1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ______)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-12
First Capital, 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):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
--------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
N/A
--------------------------------------------------------------------------
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):
N/A
--------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
N/A
--------------------------------------------------------------------------
5) Total fee paid:
N/A
--------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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.
1) Amount Previously Paid:
N/A
--------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
N/A
--------------------------------------------------------------------
3) Filing Party:
N/A
--------------------------------------------------------------------
4) Date Filed:
N/A
--------------------------------------------------------------------
2
[FIRST CAPITAL, INC. LETTERHEAD]
March 17, 2005
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
First Capital, Inc. We will hold the meeting at the main office of First
Harrison Bank, 220 Federal Drive, N.W., Corydon, Indiana, on Wednesday, April
20, 2005 at 12:00 noon, local time.
The notice of annual meeting and the proxy statement appearing on the
following pages describe the formal business to be transacted at the meeting.
During the meeting, we also will report on the operations of the Company.
Directors and officers of the Company, as well as a representative of Monroe
Shine & Co., Inc., the Company's independent auditors, will be present to
respond to appropriate questions of shareholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete and
mail the enclosed proxy card. If you attend the meeting, you may vote in person
even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ J. Gordon Pendleton /s/ William W. Harrod
J. Gordon Pendleton William W. Harrod
CHAIRMAN OF THE BOARD PRESIDENT AND CHIEF EXECUTIVE OFFICER
3
FIRST CAPITAL, INC.
220 FEDERAL DRIVE, N.W.
CORYDON, INDIANA 47112
(812) 738-2198
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
On April 20, 2005, First Capital, Inc. (the "Company") will hold its
annual meeting of shareholders at the main office of First Harrison Bank, 220
Federal Drive, N.W., Corydon, Indiana. The meeting will begin at 12:00 noon,
local time. At the meeting, shareholders will consider and act on the following:
1. The election of four directors of the Company, each for a three-year
term;
2. The ratification of the appointment of Monroe Shine & Co., Inc. as
independent auditors for the Company for the fiscal year ending
December 31, 2005; and
3. Such other business that may properly come before the meeting.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
The Board of Directors has set March 1, 2005 as the record date for the
meeting. This means that owners of First Capital common stock at the close of
business on that date are entitled to receive notice of the meeting and to vote
at the meeting and any adjournment or postponement of the meeting.
Please complete, sign and date the enclosed form of proxy, which is
solicited by the Board of Directors, and mail it promptly in the enclosed
envelope. The proxy will not be used if you attend the meeting and vote in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Joel E. Voyles
Joel E. Voyles
CORPORATE SECRETARY
Corydon, Indiana
March 17, 2005
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
4
FIRST CAPITAL, INC.
--------------------------------------------------------------------------------
PROXY STATEMENT
--------------------------------------------------------------------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of First Capital, Inc. ("First Capital" or the
"Company") to be used at the annual meeting of shareholders of the Company. The
Company is the holding company for First Harrison Bank ("First Harrison" or the
"Bank"). The annual meeting will be held at the main office of First Harrison,
220 Federal Drive, N.W., Corydon, Indiana, on Wednesday, April 20, 2005, at
12:00 noon, local time. This proxy statement and the enclosed proxy card are
being first mailed on or about March 17, 2005 to shareholders of record.
GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE AT THE MEETING
You are entitled to vote your shares of First Capital common stock if the
records of the Company show that you held your shares as of the close of
business on March 1, 2005. As of the close of business on March 1, 2005, a total
of 2,846,457 shares of First Capital common stock were outstanding. Each share
of common stock has one vote. The Company's Articles of Incorporation provide
that recordholders of the Company's common stock who beneficially own, either
directly or indirectly, in excess of 10% of the Company's outstanding shares are
not entitled to any vote with respect to the shares held in excess of the 10%
limit.
ATTENDING THE MEETING
If you are a beneficial owner of First Capital common stock held by a
broker, bank or other nominee (I.E., in "street name"), you will need proof of
ownership to be admitted to the meeting. A recent brokerage statement or letter
from a bank or broker are examples of proof of ownership. If you want to vote
your shares of First Capital common stock held in street name in person at the
meeting, you will have to get a written proxy in your name from the broker, bank
or other nominee who holds your shares.
VOTE REQUIRED
The annual meeting will be held only if there is a quorum, which is
necessary in order to transact business at the annual meeting. A quorum exists
if a majority of the outstanding shares of common stock entitled to vote is
represented at the meeting. If you return valid proxy instructions or attend the
meeting in person, your shares will be counted for purposes of determining
whether there is a quorum, even if you abstain from voting. Broker non-votes
also will be counted for purposes of determining the existence of a quorum. A
broker non-vote occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received voting instructions from the beneficial owner.
5
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees or withhold votes as to specific
nominees. There is no cumulative voting for the election of directors. Directors
must be elected by a plurality of the votes cast at the annual meeting.
"Plurality" means that the nominees receiving the largest number of votes cast
will be elected as directors up to the maximum number of directors to be elected
at the meeting, which is four directors. Votes that are withheld and broker
non-votes will have no effect on the outcome of the election.
In voting on the approval of the appointment of Monroe Shine & Co., Inc.
as independent auditors, you may vote in favor of the proposal, vote against the
proposal or abstain from voting. This matter will be decided by the affirmative
vote of a majority of the votes cast at the annual meeting. On this matter,
abstentions and broker non-votes will have no effect on the voting.
VOTING BY PROXY
This proxy statement is being sent to you by the Board of Directors of
First Capital for the purpose of requesting that you allow your shares of First
Capital common stock to be represented at the annual meeting by the persons
named in the enclosed proxy card. All shares of First Capital common stock
represented at the meeting by properly executed and dated proxies will be voted
according to the instructions indicated on the proxy card. If you sign, date and
return a proxy card without giving voting instructions, your shares will be
voted as recommended by the Company's Board of Directors. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR DIRECTOR AND "FOR" RATIFICATION
OF MONROE SHINE & CO., INC. AS INDEPENDENT AUDITORS.
If any matters not described in this proxy statement are properly
presented at the annual meeting, the persons named in the proxy card will use
their own judgment as to how to vote your shares. This includes a motion to
adjourn or postpone the meeting in order to solicit additional proxies. If the
annual meeting is postponed or adjourned, your First Capital common stock may be
voted by the persons named in the proxy card on the new meeting date as well,
unless you have revoked your proxy. The Company does not know of any other
matters to be presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy, you must either advise the Company's Corporate
Secretary in writing before your shares have been voted at the annual meeting,
deliver valid proxy instructions with a later date, or attend the meeting and
vote your shares in person. Attendance at the annual meeting will not in itself
constitute revocation of your proxy.
If your First Capital common stock is held in "street name," you will
receive instructions from your broker, bank or other nominee that you must
follow in order to have your shares voted. Your broker, bank or other nominee
may allow you to deliver your voting instructions via the telephone or Internet.
Please see the instruction form provided by your bank, broker or other nominee
that accompanies this proxy statement.
PARTICIPANTS IN FIRST HARRISON'S ESOP
If you participate in First Harrison's Employee Stock Ownership Plan (the
"ESOP"), you will receive a voting instruction form that reflects all shares you
may vote under the plan. Under the terms of the ESOP, the ESOP trustees vote all
shares held by the ESOP, but each participant in the ESOP may direct the
trustees how to vote the shares of Company common stock allocated to his or her
account. The ESOP Trustees, subject to the exercise of their fiduciary duties,
will vote all unallocated shares of
2
6
common stock held by the ESOP and all allocated shares for which no timely
voting instructions are received in the same proportion as shares for which the
trustees have received valid voting instructions. The deadline for returning
your voting instructions to the ESOP Trustees is April 13, 2005.
ADDITIONAL MATTERS RELATING
TO THE ANNUAL MEETING
CORPORATE GOVERNANCE
GENERAL
The Company periodically reviews its corporate governance policies and
procedures to ensure that the Company meets the highest standards of ethical
conduct, reports results with accuracy and transparency and fully complies with
the laws, rules and regulations that govern the Company's operations. As part of
this periodic corporate governance review, the Board of Directors reviews and
adopts best corporate governance policies and practices for the Company.
CODE OF ETHICS AND BUSINESS CONDUCT
The Company has adopted a Code of Ethics and Business Conduct (the "Code")
that is designed to ensure that the Company's directors, executive officers and
employees meet the highest standards of ethical conduct. The Code requires that
the Company's directors, executive officers and employees avoid conflicts of
interest, comply with all laws and other legal requirements, conduct business in
an honest and ethical manner and otherwise act with integrity and in the
Company's best interest. Under the terms of the Code, directors, executive
officers and employees are required to report any conduct that they believe in
good faith to be an actual or apparent violation of the Code.
As a mechanism to encourage compliance with the Code, the Company has
established procedures to receive, retain and treat complaints received
regarding accounting, internal accounting controls or auditing matters. These
procedures ensure that individuals may submit concerns regarding questionable
accounting or auditing matters in a confidential and anonymous manner. The Code
also prohibits the Company from retaliating against any director, executive
officer or employee who reports actual or apparent violations of the Code.
MEETINGS OF THE BOARD OF DIRECTORS
The business of First Capital and First Harrison is conducted through
meetings and activities of their respective Board of Directors and committees.
During the fiscal year ended December 31, 2004, the Board of Director of First
Capital and First Harrison each held 12 meetings. No director attended fewer
than 75% of the total meetings of the Boards of Directors and of the committees
on which that director served.
3
7
COMMITTEES OF THE BOARD OF DIRECTORS
The following table shows the current membership of the Board's
committees.
ASSET ASSET/
EXECUTIVE AUDIT COMPENSATION REVIEW LIABILITY NOMINATING
NAME COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE
---- --------- --------- ------------ --------- --------- ----------
James S. Burden * * *
------------------------------------------------------------------------------------------------------------------
John W. Buschemeyer * * *
------------------------------------------------------------------------------------------------------------------
Kathryn W. Ernstberger * * *
------------------------------------------------------------------------------------------------------------------
William W. Harrod * * *
------------------------------------------------------------------------------------------------------------------
Dennis L. Huber *
------------------------------------------------------------------------------------------------------------------
James E. Nett * * *
------------------------------------------------------------------------------------------------------------------
J. Gordon Pendleton * * *
------------------------------------------------------------------------------------------------------------------
Kenneth R. Saulman * * *
------------------------------------------------------------------------------------------------------------------
Mark D. Shireman *
------------------------------------------------------------------------------------------------------------------
Michael L. Shireman *
------------------------------------------------------------------------------------------------------------------
Samuel E. Uhl * * *
------------------------------------------------------------------------------------------------------------------
Gerald L. Uhl * *
------------------------------------------------------------------------------------------------------------------
EXECUTIVE COMMITTEE. The Executive Committee evaluates issues of major
importance to the Company between regularly scheduled Board meetings. The
Executive Committee acts on issues delegated to the Committee by the Board of
Directors. The Executive Committee met three times during the fiscal year ended
December 31, 2004.
AUDIT COMMITTEE. The Board of Directors has a separately-designated
standing Audit Committee established in accordance with Section 3(a)(58)(A) of
the Securities Exchange Act of 1934, as amended. The Audit Committee meets
periodically with independent auditors and management to review accounting,
auditing, internal control structure and financial reporting matters. This
committee met 10 times during the year ended December 31, 2004. Each member of
the Audit Committee is independent in accordance with the listing standards of
the Nasdaq Stock Market. The Board of Directors has determined that James E.
Nett and J. Gordon Pendleton are audit committee financial experts under the
rules of the Securities and Exchange Commission. The Audit Committee acts under
a written charter adopted by the Board of Directors, a copy of which was
included as an appendix to the proxy statement for the 2004 annual meeting of
stockholders. The report of the Audit Committee required by the rules of the
Securities and Exchange Commission is included in this proxy statement. See
"PROPOSAL 2-RATIFICATION OF INDEPENDENT AUDITORS-REPORT OF THE AUDIT COMMITTEE."
COMPENSATION COMMITTEE. The Compensation Committee is responsible for
establishing and recommending employee and executive compensation policies to
the full Board of Directors. This committee met twice during the year ended
December 31, 2004. Each member of the Compensation Committee is independent in
accordance with the listing standards of the Nasdaq Stock Market. The report of
the compensation committee required by the rules of the Securities and Exchange
Commission is included in this proxy statement. See "REPORT OF THE COMPENSATION
COMMITTEE."
ASSET REVIEW COMMITTEE. The Asset Review Committee generally meets
quarterly to assess the risk of First Harrison's loan portfolio. The committee
monitors residential loans, all commercial loans and all loans on the Asset
Review List. The committee also reviews First Harrison's loan loss reserves. The
Asset Review Committee met four times in the fiscal year ended December 31,
2004.
4
8
ASSET/LIABILITY COMMITTEE. The Asset/Liability Committee is responsible
for establishing First Capital's investment policy and overseeing interest rate
risk management, funds management, liquidity management and capital management.
The Asset/Liability Committee, which also includes the Bank's Senior Officers,
meets weekly to evaluate loan and deposit pricing, cash flow, investments and
borrowings. The Asset/Liability Committee met weekly during the fiscal year
ended December 31, 2004.
NOMINATING COMMITTEE. The Nominating Committee annually selects the
Board's nominees for election as directors. This committee met once in the
fiscal year ended December 31, 2004 to select management's nominees for election
at this annual meeting. Each member of the Nominating Committee is independent
in accordance with the listing standards of the Nasdaq Stock Market. The
Nominating Committee acts under a written charter adopted by the Board of
Directors, a copy of which was included as an appendix to the proxy statement
for the 2004 annual meeting of stockholders. For the procedures of the
Nominating Committee, see "NOMINATING COMMITTEE PROCEDURES."
ATTENDANCE AT THE ANNUAL MEETING. The Board of Directors encourages each
director to attend annual meetings of stockholders. All directors attended the
2004 annual meeting of stockholders.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. Members of First Harrison's Board of Directors received
$860 per meeting during 2004. No separate fees are paid for service on First
Capital's Board of Directors. In 2004, the directors, as a group, received cash
bonuses totaling approximately $9,960. Total fees and bonuses paid to directors
of the Company and Bank, as a group, during the fiscal year ended December 31,
2004 totaled approximately $123,840.
DIRECTORS' DEFERRED COMPENSATION PLAN. Certain directors have elected to
defer their monthly directors' fees until retirement with no income tax payable
by the director until retirement benefits are received. Upon termination of
service on or after attaining age 70, the retired director receives between $217
and $676 per month for 180 months. Benefits are also payable upon disability,
early retirement, other termination of service or death. Directors John W.
Buschemeyer, J. Gordon Pendleton, Mark D. Shireman and Gerald L. Uhl participate
in the plan. For directors who did not elect to participate in the plan before
1993, this plan is no longer available.
OTHER. In 2004, Katherine Ernstberger was granted options for 1,400 shares
of Company common stock at an exercise price of $23.00 per share, the fair
market value of the common stock on the date of grant. The options became
exercisable in five equal annual installments commencing on June 21, 2004.
5
9
STOCK OWNERSHIP
First Capital does not know of any beneficial owners of more than 5% of
the Company's outstanding common stock. The following table provides information
as of March 1, 2005 about the shares of First Capital common stock that may be
considered to be beneficially owned by each director, each nominee for director
and all directors and executive officers of the Company as a group. A person may
be considered to beneficially own any shares of common stock over which he or
she has, directly or indirectly, sole or shared voting or investment power.
Unless otherwise indicated, each of the named individuals has sole voting power
and sole investment power with respect to the shares shown.
NUMBER OF SHARES
THAT MAY BE
NUMBER OF ACQUIRED WITHIN PERCENT OF
SHARES OWNED 60 DAYS BY COMMON STOCK
NAME (EXCLUDING OPTIONS) EXERCISING OPTIONS OUTSTANDING(1)
------------------------------- ------------------- ------------------ --------------
James S. Burden...................... 11,935(2) 1,400 *
John W. Buschemeyer.................. 18,829(3) -- *
Kathryn W. Ernstberger............... 200 -- *
William W. Harrod.................... 5,412(4) 9,825 *
Dennis L. Huber...................... 7,902 1,400 *
James E. Nett........................ 3,100 1,400 *
J. Gordon Pendleton.................. 23,216 3,500 *
Kenneth R. Saulman................... 11,834(5) 280 *
Mark D. Shireman..................... 34,760(6) 1,400 1.27%
Michael L. Shireman.................. 9,676(7) 560 *
Gerald L. Uhl........................ 32,767(8) 911(9) 1.18%
Samuel E. Uhl........................ 34,671(10) 7,500 1.48%
All directors and executive officers
as a group (16 persons)........... 206,912 43,031 8.65%
-------------------------------
* Less than 1.0% of the Company's outstanding common stock.
(1) Based on 2,846,457 shares of Company common stock outstanding and entitled
to vote as of March 1, 2005 plus the number of shares that may be acquired
within 60 days by each individual (or group of individuals) by exercising
stock options.
(2) Includes 8,835 shares owned by Mr. Burden's spouse.
(3) Includes 5,560 shares owned by Mr. Buschemeyer's spouse.
(4) Includes 787 shares allocated under the ESOP as to which Mr. Harrod
exercises voting but not investment power.
(5) Includes 1,795 shares owned by Saulman Brothers, a corporation controlled
by Mr. Saulman.
(6) Includes 6,000 shares owned by Mr. Mark Shireman's spouse and 500 shares
owned by Mr. Mark Shireman's children.
(7) Includes 5,736 shares owned by Mr. Michael Shireman's spouse.
(8) Includes 13,288 shares owned by Mr. Gerald Uhl's spouse and 354 shares
allocated under the ESOP as to which the holder (Mr. Gerald Uhl's spouse,
who is an employee of the Bank) exercises voting but not investment power.
(9) Includes options for 300 shares held by his spouse who is an employee of
the Bank.
(10) Includes 200 shares owned by Mr. Samuel Uhl's spouse and 1,451 shares
allocated under the ESOP as to which Mr. Samuel Uhl exercises voting but
not investment power.
6
10
PROPOSAL 1-- ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of twelve members. The
Board is divided into three classes with three-year staggered terms, with
approximately one-third of the directors elected each year. Four directors will
be elected at the annual meeting to serve for a three-year term, or until their
respective successors have been elected and qualified. The nominees are J.
Gordon Pendleton, Gerald L. Uhl, Dennis L. Huber and William W. Harrod, all of
whom are currently directors of the Company and First Harrison.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the nominees named above. If any nominee is unable
to serve, the persons named in the proxy card will vote your shares to approve
the election of any substitute proposed by the Board of Directors.
Alternatively, the Board of Directors may adopt a resolution to reduce the size
of the Board. At this time, the Board of Directors knows of no reason why any
nominee might be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF J. GORDON
PENDLETON, GERALD L. UHL, DENNIS L. HUBER AND WILLIAM W. HARROD.
Information regarding the nominees and the directors continuing in office
is provided below. Unless otherwise stated, each individual has held his or her
current occupation for the last five years. The age indicated in each
individual's biography is as of December 31, 2004. The indicated period for
service as a director includes service as a director of First Harrison before
the formation of the Company.
BOARD NOMINEES FOR ELECTION AS DIRECTORS
THE DIRECTORS STANDING FOR ELECTION ARE:
J. GORDON PENDLETON is the Chairman of the Board of First Capital. Mr.
Pendleton was President and Chief Executive Officer of First Harrison from 1961
to 1996. From 1996 until First Capital's merger with HCB Bancorp, Inc. in 2000,
he served as Chief Executive Officer. Age 71. Director since 1963.
GERALD L. UHL is the Business Manager and Controller for Jacobi Sales,
Inc., a farm implement dealership in Palmyra, Indiana. Age 64. Director since
1973.
DENNIS L. HUBER is the President and Publisher of O'Bannon Publishing Co.,
Inc. in Corydon, Indiana. Age 65. Director since 1997.
WILLIAM W. HARROD became the President and Chief Executive Officer of
First Capital and Chief Operating Officer of First Harrison in January 2000. Mr.
Harrod previously served as President and Chief Executive Officer of HCB
Bancorp, Inc. and Harrison County Bank. Mr. Harrod is a former director of HCB
Bancorp, Inc. Age 48. Director since 2000.
7
11
DIRECTORS CONTINUING IN OFFICE
THE FOLLOWING DIRECTORS HAVE TERMS ENDING IN 2006:
JOHN W. BUSCHEMEYER was the President and majority owner of Hurst Lumber
Co. in Corydon, Indiana, until his retirement in 2003. Age 66. Director since
1973.
KENNETH R. SAULMAN is employed as a right-of-way supervisor for Clark
County REMC, an electrical service company in Sellersburg, Indiana. Age 62.
Director since 1997.
KATHRYN W. ERNSTBERGER is an associate professor of business
administration at Indiana University Southeast in New Albany, Indiana. Age 41.
Director since 2003.
THE FOLLOWING DIRECTORS HAVE TERMS ENDING IN 2007:
SAMUEL E. UHL is the President and Chief Executive Officer of First
Harrison and Chief Operating Officer of First Capital. Mr. Uhl has served as
President of First Harrison since 1996. Upon completion of the merger of First
Federal and Harrison County Bank, Mr. Uhl added the title of Chief Executive
Officer of First Harrison. Age 59. Director since 1995.
MARK D. SHIREMAN is the President of James L. Shireman Construction Co.,
Inc. in Corydon, Indiana. Age 53. Director since 1989.
JAMES S. BURDEN is the owner and operator of Tracy's Mobile Home Park in
Georgetown, Indiana, and a bus driver for Floyd County Schools in New Albany,
Indiana. Mr. Burden is a former director of HCB Bancorp, Inc. Age 59. Director
since 2000.
MICHAEL L. SHIREMAN is the President of Uhl Truck Sales, a medium and
heavy truck dealer in Louisville, Kentucky and Palmyra, Indiana. Mr. Shireman is
a former director of HCB Bancorp, Inc. Age 56. Director since 2000.
JAMES E. NETT is the controller for Koetter Woodworking, Inc. in Borden,
Indiana. Mr. Nett is a former director of HCB Bancorp, Inc. Age 61. Director
since 2000.
The following family relationships exist between the directors and
officers of First Capital: Samuel E. Uhl and Gerald L. Uhl are brothers and
Michael L. Shireman and Mark D. Shireman are brothers.
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has appointed Monroe Shine &
Co., Inc. to be the Company's independent auditors for the 2005 fiscal year,
subject to ratification by shareholders. A representative of Monroe Shine & Co.,
Inc. is expected to be present at the annual meeting to respond to appropriate
questions from shareholders and will have the opportunity to make a statement
should he or she desire to do so.
8
12
If the ratification of the appointment of the independent auditors is not
approved by a majority of the votes cast by shareholders at the annual meeting,
the Audit Committee of the Board of Directors will consider other independent
auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.
AUDIT FEES
The following table sets forth the fees that Monroe Shine & Co., Inc.
billed to the Company for the fiscal years ended December 31, 2004 and 2003.
2004 2003
---- ----
Audit Fees..................... $77,960 $69,025
Audit-Related Fees(1).......... 13,970 24,633
Tax Fees(2).................... 15,310 15,922
All other fees................. -- --
--------------------------
(1) Includes assurance and related services, including work
performed in connection with registration statement and
regulatory filings, due diligence services performed in
connection with merger and acquisition procedures,
accounting consultations in connection with acquisitions,
attest services required by the Federal Home Loan Bank, and
consultation concerning financial accounting, reporting and
regulatory standards.
(2) Includes income tax return preparation, preparation of
fiduciary and property tax returns, and tax advice and
planning services.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS
The Audit Committee is responsible for appointing and overseeing the work
of the independent auditors and setting the independent auditors' compensation.
In accordance with its charter, the Audit Committee approves, in advance, all
audit and permissible non-audit services to be performed by the independent
auditors. This approval process ensures that the external auditor does not
provide any non- audit services to the Company that are prohibited by law or
regulation.
9
13
REPORT OF THE AUDIT COMMITTEE
THE REPORT OF THE AUDIT COMMITTEE SHALL NOT BE DEEMED INCORPORATED BY
REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE
COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
The Company's management is responsible for the Company's internal control
over financial reporting. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements and issuing an opinion on the conformity of those financial
statements with generally accepted accounting principles. The Audit Committee
oversees the Company's internal controls and financial reporting process on
behalf of the Board of Directors.
In this context, the Audit Committee has met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the consolidated financial statements with
management and the independent auditors. The Audit Committee discussed with the
independent auditors matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication With Audit Committees), including the quality,
not just the acceptability, of the accounting principles, the reasonableness of
significant judgments and the clarity of the disclosures in the financial
statements.
In addition, the Audit Committee has received the written disclosures and
the letter from the independent auditors required by the Independence Standards
Board Standard No. 1 (Independence Discussions With Audit Committees) and has
discussed with the independent auditors the auditors' independence from the
Company and its management. In concluding that the auditors are independent, the
Audit Committee considered, among other factors, whether the non-audit services
provided by the auditors were compatible with its independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluation of the Company's internal control
over financial reporting and the overall quality of the Company's financial
reporting process.
In performing all of these functions, the Audit Committee acts only in an
oversight capacity. In its oversight role, the Audit Committee relies on the
work and assurances of the Company's management, which has the primary
responsibility for financial statements and reports, and of the independent
auditors who, in their report, express an opinion on the conformity of the
Company's financial statements to generally accepted accounting principles. The
Audit Committee's oversight does not provide it with an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal control over financial
reporting designed to assure compliance with accounting standards and applicable
laws and regulations. Furthermore, the Audit Committee's considerations and
discussions with management and the independent auditors do not assure that the
Company's financial statements are presented in accordance with generally
accepted accounting principles, that the audit of the Company's financial
statements has been carried out in
10
14
accordance with the standards of the Public Company Accounting Oversight Board
(United States) or that the Company's independent auditors are in fact
"independent."
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2004 for filing with
the Securities and Exchange Commission. The Audit Committee has appointed,
subject to stockholder ratification, the selection of the Company's independent
auditors for the fiscal year ending December 31, 2005.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF FIRST CAPITAL, INC.
JAMES E. NETT, CHAIRMAN
J. GORDON PENDLETON
KATHRYN W. ERNSTBERGER
JAMES S. BURDEN
JOHN W. BUSCHEMEYER
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for William W. Harrod and Samuel E.
Uhl. No other executive officer of the Company or the Bank received salary and
bonus totaling $100,000 or more during the fiscal year ended December 31, 2004.
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------------------
OTHER
ANNUAL RESTRICTED SECURITIES
NAME AND PRINCIPAL FISCAL COMPEN- STOCK UNDERLYING ALL OTHER
POSITIONS YEAR SALARY(1) BONUS SATION(2) AWARDS OPTIONS COMPENSATION
-------------------- ------ ---------- ------- --------- ---------- ---------- ------------
William W. Harrod.......... 2004 $134,600 $10,277 $18,119 $ -- $ -- $ --
Chief Executive Officer 2003 129,460 13,030 19,520 -- -- --
and President 2002 124,806 14,059 17,500 -- -- --
Samuel E. Uhl.............. 2004 $134,600 $10,277 $20,585 $ -- $ -- $ --
Chief Operating Officer 2003 129,460 13,030 21,279 -- -- --
2002 124,806 14,059 19,044 -- -- --
-----------
(1) Includes directors' fees.
(2) For Mr. Harrod, consists of $672 for an automobile allowance, $8,574 for
health insurance, $5,592 for employer contribution to 401(k) plan and ESOP
allocations with a market value of $3,281. For Mr. Uhl, consists of $2,805
for an automobile allowance, $8,285 for health insurance, $6,214 for
employer contribution to 401(k) plan and ESOP allocations with a market
value of $3,281. These figures are for the year ended December 31, 2004.
11
15
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information regarding option exercises by
Messrs. Harrod and Uhl during the fiscal year ended December 31, 2003 and
unexercised stock options for each individual as of December 31, 2004. Messrs.
Harrod and Uhl were not granted any stock options during the fiscal year ended
December 31, 2004.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
--------------------------- ---------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ----------- ----------- ----------- ------------- ----------- -------------
William W. Harrod... -- $-- 8,325 1,500 $81,917 $15,000
Samuel E. Uhl....... -- $-- 6,000 1,500 $60,000 $15,000
-------------------------------
(1) Value of unexercised in-the-money stock options equals the market value
($21.00) of shares covered by in-the-money options on December 31, 2004
(the last trading day in 2004) less the option exercise price. Options are
in-the-money if the market value of shares covered by the options is
greater than the exercise price.
EMPLOYMENT AGREEMENTS. First Harrison and First Capital maintain
employment agreements with William W. Harrod and Samuel E. Uhl. The employment
agreements provide for a three-year term which is renewable on an annual basis.
The employment agreements provide that each executive's base salary will be
reviewed annually. The current base salary under the employment agreements for
Mr. Harrod and Mr. Uhl (collectively the "executive") is $124,280 for both men.
In addition to the base salary, the employment agreements provide for, among
other things, participation in stock benefits plans and other fringe benefits
applicable to executive personnel. The employment agreements provide for
termination by First Harrison for cause, as defined in the employment
agreements, at any time. If First Harrison chooses to terminate the executive's
employment for reasons other than for cause, or if either executive resigns from
First Harrison after specified circumstances that would constitute constructive
termination, the executive (or, if the executive dies, his beneficiary), would
be entitled to receive an amount equal to the payments that executive would have
received during the remaining term of his employment agreement, including base
salary, bonuses and other cash or deferred compensation paid or to be paid to
the executive and contributions that would have been made on the executive's
behalf to any employee benefit plans of First Harrison during the remaining term
of the employment agreement. First Harrison would also continue to pay for the
executive's life, medical, dental and disability coverage for the remaining term
of the employment agreement. If the executive terminates his employment with
First Harrison due to a "disability" (as defined in the employment agreement)
during the term of his employment agreement, the Bank will pay the executive, as
disability pay, a bi-weekly payment equal to three-quarters of the executive's
bi-weekly rate of salary on the date of his termination. First Harrison will
also continue to provide the executive with life, medical, dental and disability
coverage. Disability pay and health and welfare insurance coverage will cease
upon the earlier of the following: the executive's attainment of age 65, the
executive's death, expiration of the term of the employment agreement or his
return to full-time employment. Upon the executive's termination of employment
for reasons other than cause or a change in control, the executive must adhere
to a one-year non-competition agreement.
12
16
The maximum present value of the severance benefits under the employment
agreements is 2.99 times the executive's average annual compensation during the
five-year period preceding the effective date of the change in control (the
"base amount"). The employment agreements provide that the value of the maximum
benefit may be distributed, at the executive's election, in the form of a lump
sum cash payment equal to 2.99 times the executive's base amount or a
combination of a cash payment and continued coverage under First Harrison's
life, medical, dental and disability programs for a 36-month period following
the change in control, the total value of which does not exceed 2.99 times the
executive's base amount. Section 280G of the Internal Revenue Code provides that
severance payments that equal or exceed three times the individual's base amount
are deemed to be "excess parachute payments" if they are contingent upon a
change in control. Individuals receiving excess parachute payments are subject
to a 20% excise tax on the amount of the excess payments, and First Capital
would not be entitled to deduct the amount of the excess payments.
First Capital guarantees the payments to the executive under the
employment agreement if they are not paid by First Harrison. First Capital will
pay or reimburse all reasonable costs and legal fees incurred by the executive
under any dispute or question of interpretation relating to the employment
agreements, if the executive is successful on the merits in a legal judgment,
arbitration or settlement. The employment agreements also provide that First
Harrison will indemnify the executive to the fullest extent legally allowable
for all expenses and liabilities he may incur in connection with any suit or
proceeding in which he may be involved by reason of his having been a director
or officer of First Harrison or First Capital.
REPORT OF THE COMPENSATION COMMITTEE
THE REPORT OF THE COMPENSATION COMMITTEE SHALL NOT BE DEEMED INCORPORATED
BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE
COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
The following is the report of the Compensation Committee of the Board of
Directors regarding executive compensation. All compensation is paid by the
Bank.
COMPENSATION POLICIES
The Compensation Committee bases its executive compensation policy on the
same principles that guide the Company in establishing all of its compensation
programs. The Company designs programs to attract, retain and motivate highly
talented individuals at all levels of the organization while balancing the
interests of stockholders. The compensation program for executives consists of
three key elements:
o Annual base salary;
o Performance based annual bonus; and
o Long-term stock incentive compensation.
13
17
COMPONENTS OF EXECUTIVE COMPENSATION
BASE SALARY. Salary levels for all employees, including executive
officers, are set to reflect the duties and levels of responsibilities inherent
in the position and to reflect competitive conditions in the banking business in
the Company's market area. In determining the appropriate level of compensation,
the Compensation Committee reviewed the total compensation and components of
compensation of other financial institutions of similar size and characteristics
to ensure that compensation is consistent and competitive with such other
financial institutions and that compensation serves as an appropriate incentive
for individuals to achieve the Company's objectives. Base salaries for all
management and officer positions, including the executive officers, are reviewed
annually by the Compensation Committee. In setting base salaries, in addition to
reviewing other similarly situated financial institutions, the Compensation
Committee also considers a number of factors relating to the particular
executive, including individual performance, job responsibilities, level of
experience, ability and knowledge of the position. These factors are considered
subjectively in the aggregate and none of the factors is accorded a specific
weight.
BONUS. During fiscal 2004, bonuses were awarded to all employees based on
the Compensation Committee's recognition of the contributions made by the staff
that enabled the Company to perform well both financially and operationally
despite the very difficult economic environment and based on competitive levels
of compensation at similar companies. Cash bonuses are paid pursuant to a Profit
Sharing Plan, under which all employees are eligible to receive a percentage of
their base salary based on the profitability of the Bank. The maximum eligible
bonus for each employee is 15% of the base salary. For 2004, the Bank paid a 9%
bonus to each employee and director based on his or her base salary and, if
applicable, annual directors' fees.
LONG-TERM INCENTIVE COMPENSATION. Under the Company's 1994 Stock Option
Plan and 1999 Stock-Based Incentive Plan, the Compensation Committee is
authorized, in its discretion, to grant stock options and restricted stock
awards in such proportions and upon such terms and conditions as the
Compensation Committee may determine, subject to regulatory limits. All stock
options granted have an exercise price equal to the fair market value of the
Company's common stock at the time of grant and are exercisable within a
ten-year period. In order to assure the retention of high level executives and
to tie the compensation of those executives to the creation of long-term value
for stockholders, the Compensation Committee requires that stock options granted
under the 1994 Stock Option Plan vest proportionately over a five-year period.
Except as disclosed under "CORPORATE GOVERNANCE-DIRECTORS' COMPENSATION," no
other stock options were granted in 2004.
The awards of restricted stock to executive officers and other key
employees represent shares of First Capital common stock that the recipient
cannot sell or otherwise transfer until the applicable restriction period
lapses. Restricted stock awards are also intended to increase the ownership of
executives in the Company, thereby further integrating the compensation of the
executive with the creation of long term value for stockholders. The
Compensation Committee has provided that restricted stock awards granted under
the 1999 Stock-Based Incentive Plan vest in equal portions over five years. No
restricted stock awards were granted by the Compensation Committee in 2004.
14
18
CHIEF EXECUTIVE OFFICER COMPENSATION
First Capital, First Harrison and Mr. Harrod are parties to an employment
agreement. The terms of Mr. Harrod's employment agreement are set forth under
"EXECUTIVE COMPENSATION" in this proxy statement. In determining Mr. Harrod's
cash compensation for fiscal 2004, the Compensation Committee focused on the
Company's financial performance during the prior year, the number of initiatives
begun, expanded or completed by the Company since Mr. Harrod's employment began,
competitive levels of compensation for Chief Executive Officers managing
operations of similar size, complexity and performance level and the importance
of retaining a President and Chief Executive Officer with the strategic,
financial and leadership skills to ensure the Company's continued growth into
the foreseeable future. Under the Profit Sharing Plan adopted for the fiscal
year ended December 31, 2004, Mr. Harrod was eligible for a maximum cash bonus
of 15% of his base salary, but received a cash bonus of 9% of his base salary.
The Compensation Committee believes that Mr. Harrod's total compensation package
for 2004 is commensurate with the total compensation for CEOs in its peer group,
based on its review of the compensation provided by other similarly situated
financial institutions.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF FIRST CAPITAL, INC.
DENNIS L. HUBER, CHAIRPERSON
JOHN W. BUSCHEMEYER
JAMES E. NETT
J. GORDON PENDLETON
KATHRYN W. ERNSTBERGER
KENNETH R. SAULMAN
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company or the Bank serves or has served as a
member of the compensation committee of any other entity, one of whose executive
officers serves on the Compensation Committee of the Company. No executive
officer of the Company or the Bank serves or has served as a director of another
entity, one of whose executive officers serves on the Compensation Committee of
the Company.
15
19
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
First Capital common stock with the cumulative total return on the Nasdaq Index
(U.S. Companies) and with the SNL Midwest Thrift Index. Total return assumes the
reinvestment of all dividends. The graph assumes $100 was invested at the close
of business on December 31, 1999.
[GRAPHIC OMITTED]
---------------------------------------------------------
12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
-------- -------- -------- -------- -------- --------
First Capital, Inc............ $100.00 $ 95.21 $129.55 $188.58 $199.96 $205.41
NASDAQ - Total U.S............ 100.00 60.82 48.16 33.11 49.93 54.49
SNL Midwest Thrift Index...... 100.00 134.86 155.10 199.94 277.78 306.76
THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY
INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED
FILED UNDER SUCH ACTS.
16
20
OTHER INFORMATION RELATING TO DIRECTORS AND EXECUTIVE OFFICERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of any registered class of the Company's equity securities, to file reports
of ownership and changes in ownership with the Securities Exchange Commission.
Executive officers, directors and greater than 10% shareholders are required by
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of its executive
officers, directors and greater than 10% beneficial owners has complied with
applicable reporting requirements for transactions in First Capital common stock
during the fiscal year ended December 31, 2004, with the following exceptions:
the reporting of stock option grants on Form 4 for each of Messrs. Backherms,
Frederick, Thomas, Gerald Uhl and Voyles and Ms. Ernstberger and two Forms 4
reporting stock purchases for Mr. Mark Shireman.
TRANSACTIONS WITH MANAGEMENT
LOANS TO OFFICERS AND DIRECTORS. The Sarbanes-Oxley Act of 2002 generally
prohibits loans by First Capital to its executive officers and directors.
However, the Sarbanes-Oxley Act contains a specific exemption from such
prohibition for loans by First Harrison to its executive officers and directors
in compliance with federal banking regulations. Federal regulations require that
all loans or extensions of credit to executive officers and directors of insured
financial institutions must be made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and must not involve more than the normal risk
of repayment or present other unfavorable features. First Harrison is therefore
prohibited from making any new loans or extensions of credit to executive
officers and directors at different rates or terms than those offered to the
general public. Notwithstanding this rule, federal regulations permit First
Harrison to make loans to executive officers and directors at reduced interest
rates if the loan is made under a benefit program generally available to all
other employees and does not give preference to any executive officer or
director over any other employee.
In addition, loans made to a director or executive officer in an amount
that, when aggregated with the amount of all other loans to such person and his
or her related interests, exceed the greater of $25,000 or 5% of First Capital's
capital and surplus (up to a maximum of $500,000) must be approved in advance by
a majority of the disinterested members of the Board of Directors.
OTHER TRANSACTIONS. Director Gerald L. Uhl is a shareholder and the
Business Manager of Jacobi Sales, Inc. ("JSI"), a farm implement dealership that
has contracted with First Harrison to provide sales financing to customers of
JSI. First Harrison does not grant preferential credit under this arrangement.
All sales contracts are presented to First Harrison on a 50% recourse basis,
with JSI responsible for the sale and disposition of any repossessed equipment.
During the fiscal year ended December 31, 2004, First Harrison granted
approximately $1.7 million of credit to JSI customers. At December 31, 2004,
seven outstanding loans totaling approximately $42,000 to JSI customers were
delinquent 30 days or more.
17
21
NOMINATING COMMITTEE PROCEDURES
GENERAL
It is the policy of the Nominating Committee of the Board of Directors of
the Company to consider director candidates recommended by shareholders who
appear qualified to serve on the Board of Directors. The Nominating Committee
may choose not to consider an unsolicited recommendation if no vacancy exists on
the Board of Directors and the Nominating Committee does not perceive a need to
increase the size of the Board of Directors. In order to avoid the unnecessary
use of the Nominating Committee's resources, the Nominating Committee will
consider only those director candidates recommended in accordance with the
procedures set forth below.
PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS
To submit a recommendation of a director candidate to the Nominating
Committee, a shareholder should submit the following information in writing,
addressed to J. Gordon Pendleton, the Chairman of the Nominating Committee, care
of the Corporate Secretary, at the main office of the Company:
1. The name of the person recommended as a director candidate;
2. All information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended;
3. The written consent of the person being recommended as a director
candidate to being named in the proxy statement as a nominee and to
serving as a director if elected;
4. As to the shareholder making the recommendation, the name and
address, as he or she appears on the Company's books, of such
shareholder; provided, however, that if the shareholder is not a
registered holder of the Company's common stock, the shareholder
should submit his or her name and address, along with a current
written statement from the recordholder of the shares that reflects
ownership of the Company's common stock; and
5. A statement disclosing whether such shareholder is acting with or on
behalf of any other person and, if applicable, the identity of such
person.
In order for a director candidate to be considered for nomination at the
Company's annual meeting of shareholders, the Nominating Committee must receive
the recommendation at least 120 calendar days before the date the Company's
proxy statement was released to shareholders in connection with the previous
year's annual meeting, advanced by one year.
18
22
MINIMUM QUALIFICATIONS
The Nominating Committee has adopted a set of criteria that it considers
when it selects individuals to be nominated for election to the Board of
Directors. First, a candidate must meet the age limitation requirements set
forth in the Company's Bylaws. A candidate also must meet any qualification
requirements set forth in any Board or committee governing documents.
The Nominating Committee will consider the following criteria in selecting
nominees: financial, regulatory and business experience; familiarity with and
participation in the local community; integrity, honesty and reputation;
dedication to the Company and its stockholders; independence; and any other
factors the Nominating Committee deems relevant, including age, diversity, size
of the Board of Directors and regulatory disclosure obligations.
In addition, before nominating an existing director for re-election to the
Board of Directors, the Nominating Committee will consider and review an
existing director's Board and committee attendance and performance; length of
Board service; experience, skills and contributions that the existing director
brings to the Board; and independence.
PROCESS FOR IDENTIFYING AND EVALUATING NOMINEES
The process that the Nominating Committee follows when it identifies and
evaluates individuals to be nominated for election to the Board of Directors is
as follows:
IDENTIFICATION. For purposes of identifying nominees for the Board of
Directors, the Nominating Committee relies on personal contacts of the committee
members and other members of the Board of Directors, as well as its knowledge of
members of First Capital's local communities. The Nominating Committee will also
consider director candidates recommended by shareholders in accordance with the
policy and procedures set forth above. The Nominating Committee has not used an
independent search firm in identifying nominees.
EVALUATION. In evaluating potential candidates, the Nominating Committee
determines whether the candidate is eligible and qualified for service on the
Board of Directors by evaluating the candidate under the selection criteria set
forth above. In addition, the Nominating Committee will conduct a check of the
individual's background and interview the candidate.
SUBMISSION OF FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
Proposals that shareholders seek to have included in the proxy statement
for the Company's next annual meeting must be received by the Company no later
than November 18, 2005. If next year's annual meeting is held on a date more
than 30 days from April 20, 2006, a shareholder proposal must be received within
a reasonable time before the Company begins to print and mail its proxy
solicitation materials for such annual meeting. Any such proposals will be
subject to the requirements of the proxy rules adopted by the Securities
Exchange Commission.
19
23
The Company's Bylaws provide that, in order for a shareholder to make
nominations for the election of directors or proposals for business to be
brought before the annual meeting, a shareholder must deliver notice of such
nominations and/or proposals to the Corporate Secretary not less than 90 nor
more than 120 days before the date of the annual meeting; provided that if less
than 100 days' notice of the annual meeting is given to shareholders, such
notice must be delivered not later than the close of the tenth day following the
day on which notice of the annual meeting was mailed to shareholders. A copy of
the Bylaws may be obtained from the Company.
STOCKHOLDER COMMUNICATIONS
The Company encourages stockholder communications with the Board of
Directors and/or individual directors. Stockholders who wish to communicate with
the Board of Directors or an individual director should send their
communications to the care of William W. Harrod, President and Chief Executive
Officer of First Capital, Inc., 220 Federal Drive, N.W., Corydon, Indiana 47112.
Communications regarding financial or accounting policies should be sent to the
attention of the Chairman of the Audit Committee, James E. Nett, at the same
address. All other communications should be sent to the attention of the
Chairman of the Nominating Committee, J. Gordon Pendleton, also at the same
address.
MISCELLANEOUS
The Company will pay the cost of this proxy solicitation. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of First Capital common stock. In addition to soliciting
proxies by mail, directors, officers and regular employees of the Company may
solicit proxies personally or by telephone. None of these persons will receive
additional compensation for these activities.
The Company's Annual Report to Shareholders has been mailed to persons who
were shareholders as of the close of business on March 1, 2005. Any shareholder
who has not received a copy of the Annual Report may obtain a copy by writing to
the Corporate Secretary of the Company. The Annual Report is not to be treated
as part of the proxy solicitation material or as having been incorporated in
this proxy statement by reference.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, WITHOUT EXHIBITS, FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2004, AS FILED WITH THE SECURITIES EXCHANGE
COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO PERSONS WHO WERE SHAREHOLDERS AS
OF THE CLOSE OF BUSINESS ON MARCH 1, 2005 UPON WRITTEN REQUEST TO JOEL E.
VOYLES, CORPORATE SECRETARY, FIRST CAPITAL, INC., 220 FEDERAL DRIVE, N.W.,
CORYDON, INDIANA 47112.
If you are a shareholder or a beneficial owner at a shared address to
which a single copy of both the proxy statement and the annual report have been
delivered, Registrar and Transfer Company, the Company's transfer agent, has
undertaken on behalf of the Company to deliver to you promptly, upon written or
oral request, a separate copy of this proxy statement and the annual report. If
you are such a shareholder or a beneficial owner and you would like to receive
your own copy of this proxy statement and the annual report, please contact
Registrar and Transfer Company either by phone at (800) 368-5948, by fax at
(908) 497-2318, by e-mail at info@rtco.com or by mail at 10 Commerce Drive,
Cranford, New Jersey 07016-3572, and indicate that you are a shareholder at a
shared address and would like an
20
24
additional copy of each document. If you are a recordholder and would like to
receive a separate proxy statement or annual report in the future, please
contact Registrar and Transfer Company at the phone number or addresses listed
above. If you are a beneficial owner and would like to receive a separate proxy
statement or annual report in the future, please contact your broker, bank or
other nominee.
If, on the other hand, you are a multiple shareholder sharing an address
and are receiving multiple copies of this proxy statement or the annual report,
please contact Registrar and Transfer Company at the phone number or at any of
the addresses listed above and all shareholders at the shared address can
request that only a single copy of each document be mailed to your address in
the future. If you are the beneficial owner, but not the recordholder, of
Company shares and wish to receive only one copy of the proxy statement and
annual report in the future, you will need to contact your broker, bank or other
nominee and all shareholders at the shared address can request that only a
single copy of each document be mailed to your address in the future.
Whether or not you plan to attend the annual meeting, please vote by
marking, signing, dating and promptly returning the enclosed proxy card in the
enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Joel E. Voyles
Joel E. Voyles
CORPORATE SECRETARY
Corydon, Indiana
March 17, 2005
21
25
REVOCABLE PROXY
FIRST CAPITAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 20, 2005
12:00 NOON, LOCAL TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Samuel E. Uhl, John W. Buschemeyer and
Mark D. Shireman each with full power of substitution, to act as proxy for the
undersigned, and to vote all shares of common stock of First Capital, Inc.
("First Capital") owned of record by the undersigned at the Annual Meeting of
Shareholders, to be held on April 20, 2005, at 12:00 noon, local time, at 220
Federal Drive, N.W., Corydon, Indiana, and at any and all adjournments and
postponements of the meeting, as designated below with respect to the matters
set forth below and described in the accompanying Proxy Statement and, in their
discretion, for the election of a person to the Board of Directors if any
nominee named below becomes unable to serve or for good cause will not serve and
with respect to any other business that may properly come before the meeting.
Any prior proxy or voting instructions are hereby revoked.
1. The election as directors of all nominees listed (except as marked to
the contrary below).
J. Gordon Pendleton Dennis L. Huber
Gerald L. Uhl William W. Harrod
FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- ------
/_/ /_/ /_/
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Monroe Shine & Co., Inc. as
independent auditors for First Capital for the fiscal year ending December 31,
2005.
FOR AGAINST ABSTAIN
--- ------- -------
/_/ /_/ /_/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS.
26
THIS PROXY, PROPERLY SIGNED AND DATED, IS REVOCABLE AND WILL BE VOTED AS
DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR"
EACH OF THE PROPOSALS LISTED ONLY IF SIGNED AND DATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE ANNUAL MEETING, INCLUDING WHETHER OR NOT TO ADJOURN THE ANNUAL
MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES IN THEIR BEST JUDGMENT. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE ANNUAL MEETING. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY ON THE
BOARD OF DIRECTORS TO VOTE (1) WITH RESPECT TO THE ELECTION OF ANY PERSON AS
DIRECTOR, WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT
SERVE AND (2) MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
Dated:
--------------------------
--------------------------------
SHAREHOLDER SIGN ABOVE
--------------------------------
CO-HOLDER (IF ANY) SIGN ABOVE
The above signed acknowledges receipt from First Capital, prior to the
execution of this proxy, of a Notice of Annual Meeting of Shareholders and a
Proxy Statement for the Annual Meeting.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
-----------------------------
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
27
[COMPANY LETTERHEAD APPEARS HERE]
Dear ESOP Participant:
On behalf of the Board of Directors of First Capital, Inc. (the
"Company"), I am forwarding you the attached vote authorization form for the
purpose of conveying your voting instructions to William W. Harrod, Samuel E.
Uhl and Michael C. Frederick (collectively, the "Trustees") on the proposals to
be presented at the Annual Meeting of Shareholders of First Capital, Inc. to be
held on April 20, 2005. Also enclosed is a Notice and Proxy Statement for the
Annual Meeting of First Capital, Inc. Shareholders and a copy of the Company's
Annual Report to Shareholders.
As a participant in the First Harrison Bank Employee Stock Ownership Plan
(the "ESOP"), you are entitled to vote all shares of Company common stock
allocated to your ESOP account as of March 1, 2005, the Annual Meeting record
date. These allocated shares of Company common stock will be voted as directed
by you; provided your instructions are received by the ESOP Trustees by April
13, 2005. The ESOP Trustees, subject to their fiduciary duties, will vote any
unallocated shares of Company common stock and any allocated shares of Company
common stock for which timely instructions are not provided in a manner
calculated to most accurately reflect the instructions from participants
regarding the shares of Company common stock allocated to participants'
accounts.
In order to direct the voting of the shares of Company common stock
allocated to your ESOP account, please complete and sign the attached vote
authorization form and return it in the enclosed postage-paid envelope no later
than April 13, 2005. Your vote will not be revealed, directly or indirectly, to
any employee or director of the Company or First Harrison Bank.
Sincerely,
/s/ William W. Harrod
William W. Harrod
PRESIDENT AND CHIEF EXECUTIVE OFFICER
28
VOTE AUTHORIZATION FORM
-----------------------
I understand that William W. Harrod, Samuel E. Uhl and Michael C.
Frederick, serving as the trustees of the First Harrison Bank Employee Stock
Ownership Plan ("ESOP"), are the holders of record and custodian of all shares
of First Capital, Inc. (the "Company") common stock allocated to me under the
ESOP. Further, I understand that my voting instructions are solicited on behalf
of the Company's Board of Directors for the Annual Meeting of Shareholders to be
held on April 20, 2005.
Accordingly, please vote my shares as follows:
1. The election as directors of all nominees listed (except as marked to
the contrary below).
J. Gordon Pendleton Dennis L. Huber
Gerald L. Uhl William W. Harrod
FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- ------
/_/ /_/ /_/
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Monroe Shine & Co., Inc. as
independent auditors for First Capital for the fiscal year ending December 31,
2005.
FOR AGAINST ABSTAIN
--- ------- -------
/_/ /_/ /_/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS.
The ESOP Trustees are hereby authorized to vote all shares allocated to my
ESOP account as indicated above.
------------------------------ ---------------------------------
Date Signature
PLEASE DATE, SIGN AND RETURN THIS FORM IN THE ENCLOSED ENVELOPE NO LATER THAN
APRIL 13, 2005.