awards. As shown in the table below,
the Committee has targeted equity compensation incentives between 15% and 20% of salary with
maximum performance historically allowing for compensation incentives between 30% and 40% of
salary. This table shows the award opportunities for the 2007 performance-based equity grants at
threshold, target, and maximum levels. The table shows the awards as a percentage of salary for
each executive, based upon grant date fair value as used for determining expense in the financial
statements.
The Committee will grant equity awards based on 2007 executive officer performance, which will
have a three-year vesting schedule after grant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 Performance-Based Equity Incentive Plan |
|
|
(Grant Value Stock Option Awards as a Percent of Salary) |
Executive |
|
Threshold |
|
Target |
|
Maximum |
Douglas M. Hultquist |
|
|
16.25 |
% |
|
|
32.50 |
% |
|
|
65.00 |
% |
Michael A. Bauer |
|
|
10.00 |
% |
|
|
20.00 |
% |
|
|
40.00 |
% |
Todd A. Gipple |
|
|
8.75 |
% |
|
|
17.50 |
% |
|
|
35.00 |
% |
Larry J. Helling |
|
|
7.50 |
% |
|
|
15.00 |
% |
|
|
30.00 |
% |
Total Direct Compensation. The sum of cash compensation plus the annual equity long-term
incentive awards creates total direct compensation. The Committee has targeted total direct
compensation between the 50th and 65th percentile with the higher level attainable when it is
warranted by performance.
Timing of Equity Grants. In previous years QCR Holdings did not have a formal written policy
guiding the timing of equity grants and would make such awards at our regularly scheduled meeting
in January of each year. Additionally, all past grants have been priced appropriately at fair
market value on the date of grant and in accordance with the terms of the appropriate Stock Option
or Incentive Plan.
QCR Holdings recently adopted a formal policy regarding the equity grant process and related
controls. The guidelines are to help ensure that all equity grants are properly and legally made,
are reported and disclosed correctly and accurately, are properly accounted for, and receive proper
tax treatment.
Stock Option and Equity Incentive Plans
1993 Stock Option Plan. In 1993, QCR Holdings adopted a stock option plan for the benefit of
directors, officers, and employees of QCR Holdings and its subsidiaries. The plan was approved by
stockholders and provided for the issuance of incentive stock options, nonqualified stock options
and tax benefit rights. All of the options under the plan have been granted, and on June 30, 2003,
the plan expired.
18
1997 Stock Incentive Plan. In 1997, we adopted the QCR Holdings, Inc. Stock Incentive Plan
for the benefit of our directors, officers and employees. The plan was approved by stockholders
and provided for the issuance of incentive stock options, nonqualified stock options, restricted
stock, tax benefit rights and stock appreciation rights. All of the awards available for issuance
under the plan have been issued, although options remain outstanding.
2004 Stock Incentive Plan. In 2004, we adopted the QCR Holdings, Inc. Stock Incentive Plan
for the benefit of our directors, officers and employees. The plan was approved by stockholders
and authorized 225,000 shares for issuance under the plan. This plan provides for the issuance of
incentive stock options, nonqualified stock options, restricted stock, tax benefit rights and stock
appreciation rights. As of December 31, 2006, there are 124,996 remaining options available for
grant under this plan.
2002 Stock Purchase Plan. QCR Holdings adopted and stockholders approved the QCR Holdings,
Inc. Employee Stock Purchase Plan in 2002. The plan is intended to qualify as an employee stock
purchase plan under Section 423 of the Internal Revenue Code. The plan allows employees of QCR
Holdings and our subsidiaries to purchase shares of common stock available under the plan. The
purchase price is currently 90% of the lesser of the fair market value at the date of the grant or
the investment date. The investment date is the date common stock is purchased after the end of
each calendar quarter during an offering period. During 2006, the maximum dollar amount any one
participant can elect to contribute in an offering period is $5,000 and the maximum percentage that
any one participant can elect to contribute is 5% of his or her compensation. During 2006, Messrs.
Hultquist, Bauer, Gipple and Helling further limited their contribution to $50 per pay period, or
$1,300 for the year. Beginning January 1, 2007, the maximum percentage that any one participant
can elect to contribute is 8% of his or her compensation. During 2007, Messrs. Hultquist, Bauer,
Gipple and Helling will limit their contribution to $100 per pay period, or $2,600 for the year.
During 2006, 14,552 shares were purchased under the plan.
401(k) Retirement Savings Plan. QCR Holdings sponsors a qualified, tax-exempt profit sharing
plan qualifying under Section 401(k) of the Internal Revenue Code. All employees are eligible to
participate in the plan. Pursuant to the plan, QCR Holdings matches 100% of the first 3% of
employee contributions and 50% of the next 3% of employee contributions, up to a maximum of 4.5% of
an employees compensation. Additionally, at its discretion, QCR Holdings may make additional
contributions to the plan, which are allocated to the accounts of participants based on relative
compensation. The total contributions under the 401(k) plan for the benefit of our NEOs are
reflected in the Summary Compensation Table on page 25 of this proxy statement.
Non-qualified Supplemental Executive Retirement Program (SERP). QCR Holdings provides SERP
benefits to its key executives, which will provide supplemental retirement income to the NEOs. The
SERP arrangements are an important, common component of competitive compensation packages in
comparable banks; forty percent (40%) of QCR Holdings peer group currently utilize SERP
arrangements. Furthermore, the SERP arrangements include retention and non-competition provisions
that protect QCR Holdings and help support the objective of maintaining a stable, committed, and
qualified team of key executives.
QCR Holdings currently has SERP arrangements in place for Messrs. Hultquist, Bauer, Gipple,
and Helling. The SERP arrangements were approved by QCR Holdings in April 2004, and have an
effective date of May 2004. Under the agreements, the executives will receive a supplemental
retirement benefit in an annual pre-tax amount equal to 2.5% for each year of full-time service
until the executive reaches age 65 (not to exceed 40 years), multiplied by the executives average
annual base salary plus cash bonus for the three most recently completed plan years, subject to a
maximum of 70%.
19
The supplemental retirement benefit will be reduced by any contributions plus earnings thereon
made by QCR Holdings to the credit of the executive pursuant to the QCR Holdings, Inc.
401(k)/Profit Sharing Plan or other deferred compensation plans. The supplemental retirement
benefit payable under the plans will generally be made in monthly installments for a period of 180
months. If an executive retires after reaching age 55 (but before reaching age 65) and has at
least 10 years of service, QCR Holdings will pay a supplemental early retirement benefit made in
monthly installments for a period of 180 months to the executive. The SERP arrangements also
provide for the payment of a survivors benefit payable to a participating executives beneficiary
upon the executives death.
Pursuant to the existing SERP arrangements, assuming the participating executives retire on or
after reaching age 65 and based on the participants salary and cash bonus paid for 2006, we will
owe the following projected annual amounts: Mr. Hultquist $214,036; Mr. Gipple $270,433; Mr.
Helling $98,849. These amounts are for illustrative purposes only and do not reflect the
reduction in payments as described above and do not reflect any annual increases in the
executives salaries. Mr. Bauers SERP arrangement was amended on March 21, 2006 with respect to
his upcoming retirement, to provide a fixed benefit of $117,000 per year commencing upon attainment
of age 60.
Deferred Compensation Plan Agreements (DCPs). QCR Holdings has entered into DCPs with the
executive officers to allow them to defer a portion of their salary or annual bonus. These plans
are voluntary, non-tax qualified, deferred compensation plans that enable the executives to save
for retirement by deferring a portion of their current cash compensation. QCR Holdings matches
these deferrals up to certain maximums and interest is earned at the prime rate subject to certain
floor and cap rates, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan Agreements |
|
|
2006 Match |
|
2007 Match |
|
Interest Rate |
Executive |
|
Maximum |
|
Maximum |
|
Floor and Cap |
Douglas M. Hultquist |
|
$ |
15,000 |
|
|
$ |
15,000 |
|
|
|
8.00% - 10.00 |
% |
Michael A. Bauer |
|
$ |
20,000 |
|
|
$ |
20,000 |
|
|
|
8.00% - 10.00 |
% |
Todd A. Gipple |
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
|
6.00% - 12.00 |
% |
Larry J. Helling |
|
$ |
12,000 |
|
|
$ |
12,000 |
|
|
|
8.00% - 12.00 |
% |
Our analyses of competitive positioning of total compensation took into account the value of
both the SERP arrangements and the DCP agreements of the NEOs. Market data on the benefits and
prevalence of SERP arrangements and DCP agreements in peer banks was utilized when implementing
these plans. The SERP arrangements and DCP agreements are consistent with the compensation
philosophy of QCR Holdings.
Long-Term Deferred Incentive Compensation Program. QCR Holdings has entered into a Long-Term
Deferred Incentive Compensation Program with certain key senior management members at Cedar Rapids
Bank & Trust, Rockford Bank & Trust and First Wisconsin Bank & Trust. Mr. Helling is a participant
in this program. The program is administered by the Committee and results in deferred
incentive compensation contributions being made into the plan, for the benefit of the participants,
if certain growth and earnings objectives are met. Mr. Helling is a participant in the plan for
the years 2006 through 2011, and can earn a range of between $16,000 and $120,000 annually based on
the performance of Cedar Rapids Bank & Trust. Mr. Helling did not earn any deferred incentive
compensation in 2006 as the minimum Return on Equity measure under the plan of 12.00% was not
reached.
20
Deferred Income Plans. QCR Holdings adopted and stockholders approved the 1997 Deferred
Income Plan and 2005 Deferred Income Plan to enable directors and selected key officers of QCR
Holdings and its related companies, to elect to defer all or a portion of the fees and cash
compensation payable to them for their service as directors or employees. The NEOs participated in
the 1997 Deferred Income Plan in 2004 and prior years by deferring 100% of the director fees that
they had earned from their service as directors. None of the NEOs have participated in the 1997 or
2005 Deferred Income plans since December 31, 2004 when QCR Holdings terminated board fees for
inside directors.
Other Compensation. The NEOs participate in QCR Holdings broad-based employee benefit plans,
such as medical, dental, and life insurance programs. The NEOs also receive an automobile
allowance, fuel, maintenance and insurance expense of such automobile and payments for country club
memberships. In addition, QCR Holdings pays for tax planning and preparation services for each of
the NEOs. The value of the perquisites provided by or paid for by QCR Holdings are reflected in
the Summary Compensation Table on page 25 of this proxy statement.
Summary of Pay Components. The previously mentioned pay components are used to balance and
achieve various objectives. The Committee desires to balance short-term and long-term objectives,
so annual incentives are combined with long-term incentives. To attract executives, maintain a
stable team of effective leaders, and provide non-competition and other protections for QCR
Holdings, the compensation programs include components such as employment agreements and SERP
arrangements. The compensation framework balances the executives need for current cash, security,
and funds to cover taxes on long-term incentives (through vehicles such as salary and annual
incentives) with the need for alignment of executives long-term interests with those of
stockholders (through vehicles such as equity grants). The components provide a degree of security
at the threshold level of compensation, while motivating executives to focus on the strategic goals
that will produce both outstanding company financial performance and long-term incentives that
align the interest of management with the long-term stockholders.
Pay Level
Pay levels for executives are determined based on a number of factors, including the
individuals roles and responsibilities within QCR Holdings, the individuals experience and
expertise, the pay levels for peers within QCR Holdings, pay levels in the marketplace for similar
positions and performance of the individual and QCR Holdings as a whole. The Committee is
responsible for approving pay levels for the executive officers. In determining these pay levels,
the Committee considers all forms of compensation and benefits.
As noted earlier, compensation structure for QCR Holdings executives is designed to position
an executives total compensation near the 50th percentile of comparable companies, assuming QCR
Holdings performance is at target levels. In 2006, the Committee worked with Clark Consulting to
review total compensation levels for the NEOs. Total compensation consists of salary, cash
compensation (salary and annual cash incentives), direct compensation (cash compensation and all
forms of equity compensation), and total compensation (direct compensation and all other forms of
compensation, such as SERP accruals).
Chief Executive Officer (CEO) Comparisons. The Committee reviewed compensation comparisons
for the CEO and a combination of the top two executives of the peer group when determining the CEO
compensation. This review of the combined top two positions was requested specifically by the
Committee, given the unique leadership structure at QCR Holdings. QCR Holdings
executive leadership and compensation structure was designed in the past to meet our dual
leadership structure. Mr. Hultquist has been in the position of the President and CEO of QCR
Holdings and
21
Chairman of Quad City Bank & Trust, and Mr. Bauer has been in the position of President and CEO of
Quad City Bank & Trust and Chairman of QCR Holdings. In the past, the Committee has targeted
identical levels of compensation for these two individuals. The two founding executives have
operated as a dual CEO Team for both QCR Holdings and Quad City Bank & Trust since the inception of
the entities. The Committee has targeted a total compensation package that is competitive when
compared to the combined total compensation levels of the top two positions in a peer group of
comparable companies. However, the leadership structure of QCR Holdings will be changing in 2007
and beyond given the upcoming retirement of Mr. Bauer (as discussed on page 29 of this proxy
statement). Beyond 2006, Mr. Bauers compensation will be determined based on his duties with Quad
City Bank & Trust and his incentive performance will be based on specific goals and objectives on
behalf of Quad City Bank & Trust. Mr. Hultquists compensation in years beyond 2006 will be based
on his role as the sole CEO of QCR Holdings. Based on the recent performance of QCR Holdings, Mr.
Hultquists compensation will be compared to the 50th percentile of the competitive peer group and
transitioned to that level during the period preceding Mr. Bauers retirement in May 2009. The
Committee believes strongly in a pay for performance compensation philosophy and the exact
percentile positioning versus the peer group will be dependent on the performance of QCR Holdings.
Other Officer Comparisons: The Committee also reviewed compensation comparisons for the other
NEOs. The entire peer group was utilized for these comparisons, but the individual NEOs were only
benchmarked to peer group NEOs with similar position titles and responsibilities.
After consideration of the data collected on external competitive levels of compensation and
based on each executive officers role within the executive group, the Committee makes decisions
regarding individual executives target total compensation opportunities based on the need to
attract, motivate and retain an experienced and effective management team.
As noted above, notwithstanding QCR Holdings overall pay positioning objectives, pay
opportunities for specific individuals vary based on a number of factors such as individual
experience, scope of duties, and individual Company knowledge. Actual total compensation in a
given year will vary above or below the target compensation levels based primarily on the
attainment of performance-goals under the annual incentive and long-term incentive plans. In some
instances, the amount and structure of compensation results from arms-length negotiations with
executives, which reflect an increasingly competitive market for quality, proven managerial talent.
Review of Prior Amounts Granted and Realized. The Committee desires to motivate and reward
executives relative to driving superior future performance, so prior stock compensation gains are
not currently considered as a factor in determining future compensation levels.
Adjustment or Recovery of Awards
QCR Holdings has not adopted a formal policy or any employment agreement provisions that
enable recovery, or clawback, of incentive awards in the event of misstated or restated financial
results. However, Section 304 of Sarbanes-Oxley does provide some ability to recover incentive
awards in certain circumstances. If QCR Holdings is required to restate its financials due to
noncompliance with any financial reporting requirements as a result of misconduct, the Chief
Executive Officer and Chief Financial Officer must reimburse QCR Holdings for (1) any bonus or
other incentive- or equity-based compensation received during the 12 months following the first
public issuance of the non-complying document, and (2) any profits realized from the sale of
securities of QCR Holdings during those 12 months.
22
Stock Ownership Guidelines
QCR Holdings does not have any stock ownership requirements for its executive officers or
directors. Both the executive officers as a group and the directors as a group have made and
continue to maintain significant investment in QCR Holdings.
Employment Agreements and Post-Termination Payments
On January 1, 2004, QCR Holdings entered into separate Employment Agreements with each of the
NEOs. On March 21, 2006 and again on December 14, 2006, QCR Holdings entered into an amended and
restated employment agreement with Mr. Bauer as a part of our succession plan, as described on page
29 of this proxy statement.
These agreements provide for severance compensation to be paid if the executives employment
is terminated under certain conditions, such as termination by the executive, following a change in
control, or termination by us other than due to death or disability, for cause or upon a material
breach of the agreement. The appropriate terms are defined in the employment agreements.
The employment agreements between us and the NEOs and the related severance provisions are
designed to meet the following objectives:
Change in Control. As part of our normal course of business, we engage in discussions with
other companies about possible collaborations and/or other ways in which the companies may work
together to further our respective long-term objectives. In addition, many larger, established
companies consider companies at similar stages of development to ours as potential acquisition
targets. In certain scenarios, the potential for merger or being acquired may be in the best
interests of our stockholders. We provide severance compensation if an executives employment is
terminated following a change in control transaction to promote the ability of our senior
executives to act in the best interests of our stockholders even though their employment could be
terminated as a result of the transaction.
Termination without Cause. If we terminate the employment of an executive officer without
cause as defined in the applicable agreement, we are obligated to continue to pay him certain
amounts.
We believe these payments are appropriate because the terminated executive is bound by
confidentiality, nonsolicitation and non-compete provisions and because the executive and we have a
mutually agreed to severance package that is in place prior to any termination event. This provides
us with more flexibility to make a change in senior management if such a change is in our and our
stockholders best interests.
Tax and Accounting Considerations
QCR Holdings takes into account tax and accounting implications in the design of its
compensation programs. For example, in the selection of long-term incentive instruments, the
Committee reviews the projected expense amounts and expense timing associated with alternative
types of awards. Under current accounting rules (i.e., Financial Accounting Standard 123, as
revised in 2004), QCR Holdings must expense the grant-date fair value of share-based grants such as
stock options, restricted stock, and SARs settled in stock. The grant-date value is amortized and
expensed over the service period or vesting period of the grant. In contrast, awards that are not
share-based (e.g., SARs settled in cash) are expensed based on a value that may fluctuate widely
over the vesting period and is not fixed at grant date. In selecting appropriate incentive
devices, the Committee reviews extensive modeling analyses and considers the related tax and
accounting issues.
23
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public
corporations for compensation in excess of $1 million paid to the chief executive officer and four
other most highly compensated executive officers in any fiscal year. The compensation QCR Holdings
paid in 2006 to the NEOs is intended to be deductible under Section 162(m). However, deductibility
is not the sole factor used in determining the appropriate levels or methods of compensation. The
Committee retains the flexibility to pay non-deductible compensation if it believes doing so is in
the best interests of QCR Holdings.
EXECUTIVE COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Committee believes our compensation philosophy and policies regarding executive
compensation has been established which will allow us to attract and retain exceptional executive
officers and to motivate and reward those executives based on high levels of performance, which
will contribute to long-term shareholder value.
In performing its oversight role, the Committee has reviewed and discussed the CD&A with
management. Based on such review and discussion, the Committee recommended to the board of
directors that the 2006 CD&A be included in its Annual Report on Form 10-K and this Proxy
Statement.
Respectfully submitted by the members of the Executive Committee of the Board of Directors:
James J. Brownson (Chair)
Patrick S. Baird
Mark C. Kilmer
John K. Lawson
Ronald G. Peterson
John A. Rife
24
EXECUTIVE COMPENSATION
The following table sets forth the following information: (i) the dollar value of base salary
and bonus earned during the year ended December 31, 2006; (ii) the aggregate grant date fair value
of stock and option awards granted at any time and expensed during the year, computed in accordance
with FAS 123(R); (iii) the dollar value of earnings for services pursuant to awards granted during
the year under non-equity incentive plans; (iv) the change in pension value and non-qualified
deferred compensation earnings during the year; (v) all other compensation for the year; and,
finally, (vi) the dollar value of total compensation for the year.
Summary Compensation Table
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Change in |
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pension |
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value and |
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nonqualified |
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Non-equity |
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deferred |
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Name and |
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Stock |
|
Option |
|
incentive plan |
|
compensation |
|
All other |
|
|
principal |
|
|
|
|
|
Salary |
|
Bonus |
|
awards |
|
awards |
|
compensation |
|
earnings |
|
compensation |
|
Total |
position |
|
Year |
|
($) |
|
($) |
|
($) |
|
($)(1) |
|
($) |
|
($) |
|
($) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(j) |
Douglas M.
Hultquist,
President & CEO |
|
|
2006 |
|
|
$ |
220,500 |
|
|
|
|
|
|
|
|
|
|
$ |
13,563 |
|
|
$ |
55,125 |
|
|
$ |
164,639 |
|
|
$ |
46,591 |
(2) |
|
$ |
500,418 |
|
|
|
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Michael A.
Bauer, President &
CEO of Quad City
Bank |
|
|
2006 |
|
|
$ |
220,500 |
|
|
|
|
|
|
|
|
|
|
$ |
16,953 |
|
|
$ |
64,313 |
|
|
$ |
291,665 |
|
|
$ |
143,934 |
(3) |
|
$ |
737,365 |
|
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Todd A. Gipple, EVP
& CFO |
|
|
2006 |
|
|
$ |
178,500 |
|
|
|
|
|
|
|
|
|
|
$ |
18,562 |
|
|
$ |
49,534 |
|
|
$ |
48,728 |
|
|
$ |
36,657 |
(4) |
|
$ |
331,981 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry J.
Helling, President
& CEO of Cedar
Rapids Bank |
|
|
2006 |
|
|
$ |
200,000 |
|
|
|
|
|
|
|
|
|
|
$ |
6,455 |
|
|
$ |
67,111 |
|
|
$ |
48,582 |
|
|
$ |
61,847 |
(5) |
|
$ |
383,995 |
|
|
|
|
(1) |
|
The value shown is what is included in our financial statements per FAS
123(R) and covers all amounts expensed in 2006 for all options granted to that executive,
whether or not the options were granted in 2006. See our Annual Report for the year ended
December 31, 2006 for a complete description of the FAS 123(R) valuation. The actual number of
awards granted in 2006 is shown in the Grants of Plan Based Awards table included in this
filing. |
|
(2) |
|
Mr. Hultquist had contributions made to the 401(k) Plan for his benefit in
the amount of $10,624; reimbursement for tax preparation services in the amount of $2,030; car
allowance of $8,000; country club dues of $9,539 and received term life insurance, which had a
premium cost of $1,398. In addition, pursuant to the deferred compensation arrangement, QCR
Holdings made a contribution for his benefit in the amount of $15,000. This does not include
the incremental benefit recognized by QCR Holdings during 2006 with respect to the 31,125 cash
settled stock appreciation rights he had outstanding at December 31, 2006. |
25
|
|
|
(3) |
|
Mr. Bauer had contributions made to the 401(k) Plan for his benefit in the
amount of $10,624; reimbursement for tax preparation services in the amount of $2,030; car
allowance of $8,000; country club dues of $4,242 and received term life insurance, which had a
premium cost of $3,138. He also received a payment in the amount of $55,900 in connection
with the exercise of 6,000 stock appreciation rights. In addition, pursuant to the deferred
compensation arrangement, QCR Holdings made a contribution for his benefit in the amount of
$60,000. This does not include the incremental benefit recognized by QCR Holdings during 2006
with respect to the 24,375 cash settled stock appreciation rights he had outstanding at
December 31, 2006. |
|
(4) |
|
Mr. Gipple had contributions made to the 401(k) Plan for his benefit in
the amount of $10,418; reimbursement for tax preparation services in the amount of $1,705; car
allowance of $8,000; country club dues of $6,024 and received term life insurance, which had a
premium cost of $510. In addition, pursuant to the deferred compensation arrangement, QCR
Holdings made a contribution for his benefit in the amount of $10,000. This does not include
the incremental benefit recognized by QCR Holdings during 2006 with respect to the 3,750 cash
settled stock appreciation rights he had outstanding at December 31, 2006. |
|
(5) |
|
Mr. Helling had contributions made to the 401(k) Plan for his benefit in
the amount of $10,624; reimbursement for tax preparation services in the amount of $880; car
allowance of $6,000; country club dues of $10,995 and received term life insurance, which had
a premium cost of $1,098. He also received a payment in the amount of $20,250 in connection
with the exercise of 1,800 stock appreciation rights. In addition, pursuant to the deferred
compensation arrangement, QCR Holdings made a contribution for his benefit in the amount of
$12,000. This does not include the incremental benefit recognized by QCR Holdings during 2006
with respect to the 1,800 cash settled stock appreciation rights he had outstanding at
December 31, 2006. |
The following table sets forth certain information with respect to potential payment
levels under the annual cash incentive (bonus) program and the options granted during 2006 to the
individuals named in the Summary Compensation Table.
Grants of Plan Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other |
|
All other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock |
|
option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
awards; |
|
awards; |
|
Exercise |
|
|
|
|
|
|
|
|
Estimated future payouts under |
|
Number |
|
Number of |
|
or base |
|
Grant date |
|
|
|
|
|
|
non-equity incentive plan |
|
of shares |
|
securities |
|
price of |
|
fair value |
|
|
|
|
|
|
awards(1) |
|
of stock |
|
underlying |
|
option |
|
of option |
|
|
Grant |
|
Threshold |
|
Target |
|
Maximum |
|
or units |
|
options(2) |
|
awards |
|
awards |
Name |
|
date |
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
($/Sh) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
Douglas M. Hultquist |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
1/27/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900 |
|
|
$ |
19.05 |
|
|
$ |
25,428 |
|
Annual cash
incentive
(bonus) |
|
|
|
|
|
$ |
0 |
|
|
$ |
143,325 |
|
|
$ |
214,988 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Bauer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
1/27/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900 |
|
|
$ |
19.05 |
|
|
$ |
25,428 |
|
Annual cash
incentive
(bonus) |
|
|
|
|
|
$ |
0 |
|
|
$ |
143,325 |
|
|
$ |
214,988 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd A. Gipple |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
1/27/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500 |
|
|
$ |
19.05 |
|
|
$ |
16,300 |
|
|
|
|
10/26/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750 |
|
|
$ |
17.60 |
|
|
$ |
4,568 |
|
Annual cash
incentive
(bonus) |
|
|
|
|
|
$ |
0 |
|
|
$ |
80,325 |
|
|
$ |
120,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry J. Helling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
1/27/06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,350 |
|
|
$ |
19.05 |
|
|
$ |
15,428 |
|
Annual cash
incentive
(bonus) |
|
|
|
|
|
$ |
0 |
|
|
$ |
80,000 |
|
|
$ |
120,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents estimated possible payouts under the annual cash incentive (bonus)
plan. Actual payouts are shown in the Summary Compensation Table. |
|
(2) |
|
Represents actual stock options grants made under the stock incentive plan. |
26
The following table sets forth information on outstanding options held by the individuals
named in the Summary Compensation Table at December 31, 2006, including the number of shares
underlying both exercisable and unexercisable portions of each stock option as well as the exercise
price and the expiration date of each outstanding option. Other than what is footnoted below, the
options vest in five equal annual portions beginning one year from the date of grant. There were
no stock awards held at December 31, 2006.
Outstanding Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
|
|
|
|
|
|
|
|
Equity incentive |
|
|
|
|
|
|
Number of |
|
|
|
|
|
plan awards; Number |
|
|
|
|
|
|
securities |
|
Number of |
|
of securities |
|
|
|
|
|
|
underlying |
|
securities |
|
underlying |
|
|
|
|
|
|
unexercised options |
|
underlying |
|
unexercised |
|
Option exercise |
|
|
|
|
(#) |
|
unexercised options |
|
unearned options |
|
Price |
|
Option expiration |
Name |
|
Exercisable |
|
(#) Unexercisable |
|
(#) |
|
($) |
|
date |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
Douglas M. Hultquist |
|
|
1,000 |
|
|
|
4,000 |
|
|
|
|
|
|
$ |
21.00 |
|
|
|
1/28/2015 |
|
|
|
|
|
|
|
|
3,900 |
(1) |
|
|
|
|
|
$ |
19.05 |
|
|
|
1/27/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Bauer |
|
|
1,000 |
|
|
|
4,000 |
|
|
|
|
|
|
$ |
21.00 |
|
|
|
1/28/2015 |
|
|
|
|
|
|
|
|
3,900 |
(2) |
|
|
|
|
|
$ |
19.05 |
|
|
|
1/27/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd A. Gipple |
|
|
11,250 |
|
|
|
|
|
|
|
|
|
|
$ |
8.83 |
|
|
|
1/5/2010 |
|
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
$ |
10.75 |
|
|
|
6/30/2010 |
|
|
|
|
2,250 |
|
|
|
|
|
|
|
|
|
|
$ |
7.13 |
|
|
|
1/5/2011 |
|
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
$ |
6.90 |
|
|
|
6/29/2011 |
|
|
|
|
1,800 |
|
|
|
450 |
|
|
|
|
|
|
$ |
7.45 |
|
|
|
1/4/2012 |
|
|
|
|
91 |
|
|
|
22 |
|
|
|
|
|
|
$ |
9.87 |
|
|
|
6/28/2012 |
|
|
|
|
1,350 |
|
|
|
900 |
|
|
|
|
|
|
$ |
11.41 |
|
|
|
1/6/2013 |
|
|
|
|
90 |
|
|
|
1,350 |
|
|
|
|
|
|
$ |
18.67 |
|
|
|
1/5/2014 |
|
|
|
|
300 |
|
|
|
1,200 |
|
|
|
|
|
|
$ |
22.00 |
|
|
|
1/5/2015 |
|
|
|
|
600 |
|
|
|
2,400 |
|
|
|
|
|
|
$ |
21.00 |
|
|
|
1/28/2015 |
|
|
|
|
|
|
|
|
2,500 |
(1) |
|
|
|
|
|
$ |
19.05 |
|
|
|
1/27/2016 |
|
|
|
|
|
|
|
|
750 |
|
|
|
|
|
|
$ |
17.60 |
|
|
|
10/26/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry J. Helling |
|
|
10,800 |
|
|
|
|
|
|
|
|
|
|
$ |
7.00 |
|
|
|
4/10/2011 |
|
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
$ |
6.90 |
|
|
|
6/29/2011 |
|
|
|
|
400 |
|
|
|
1,600 |
|
|
|
|
|
|
$ |
21.00 |
|
|
|
1/28/2015 |
|
|
|
|
|
|
|
|
2,350 |
(1) |
|
|
|
|
|
$ |
19.05 |
|
|
|
1/27/2016 |
|
|
|
|
(1) |
|
Options vest one year from date of grant. |
|
(2) |
|
Options vest in three equal annual portions beginning one year from date of
grant. |
None of the individuals named in the Summary Compensation Table exercised any stock
options during the year ended December 31, 2006, therefore the Option Exercises and Stock Vested
table has been omitted.
27
The following table sets forth the present value of accumulated benefits payable to each of
the individuals named in the Summary Compensation Table, including the number of years of service
credited to each under the Supplemental Retirement Plan determined using interest rate and
mortality rate assumptions consistent with those used in our financial statements. Information
regarding the Supplemental Retirement Plan can be found under the heading Non-qualified
Supplemental Executive Retirement Program on page 19 of this proxy statement.
Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of years |
|
Present value of |
|
Payments during |
|
|
|
|
credited service |
|
accumulated benefit |
|
last fiscal year |
Name |
|
Plan name |
|
(#) |
|
($) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
Douglas M. Hultquist |
|
Supplemental Executive
Retirement Plan |
|
|
12 |
|
|
$ |
255,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Bauer |
|
Supplemental Executive
Retirement Plan |
|
|
12 |
|
|
$ |
415,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd A. Gipple |
|
Supplemental Executive
Retirement Plan |
|
|
6 |
|
|
$ |
78,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry J. Helling |
|
Supplemental Executive
Retirement Plan |
|
|
5 |
|
|
$ |
93,764 |
|
|
|
|
|
The following table sets forth information concerning our non-qualified deferred
compensation agreements with each individual named in the Summary Compensation Table. The
agreements are discussed in detail on page 20 of this proxy statement.
Non-Qualified Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
|
Registrant |
|
Aggregate |
|
Aggregate |
|
|
|
|
contributions in |
|
contributions in |
|
earnings in |
|
withdrawals/ |
|
Aggregate balance |
|
|
2006 |
|
2006 |
|
2006 |
|
distributions |
|
at 12/31/06 |
Name |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
Douglas M. Hultquist |
|
$ |
15,000 |
|
|
$ |
15,000 |
|
|
$ |
23,796 |
|
|
|
|
|
|
$ |
324,234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Bauer |
|
$ |
15,000 |
|
|
$ |
60,000 |
(1) |
|
$ |
28,836 |
|
|
|
|
|
|
$ |
401,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd A. Gipple |
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
$ |
7,548 |
|
|
|
|
|
|
$ |
117,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry J. Helling |
|
$ |
12,000 |
|
|
$ |
12,000 |
|
|
$ |
11,835 |
|
|
|
|
|
|
$ |
165,825 |
|
|
|
|
(1) |
|
The amended employment agreement signed on March 21, 2006 provided for a one-time
contribution in the amount of $40,000, which is included in this amount. |
28
Succession Plan
In March 2006, Mr. Bauer indicated to our Executive Committee that he intends to retire in
2009 at age 60. The Executive Committee, Mr. Bauer and Mr. Hultquist worked together during the
following months to design a succession plan. This succession plan addresses the ongoing needs of
QCR Holdings and recognizes Mr. Bauers contribution to the organization. The Committee believes
that the succession plan will further our interests by ensuring a smooth management transition,
promoting the continued success and financial performance of QCR Holdings and outlining the
continuing relationship with Mr. Bauer. On December 15, 2006, we issued a press release announcing
that John H. Anderson will succeed Mr. Bauer as President and Chief Executive Officer of Quad City
Bank & Trust at the time of our annual meeting in May of 2007. In the interim, Mr. Anderson has
assumed the title of Executive Vice President. After Mr. Anderson becomes the President in May of
2007, Mr. Bauer will move into the role of Vice Chairman of both QCR Holdings and Quad City Bank &
Trust and will continue to serve on the boards of both in addition to a number of the our other
affiliated bank boards until his retirement in May of 2009. Mr. Bauer will gradually reduce his
executive management duties with us over the next two years and continue to play a role beyond the
May 2009 retirement date.
As part of the succession plan, Mr. Bauer entered into amended agreements that reflect his
employment relationship with us, as more fully described below. As part of our desire to recognize
Mr. Bauers long-standing contribution and to reward his continued contribution during the
transition period, the board of directors approved certain amendments to Mr. Bauers compensation
arrangements to provide additional retirement benefits and additional performance-based bonus
incentives based on the success of the overall transition. These arrangements are further
described in the following sections of this Proxy Statement.
Future arrangements contemplated under the succession plan include our plan to enter into a
separate consulting agreement with Mr. Bauer that would take effect upon his retirement from the
board of directors in May of 2009. The consulting agreement will provide for fees of up to $2,000
per month, based on customer retention formulas or other fee schedules set by the Executive
Committee. Upon Mr. Bauers retirement from the board of directors of QCR Holdings, we plan to
establish and fund a charitable foundation to be administered by Mr. Bauer for the benefit of the
local community. Mr. Bauer may earn additional fees of $1,500 per month for services rendered on
behalf of the foundation.
Terms of Mr. Douglas M. Hultquists Employment Agreement
On January 1, 2004, we entered into an employment agreement with Mr. Hultquist. The agreement
has a three-year term and in the absence of notice from either party to the contrary, the
employment term extends for an additional one year on the anniversary of the agreement. Pursuant
to the agreement, Mr. Hultquist will receive a minimum salary of $175,000. The agreement includes
provisions for the increase of compensation on an annual basis, performance bonuses, membership in
various local clubs, an automobile allowance and participation in our benefit plans. The agreement
also provides term life insurance coverage of two times Mr. Hultquists base salary and average
annual bonus as of the date of the agreement, which may be provided through a group term carve-out
plan. The agreement further provides for severance compensation equal to one year of salary plus
average annual bonus in the event Mr. Hultquist is terminated without cause and three times the sum
of salary and average annual bonus if he is terminated within one year following a change in
control or if he voluntarily terminates employment within six months of a change in control.
29
Terms of Mr. Michael A. Bauers Employment Agreement
On March 21, 2006 and again on December 14, 2006, QCR Holdings entered into an amended and
restated employment agreement with Mr. Bauer as part of our succession plan, as described on page
29 of this proxy statement. Both agreements have a term ending on the date of the 2009 annual
meeting of stockholders. Consistent with QCR Holdings corporate succession plan, Mr. Bauer shall
serve as President and Chief Executive Officer of Quad City Bank & Trust through May 2, 2007. Upon
relinquishing the above titles with Quad City Bank & Trust, Mr. Bauer shall continue as an employee
of QCR Holdings and shall become Vice Chairman of the board of directors of Quad City Bank & Trust
and QCR Holdings, until otherwise provided by QCR Holdings board of directors. Pursuant to the
agreement, Mr. Bauer will receive a salary of $220,500 through his retirement in May 2009. The
agreement includes provisions for the possible increase of compensation on an annual basis,
performance bonuses, membership in various local clubs, an automobile allowance and participation
in our benefit plans. With respect to performance bonuses, the agreement specifically provides for
an additional transition incentive bonus arrangement with an opportunity to earn up to $80,000
annually based on overall assistance with the transition contemplated by the succession plan. The
payment of the transitional incentive bonus may be credited to Mr. Bauers deferred income account,
with such election to defer made in accordance with applicable laws. The agreement also provides
term life insurance coverage of two times Mr. Bauers base salary and average annual bonus as of
the date of the agreement, which may be provided through a group term carve-out plan. The agreement
further provides for severance compensation equal to one year of salary plus average annual bonus
in the event Mr. Bauer is terminated without cause and a pro-rata share, as if his employment was
not terminated, equal to three times the sum of salary plus average annual bonus if he is
terminated within one year following a change in control or if he voluntarily terminates employment
within six months of a change in control.
Terms of Mr. Todd A. Gipples Employment Agreement
On January 1, 2004, we entered into an employment agreement with Mr. Gipple. Mr. Gipples
employment agreement provides that Mr. Gipple is to receive a minimum salary of $140,500. The
agreement includes a provision for the increase in compensation on an annual basis, performance
bonuses, membership in a Quad Cities country club, a monthly automobile allowance and participation
in our benefit plans. Mr. Gipples agreement also provides term life insurance coverage of two
times the sum of his base salary and average annual bonus as of the date of the agreement, which
may be provided through a group term carve-out plan. The agreement further provides that he is
entitled to a payment equal to the sum of one-half of his then-current annual salary plus one-half
of his average annual bonus if he is terminated without cause and two times the sum of his annual
salary and average annual bonus if he is terminated within one year following a change in control
or if he voluntarily terminates employment within six months of a change in control.
Terms of Mr. Larry J. Hellings Employment Agreement
On January 1, 2004, we entered into an employment agreement with Mr. Helling. Mr.
Hellings employment agreement provides that Mr. Helling is to receive a base annual salary of
$167,000. The agreement includes a provision for the increase in compensation on an annual basis,
performance bonuses, a monthly automobile allowance, membership in various country clubs and
participation in our benefit plans. Mr. Hellings agreement also provides term life insurance
coverage of two times the sum of his base salary and average annual bonus as of the date of the
agreement, which may be provided through a group term carve-out plan. The agreement further
provides for a severance payment equal to six months of his salary in the event
of a termination without cause and two times his annual salary in the event he is terminated
within one year following a change in control or if he voluntarily terminates employment within six
months of a change in control. Additionally, Mr. Hellings agreement allows him to participate in
the Cedar Rapids Long-term Deferred Incentive Compensation Program (as described
30
under the heading Long-Term Deferred Incentive Compensation Program). Under the
agreement, Mr. Helling will be allocated a total of 40% of amounts paid pursuant to the incentive
program.
Potential Payments Upon Termination or Change of Control
The following table sets forth the potential payments payable to each of the individuals named
in the Summary Compensation Table upon termination of employment, change in control, disability and
death, assuming the events occurred on December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Cause |
|
|
|
|
|
|
|
|
|
|
Termination |
|
Or Voluntary |
|
Change |
|
|
|
|
Name |
|
Benefit |
|
Without Cause |
|
Termination |
|
In Control |
|
Disability |
|
Death |
Douglas M. |
|
Salary |
|
$ |
220,500 |
|
|
|
(1) |
|
|
$ |
661,500 |
|
|
$ |
147,007 |
(2) |
|
|
(3) |
|
Hultquist |
|
Bonus |
|
$ |
77,471 |
|
|
|
(1) |
|
|
$ |
232,414 |
|
|
$ |
51,650 |
|
|
|
(3) |
|
|
|
Option acceleration |
|
|
|
|
|
|
|
|
|
$ |
48,190 |
(4) |
|
|
|
|
|
|
|
|
|
|
Health Insurance |
|
$ |
25,865 |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
595,943 |
(7) |
|
|
SERP acceleration |
|
|
|
|
|
|
|
|
|
$ |
137,468 |
|
|
|
|
|
|
|
|
|
|
|
Tax gross up |
|
|
|
|
|
|
|
|
|
$ |
363,725 |
(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. |
|
Salary |
|
$ |
220,500 |
|
|
|
(1) |
|
|
$ |
514,500 |
|
|
$ |
147,007 |
(2) |
|
|
(3) |
|
Bauer |
|
Bonus |
|
$ |
80,534 |
|
|
|
(1) |
|
|
$ |
187,913 |
|
|
$ |
53,692 |
|
|
|
(3) |
|
|
|
Option acceleration |
|
|
|
|
|
|
|
|
|
$ |
48,190 |
(4) |
|
|
|
|
|
|
|
|
|
|
Health Insurance |
|
$ |
20,836 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
602,068 |
(7) |
|
|
SERP acceleration |
|
|
|
|
|
|
|
|
|
$ |
41,344 |
|
|
|
|
|
|
|
|
|
|
|
Tax gross up |
|
|
|
|
|
|
|
|
|
|
|
(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd A. |
|
Salary |
|
$ |
89,250 |
|
|
|
(1) |
|
|
$ |
357,000 |
|
|
$ |
119,006 |
(2) |
|
|
(3) |
|
Gipple |
|
Bonus |
|
$ |
24,798 |
|
|
|
(1) |
|
|
$ |
99,190 |
|
|
$ |
33,065 |
|
|
|
(3) |
|
|
|
Option acceleration |
|
|
|
|
|
|
|
|
|
$ |
58,389 |
(4) |
|
|
|
|
|
|
|
|
|
|
Health Insurance |
|
$ |
25,865 |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
456,190 |
(7) |
|
|
SERP acceleration |
|
|
|
|
|
|
|
|
|
$ |
55,613 |
|
|
|
|
|
|
|
|
|
|
|
Tax gross up |
|
|
|
|
|
|
|
|
|
$ |
214,566 |
(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry J. |
|
Salary |
|
$ |
100,000 |
|
|
|
(1) |
|
|
$ |
400,000 |
|
|
$ |
133,340 |
(2) |
|
|
(3) |
|
Helling |
|
Bonus |
|
|
|
|
|
|
(1) |
|
|
|
|
|
|
$ |
45,062 |
|
|
|
(3) |
|
|
|
Option acceleration |
|
|
|
|
|
|
|
|
|
$ |
24,095 |
(4) |
|
|
|
|
|
|
|
|
|
|
Health Insurance |
|
$ |
22,659 |
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
490,124 |
(7) |
|
|
SERP acceleration |
|
|
|
|
|
|
|
|
|
$ |
52,092 |
|
|
|
|
|
|
|
|
|
|
|
Tax gross up |
|
|
|
|
|
|
|
|
|
|
|
(8) |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In the event the NEO is terminated for cause or voluntarily terminates his
employment, QCR Holdings would pay his accrued and unpaid salary, and any accrued and unpaid
personal days and would have no further obligations to the NEO. Cause is defined in each
NEOs employment agreement. |
|
(2) |
|
In the event of each of the NEOs disability during the employment term, payments
based upon his then current annual salary and the average annual bonus shall continue
thereafter through the last day of the one (1) year period beginning on the date of
disability, after which time the NEOs employment shall terminate. Payments made in the event
of the NEOs disability shall be equal to 66-2/3% of his salary and the average annual bonus, |
31
|
|
|
|
|
less any amounts received under his short or long-term disability programs, as applicable. The
above amounts do not reflect the offset of disability insurance benefits. |
|
(3) |
|
In the event of each of the NEOs death during the employment term, the NEO shall be
paid his accrued and unpaid salary, and his earned annual bonus for the year in which he died
prorated on a per diem basis through the date of death. |
|
(4) |
|
In the event of a change of control, all outstanding options shall become
immediately and fully vested, exercisable and unrestricted. This represents the aggregate
fair value of option awards unexercisable at December 31, 2006, computed in accordance with
FAS 123(R). |
|
(5) |
|
Health insurance coverage comparable to the coverage in effect immediately prior to
termination would continue for a period of three years. |
|
(6) |
|
Health insurance coverage comparable to the coverage in effect immediately prior to
termination would continue until May 2009. |
|
(7) |
|
A death benefit equal to two times the sum of the NEOs then current annual salary
and the average annual bonus would be paid to his beneficiary as of the date of death. |
|
(8) |
|
Upon a change in control of QCR Holdings, the NEO may be subject to certain excise
taxes pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended. We have
agreed to reimburse each NEO for all excise taxes that are imposed on him under Section 4999
and any income and excise taxes that are payable by him as a result of any reimbursements for
Section 4999 excise taxes. The calculation of the 4999 gross-up amount in the above tables is
based upon a 4999 excise tax rate of 20%, a 35% federal income tax rate, a 1.45% Medicare tax
rate and, for Mr. Hultquist, a 3% state income tax rate and for Mr. Gipple, a 6% state tax
income tax rate. Based on the amounts shown in the Change-in-Control column, Messrs. Bauer
and Helling would not have an excise tax liability. |
Compensation Committee Interlocks and Insider Participation
During 2006, the Executive Committee, which sets the salaries and compensation for our
executive officers, was comprised solely of independent directors: Messrs. Baird, Brownson, Kilmer,
Lawson, Peterson, Rife and Royer. The Compensation and Benefits Committee, which sets the salaries
and compensation of all employees who are not executive officers, consisted of Messrs. Bauer,
Hultquist, Gipple, Helling, Lawson and Harris, Ms. Bawden and Whiteside. Messrs. Bauer, Hultquist,
Gipple and Helling are executives officers and do not participate in any decisions involving their
own compensation.
DIRECTOR COMPENSATION
QCR Holdings uses a combination of cash and stock-based incentive compensation to attract
and retain qualified candidates to serve on the Board. In setting director compensation, we
consider the significant amount of time that Directors expend in fulfilling their duties as well as
the skill-level required of members of the Board.
Cash Compensation Paid to Board Members
Members of the board who are not employees of QCR Holdings are entitled to receive an annual
cash retainer and an attendance fee of scheduled Board and Committee meetings. Pursuant to the
QCR Holdings, Inc. 1997 Deferred Income Plan, a director may elect to defer the fees and cash
compensation payable by us for the directors service until either the termination of such
directors service on the board or the age specified in the directors deferral election. During
2006, all but three directors deferred 100% of his or her director fees pursuant to the plan, and the total expense for the deferred fees
with respect to all participating directors was $298,317 for 2006. Directors who are employees of
QCR Holdings
32
receive no compensation for their service as directors. The following table shows the
director fees approved for 2007 and the fees paid for 2006 for QCR Holdings and our other
affiliated boards.
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
2006 |
|
QCR Holdings |
|
|
|
|
|
|
|
|
Quarterly Retainer |
|
$ |
2,500 |
|
|
$ |
2,500 |
|
Additional Quarterly Retainer |
|
|
|
|
|
|
|
|
Board Chairman |
|
|
2,000 |
|
|
|
|
|
Audit Committee Chairman |
|
|
1,500 |
|
|
|
1,500 |
|
Executive Committee Chairman |
|
|
|
|
|
|
1,500 |
|
Compensation and Benefits Committee Chairman |
|
|
500 |
|
|
|
250 |
|
Technology Committee Chairman |
|
|
500 |
|
|
|
250 |
|
Attendance at Board Meeting |
|
|
200 |
|
|
|
200 |
|
Attendance at Audit Committee Meeting |
|
|
500 |
|
|
|
400 |
|
Attendance at all other Committee Meetings |
|
|
300 |
|
|
|
300 |
|
Quad City Bank & Trust (1) |
|
|
|
|
|
|
|
|
Quarterly Retainer |
|
|
1,440 |
|
|
|
1,600 |
|
Additional Quarterly Retainer |
|
|
|
|
|
|
|
|
Board Chairman |
|
|
900 |
|
|
|
|
|
Loan Committee Chairman |
|
|
450 |
|
|
|
500 |
|
Trust Committee Chairman |
|
|
225 |
|
|
|
250 |
|
Asset/Liability Management Committee Chairman |
|
|
225 |
|
|
|
250 |
|
Board Affairs Committee Chairman |
|
|
|
|
|
|
250 |
|
Attendance at Board Meeting |
|
|
90 |
|
|
|
100 |
|
Attendance at Committee Meeting |
|
|
225 |
|
|
|
250 |
|
Cedar Rapids Bank & Trust |
|
|
|
|
|
|
|
|
Quarterly Retainer |
|
|
1,600 |
|
|
|
1,600 |
|
Additional Quarterly Retainer |
|
|
|
|
|
|
|
|
Board Chairman |
|
|
1,000 |
|
|
|
|
|
Loan Committee Chairman |
|
|
500 |
|
|
|
500 |
|
Trust Committee Chairman |
|
|
250 |
|
|
|
250 |
|
Asset/Liability Management Committee Chairman |
|
|
250 |
|
|
|
250 |
|
Attendance at Board Meeting |
|
|
100 |
|
|
|
100 |
|
Attendance at Committee Meeting |
|
|
250 |
|
|
|
250 |
|
Rockford Bank & Trust |
|
|
|
|
|
|
|
|
Attendance at Board Meeting |
|
|
500 |
|
|
|
500 |
|
Quarterly Retainer |
|
|
|
|
|
|
|
|
Loan Committee Chairman |
|
|
500 |
|
|
|
500 |
|
Trust Committee Chairman |
|
|
250 |
|
|
|
|
|
Asset/Liability Management Committee Chairman |
|
|
250 |
|
|
|
250 |
|
Attendance at Committee Meeting |
|
|
250 |
|
|
|
250 |
|
First Wisconsin Bank & Trust |
|
|
|
|
|
|
|
|
Attendance at Board Meeting |
|
|
500 |
|
|
|
|
|
Quarterly Retainer |
|
|
|
|
|
|
|
|
Loan Committee Chairman |
|
|
500 |
|
|
|
|
|
Asset/Liability Management Committee Chairman |
|
|
250 |
|
|
|
|
|
Attendance at Committee Meeting |
|
|
250 |
|
|
|
|
|
Quad City Bancard, Inc. |
|
|
|
|
|
|
|
|
Attendance at Board Meeting |
|
|
300 |
|
|
|
300 |
|
M2 Lease Funds, LLC |
|
|
|
|
|
|
|
|
Attendance at Board Meeting |
|
|
500 |
|
|
|
500 |
|
|
|
|
(1) |
|
The directors of Quad City Bank & Trust voluntarily reduced their 2007 fees by
10% based on financial performance in 2006. |
33
Stock Options
In January 2006, each current non-employee director received a grant of 300 options at the
fair market price of QCR Holdings stock on the date of the grant, or $18.38. In March 2006,
director Brownson received a grant of 2,350 options, and director Kilmer received a grant of 500
options, for their additional work associated with the succession planning for Mr. Bauer. They
were granted at the fair market price of QCR Holdings stock on the grant date, or $18.48. Until an
option is exercised, shares subject to options cannot be voted nor are they eligible to receive
dividends. The options have a 10-year life and will vest in five equal annual portions beginning
one year from the date of grant.
The following table discloses the cash, equity awards and other compensation earned, paid or
awarded, as the case may be, to each of our directors during the fiscal year ended 2006.
Summary Compensation Table Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees earned or |
|
Stock |
|
Option |
|
All other |
|
|
|
|
paid in cash |
|
awards |
|
awards |
|
compensation |
|
Total |
Name |
|
($)(1) |
|
($) |
|
($)(2) (3) |
|
($) |
|
($) |
(a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
Patrick S. Baird |
|
$ |
22,300 |
|
|
|
|
|
|
$ |
2,628 |
|
|
|
|
|
|
$ |
24,928 |
|
James J. Brownson |
|
$ |
34,300 |
|
|
|
|
|
|
$ |
13,502 |
|
|
|
|
|
|
$ |
47,802 |
|
Mark C. Kilmer |
|
$ |
26,450 |
|
|
|
|
|
|
$ |
2,765 |
|
|
|
|
|
|
$ |
29,215 |
|
John K. Lawson |
|
$ |
30,200 |
|
|
|
|
|
|
$ |
2,700 |
|
|
|
|
|
|
$ |
32,900 |
|
Ronald G. Peterson |
|
$ |
25,350 |
|
|
|
|
|
|
$ |
2,767 |
|
|
|
|
|
|
$ |
28,117 |
|
John A. Rife |
|
$ |
16,783 |
|
|
|
|
|
|
$ |
1,308 |
|
|
|
|
|
|
$ |
18,091 |
|
|
|
|
(1) |
|
Directors may elect to defer the receipt of all or part of their fees and
retainers. |
|
(2) |
|
The value shown is what is included in our financial statements per FAS 123(R) and
covers all amounts expensed in 2006 for all options granted to that director, whether or not
the options were granted in 2006. See our Annual Report for the year ended December 31, 2006
for a complete description of the FAS 123(R) valuation. The actual number of awards granted is
shown in the Grants of Plan Based Awards table included in this filing. |
|
(3) |
|
The aggregate number of common shares subject to options outstanding at year end for
each director is disclosed in the Security Ownership of Certain Beneficial Owners on page 35
and 36. |
34
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding our common stock beneficially
owned on December 31, 2006, by each director, by each executive officer named in the summary
compensation table, by persons who are the beneficial owners of more than 5% of our common stock
and by all directors and executive officers of QCR Holdings as a group. Beneficial ownership has
been determined for this purpose in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the Exchange Act), under which a person is deemed to be the beneficial owner of
securities if he or she has or shares voting power or investment power in respect of such
securities or has the right to acquire beneficial ownership of securities within 60 days of
December 31, 2006.
|
|
|
|
|
|
|
|
|
Name of Individual and |
|
Amount and Nature of |
|
Percent |
Number of Persons in Group |
|
Beneficial Ownership(1) |
|
of Class |
|
|
|
|
|
|
|
|
|
Directors and Nominees |
|
|
|
|
|
|
|
|
Patrick S. Baird |
|
|
39,574 |
(2) |
|
|
* |
|
Michael A. Bauer |
|
|
52,670 |
(3) |
|
|
1.2 |
% |
James J. Brownson |
|
|
37,488 |
(4) |
|
|
* |
|
Larry J. Helling |
|
|
48,724 |
(5) |
|
|
1.1 |
% |
Douglas M. Hultquist |
|
|
60,466 |
(6) |
|
|
1.3 |
% |
Mark C. Kilmer |
|
|
35,397 |
(7) |
|
|
* |
|
John K. Lawson |
|
|
16,148 |
(8) |
|
|
* |
|
Charles M. Peters |
|
|
12,888 |
(9) |
|
|
* |
|
Ronald G. Peterson |
|
|
16,683 |
(10) |
|
|
* |
|
John A. Rife |
|
|
7,620 |
(11) |
|
|
* |
|
Other Named Executive Officer |
|
|
|
|
|
|
|
|
Todd A. Gipple |
|
|
48,724 |
(12) |
|
|
1.1 |
% |
5% Stockholder |
|
|
|
|
|
|
|
|
Banc Funds** |
|
|
373,553 |
(13) |
|
|
8.2 |
% |
Tontine*** |
|
|
251,494 |
(14) |
|
|
5.5 |
% |
All directors and executive
officers as a group (20
persons) |
|
|
464,067 |
(15) |
|
|
10.1 |
% |
|
|
|
* |
|
Less than 1%. |
|
** |
|
The Banc Funds, 200 South LaSalle Street, Suite 1680, Chicago, Illinois 60604 |
|
*** |
|
Tontine Financial Partners, L.P., 55 Railroad Avenue, Greenwich, Connecticut 06830 |
|
(1) |
|
Amounts reported include shares held directly, including certain shares subject
to options, as well as shares held in retirement accounts, by certain members of the named
individuals families or held by trusts of which the named individual is a trustee or
substantial beneficiary. Inclusion of shares shall not constitute an admission of beneficial
ownership or voting and sole investment power over included shares. The nature of beneficial
ownership for shares listed in this table is sole voting and investment power, except as set
forth in the following footnotes. |
35
|
|
|
(2) |
|
Includes 720 shares subject to options which are presently exercisable and over
which Mr. Baird has no voting and sole investment power. Also includes 34,634 shares held
jointly by Mr. Baird and his spouse and 4,220 shares held in a trust, over which he has shared
voting and investment power. Excludes 1,380 option shares not presently exercisable. |
|
(3) |
|
Includes 1,000 shares subject to options which are presently exercisable and over
which Mr. Bauer has no voting and sole investment power. Includes 10,181 shares held jointly
by Mr. Bauer and his spouse, includes 1,704 shares held by Mr. Bauers children, 6,862 shares
held in an IRA account, 8,699 shares held in a trust, 7,292 shares held in the 401(k) Plan and
18 shares held by his spouse, all of which he has shared voting and investment power.
Excludes 7,900 option shares not presently exercisable. |
|
(4) |
|
Includes 4,461 shares subject to options which are presently exercisable and over
which Mr. Brownson has no voting and sole investment power. Also includes 3,690 shares held
jointly by Mr. Brownson and his spouse, 2,025 shares held by his spouse, 10,617 shares held in
a trust, and 16,695 shares held in an IRA account, all of which he has shared voting and
investment power. Excludes 6,789 option shares not presently exercisable. |
|
(5) |
|
Includes 11,350 shares subject to options which are presently exercisable and over
which shares Mr. Helling has no voting and sole investment power. Also includes 32,250 shares
held in an IRA account, 3,992 shares held in a trust and 2,997 shares held in the 401(k) Plan,
all of which he has shared voting and investment power. Excludes 3,950 option shares not
presently exercisable. |
|
(6) |
|
Includes 1,000 shares subject to options which are presently exercisable and over
which Mr. Hultquist has no voting and sole investment power. Includes 9,337 shares held by
his spouse or for the benefit of his children, 4,050 shares held in an IRA account, 23,244
shares held in a trust and 6,674 shares in the 401(k) Plan, all of which Mr. Hultquist has
shared voting and investment power. Excludes 7,900 option shares not presently exercisable. |
|
(7) |
|
Includes 1,065 shares subject to options which are presently exercisable and over
which Mr. Kilmer has no voting and sole investment power. Also includes 7,634 shares held by
his spouse or children, 7,123 shares held in a trust and 3,375 shares held in an IRA account,
all of which he has shared voting and investment power. Excludes 1,760 option shares not
presently exercisable. |
|
(8) |
|
Includes 1,590 shares subject to options which are presently exercisable and over
which Mr. Lawson has no voting and sole investment power. Also includes 9,345 shares held in
trust, over which shares he has shared voting and investment power. Excludes 1,410 option
shares not presently exercisable. |
|
(9) |
|
Includes 260 shares subject to options which he has shared voting and investment
power. Also includes 10,500 shares held in an IRA account, 2,028 held in a trust, all of
which he has shared voting and investment power. Excludes 690 option shares not presented
exercisable. |
|
(10) |
|
Includes 2,460 shares subject to options which are presently exercisable and over
which Mr. Peterson has no voting and sole investment power. Also includes 10,848 shares held
in a trust, over which shares he has shared voting and investment power. Excludes 1,440
option shares not presently exercisable. |
|
(11) |
|
Includes 360 shares subject to options which are presently exercisable and over
which Mr. Rife has no voting and sole investment power. Also includes 4,619 shares held
jointly by Mr. Rife and his spouse and 2,641 shares held in a trust, over which he has shared
voting and investment power. Excludes 690 option shares not presently exercisable. |
|
(12) |
|
Includes 18,841 shares subject to options which are presently exercisable and over
which Mr. Gipple has no voting and sole investment power. Also includes 14,722 shares held in
an IRA account, 2,800 shares held by his children and spouse, 2,085 shares held in the 401(k)
Plan, and 638 shares held in a trust, over which he has shared voting and investment power.
Excludes 9,572 option shares not presently exercisable. |
|
(13) |
|
Includes shares held by Banc Fund V L.P., Banc Fund VI L.P. and Banc Fund VII L.P.
as reported in a Schedule 13G/A filed on February 12, 2007. |
|
(14) |
|
Includes shares held by Tontine Financial Partners, L.P., Tontine Management,
L.L.C. and Jeffrey L. Gendell, as reported in a Schedule 13G/A filed on February 2, 2007. |
|
(15) |
|
Excludes 47,111 option shares not presently exercisable. |
36
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the directors, executive
officers and persons who own more than 10% of our common stock file reports of ownership and
changes in ownership with the Securities and Exchange Commission and with the exchange on which the
shares of common stock are traded. These persons are also required to furnish us with copies of
all Section 16(a) forms they file. Based solely on our review of the copies of such forms
furnished to us, and, if appropriate, representations made to us by any reporting person concerning
whether a Form 5 was required to be filed for 2006, we are not aware of any failures to comply with
the filing requirements of Section 16(a) during 2006.
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
Our directors and officers and their associates were customers of and had transactions with
QCR Holdings and our subsidiaries during 2006. Additional transactions are expected to take place
in the future. All outstanding loans, commitments to loan, and certificates of deposit and
depository relationships, in the opinion of management, were made in the ordinary course of
business, on substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did not involve more than
the normal risk of collectibility or present other unfavorable features. All such loans are
approved by the subsidiary banks board of directors in accordance with the bank regulatory
requirements. Additionally, the Audit Committee considers other non-lending transactions between
us and a director to ensure that such transactions do not affect a directors independence.
AUDIT COMMITTEE REPORT
The incorporation by reference of this proxy statement into any document filed with the
Securities and Exchange Commission by QCR Holdings shall not be deemed to include the following
report and related information unless such report is specifically stated to be incorporated by
reference into such document.
The Audit Committee assists the board of directors in carrying out its oversight
responsibilities for our financial reporting process, audit process and internal controls. The
Audit Committee also reviews the audited financial statements and recommends to the board that they
be included in our annual report on Form 10-K. The committee is comprised solely of independent
directors.
The Audit Committee has reviewed and discussed our audited financial statements for the year
ended December 31, 2006 with our management and McGladrey & Pullen, LLP, our independent registered
public accounting firm, including their attestation report on managements assessment of the
effectiveness of the internal control over financial reporting. The committee has also discussed
with McGladrey & Pullen, LLP the matters required to be discussed by SAS 61 (Codification for
Statements on Auditing Standards) as well as having received and discussed the written disclosures
and the letter from McGladrey & Pullen, LLP required by Independence Standards Board Statement No.
1 (Independence Discussions with Audit Committees). Based on the review and discussions with
management and McGladrey & Pullen, LLP, the committee has recommended to the board that the audited
financial statements be included in our annual report on Form 10-K for the year ending December 31,
2006 for filing with the Securities and Exchange Commission.
Audit Committee:
|
|
|
|
|
|
|
|
|
|
|
Patrick S. Baird
|
|
|
|
Mark C. Kilmer
|
|
|
|
|
James J. Brownson
|
|
|
|
John K. Lawson |
|
|
37
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Representatives of McGladrey & Pullen, LLP, our independent registered public accounting firm,
are expected to be present at the meeting and will be given the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
Following is a summary of fees for professional services by McGladrey & Pullen, LLP and RSM
McGladrey, Inc. (an affiliate of McGladrey & Pullen, LLP).
Accountant Fees
During the period covering the fiscal years ended December 31, 2006 and 2005, McGladrey &
Pullen, LLP and RSM McGladrey, Inc. performed the following professional services:
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
2005 |
|
|
|
|
|
|
|
|
|
Audit Fees (1) |
|
$ |
271,222 |
|
|
$ |
220,583 |
|
Audit related fees (2) |
|
|
6,066 |
|
|
|
36,596 |
|
Tax fees (3) |
|
|
113 |
|
|
|
|
|
|
|
|
(1) |
|
Audit fees consist of fees for professional services rendered for the audit of
QCR Holdings financial statements, the audit of QCR Holdings internal control over financial
reporting, review of financial statements included in QCR Holdings quarterly reports, and
review and assistance with review of other SEC filings. |
|
(2) |
|
Audit related fees are principally for research and consultations concerning
financial accounting and internal control reporting matters, student loan audit for Quad City
Bank & Trust, and agreed-upon procedures for 2005. |
|
(3) |
|
Tax fees consist of sales tax consulting fees. |
Audit Committee Approval Policy
Among other things, the Audit Committee is responsible for appointing, setting compensation
for and overseeing the work of the independent auditor. The Audit Committees policy is to approve,
on a case-by-case basis, all audit and permissible non-audit services provided by any audit, tax
consulting or general business consulting firm. The Audit Committee does have a policy of
pre-approving any of these services.
38
REPORT ON FORM 10-K
We will furnish without charge to each person whose proxy is solicited, and to each person
representing that he or she is a beneficial owner of our common stock as of the record date for the
meeting, upon written request, copies of our annual report on Form 10-K as filed with the
Securities and Exchange Commission, together with the financial statements and schedules thereto.
Such written request should be sent to Ms. Shellee R. Showalter, QCR Holdings, Inc., 3551
7th Street, Suite 204, Moline, Illinois 61265.
By order of the Board of Directors
|
|
|
|
James J. Brownson
|
|
Douglas M. Hultquist |
|
Chairman of the Board
|
|
President |
|
Moline, Illinois
March 21, 2007
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
39
|
Annual Meeting of ShareholdersMay 2, 2007 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS Please complete, date, sign and mail the detached proxy card in the enclosed postage-prepaid
envelope. PROXY VOTING You can vote in one of three ways: 1) By Mail, 2) By Internet, 3) By Phone. See the reverse side of this sheet for instructions. IF YOU ARE NOT VOTING BY INTERNET OR BY TELEPHONE, COMPLETE BOTH SIDES
OF THIS PROXY, DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO: Illinois Stock Transfer Co. 209 West Jackson Boulevard, Suite 903 Chicago, Illinois 60606 DETACH PROXY CARD HERE DETACH ATTENDANCE CARD HERE AND MAIL WITH PROXY CARD QCR
HOLDINGS, INC. - This Proxy is Solicited by the Board of Directors. This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR Proposal 1. VOTER CONTROL NUMBER ABOVE NAME HERE
If you plan to personally attend the Annual Meeting of Stockholders, please check the box below and list the names of attendees on the reverse side. COMMON Signature Return this stub in the enclosed envelope with your completed proxy card.
Signature Date , 2007 I/We do plan to attend Please sign exactly as your name appears above. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder should sign. the 2007 meeting.
PLEASE COMPLETE BOTH SIDES, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE. |
|
To vote by mail, complete both sides, sign and date the proxy card below. Detach the card below and return it in the envelope provided. Your Internet vote is quick, confidential and your vote is immediately
submitted. Just follow these easy steps: 1. Read the accompanying Proxy Statement. 2. Visit our Internet voting Site at http://www.illinoisstocktransfer.com, click on the heading Internet Voting
and follow the instructions on the screen. 3. When prompted for your Voter Control Number, enter the number printed just above your name on the front of the proxy card.
Please note that all votes cast by Internet must be completed and submitted prior to Monday, April 30, 2007 at midnight 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. If You Vote By INTERNET, Please Do Not Return Your Proxy Card By Mail 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 just above your name on the front of the proxy card below. Please note that all votes cast by telephone must be completed and submitted prior to Monday,
April 30, 2007 at midnight 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.
If You Vote By TELEPHONE, Please Do Not Return Your Proxy Card By Mail NAMES OF PERSONS PLANNING QCR HOLDINGS, INC. PROXY COMMON TO ATTEND THE 2007 MEETING Proxy is Solicited By the Board of Directors For the Annual
Meeting of Stockholders May 2, 2007 The undersigned hereby appoints Michael A. Bauer, James J. Brownson and Douglas M. Hultquist, or any of them acting in the absence of the others,
with power of substitution, attorneys and proxies, for and in the name and place of the undersigned, to vote the number of shares of common stock that the undersigned would be
entitled to vote if then personally present at the annual meeting of stockholders of QCR Holdings, Inc., to be held at The MARK of the Quad Cities, 1201 River Drive, Moline, Illinois,
on Wednesday, May 2, 2007, at 10:00 a.m., local time, or any adjournments or postponements of the meeting, upon the matters set forth in the notice of annual meeting and proxy statement (receipt of
which is hereby acknowledged) as designated on the reverse side, and in their discretion, the proxies are authorized to vote upon such other business as may come before the meeting.
The Board of Directors recommends a vote FOR: 1. The election of the following Directors: 01 Larry J. Helling 02 Douglas M. Hultquist 03 Mark C. Kilmer 04
Charles M. Peters INSTRUCTION: To vote for nominee(s) above, check box FOR below; to withhold authority to vote for any individual nominee(s), check box WITHHOLD below and list name(s) below.
FOR WITHHOLD |