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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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
QCR HOLDINGS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which 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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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PERSONS WHO POTENTIALLY 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.
SEC 1913 (02-02)
[QCR HOLDINGS, INC. LOGO]
March 23, 2005
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 4, 2005, at The Lodge located at
900 Spruce Hills Drive, Bettendorf, Iowa. 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 2004 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 three persons
to serve as Class III directors. In addition to the election of Class III
directors, stockholders are being asked to approve the QCR Holdings, Inc. 2005
Deferred Income Plan. We recommend that you vote your shares for the director
nominees and in favor of the Deferred Income Plan.
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,
Michael A. Bauer Douglas M. Hultquist
Chairman of the Board President
3551-7th Street, Suite 204 - Moline, IL 61265
Phone (309) 736-3580 - Fax (309) 736-3149
[QCR HOLDINGS, INC. LOGO]
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 2005
To the stockholders of QCR HOLDINGS, INC.:
The annual meeting of stockholders of QCR Holdings, Inc., a Delaware
corporation, will be held at The Lodge, 900 Spruce Hills Drive, Bettendorf, Iowa
on Wednesday, May 4, 2005, at 10:00 a.m., local time, for the following
purposes:
1. to elect three Class III directors for a term of three years;
2. to approve the QCR Holdings, Inc. 2005 Deferred Income Plan; and
3. 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 16, 2005,
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 or ratify any of the foregoing 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
Todd A. Gipple
Executive Vice President,
Chief Financial Officer and
Secretary
Moline, Illinois
March 23, 2005
3551-7th Street, Suite 204 - Moline, IL 61265
Phone (309) 736-3580 - 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 and the
recently chartered Rockford 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. During 2004, Quad City
Bank & Trust also served Rockford, Illinois and adjacent communities through a
temporary facility. Effective January 3, 2005, QCR Holdings' third bank charter,
Rockford Bank & Trust, began serving this market. Rockford Bank & Trust is an
Illinois-chartered bank located in Rockford, Illinois. Cedar Rapids Bank & Trust
is also an Iowa banking association located in Cedar Rapids, Iowa. Quad City
Bancard, Inc. is our wholly owned subsidiary, which functions as a credit card
center that provides cardholder and merchant credit card processing services. We
also own all of the common stock of two 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, 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 Lodge, 900 Spruce Hills Drive,
Bettendorf, Iowa, on May 4, 2005, at 10:00 a.m., local time, and at any
adjournments or postponements of the meeting. We have enclosed our 2004 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 23, 2005.
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 16, 2005, 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 three Class III directors
for a term expiring in 2008 and to approve the QCR Holdings, Inc. 2005 Deferred
Income Plan. These matters are more fully described in this proxy statement.
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
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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 and "for" approval of the
Deferred Income Plan.
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 CST on Monday, May 2, 2005. 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 your broker (or in
what is usually referred to as "street name"), you will need to arrange to
obtain a legal proxy from your broker 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, your broker should
have given you instructions for directing how your broker should vote your
shares. It will then be your broker's 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 may generally vote on routine matters, such as the election of directors
and the ratification of independent auditors, 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 does
not receive instructions from you on how to vote on that matter, your broker
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 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 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. on Tuesday, May 3, 2005. 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 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
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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:
- signing another proxy with a later date and returning that proxy to
us;
- timely submitting another proxy via the telephone or internet;
- sending notice to us that you are revoking your proxy; or
- 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:
- is present in person at the meeting; or
- has properly submitted a signed proxy card or other proxy.
On March 16, 2005, the record date, there were 4,509,622 shares of common
stock outstanding. Therefore, at least 2,254,812 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 the approval of the
Deferred Income Plan or any other proposal that may properly be brought before
the meeting.
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?
The three individuals receiving the highest number of votes cast "for"
their election will be
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elected as Class III 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 the Deferred Income Plan and any 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?
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, 2005.
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 three Class III directors
for a term expiring in 2008. The board has nominated Patrick S. Baird, John K.
Lawson and Ronald G. Peterson to serve as Class III directors.
Other than as described above, 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 III directors for three-year terms expiring
in 2008. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALL OF THE
NOMINEES FOR DIRECTOR.
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NOMINEES
NAME DIRECTOR
(AGE) SINCE POSITIONS WITH QCR HOLDINGS AND SUBSIDIARIES
----- ----- --------------------------------------------
CLASS III
(TERM EXPIRES 2008)
Patrick S. Baird 2002 Director of QCR Holdings and Cedar Rapids Bank & Trust
(Age 51)
John K. Lawson 2000 Director of QCR Holdings and Quad City Bank & Trust
(Age 65)
Ronald G. Peterson 1993 Director of QCR Holdings and Quad City Bank & Trust
(Age 61)
CONTINUING DIRECTORS
NAME DIRECTOR
(AGE) SINCE POSITIONS WITH QCR HOLDINGS AND SUBSIDIARIES
----- ----- --------------------------------------------
CLASS I
(TERM EXPIRES 2006)
Michael A. Bauer 1993 Chairman of the Board and Director of QCR Holdings; President,
(Age 56) Chief Executive Officer 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
James J. Brownson 1997 Director of QCR Holdings; Secretary and Director of Quad City
(Age 59) Bank & Trust
Henry Royer 2002 Director of QCR Holdings; Chairman of the Board and Director of
(Age 73) Cedar Rapids Bank & Trust
CLASS II
(TERM EXPIRES 2007)
Larry J. Helling 2001 Director of QCR Holdings; President, Chief Executive Officer
(Age 49) and Director of Cedar Rapids Bank & Trust; Director of Quad
City Bank & Trust
Douglas M. Hultquist 1993 President, Chief Executive Officer and Director of QCR
(Age 49) Holdings; Chairman of the Board and Director of Quad City Bank
& Trust; Director of Cedar Rapids Bank & Trust; Director of
Rockford Bank & Trust; President, Chief Executive Officer and
Director of Quad City Bancard
Mark Kilmer 2004 Director of QCR Holdings; Director of Quad City Bank & Trust
(Age 46)
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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. Royer
is also a director of Media Sciences International, Inc., a company registered
under the Securities Exchange Act, and a trustee of Berthel Growth and Income
Fund I, a business trust registered under the Investment Company Act of 1940.
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., a U.S. subsidiary of the international insurance company, AEGON nv. He is
also an officer and director of many of AEGON USA's life insurance subsidiaries.
He currently serves on the board of directors of the Kirkwood Community College
Foundation, Waypoint (formerly YMCA) and Priority One in Cedar Rapids. Mr. Baird
has been a director of Cedar Rapids Bank & Trust since September 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, Genesis Medical Center, Kahl
Home for the Aged and Infirm, and Davenport ONE. He also currently serves on the
Community Bank Council of the Chicago Federal Reserve. Mr. Bauer is a member of
Rotary Club of Davenport and serves as Chairman of 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 the President of W.E. Brownson Co., a manufacturers'
representative agency located in Davenport, Iowa, and has been in that position
since 1978. Mr. Brownson began his career in 1967 as a staff auditor with Arthur
Young & Co., CPA's, of Chicago, Illinois. From 1969 until 1978, Mr. Brownson was
employed by Davenport Bank & 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 been a director and the Secretary of
Quad City Bank & Trust since October 1993.
Larry J. Helling, prior to founding Cedar Rapids Bank and Trust Company,
Mr. Helling was 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 seven 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 boards of several organizations within the metro area,
including the board of directors of the United Way of East Central Iowa, the
board of the Entrepreneurial Development Center, the board of trustees of Big
Brothers/Big Sisters, board of trustees of Junior Achievement, and is President
Elect and board member of Downtown Rotary. He is actively involved in numerous
school and church related activities, in addition to various committees within
the community.
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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 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 and The Robert Young
Center for Mental Health and is a member of the Augustana College board of
trustees and serves 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 and is a board member of
the NewVentures Initiative. 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, an 89-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
serves as the Chairman of the Board of Genesis Medical Center and also is a
Board Member of Genesis Health System. He serves on the Board of the PGA TOUR
John Deere Classic and was a two-term Chairman of that organization. He is also
the past Chairman of the Scott County YMCA's Board of Directors. Mr. Kilmer has
served on the Boards of The Genesis Heart Institute, St. Luke's Hospital,
Rejuvenate Davenport, The Vera French Foundation and Trinity Lutheran Church and
was a four-time Project Business consultant for Junior Achievement. Mr. Kilmer
has been a director of Quad City Bank & Trust since February 1996.
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 1960's, 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, 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 company's engineering, business computer systems, quality,
supply management and communications areas. He serves on the board of directors
of the Iowa State University Foundation, Junior Achievement of the Heartland
Foundation, Moline Foundation Finance Committee and the Trinity Healthcare
Foundation. Mr. Lawson also serves as an Advisory Board Member for Varied
Investments, located in Muscatine, Iowa. Mr. Lawson has been director of Quad
City Bank & Trust since July 1997.
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Ronald G. Peterson is the 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
bank's holding company, Lamoine Bancorp, Inc. He currently serves as President
of the LaHarpe Educational Foundation, Treasurer of the Western Illinois
University Foundation, a member of the McDonough District Hospital Development
Council, and is a member of the Strategic Planning Committee for the Illinois
Bankers Association. Mr. Peterson has been a director of Quad City Bank & Trust
since October 1993.
Henry Royer is a 30-year veteran of the banking industry who served as
President of Merchants National Bank in Cedar Rapids from 1983 to 1994. He is
currently Executive Vice President of Berthel Fisher Planning, Inc., President
of Berthel SBIC, LLC and General Manager of Berthel Growth and Income Trust I.
Mr. Royer currently serves as the Chairman of the board of directors of the
Mid-America Housing Partnership. He is the past President of the Cedar Rapids
Chamber of Commerce and the past Chairman of Priority One. Mr. Royer has served
as a director or trustee for many Cedar Rapids companies and institutions
including the Cedar Rapids Art Museum, Coe College, Iowa Electric Light and
Power Company, Mercy Hospital and United Way. Mr. Royer has been the Chairman of
the board of directors of Cedar Rapids Bank & Trust since September 2001.
CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
GENERAL. Currently, there are nine members of the board of directors of
QCR Holdings. 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 on a quarterly basis. 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,
Inc., also meets 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).
Directors Baird, Brownson, Kilmer, Lawson, Peterson and Royer are deemed
to be "independent" as that term is defined by Nasdaq. Directors Bauer, Helling
and Hultquist are not considered to be "independent" because they also serve as
executive officers or 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,
www.qcrh.com, as well as on our banking subsidiaries' websites at www.qcbt.com,
www.crbt.com and www.rkfdbank.com. Also posted on the websites is general
information regarding the company and our common stock, many of our corporate
polices and links to our filings with the Securities and Exchange Commission.
A total of nine regularly scheduled and special meetings were held by the
board of directors of QCR Holdings in 2004. During that time, 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 and expect all of our directors to attend. Last year, all nine
directors were present at the annual meeting.
AUDIT COMMITTEE. The Audit Committee consists of directors Baird,
Brownson, Lawson and Royer. 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
director Baird qualifies as an "Audit Committee Financial Expert" under the
regulations of the
10
Securities and Exchange Commission. The board based this decision on director
Baird's educational and professional experience.
The functions performed by the Audit Committee include, but are not
limited to, the following:
- selecting our independent auditors and pre-approving all
engagements and fee arrangements;
- reviewing the independence of the independent auditors;
- reviewing actions by management on recommendations of the
independent auditors and internal auditors;
- meeting with management, the internal auditors and the
independent auditors to review the effectiveness of our system
of internal control and internal audit procedures;
- reviewing our earnings releases and reports filed with the
Securities and Exchange Commission; and
- reviewing reports of bank regulatory agencies and monitoring
management's 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 committee's duties and responsibilities. Our current
charter was attached to our 2004 proxy statement and is available on our
websites at www.qcbt.com, www.crbt.com and www.rkfdbank.com. The Audit Committee
met four times in 2004.
EXECUTIVE COMMITTEE. The Executive Committee is comprised of Messrs.
Baird, Brownson, Kilmer, Lawson, Peterson and Royer, each of whom is considered
"independent" according to the Nasdaq listing requirements, an "outside"
director under Section 162(m) of the Internal Revenue Code of 1986 and a
"non-employee" director pursuant to Section 16 under the Securities Exchange Act
of 1934. Mr. Brownson serves as Chairman of the Executive Committee. The
Executive Committee met five times in calendar 2004. 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 also reviews and monitors our policies, procedures and
structure as they relate to corporate governance. The committee's
responsibilities and functions are further described in its charter, which is
available on our websites at www.qcrh.com, www.qcbt.com, www.crbt.com and
www.rkfdbank.com.
COMPENSATION AND BENEFITS COMMITTEE. The Compensation and Benefits
Committee consists of directors Bauer, Hultquist, Helling, and Lawson, as well
as Arthur L. Christofferson, 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. The Compensation
and Benefits Committee met three times during 2004.
TECHNOLOGY COMMITTEE. The Technology Committee consists of directors
Bauer, Helling and Hultquist, 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
11
plans of QCR Holdings and our subsidiaries for the future. The Technology
Committee met four times during 2004.
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
director 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.
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 websites at www.qcrh.com, www.qcbt.com,
www.crbt.com and www.rkfdbank.com. We recently amended the code to more
specifically address the procedures for dealing with potential conflicts of
interest. 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.
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, at a minimum, 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 Executive Committee reviewed the nominations and determined that
Messrs. Baird, Lawson and Peterson, incumbent directors, would stand as our
nominees for election as Class III directors. The board did not receive any
stockholder nominations for director for the 2005 annual meeting.
12
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 of directors as well as the lead independent director, Mr. 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 year's 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
nominee's 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 stockholder's
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 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 nominee's 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 2006 annual meeting of stockholders,
stockholder proposals must be received by our Corporate Secretary, at the above
address, no later than November 23, 2005, 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
corporation's common stock beneficially owned by the stockholder on the date of
the notice; and (iv) any financial or other interest of the stockholder in
13
the proposal. Stockholder proposals brought under this paragraph will not be
included in our proxy statement.
DIRECTOR COMPENSATION. The director fees approved for 2005 and the fees
paid for 2004 are set forth in the chart below. In 2004, all directors received
quarterly fees and attendance fees for board meetings, with the exception of
directors who were also employees, who did not receive fees for attending
committee meetings. Directors who are also employees of either QCR Holdings or
one of our subsidiaries will not receive any board fees in 2005. However, their
2005 base salaries have been increased to reflect this change of policy.
2005 2004
QCR HOLDINGS
Quarterly Retainer $ 2,500 $ 2,000
Additional Quarterly Retainer
- Audit Committee Chairman $ 1,500 $ 1,000
- Executive Committee Chairman $ 1,500 N/A
- Compensation Committee Chairman $ 250 N/A
- Technology Committee Chairman $ 250 N/A
Attendance at Board Meeting $ 200 $ 100
Attendance at Audit Committee Meetings $ 400 $ 200
Attendance at all other Committee Meetings $ 300 $ 200
QUAD CITY BANK & TRUST
Quarterly Retainer $ 1,600 $ 1,500
Additional Quarterly Retainer
- Loan Committee Chairman $ 500 N/A
- Trust Committee Chairman $ 250 N/A
- Asset/Liability Management Committee Chairman $ 250 N/A
- Board Affairs Committee Chairman $ 250 N/A
Attendance at Board Meeting $ 100 $ 100
Attendance at Committee Meetings $ 250 $ 200
CEDAR RAPIDS BANK & TRUST
Quarterly Retainer $ 1,600 $ 1,500
Additional Quarterly Retainer
- Loan Committee Chairman $ 500 N/A
- Trust Committee Chairman $ 250 N/A
- Asset/Liability Management Committee Chairman $ 250 N/A
Attendance at Board Meeting $ 100 $ 100
Attendance at Committee Meetings $ 250 $ 200
ROCKFORD BANK & TRUST
Attendance at board meeting $ 500 N/A
Quarterly Retainer
- Loan Committee Chairman $ 500 N/A
- Asset/Liability Management Committee Chairman $ 250 N/A
Attendance at Committee Meetings $ 250 N/A
14
Pursuant to the QCR Holdings, Inc. 1997 Deferred Income Plan, a director
may elect to defer all or a portion of the fees and cash compensation payable by
us for the director's service until either the termination of such director's
service on the board or the age specified in the director's deferral election.
During 2004, all but one director deferred 100% of his director fees pursuant to
the plan, and the total expense for the deferred fees with respect to all
participating directors was $293,800 for 2004.
APPROVAL OF DEFERRED INCOME PLAN
On January 26, 2005, our board of directors adopted the QCR Holdings, Inc.
2005 Deferred Income Plan, subject to stockholder approval at the May 4, 2005
stockholder meeting. The plan will permit directors and certain selected key
officers to defer all or a portion of their fees and cash compensation. The
Board believes the design of the plan, and the current selection of our stock as
the only notional investment choice for deferrals, will help to further align
the interest of the participants with those of our stockholders. A summary of
the Deferred Income Plan is set forth below. This summary is qualified in its
entirety by reference to the Deferred Income Plan, a copy of which is attached
as Exhibit A to this proxy statement.
ADMINISTRATION. The Deferred Income Plan is to be administered by a
committee appointed by the board. Among other things, the committee will have
the authority to select key officers who may participate in the plan, to
interpret the provisions of the plan, to correct any defects or inconsistencies
in the plan and to adopt rules, regulations, forms and agreements that it may
deem necessary or advisable for the administration of the plan.
SHARES SUBJECT TO THE PLAN. The maximum number of shares that may be
delivered to participants under the plan is 100,000 shares. Any shares that
remain unissued at the termination of the plan will cease to be subject to the
plan, but until the plan is terminated, we will make available sufficient shares
to meet the requirements of the plan. All shares distributed under the plan
shall come from our treasury shares or from open market purchases.
DEFERRAL OPTION/CONTRIBUTIONS. Upon completing an irrevocable election
once a year to defer all or a portion of the fees and cash compensation for a
particular plan year, the deferred amounts shall be notionally invested in one
of the available investment alternatives. Currently, the committee only permits
notional investments in our common stock.
DISTRIBUTIONS. At the time of his or her deferral election, each
participant shall designate the date on which distribution of his or her account
balances will begin. Distribution dates may be one of the following: (i) the
date the participant separates from service with us (or six (6) months from such
date if the participant is a key employee as defined in Code Section 409A); (ii)
the date the participant attains the age designated on his or her election form;
or (iii) the first or later to occur of either of such dates as set forth on the
election form. In addition to the designated distribution dates, participants
may receive a distribution upon death or unforeseeable financial hardship.
AMENDMENT AND TERMINATION. The board may amend, suspend or terminate the
plan or any portion thereof at any time; provided, however, that no such
amendment, suspension or termination shall impair the rights of any participant
in his or her account under the plan, without such participant's consent.
Notwithstanding the foregoing, the board may amend, suspend or terminate the
plan or any portion thereof at any time, without the consent of the
participants, to the extent deemed necessary by the board in order for the plan
and deferred income to be compliant with the requirements of Code Section 409A.
15
TERM OF THE PLAN. The plan will become effective upon July 1, 2005,
provided that shares of Company common stock may only be issued under the plan
if the plan is approved by the stockholders. It is anticipated that the plan
will be first used beginning January 1, 2006 as a replacement to the current
Deferred Income Plan, unless the current Deferred Income Plan has utilized the
maximum shares available pursuant to its terms, at which time the plan will be
used as a replacement of the current Deferred Income Plan.
STATEMENT OF USAGE. Due to the design of the plan, eligible persons have
the ability to elect to participate by deferring all or a portion of their fees
and cash compensation; therefore, the benefits or amounts that will be received
or allocated to the plan's participants is not determinable at this time. The
committee shall have the authority to determine which key officers may
participate in the plan.
FEDERAL INCOME TAX CONSEQUENCES. The following is a brief summary of the
principal federal income tax consequences under current federal income tax laws
relating to amounts deferred under the plan. This summary is not intended to be
exhaustive and, among other things, does not describe the state or local tax
consequences or tax consequences of non-U.S. jurisdictions. Each participant
should consult a tax advisor concerning the federal, state and local tax
consequences of participating in the plan.
The plan will be administered as a nonqualified deferred income plan for a
select group of management or highly compensated employees. Assuming the plan is
administered in such manner, participation should have the following
implications for federal income tax purposes:
(a) Amounts contributed to participants' deferred income accounts, and
the investment earnings thereon, are not includable in a
participant's federal taxable income until such amounts are actually
distributed or withdrawn from the plan.
(b) Income earned on assets held under any trust arrangement are taxable
to us.
(c) Participants will be subject to federal income taxation on the value
of the amounts distributed or withdrawn from the plan (including any
shares received). For participants who are employees, we are
required to withhold income tax on such distributions. We are
authorized to withhold from any cash income then or thereafter
payable to such individual, to withhold sufficient shares or cash,
to pay any tax required to be withheld by reason of the receipt of
such income. Alternatively, the individual may tender a personal
check in the amount of the tax to be withheld. We will be entitled
to a corresponding tax deduction for the amount included as income
for the individual.
(d) Subsequent sales of shares distributed to the participant will
result in a capital gain or loss for the participant.
STOCKHOLDER VOTE NECESSARY FOR APPROVAL OF THE DEFERRED INCOME PLAN. The
affirmative vote of the holders of a majority of the shares of common stock
present in person or by proxy at the annual meeting is required to approve the
Deferred Income Plan. OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE PROPOSED DEFERRED INCOME PLAN.
16
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth the following information as of December 31,
2004 for (i) all compensation plans previously approved by QCR Holdings'
stockholders and (ii) all compensation plans not previously approved by QCR
Holdings' stockholders:
(a) the number of securities to be issued upon the exercise of outstanding
options, warrants and rights;
(b) the weighted-average exercise price of such outstanding options,
warrants and rights; and
(c) other than securities to be issued upon the exercise of such
outstanding options, warrants and rights, the number of securities
remaining available for future issuance under the plans.
EQUITY COMPENSATION PLAN INFORMATION
------------------------------------
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED-AVERAGE EXERCISE FUTURE ISSUANCE UNDER EQUITY
EXERCISE OF PRICE OF OUTSTANDING OPTIONS, COMPENSATION PLANS (EXCLUDING
OUTSTANDING OPTIONS, WARRANTS AND RIGHTS SECURITIES REFLECTED IN
WARRANTS AND RIGHTS COLUMN (a))
PLAN CATEGORY (a) (b) (c)
------------- --------------------- ---------------------------- -----------------------------
Equity compensation plans approved
by security holders 247,328 $ 11.61 331,789(1)
Equity compensation plans
not approved by security holders - - -
------- --------- -------
TOTAL............................. 247,328 $ 11.61 331,789(1)
======= ========= =======
(1) Includes 128,185 shares available under the QCR Holdings, Inc. Employee
Stock Purchase Plan.
* Share data has been adjusted to effect a 3:2 common stock split, which
occurred on May 28, 2004.
17
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid or granted to QCR Holdings' Chief Executive Officer and the other executive
officers who had an aggregate salary and bonus which exceeded $100,000 for the
year ended December 31, 2004.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
(a) (b) (c) (d) (e) (g) (i)
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND CALENDAR COMPENSATION OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR(1) SALARY($)(2) BONUS($)(3) ($)(4) SARs(#) ($)
-------------------------- --------- ------------ ----------- ------------ ------------ ------------
Douglas M. Hultquist 2004 $ 175,000 $ 82,396 $ 22,200(5) --- $ 26,112(8)
President and Chief 2003 $ 175,000 $ 94,792 $ 57,556(6) --- $ 27,046(9)
Executive Officer of QCR 2002 $ 172,000 $ 116,146 $ 46,558(7) --- $ 21,701(10)
Holdings, Chairman of Quad
City Bank & Trust
Michael A. Bauer 2004 $ 175,000 $ 82,396 $ 22,300(5) --- $ 31,112(8)
Chairman of QCR Holdings, 2003 $ 175,000 $ 94,792 $ 69,881(6) --- $ 32,046(9)
President and Chief 2002 $ 172,000 $ 116,146 $ 28,587(7) --- $ 30,213(10)
Executive Officer of Quad
City Bank & Trust
Larry J. Helling 2004 $ 167,000 $ 94,189 $ 21,300(5) --- $ 23,112(8)
President and Chief 2003 $ 163,000 $ 75,790 $ 14,500(6) --- $ 23,801(9)
Executive Officer of Cedar 2002 $ 161,500 $ 49,800 $ 10,300(7) --- $ 21,677(10)
Rapids Bank & Trust
Todd A. Gipple 2004 $ 140,500 $ 62,015 $ 8,900(5) 2,250 $ 19,718(8)
Executive Vice President 2003 $ 132,600 $ 38,675 --- 2,250 $ 20,333(9)
and Chief Financial 2002 $ 127,500 $ 58,700 --- 2,363 $ 20,434(10)
Officer of QCR Holdings
(1) QCR Holdings changed its fiscal year end from June 30 to December 31
following its filed Form 10-K for the fiscal year ended June 30, 2002.
Therefore, the Summary Compensation Table has been restated to include
information regarding the compensation of the named executive officers for
the fiscal years 2004 and 2003 and the calendar year ended December 31,
2002.
(2) Includes amounts deferred under the QCR Holdings, Inc. 401(k)/Profit
Sharing Plan (the "401(k) Plan") and the deferred compensation agreements.
18
(3) As indicated above, bonus payments have been restated to a calendar year
basis from a fiscal year basis for the year 2002. The bonus for 2004 was
paid in February 2005. The bonus for 2003 was paid in February 2004. The
bonus for the six month transition period ended December 31, 2002, was
paid in January 2003 for Messrs. Helling and Gipple, and in two
installments in January 2003 and May 2003 for Messrs. Bauer and Hultquist.
(4) Represents amount of tax benefit rights paid on behalf of Messrs.
Hultquist and Bauer in connection with their exercise of stock options, as
well as director fees paid on behalf of Messrs. Hultquist, Bauer, Helling
and Gipple to the 1997 Deferred Income Plan .
(5) During the 2004 calendar year, each individual had contributions made to
the 1997 Deferred Income Plan for his benefit as follows: Mr. Hultquist -
$22,200; Mr. Bauer - $22,300; Mr. Helling - $21,300; and Mr. Gipple
$8,900.
(6) During the 2003 calendar year, each individual had contributions made to
the 1997 Deferred Income Plan for his benefit as follows: Mr. Hultquist -
$15,800; Mr. Bauer - $15,600 and Mr. Helling - $14,500. Also represents
amount of tax benefit rights paid on behalf of Mr. Hultquist - $41,756 and
Mr. Bauer - $54,281 in connection with their exercise of stock options.
(7) During the 2002 calendar year, each individual had contributions made to
the 1997 Deferred Income Plan for his benefit as follows: Messrs.
Hultquist and Bauer - $13,000 and Mr. Helling - $10,300. Also represents
amount of tax benefit rights paid on behalf of Mr. Hultquist - $33,558 and
Mr. Bauer - $15,587 in connection with their exercise of stock options.
8) During the 2004 calendar year, each individual had contributions made to
the 401(k) Plan for his benefit as follows: Messrs. Hultquist, Bauer and
Helling - $11,062; and Mr. Gipple - $9,668. In addition, each received
term life insurance which had a per person premium cost as follows:
Messrs. Hultquist, Bauer, Helling, and Gipple - $50. In addition, pursuant
to the deferred compensation agreements entered into between QCR Holdings
and each of Messrs. Hultquist, Bauer, Helling and Gipple, QCR Holdings
contributed deferred compensation as follows: Mr. Hultquist - $15,000, Mr.
Bauer - $20,000, Mr. Helling - $12,000, and Mr. Gipple - $10,000.
(9) During the 2003 calendar year, each individual had contributions made to
the 401(k) Plan for his benefit as follows: Messrs. Hultquist and Bauer -
$11,000; Mr. Helling - $10,826; and Mr. Gipple - $9,539. In addition, each
received term life insurance which had a per person premium cost as
follows: Messrs. Hultquist and Bauer - $1,050; Mr. Helling - $978; and Mr.
Gipple - $796. In addition, pursuant to the deferred compensation
agreements entered into between QCR Holdings and each of Messrs.
Hultquist, Bauer, Helling and Gipple, QCR Holdings contributed deferred
compensation as follows: Mr. Hultquist - $15,000, Mr. Bauer - $20,000, Mr.
Helling - $12,000, and Mr. Gipple - $10,000.
(10) During the 2002 calendar year, each individual had contributions made to
the 401(k) Plan for his benefit as follows: Mr. Hultquist - $5,666; Mr.
Bauer - $9,178; Mr. Helling - $8,712; and Mr. Gipple - $9,669. In
addition, each received term life insurance which had a per person premium
cost as follows: Messrs. Hultquist and Bauer - $1,035; Mr. Helling - $965;
and Mr. Gipple - $765. In addition, pursuant to the deferred compensation
agreements entered into between QCR Holdings and each of Messrs.
Hultquist, Bauer, Helling and Gipple, QCR Holdings contributed deferred
compensation as follows: Mr. Hultquist - $15,000, Mr. Bauer - $20,000, Mr.
Helling - $12,000, and Mr. Gipple - $10,000.
19
The following table sets forth certain information concerning the number
and value of stock options granted in 2004 to the individuals named in the
Summary Compensation Table.
OPTION GRANTS IN 2004
INDIVIDUAL GRANTS
(a) (b) (c) (d) (e) (f)
% OF TOTAL
OPTIONS OPTIONS GRANTED EXERCISE OR GRANT DATE
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) YEAR ($/SH) DATE ($)(2)(3)
-------------------- ------- --------------- ----------- --------------- -------------
Douglas M. Hultquist --- --- $ --- --- $ ---
Michael A. Bauer --- --- $ --- --- $ ---
Larry J. Helling --- --- $ --- --- $ ---
Todd A. Gipple 2,250 3.74% $ 18.67 January 5, 2014 $ 17,970
(1) Options vest in five equal annual portions beginning one year from the
date of grant.
(2) The Black-Scholes valuation model was used to determine the grant date
present values. Significant assumptions include: risk-free interest rate,
4.57%; expected option life, 10 years; expected volatility 24.25% and
expected dividends, 0.43%.
(3) The ultimate value of the options will depend on the future market price
of our common stock, which cannot be forecast with reasonable accuracy.
The actual value, if any, an executive may realize upon the exercise of an
option will depend on the excess of the market value of our common stock,
on the date the option is exercised, over the exercise price of the
option.
20
The following table sets forth certain information concerning the number
of stock options at December 31, 2004 held by the individuals named in the
Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN 2004
AND YEAR END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARs
OPTIONS/SARs AT AT
DECEMBER 31, 2004 (#) DECEMBER 31, 2004 ($)
--------------------------- ----------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- ------------ ----------- ----------- ------------- ----------- -------------
Douglas M. Hultquist --- --- 27,000 4,125 $ 266,085 $ 53,831
Michael A. Bauer --- --- 26,250 4,125 $ 257,170 $ 53,831
Larry J. Helling --- --- 10,890 10,860 $ 152,469 $ 152,046
Todd A. Gipple --- --- 14,206 10,207 $ 179,476 $ 103,717
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS WITH MICHAEL A. BAUER AND
DOUGLAS M. HULTQUIST. On January 1, 2004, we entered into employment agreements
with Messrs. Bauer and Hultquist. The agreements each have a three-year term and
in the absence of notice from either party to the contrary, the employment term
under each agreement extends for an additional one year on the anniversary of
each agreement. Pursuant to the agreements, Messrs. Bauer and Hultquist will
each receive minimum salaries of $175,000. The agreements include 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 agreements also provide term life insurance coverage of two times the
sum of their respective base salaries and average annual bonuses as of the date
of the agreement, which may be provided through a group term carve-out plan. The
agreements further provide for severance compensation equal to the sum of one
year of their respective salaries plus average annual bonuses in the event they
are terminated without cause and three times the sum of their respective
salaries and average annual bonuses if they are terminated within one year
following a change in control or if they voluntarily terminate employment within
six months of a change in control.
Messrs. Bauer and Hultquist also entered into new deferred compensation
agreements with us on January 1, 2004. Under Mr. Hultquist's agreement, he may
defer all or a portion of his salary or bonus and the Company will match the
deferral up to $15,000 annually. Under Mr. Bauer's agreement, he may defer all
or a portion of his salary or bonus and the Company will match the deferral up
to $20,000 annually. Full benefits under the agreements will be payable to
Messrs. Bauer and Hultquist when they reach 65 years of age.
21
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS WITH TODD A. GIPPLE AND
LARRY J. HELLING. On January 1, 2004, we also entered into new employment
agreements with Todd A. Gipple and Larry J. Helling. Mr. Gipple's 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. Gipple's
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. Mr. Gipple also entered into a deferred compensation agreement with us
on January 1, 2004 under which he may defer all or a portion of his salary or
bonus and we will match the deferral up to $10,000 annually.
Mr. Helling's 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. Helling's 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. Helling's agreement allows him to participate in the
Cedar Rapids Short-term Cash Incentive Compensation Program and the Cedar Rapids
Long-term Deferred Incentive Compensation Program (as described under the
heading "Other Incentive Plans" on pages 24 and 25 of this proxy statement).
Under the agreement, Mr. Helling will be allocated a total of 40% of amounts
paid pursuant to the incentive programs. Mr. Helling also entered into a
deferred compensation agreement with us on January 1, 2004 under which he may
defer all or a portion of his salary or bonus and we will match the deferrals up
to $12,000 annually.
ALL EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS. Amounts deferred by
each of the officers under the respective deferred compensation agreements earn
interest at The Wall Street Journal prime rate, subject to a minimum of 6% and a
maximum of 12%, with such amounts differing depending on the executive. Upon
retirement, the executives will receive the deferral balance in 180 equal
monthly installments.
Additionally, all of the employment agreements are terminable at any time
by either our board of directors or the respective officer. We may terminate
these agreements at any time for cause without incurring any post-termination
obligation to the terminated officer. If the officers are terminated without
cause or upon a change in control, we must make severance payments as described
in the previous sections. If the termination without cause or change in control
provisions were triggered as of the date of this proxy statement, we would owe
the executives the following, approximate, pre-tax amounts: Mr. Bauer - $312,778
for termination without cause and $938,334 for change in control; Mr. Hultquist
- $312,778 for termination without cause and $938,334 for change in control; Mr.
Gipple - $114,065 for termination without cause and $456,260 for change in
control; Mr. Helling- $97,500 for termination without cause and $390,000 for
change in control. This is in addition to any other payments we may owe the
executives pursuant to the incentive stock plan, the deferred income plan, the
deferred compensation agreement or pursuant to any other plan or benefit then
due the officer.
22
Each of the employment agreements also contains a non-compete provision,
which provides that each officer is prohibited from competing with us or our
subsidiaries within a 60-mile radius of any of our offices for a period of two
years following the termination of the agreement.
NON-QUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PROGRAM
In April 2004, the boards of directors of Quad City Bank & Trust and Cedar
Rapids Bank & Trust each adopted a Non-Qualified Supplemental Executive
Retirement Agreement ("SERP") for executive officers. The SERP will provide
supplemental retirement income to certain key executive officers of Quad City
Bank & Trust and Cedar Rapids Bank & Trust. Pursuant to the plan, a
participating executive will receive a supplemental retirement benefit in an
annual pre-tax amount equal to 2-1/2% for each year of full-time service until
the executive reaches age 65 (not to exceed 40 years), multiplied by the
executive's average annual base salary plus cash bonus for the three most
recently completed plan years, subject to a maximum of 70%.
The supplemental retirement benefit will be reduced by any contributions
plus earnings thereon made by us to the credit of the executive pursuant to the
Company's 401(k) 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, we
will pay a supplemental early retirement benefit to the executive. The SERP also
provides for the payment of a survivor's benefit payable to a participating
executive's beneficiary upon the executive's 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 2004, we will owe the following projected annual
amounts: Mr. Bauer - $104,621; Mr. Hultquist - $195,572; Mr. Gipple - $146,382;
Mr. Helling - $103,333. 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.
In 2004, we contributed $134,000 to the SERP, and as of December 31, 2004,
our aggregate liability related to the SERP was $134,000.
401(k) SAVINGS / PROFIT SHARING PLAN
We sponsor 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, we match 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 employee's compensation. Additionally, at our discretion,
we 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 by our named executive
officers are reflected in the Summary Compensation Table on page 18 of this
proxy statement.
23
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 and nonqualified stock options. All of the
options under the plan have been granted, and on June 30, 2003, the plan
expired.
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.
Stockholders approved the 2004 plan 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.
In 2004, we awarded stock options to purchase an aggregate of 51,950
shares of QCR Holdings common stock to thirty employees and aggregate of 8,150
shares of QCR Holdings common stock to sixteen directors. The stock options
awarded to the named executive officers during 2004 are included in the tables
above.
STOCK PURCHASE PLAN. In 2002, we adopted and stockholders approved the QCR
Holdings, Inc. Employee Stock Purchase Plan. 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. 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 2004, 8,917 shares were
granted and 6,438 were purchased under the plan.
OTHER INCENTIVE PLANS
Certain designated officers of Cedar Rapids Bank & Trust, including Mr.
Helling, are also eligible to receive cash compensation pursuant to the Cedar
Rapids Short-Term Cash Incentive Compensation Program and the Cedar Rapids
Long-Term Deferred Incentive Compensation Program.
SHORT-TERM CASH INCENTIVE COMPENSATION PROGRAM. Under the Short-Term Cash
Incentive Compensation Program, we will pay eligible officers of Cedar Rapids
Bank & Trust, based on a fixed percentage allocation, an aggregate target
incentive amount. Based on the performance targets attained for the year 2004,
we paid an aggregate total of $58,500 pursuant to the program, of which Mr.
Helling received $23,400. We will pay up to $75,000 for the year 2005, provided
specified assets and losses/earnings targets are met, of which Mr. Helling could
receive up to $30,000. Pursuant to the program, in the event either target is
not met, a prorata portion of the incentive amount may be payable.
24
LONG-TERM DEFERRED INCENTIVE COMPENSATION PROGRAM. Under the Long-Term
Deferred Incentive Compensation Program, with respect to years ending December
31, 2006 through December 31, 2011, we will contribute up to an aggregate
maximum of $300,000 to a deferred compensation plan for the benefit of eligible
officers of Cedar Rapids Bank & Trust, based on a fixed percentage allocation.
Contributions will only be made under the program if specified levels for return
on equity and ending total assets are attained. The program also provides for
the acceleration of certain future year contributions to the plan in the event
of a change in control. For example, if a change in control had occurred as of
December 31, 2004, the aggregate contributions would be $603,323, which equals
the present value of future estimated contributions made for the years 2006
through 2011.
DEFERRED INCOME PLAN
1997 DEFERRED INCOME PLAN. In 1997, we adopted and stockholders approved
the QCR Holdings, Inc. 1997 Deferred Income Plan to enable directors and
selected key officers of QCR Holdings and its related companies, to elect to
defer a portion of the fees and cash compensation payable to them for their
service as directors or employees. As of December 31, 2004, there were 17,798
shares of common stock remaining under the plan. If approved by stockholders, we
intend to have the 2005 Deferred Income Plan, as described in this proxy
statement, supplement this 1997 plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2004, 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 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, Helling, Lawson, Christofferson and Harris, Ms. Bawden and Ms.
Whiteside. Messrs. Bauer, Hultquist and Helling are executive officers and do
not participate in any decisions involving their own compensation.
EXECUTIVE COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The report of the Executive Committee below 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 or under the
Securities Exchange Act of 1934, except to the extent QCR Holdings specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
GENERAL. The Executive Committee is comprised of six directors of QCR
Holdings. Each of the members is considered "independent" by the board according
to the Nasdaq listing requirements, an "outside" director pursuant to Section
162(m) of the Internal Revenue Code and a "non-employee" director pursuant to
Section 16 of the Securities Exchange Act of 1934. The committee's intention is
to provide a total compensation program that supports our long-term business
strategy and performance culture and creates a commonality of interest within
our stockholders. The Executive Committee is responsible for the oversight of
executive compensation and reviews the compensation program of QCR Holdings on
an ongoing basis.
25
The overall philosophy used by the Executive Committee when making
decisions is as follows:
- to provide incentives for executive officers to work toward
achieving successful short-term and long-term goals and
objectives;
- to provide significant reward for achievement of superior
performance, as well as significant risk to penalize
substandard performance;
- to create opportunity and incentive for executives to be
long-term stockholders;
- to link executive compensation rewards to increases in
stockholder value, as measured by favorable long-term results
and continued strengthening of our financial condition;
- to provide flexibility to recognize, differentiate and reward
individual performance; and
- to facilitate stock ownership through granting of stock
options.
For each executive officer, the Executive Committee was responsible for
the establishment of base salary and bonuses paid, as well as an award level for
the annual incentive compensation program, each of which is subject to the
approval of the non-employee directors. The Executive Committee was also
responsible for the administration of the stock programs for the executive
officers, as well as recommendations regarding other executive benefits and
plans, subject to the same approval process.
In reviewing an executive's compensation, the Executive Committee
considers and evaluates all components of the executive officer's total
compensation package. This involves reviewing the executive's salary, bonus,
incentive stock awards, perquisites, participation in our 401(k) plan, deferred
compensation plans, the supplemental retirement plan, payments due upon
retirement or a change of control, if any, and all other payments and awards
that the executive officer earns.
SALARY AND BONUS. The Executive Committee reviews each executive's base
salary on an annual basis. It is the Executive Committee's policy that the base
salaries of our executives should offer each executive security and allow us to
attract qualified executives and maintain a stable management team and
environment. The Executive Committee targets base salaries at levels comparable
to those of comparable positions within the market place. In January 2004, we
entered into new employment contracts with each of our executive officers. The
base salary provided in the agreements may be increased to reflect the executive
officer's performance, as well as our overall financial performance.
Additionally, base salaries are determined by examining, among other things, the
executive's level of responsibility, prior experience, length of time with us as
an employee, breadth of knowledge and internal performance objectives. An
executive's current salary in relation to the executive's salary range and the
median salary practices of the market place are also considered. All of the
factors described herein are considered on a subjective basis in the aggregate,
and none of the factors is accorded a specific weight.
Annual adjustments to an executive's base salary are driven by corporate
and individual performance. Corporate performance, measured primarily in terms
of earnings per share, return on equity and enhancement of total assets, impacts
an executive's base salary. In addition, the Executive Committee will also
measure individual performance. When measuring individual performance, the
Executive Committee considers the individual's efforts in achieving established
financial and business objectives, managing and developing employees and
enhancing long-term relationships with customers.
26
Each executive's annual cash bonus is also driven by corporate and
individual performance. Specifically, each executive has measurable goals
determined by the Executive Committee regarding earnings per share, return on
equity, asset growth, and other financial performance measures.
Annually, the Executive Committee evaluates four primary areas of
performance in determining the Chief Executive Officer's level of compensation.
These areas are:
- our long-range strategic planning and implementation;
- our financial performance;
- our compliance with regulatory requirements and relations with
regulatory agencies; and
- the individual's effectiveness of managing relationships with
stockholders and the board of directors.
LONG-TERM INCENTIVE PROGRAMS. Our current long-term incentive plans are
intended to promote equity ownership in QCR Holdings by the directors and
selected officers and employees, to increase their proprietary interest in our
success and to encourage them to remain with us as directors and employees. They
also promote tax efficiency and replacement of benefit opportunities lost to
regulatory limits. We have established the QCR Holdings, Inc. 401(k)/Profit
Sharing Plan, the QCR Holdings, Inc. Employee Stock Purchase Plan and the QCR
Holdings, Inc. 1997 Deferred Income Plan, each of which allows participants to
acquire shares of our common stock. We are asking stockholders to approve the
proposed Deferred Income Plan as a supplement to the current deferred income
plan adopted in 1997.
We have also granted stock options through the QCR Holdings, Inc. 1993
Stock Option Plan, the 1997 Stock Incentive Plan and the 2004 Stock Incentive
Plan. We use stock options in our compensation program to reinforce our
long-term perspective and to retain valued executives. Pursuant to the 1997 and
2004 Stock Incentive Plans, we have also granted tax benefit rights and stock
appreciation rights to certain participants at the same time as options were
awarded. We did not grant options to most of our executive officers in 2004
however, options were granted to our named executive officers in January 2005,
as follows: Mr Hultquist - 5,000 options; Mr. Bauer - 5,000 options; Mr. Helling
- 2,000 options and Mr. Gipple - 3,000 options.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. The base salary paid to Mr.
Hultquist, as President and Chief Executive Officer, during 2004 was also based
in part upon the Executive Committee's satisfaction with our profitability,
asset growth and risk management. The primary evaluation criteria are considered
to be essential to our long-term viability. The Executive Committee considered
Mr. Hultquist's personal performance as President and Chief Executive Officer,
his previous years' salaries and the salary levels of other similarly situated
financial institutions, his participation in employee benefit plans and the
perquisites he receives in setting his base salary at $175,000 for 2004. Mr.
Hultquist also received a bonus in the amount of $82,396 for 2004. His bonus was
based on our 2004 financial performance as compared to measurable goals for
earnings per share, return on equity, asset growth, asset quality, and other
subjective factors determined by the Executive Committee. Mr. Hultquist also
received $26,112 in other compensation that is primarily attributable to our
matching contribution pursuant to the 401(k) plan as well as contributions
pursuant to his deferred compensation arrangement.
COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE OF 1986.
Section 162(m) of the Internal Revenue Code limits the deductibility of annual
compensation in excess of $1.0 million paid to our Chief Executive Officer and
any of the four other highest paid officers, to the extent they are listed
officers on the last day of any given tax year. However, compensation is exempt
from this limit if it qualifies as "performance based compensation." Performance
based compensation generally includes only
27
payments that are contingent on achievement of performance objectives, and
excludes fixed or guaranteed payments. We believe performance based compensation
is an important tool to provide incentive to senior executives, matching their
compensation levels to our performance. Accordingly, performance based
compensation comprises a significant portion of the compensation package for our
senior executives. This also has the effect of preserving the deduction that
might otherwise be affected by the $1.0 million limit.
Although we will consider deductibility under Section 162(m) with respect
to the compensation arrangements for executive officers, deductibility will not
be the sole factor used in determining appropriate levels or methods of
compensation. Since our objectives may not always be consistent with the
requirements for full deductibility, we may enter into compensation arrangements
under which payments would not be deductible under Section 162(m).
CONCLUSION. The Executive Committee believes these executive compensation
policies and programs effectively serve the interests of stockholders and QCR
Holdings. The Executive Committee believes these policies motivate executives to
contribute to our overall future success, thereby enhancing the value of QCR
Holdings for the benefit of all stockholders.
Executive Committee:
Patrick S. Baird
James J. Brownson
Mark C. Kilmer
John K. Lawson
Ronald G. Peterson
Henry Royer
28
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
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 performance graph and related information unless
such graph and related information are specifically stated to be incorporated by
reference into such document.
The following graph indicates, for the period commencing December 31,
1999, a comparison of cumulative total returns for QCR Holdings, the Nasdaq
Stock Market (US Companies) and the SNL Midwest Bank Index prepared by SNL
Securities, Charlottesville, Virginia. The graph below was prepared at our
request by SNL Securities.
QCR HOLDINGS, INC.
[PERFORMANCE GRAPH]
PERIOD ENDING
----------------------------------------------------------------------------------
INDEX 06/30/00 06/30/01 06/30/02 12/31/02 12/31/03 12/31/04
--------------------- -------- -------- -------- -------- -------- --------
QCR Holdings, Inc. 100.00 64.19 91.78 105.12 175.00 197.67
NASDAQ Composite 100.00 54.63 37.11 33.95 51.19 55.87
SNL NASDAQ Bank Index 100.00 140.30 158.03 146.69 189.34 217.01
29
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding our common
stock beneficially owned on December 31, 2004, 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,
2004.
NAME OF INDIVIDUAL AND AMOUNT AND NATURE OF PERCENT
NUMBER OF PERSONS IN GROUP BENEFICIAL OWNERSHIP(1) OF CLASS
----------------------------------------------- ----------------------- --------
DIRECTORS
Patrick S. Baird 36,989 (2) *
Michael A. Bauer 56,909 (3) 1.27%
James J. Brownson 32,369 (4) *
Larry J. Helling 48,897 (5) 1.08%
Douglas M. Hultquist 56,684 (6) 1.26%
Mark C. Kilmer 26,618 (7) *
John K. Lawson 12,317 (8) *
Ronald G. Peterson 15,926 (9) *
Henry Royer 10,317(10) *
OTHER NAMED EXECUTIVE OFFICER
Todd A. Gipple 41,080(11) *
5% STOCKHOLDER
Banc Funds 317,153(12) 7.00%
All directors and executive officers as a group
(17 persons) 432,634(13) 9.54%
* Less than 1%.
(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.
(2) Includes 240 shares subject to options which are presently exercisable and
over which Mr. Baird has no voting and sole investment power. Also
includes 34,421 shares held jointly by Mr. Baird and his spouse and 2,328
shares held in a trust, over which he has shared voting and investment
power. Excludes 660 option shares not presently exercisable.
30
(3) Includes 3,392 shares held by Mr. Bauer's children, 6,862 shares held in
an IRA account, 8,339 shares held in a trust, 7,189 shares held in the
401(k) Plan and 18 shares held by his wife, all of which he has shared
voting and investment power.
(4) Includes 2,250 shares subject to options which are presently exercisable
and over which Mr. Brownson has no voting and sole investment power. Also
includes 3,240 shares held jointly by Mr. Brownson and his spouse, 2,025
shares held by his spouse, 8,159 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 5,900 option shares not presently exercisable.
(5) Includes 10,890 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, 3,670 shares held in a
trust and 1,889 shares held in the 401(k) Plan, all of which he has shared
voting and investment power. Excludes 7,260 option shares not presently
exercisable.
(6) Includes 9,337 shares held by his spouse or for the benefit of his
children, 4,050 shares held in an IRA account, 8,493 shares held in a
trust and 3,844 shares in the 401(k) Plan, all of which Mr. Hultquist has
shared voting and investment power.
(7) Includes 1,125 shares subject to options which are presently exercisable
and over which Mr. Kilmer has no voting and sole investment power. Also
includes 5,084 shares held by his spouse or minor children, 5,034 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 450 option shares not
presently exercisable.
(8) Includes 960 shares subject to options which are presently exercisable and
over which Mr. Lawson has no voting and sole investment power. Also
includes 6,857 shares held in trust, over which shares he has shared
voting and investment power. Excludes 840 option shares not presently
exercisable.
(9) Includes 2,250 shares subject to options which are presently exercisable
and over which Mr. Peterson has no voting and sole investment power. Also
includes 8,726 shares held in a trust, over which shares he has shared
voting and investment power. Excludes 900 option shares not presently
exercisable.
(10) Includes 240 shares subject to options which are presently exercisable and
over which Mr. Royer has no voting and sole investment power. Includes
6,750 shares held in an IRA account and 3,327 shares held in a trust, over
all of which Mr. Royer has shared voting and investment power. Excludes
660 option shares not presently exercisable.
(11) Includes 11,956 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, 1,672 shares held in the 401(k) Plan, and 447 shares
held in a trust, over which he has shared voting and investment power.
Excludes 8,707 option shares not presently exercisable.
(12) Includes shares held by Banc Fund IV L.P., Banc Fund V L.P. and Banc Fund
VI L.P. as reported in a Schedule 13G/A filed on February 14, 2005.
(13) Excludes 29,191 option shares not presently exercisable.
31
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 2004,
we are not aware of any failures to comply with the filing requirements of
Section 16(a) during 2004 with the exception of the following: During the year,
one Form 4 was filed late for each of the following: Ms. Joyce Bawden -
acquisition of 1,207 shares and an exercise of 450 options into common stock;
Ms. Ann Lipsky - acquisition of 2,414 shares; Mr. Ronald Peterson - exercise of
1,575 option into common stock; Mr. John H Harris II - acquisition of 10,214
shares; Mr. James Brownson - grant of 5,000 shares; and Ms. Shellee Showalter -
grant of 500 options.
TRANSACTIONS WITH MANAGEMENT
Our directors and officers and their associates were customers of and had
transactions with QCR Holdings and our subsidiaries during 2004. 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.
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 fiscal year ended December 31, 2004 with our management and
McGladrey & Pullen, LLP, our independent registered public accounting firm. 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 fiscal year ending December 31, 2004 for
filing with the Securities and Exchange Commission.
Audit Committee:
Patrick S. Baird James J. Brownson
John K. Lawson Henry Royer
32
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
AUDIT FEES. The aggregate amount of fees billed by McGladrey & Pullen, LLP
in connection with the audit of our annual financial statements and Quad City
Bank's internal control attestation for fiscal years 2004 and 2003 and for its
required reviews of our unaudited interim financial statements included in our
Form 10-Q's filed during fiscal 2004 and 2003, as well as assistance with other
SEC filings, were $145,692 and $99,797, respectively. The increased level of
audit fees was primarily the result of our growth in total assets, combined with
additional services related to FDICIA attestation at Quad City Bank & Trust, the
private placement memorandum in connection with our offering of common stock in
the Rockford, Illinois community, the review of our various filings on Form 8-K,
and initial work related to our compliance with Section 404 of the
Sarbanes-Oxley Act of 1992.
AUDIT RELATED FEES. The aggregate amount of audit related fees billed by
McGladrey & Pullen, LLP for fiscal years 2004 and 2003 were $9,273 and $7,035,
respectively. The majority of these services were related to research and
consultations concerning financial accounting and reporting matters.
TAX FEES. The aggregate amount of tax related services billed by RSM
McGladrey, Inc. for fiscal years 2004 and 2003 were $756 and $3,756,
respectively, for professional services rendered for tax advice.
ALL OTHER FEES. We incurred other fees from RSM McGladrey, Inc. in the
amount of $5,408 during fiscal year 2004 for consulting services related to
internal controls. We did not incur any other fees from RSM McGladrey, Inc. or
McGladrey & Pullen, LLP in fiscal year 2003.
The Audit Committee, after consideration of the matter, does not believe
that the rendering of these services by McGladrey & Pullen, LLP and RSM
McGladrey, Inc. to be incompatible with maintaining McGladrey & Pullen, LLP's
independence as our principal accountant.
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 Committee's policy is to approve, on a case-by-case basis, all audit and
permissible non-audit services provided by McGladrey & Pullen, LLP and RSM
McGladrey, Inc. These services include audit and audit-related services, tax
services and other services. The Audit Committee does have a policy of
pre-approving any of these services.
33
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
Michael A. Bauer Douglas M. Hultquist
Chairman President
Moline, Illinois
March 23, 2005
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
34
EXHIBIT A
QCR HOLDINGS, INC.
2005 DEFERRED INCOME PLAN
SECTION 1. PURPOSE
The purpose of the QCR HOLDINGS, INC. 2005 DEFERRED INCOME PLAN ("PLAN")
is to enable directors and selected key officers of QCR HOLDINGS, INC.
("COMPANY"), and any related company, to elect to defer all or a portion of the
fees and cash compensation payable by the Company, or the related company, on
account of service as a director or employee. The Plan is intended as a means of
maximizing the effectiveness and flexibility of the compensation arrangements to
directors and a select group of management or highly compensated employees of
the Company and related companies, and as an aid in attracting and retaining
individuals of outstanding abilities and specialized skills for service.
SECTION 2. EFFECTIVE DATE
The Plan is effective as of July 1, 2005.
SECTION 3. PLAN ADMINISTRATION
The Plan shall be administered by a committee ("COMMITTEE"), as may be
designated by the Board of Directors of the Company ("BOARD") from time to time.
The Committee shall have sole authority to select the individuals, from among
those eligible, who may participate under the Plan and to establish all other
participation requirements. The Committee is authorized, subject to Board
approval, to interpret the Plan and may from time to time adopt such rules,
regulations, forms and agreements, not inconsistent with the provisions of the
Plan, as it may deem advisable to carry out the Plan. All decisions made by the
Committee in administering the Plan shall be subject to Board review.
SECTION 4. ELIGIBILITY
Any director or key officer of the Company or any related company may be
designated by the Board to participate in the Plan; provided, however, that
officers eligible for designation shall be limited to a select group of
management or highly compensated employees within the meaning of Section 201(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Any such director or key officer shall be a "PARTICIPANT" as of the date
designated by the Board, and his or her status as a Participant shall continue
until the date on which all payments due under the terms of the Plan have been
made.
SECTION 5. SHARES SUBJECT TO THE PLAN
The aggregate number of shares of common stock of the Company ("SHARES")
which may be distributed to directors and employees under the Plan shall be One
Hundred Thousand (100,000) Shares. Any Shares that remain unissued at the
termination of the Plan shall cease to be subject to the Plan, but until
termination of the Plan, the Company shall at all times make available
sufficient Shares to meet the requirements of the Plan. The aggregate number of
Shares which may be sold under the Plan shall be automatically adjusted to
reflect a change in capitalization of the Company, such as a stock dividend or
stock split, unless the Board determines in its sole discretion that, based on
the facts and circumstances, a formulaic adjustment is not appropriate, and that
a differing adjustment, or no adjustment, is more equitable.
SECTION 6. ELECTION TO DEFER INCOME
(a) In General. Each Participant shall be entitled to make an irrevocable
election ("ELECTION") to defer receipt of all or a portion of the fees or
compensation otherwise payable to him or her in cash ("INCOME"). Income with
respect to which a Election has been made (and shall not have been revoked)
shall be referred to hereinafter as "DEFERRED INCOME."
(b) Timing of Elections. An Election to defer Income under the Plan must
be properly filed with the Company not later than the following:
(i) the last business day of the tax year preceding the year in
which the Income is earned, or such earlier time as
established by the Committee;
(ii) thirty (30) days after first becoming eligible to participate
in the Plan; provided such Income relates to services
performed after the date of the Election; or
(iii) six (6) months prior to the end of an applicable performance
period; provided such Election is with respect to incentive
compensation which qualifies as "bonus compensation" as
defined under Section 409A of the Internal Revenue Code of
1986, as amended ("CODE").
All such Elections shall continue in effect until the Participant delivers to
the Board a written revocation or modification of such Election pursuant to
paragraph (d) below.
(c) Manner of Election. Elections to defer receipt of Income shall be made
in writing in accordance with such rules and procedures as the Committee may
prescribe; provided, however, that each such Election to defer shall include:
(i) the amount to be deferred, expressed either as a fixed dollar
amount or a percentage of Income;
(ii) the date on which the Deferred Income shall be paid; and
(iii) the number of annual installments for the payment of Deferred
Income (maximum ten (10)).
(d) Changes to Elections. Modifications to existing Elections which change
the timing or method of payment shall be subject to the following:
(i) A revised Election must be made not later than twelve (12)
months prior to the scheduled payment date reflected in the
most recent Election; and
A-2
(ii) To the extent required under Code Section 409A, the revised
payment date must be not sooner than the five (5) year
anniversary of the previously scheduled payment date.
SECTION 7. RECORD AND CREDITING OF DEFERRED AMOUNTS
(a) Deferred Income. The Company shall credit the amount of any Deferred
Income to a memorandum account for the benefit of the Participant ("DEFERRED
INCOME ACCOUNT") no later than the last day of the calendar quarter in which
such Income would otherwise have been paid to the Participant.
(b) Investment Direction. The Committee will allow a Participant to direct
the investment of his or her Deferred Income Account in accordance with such
rules and procedures as the Committee may prescribe, in its sole discretion,
which may include a single investment selection, including shares of the
Company's common stock. The Company will be relieved of all investment
responsibility and liability for such investment direction. A direction to
purchase Shares may not be made within six (6) months of a direction to sell
Shares, and a direction to sell Shares may not be made within six (6) months of
a direction to purchase Shares, under the Plan or any other plan or program
maintained by the Company.
(c) Value and Statement of Account. The Committee shall provide each
Participant with a statement of the value of his or her Deferred Income Account,
including the amount of Deferred Income and income thereon, determined as of
each December 31 (the "VALUATION DATE").
SECTION 8. PAYMENT OF DEFERRED ACCOUNT
(a) In General. No withdrawals or payment shall be made from the
Participant's Deferred Income Account except as provided in this SECTION 8.
(b) Payment Event. The value of a Participant's Deferred Income Account
shall be payable in either a single payment or up to ten (10) annual
installments commencing on the March 15 following the occurrence of a "payment
event," as shall be reflected in the most recently applicable Election. A
"PAYMENT EVENT" shall be the date specified in the Participant's Election, which
may be any one of the following:
(i) the date of the Participant's separation from service with the
Company or related company (six (6) months from such date if
the Participant is a "Key Employee" as defined under Code
Section 409A);
(ii) the date the Participant attains an age specified in the
Election; or
(iii) the first or later to occur of either of such dates, as may be
specified in the Election.
(c) Manner of Payment.
A-3
(i) If a Participant elects a single installment, the value of
Participant's entire Deferred Income Account as of the
Valuation Date preceding payment shall be paid to him or her
in one lump sum.
(ii) If a Participant elects two (2) or more installment payments,
the amount of an installment payment shall be a fraction of
the value of the Participant's Deferred Income Account on the
Valuation Date preceding such installment payment date, the
numerator of which is one (1) and the denominator which is the
total number of installments elected minus the number of
installments previously paid.
(d) Hardship Distributions. The Committee, in its sole discretion, and
whether or not a Payment Event shall have occurred, may accelerate payment of
amounts credited to a Participant's Deferred Income Account if requested to do
so and if the requirements of this PARAGRAPH (d) are met. Such acceleration may
occur only in the event of an unforeseeable financial emergency and the amount
of any distribution is limited to the amount deemed reasonably necessary to
satisfy such unforeseeable financial emergency. For purposes of this PARAGRAPH
(d), an "UNFORESEEABLE FINANCIAL EMERGENCY" is an unanticipated emergency that
is caused by an event beyond the control of the Participant that would result in
severe financial hardship to the participant resulting from (i) a sudden and
unexpected illness or accident of the Participant or a dependent of the
Participant, (ii) a loss of the Participant's property due to casualty, or (iii)
such other extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the sole
discretion of the Committee.
(e) Death of Participant. In the event that a Participant shall die at any
time prior to complete distribution of all amounts payable to him or her under
the provisions of the Plan, the unpaid balance of the Participant's Deferred
Income Account shall be paid to the Participant's beneficiary or beneficiaries
in a lump sum, unless another form is provided in the Participant's most recent
Election.
SECTION 9. DESIGNATION OF BENEFICIARY
Participants shall designate in writing, in accordance with such rules and
procedures as the Committee may prescribe, the beneficiary or beneficiaries who
are to receive the Participant's Deferred Income Account in the event of the
Participant's death.
SECTION 10. UNSECURED OBLIGATIONS
The obligation of the Company to make payments under the Plan shall be a
general obligation of the Company, and such payments shall be made from general
assets and property of the Company. The Participant's relationship to the
Company under the Plan shall be only that of a general unsecured creditor and
neither this Plan nor any agreement entered into hereunder or action taken
pursuant hereto shall create or be construed to create a trust or fiduciary
relationship of any kind. The Company may establish an irrevocable grantor trust
for purposes of holding and investing the Deferred Income Account balances but
such establishment shall not create any
A-4
rights in or against any amount so held, except that the trustee of such trust
may vote any Shares thereunder in accordance with the direction of the
Participants.
SECTION 11. AMENDMENT AND TERMINATION
(a) The Board may amend, suspend or terminate the Plan or any portion
thereof at any time; provided, however, that no such amendment, suspension or
termination shall impair the rights of any Participant in such Participant's
Deferred Income Account under the Plan, without such Participant's consent.
(b) Notwithstanding the foregoing, the Board shall retain the right to
amend the Plan or any portion thereof at any time, or from time to time, without
the consent of the Participants, to the extent deemed necessary by the Board, in
its sole discretion, in order for the Plan and Deferred Income to be compliant
with the requirements of Code Section 409A.
SECTION 12. EFFECT OF TRANSFER
(a) In the event of a Change in Control of the Company, the entire unpaid
balance of each Deferred Income Account shall be paid in a single lump sum to
the Participant as of the effective date thereof.
(b) For purposes of this Plan, the term Change in Control shall be as
defined in Code Section 409A and Internal Revenue Service Notice 2005-1 and any
subsequent guidance provided with respect to Code Section 409A.
SECTION 13. NON-ASSIGNABILITY
No right to receive payments under the provisions of this Plan shall be
transferable or assignable by a Participant, except by will or the laws of
descent and distribution or by gifting for the benefit of descendants in estate
planning situations, and during his or her lifetime payment may only be received
by the Participant or his or her legal representative or guardian.
SECTION 14. DELIVERY AND REGISTRATION OF STOCK
The Company's obligation to deliver Shares shall, if the Committee so
requests, be conditioned upon the receipt of a representation as to the
investment intention of the individual to whom such Shares are to be delivered,
in such form as the Committee shall determine to be necessary or advisable to
comply with the provisions of the Securities Act of 1933 ("ACT") or any other
federal, state or local securities legislation or regulation. It may be provided
that any representation requirement shall become inoperative upon a registration
of the Shares or other action eliminating the necessity of such representation
under securities legislation. The Company shall not be required to deliver any
Shares under the Plan prior to (i) the admission of such Shares to listing on
any stock exchange on which Shares may then be listed, and (ii) the completion
of such registration or other qualification of such Shares under any state or
federal law, rule or regulation, as the Committee shall determine to be
necessary or advisable.
A-5
This Plan is intended to comply with Rule 16b-3 under the Act. Any
provision of the Plan which is inconsistent with said rule shall, to the extent
of such inconsistency, be inoperative and shall not affect the validity of the
remaining provisions of the Plan.
SECTION 15. BINDING PROVISIONS
All of the provisions of this Plan shall be binding upon all persons who
shall be entitled to any benefits hereunder and their heirs and personal
representatives.
SECTION 16. CLAIMS PROCEDURE
If any benefits become payable under this Plan, the Participant (or
designated beneficiary in the case of the Participant's death) shall file a
claim for benefits by notifying the Committee in writing. If the claim is wholly
or partially denied, the Committee shall provide a written notice of the denial.
This written notice must be provided within a reasonable period of time
(generally 90 days) after the receipt of the claim by the Committee. The written
notice must contain the following information:
(a) the specific reason or reasons for the denial;
(b) specific reference to those Plan provisions on which the denial is
based;
(c) a description of any additional information or material necessary to
correct the claim and an explanation of why such material or
information is necessary; and
(d) appropriate information as to the steps to be taken if the
Particiapnt or beneficiary wants to submit the claim for review.
If notice of the denial of a claim is not furnished within a reasonable
period of time, the claim will be deemed denied.
Upon the denial of a claim for benefits, the Participant (or designated
beneficiary in the case of the Participant's death) may file a claim for review,
in writing, with the Committee within sixty (60) days after receipt of a written
notice of a denial of a claim. In requesting a review, the Participant or
beneficiary may review Plan documents and submit any written issues and comments
he or she feels are appropriate. The Committee shall then give a full and fair
review to the claim. If the claim is denied, the Committee shall provide the
Participant or beneficiary with written notice of this denial within sixty (60)
days after the Committee's receipt of the request for review. This decision
shall state the specific reasons for the decision and shall include references
to specific Plan provisions on which the decision is based.
A-6
EXHIBIT A
QCR HOLDINGS, INC.
2005 DEFERRED INCOME PLAN
SECTION 1. PURPOSE
The purpose of the QCR HOLDINGS, INC. 2005 DEFERRED INCOME PLAN ("PLAN")
is to enable directors and selected key officers of QCR HOLDINGS, INC.
("COMPANY"), and any related company, to elect to defer all or a portion of the
fees and cash compensation payable by the Company, or the related company, on
account of service as a director or employee. The Plan is intended as a means of
maximizing the effectiveness and flexibility of the compensation arrangements to
directors and a select group of management or highly compensated employees of
the Company and related companies, and as an aid in attracting and retaining
individuals of outstanding abilities and specialized skills for service.
SECTION 2. EFFECTIVE DATE
The Plan is effective as of July 1, 2005.
SECTION 3. PLAN ADMINISTRATION
The Plan shall be administered by a committee ("COMMITTEE"), as may be
designated by the Board of Directors of the Company ("BOARD") from time to time.
The Committee shall have sole authority to select the individuals, from among
those eligible, who may participate under the Plan and to establish all other
participation requirements. The Committee is authorized, subject to Board
approval, to interpret the Plan and may from time to time adopt such rules,
regulations, forms and agreements, not inconsistent with the provisions of the
Plan, as it may deem advisable to carry out the Plan. All decisions made by the
Committee in administering the Plan shall be subject to Board review.
SECTION 4. ELIGIBILITY
Any director or key officer of the Company or any related company may be
designated by the Board to participate in the Plan; provided, however, that
officers eligible for designation shall be limited to a select group of
management or highly compensated employees within the meaning of Section 201(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Any such director or key officer shall be a "PARTICIPANT" as of the date
designated by the Board, and his or her status as a Participant shall continue
until the date on which all payments due under the terms of the Plan have been
made.
SECTION 5. SHARES SUBJECT TO THE PLAN
The aggregate number of shares of common stock of the Company ("SHARES")
which may be distributed to directors and employees under the Plan shall be One
Hundred Thousand (100,000) Shares. Any Shares that remain unissued at the
termination of the Plan shall cease to be subject to the Plan, but until
termination of the Plan, the Company shall at all times make
available sufficient Shares to meet the requirements of the Plan. The aggregate
number of Shares which may be sold under the Plan shall be automatically
adjusted to reflect a change in capitalization of the Company, such as a stock
dividend or stock split, unless the Board determines in its sole discretion
that, based on the facts and circumstances, a formulaic adjustment is not
appropriate, and that a differing adjustment, or no adjustment, is more
equitable.
SECTION 6. ELECTION TO DEFER INCOME
(a) In General. Each Participant shall be entitled to make an
irrevocable election ("ELECTION") to defer receipt of all or a portion of the
fees or compensation otherwise payable to him or her in cash ("INCOME"). Income
with respect to which a Election has been made (and shall not have been revoked)
shall be referred to hereinafter as "DEFERRED INCOME."
(b) Timing of Elections. An Election to defer Income under the Plan must
be properly filed with the Company not later than the following:
(i) the last business day of the tax year preceding the year in
which the Income is earned, or such earlier time as
established by the Committee;
(ii) thirty (30) days after first becoming eligible to participate
in the Plan; provided such Income relates to services
performed after the date of the Election; or
(iii) six (6) months prior to the end of an applicable performance
period; provided such Election is with respect to incentive
compensation which qualifies as "bonus compensation" as
defined under Section 409A of the Internal Revenue Code of
1986, as amended ("CODE").
All such Elections shall continue in effect until the Participant delivers to
the Board a written revocation or modification of such Election pursuant to
paragraph (d) below.
(c) Manner of Election. Elections to defer receipt of Income shall be
made in writing in accordance with such rules and procedures as the Committee
may prescribe; provided, however, that each such Election to defer shall
include:
(i) the amount to be deferred, expressed either as a fixed dollar
amount or a percentage of Income;
(ii) the date on which the Deferred Income shall be paid; and
(iii) the number of annual installments for the payment of Deferred
Income (maximum ten (10)).
(d) Changes to Elections. Modifications to existing Elections which
change the timing or method of payment shall be subject to the following:
A-2
(i) A revised Election must be made not later than twelve (12)
months prior to the scheduled payment date reflected in the
most recent Election; and A-2
(ii) To the extent required under Code Section 409A, the revised
payment date must be not sooner than the five (5) year
anniversary of the previously scheduled payment date.
SECTION 7. RECORD AND CREDITING OF DEFERRED AMOUNTS
(a) Deferred Income. The Company shall credit the amount of any Deferred
Income to a memorandum account for the benefit of the Participant ("DEFERRED
INCOME ACCOUNT") no later than the last day of the calendar quarter in which
such Income would otherwise have been paid to the Participant.
(b) Investment Direction. The Committee will allow a Participant to
direct the investment of his or her Deferred Income Account in accordance with
such rules and procedures as the Committee may prescribe, in its sole
discretion, which may include a single investment selection, including shares of
the Company's common stock. The Company will be relieved of all investment
responsibility and liability for such investment direction. A direction to
purchase Shares may not be made within six (6) months of a direction to sell
Shares, and a direction to sell Shares may not be made within six (6) months of
a direction to purchase Shares, under the Plan or any other plan or program
maintained by the Company.
(c) Value and Statement of Account. The Committee shall provide each
Participant with a statement of the value of his or her Deferred Income Account,
including the amount of Deferred Income and income thereon, determined as of
each December 31 (the "VALUATION DATE").
SECTION 8. PAYMENT OF DEFERRED ACCOUNT
(a) In General. No withdrawals or payment shall be made from the
Participant's Deferred Income Account except as provided in this SECTION 8.
(b) Payment Event. The value of a Participant's Deferred Income Account
shall be payable in either a single payment or up to ten (10) annual
installments commencing on the March 15 following the occurrence of a "payment
event," as shall be reflected in the most recently applicable Election. A
"PAYMENT EVENT" shall be the date specified in the Participant's Election, which
may be any one of the following:
(i) the date of the Participant's separation from service with the
Company or related company (six (6) months from such date if
the Participant is a "Key Employee" as defined under Code
Section 409A);
(ii) the date the Participant attains an age specified in the
Election; or
(iii) the first or later to occur of either of such dates, as may be
specified in the Election.
A-3
(c) Manner of Payment.
(i) If a Participant elects a single installment, the value of
Participant's entire Deferred Income Account as of the
Valuation Date preceding payment shall be paid to him or her
in one lump sum.
(ii) If a Participant elects two (2) or more installment payments,
the amount of an installment payment shall be a fraction of
the value of the Participant's Deferred Income Account on the
Valuation Date preceding such installment payment date, the
numerator of which is one (1) and the denominator which is the
total number of installments elected minus the number of
installments previously paid.
(d) Hardship Distributions. The Committee, in its sole discretion, and
whether or not a Payment Event shall have occurred, may accelerate payment of
amounts credited to a Participant's Deferred Income Account if requested to do
so and if the requirements of this PARAGRAPH (d) are met. Such acceleration may
occur only in the event of an unforeseeable financial emergency and the amount
of any distribution is limited to the amount deemed reasonably necessary to
satisfy such unforeseeable financial emergency. For purposes of this PARAGRAPH
(d), an "UNFORESEEABLE FINANCIAL EMERGENCY" is an unanticipated emergency that
is caused by an event beyond the control of the Participant that would result in
severe financial hardship to the participant resulting from (i) a sudden and
unexpected illness or accident of the Participant or a dependent of the
Participant, (ii) a loss of the Participant's property due to casualty, or (iii)
such other extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the sole
discretion of the Committee.
(e) Death of Participant. In the event that a Participant shall die at
any time prior to complete distribution of all amounts payable to him or her
under the provisions of the Plan, the unpaid balance of the Participant's
Deferred Income Account shall be paid to the Participant's beneficiary or
beneficiaries in a lump sum, unless another form is provided in the
Participant's most recent Election.
SECTION 9. DESIGNATION OF BENEFICIARY
Participants shall designate in writing, in accordance with such rules and
procedures as the Committee may prescribe, the beneficiary or beneficiaries who
are to receive the Participant's Deferred Income Account in the event of the
Participant's death.
SECTION 10. UNSECURED OBLIGATIONS
The obligation of the Company to make payments under the Plan shall be a
general obligation of the Company, and such payments shall be made from general
assets and property of the Company. The Participant's relationship to the
Company under the Plan shall be only that of a general unsecured creditor and
neither this Plan nor any agreement entered into hereunder or action taken
pursuant hereto shall create or be construed to create a trust or fiduciary
relationship
A-4
of any kind. The Company may establish an irrevocable grantor trust for purposes
of holding and investing the Deferred Income Account balances but such
establishment shall not create any rights in or against any amount so held,
except that the trustee of such trust may vote any Shares thereunder in
accordance with the direction of the Participants.
SECTION 11. AMENDMENT AND TERMINATION
(a) The Board may amend, suspend or terminate the Plan or any portion
thereof at any time; provided, however, that no such amendment, suspension or
termination shall impair the rights of any Participant in such Participant's
Deferred Income Account under the Plan, without such Participant's consent.
(b) Notwithstanding the foregoing, the Board shall retain the right to
amend the Plan or any portion thereof at any time, or from time to time, without
the consent of the Participants, to the extent deemed necessary by the Board, in
its sole discretion, in order for the Plan and Deferred Income to be compliant
with the requirements of Code Section 409A.
SECTION 12. EFFECT OF TRANSFER
(a) In the event of a Change in Control of the Company, the entire
unpaid balance of each Deferred Income Account shall be paid in a single lump
sum to the Participant as of the effective date thereof.
(b) For purposes of this Plan, the term Change in Control shall be as
defined in Code Section 409A and Internal Revenue Service Notice 2005-1 and any
subsequent guidance provided with respect to Code Section 409A.
SECTION 13. NON-ASSIGNABILITY
No right to receive payments under the provisions of this Plan shall be
transferable or assignable by a Participant, except by will or the laws of
descent and distribution or by gifting for the benefit of descendants in estate
planning situations, and during his or her lifetime payment may only be received
by the Participant or his or her legal representative or guardian.
SECTION 14. DELIVERY AND REGISTRATION OF STOCK
The Company's obligation to deliver Shares shall, if the Committee so
requests, be conditioned upon the receipt of a representation as to the
investment intention of the individual to whom such Shares are to be delivered,
in such form as the Committee shall determine to be necessary or advisable to
comply with the provisions of the Securities Act of 1933 ("ACT") or any other
federal, state or local securities legislation or regulation. It may be provided
that any representation requirement shall become inoperative upon a registration
of the Shares or other action eliminating the necessity of such representation
under securities legislation. The Company shall not be required to deliver any
Shares under the Plan prior to (i) the admission of such Shares to listing on
any stock exchange on which Shares may then be listed, and (ii) the completion
of such registration or other qualification of such Shares under any state or
federal law, rule or regulation, as the Committee shall determine to be
necessary or advisable.
A-5
This Plan is intended to comply with Rule 16b-3 under the Act. Any
provision of the Plan which is inconsistent with said rule shall, to the extent
of such inconsistency, be inoperative and shall not affect the validity of the
remaining provisions of the Plan.
SECTION 15. BINDING PROVISIONS
All of the provisions of this Plan shall be binding upon all persons who
shall be entitled to any benefits hereunder and their heirs and personal
representatives.
SECTION 16. CLAIMS PROCEDURE
If any benefits become payable under this Plan, the Participant (or
designated beneficiary in the case of the Participant's death) shall file a
claim for benefits by notifying the Committee in writing. If the claim is wholly
or partially denied, the Committee shall provide a written notice of the denial.
This written notice must be provided within a reasonable period of time
(generally 90 days) after the receipt of the claim by the Committee. The written
notice must contain the following information:
(a) the specific reason or reasons for the denial;
(b) specific reference to those Plan provisions on which the denial is
based;
(c) a description of any additional information or material necessary to
correct the claim and an explanation of why such material or
information is necessary; and
(d) appropriate information as to the steps to be taken if the
Particiapnt or beneficiary wants to submit the claim for review.
If notice of the denial of a claim is not furnished within a reasonable
period of time, the claim will be deemed denied.
Upon the denial of a claim for benefits, the Participant (or designated
beneficiary in the case of the Participant's death) may file a claim for review,
in writing, with the Committee within sixty (60) days after receipt of a written
notice of a denial of a claim. In requesting a review, the Participant or
beneficiary may review Plan documents and submit any written issues and comments
he or she feels are appropriate. The Committee shall then give a full and fair
review to the claim. If the claim is denied, the Committee shall provide the
Participant or beneficiary with written notice of this denial within sixty (60)
days after the Committee's receipt of the request for review. This decision
shall state the specific reasons for the decision and shall include references
to specific Plan provisions on which the decision is based.
A-6
[QCR HOLDINGS, INC. LOGO]
March 23, 2005
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 4, 2005, at The Lodge located at
900 Spruce Hills Drive, Bettendorf, Iowa. 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 2004 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 three persons
to serve as Class III directors. In addition to the election of Class III
directors, stockholders are being asked to approve the QCR Holdings, Inc. 2005
Deferred Income Plan. We recommend that you vote your shares for the director
nominees and in favor of the Deferred Income Plan.
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,
Michael A. Bauer Douglas M. Hultquist
Chairman of the Board President
3551-7th Street, Suite 204 - Moline, IL 61265
Phone (309) 736-3580 - Fax (309) 736-3149
[QCR HOLDINGS, INC. LOGO]
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 2005
To the stockholders of QCR HOLDINGS, INC.:
The annual meeting of stockholders of QCR Holdings, Inc., a Delaware
corporation, will be held at The Lodge, 900 Spruce Hills Drive, Bettendorf, Iowa
on Wednesday, May 4, 2005, at 10:00 a.m., local time, for the following
purposes:
1. to elect three Class III directors for a term of three years;
2. to approve the QCR Holdings, Inc. 2005 Deferred Income Plan; and
3. 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 16, 2005,
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 or ratify any of the foregoing 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
Todd A. Gipple
Executive Vice President,
Chief Financial Officer and
Secretary
Moline, Illinois
March 23, 2005
3551-7th Street, Suite 204 - Moline, IL 61265
Phone (309) 736-3580 - 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 and the
recently chartered Rockford 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. During 2004, Quad City
Bank & Trust also served Rockford, Illinois and adjacent communities through a
temporary facility. Effective January 3, 2005, QCR Holdings' third bank charter,
Rockford Bank & Trust, began serving this market. Rockford Bank & Trust is an
Illinois-chartered bank located in Rockford, Illinois. Cedar Rapids Bank & Trust
is also an Iowa banking association located in Cedar Rapids, Iowa. Quad City
Bancard, Inc. is our wholly owned subsidiary, which functions as a credit card
center that provides cardholder and merchant credit card processing services. We
also own all of the common stock of two 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, 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 Lodge, 900 Spruce Hills Drive,
Bettendorf, Iowa, on May 4, 2005, at 10:00 a.m., local time, and at any
adjournments or postponements of the meeting. We have enclosed our 2004 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 23, 2005.
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 16, 2005, 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 three Class III directors
for a term expiring in 2008 and to approve the QCR Holdings, Inc. 2005 Deferred
Income Plan. These matters are more fully described in this proxy statement.
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
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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 and "for" approval of the
Deferred Income Plan.
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 CST on Monday, May 2, 2005. 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 your broker (or in
what is usually referred to as "street name"), you will need to arrange to
obtain a legal proxy from your broker 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, your broker should
have given you instructions for directing how your broker should vote your
shares. It will then be your broker's 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 may generally vote on routine matters, such as the election of directors
and the ratification of independent auditors, 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 does
not receive instructions from you on how to vote on that matter, your broker
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 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 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. on Tuesday, May 3, 2005. 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 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
4
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:
- signing another proxy with a later date and returning that proxy to
us;
- timely submitting another proxy via the telephone or internet;
- sending notice to us that you are revoking your proxy; or
- 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:
- is present in person at the meeting; or
- has properly submitted a signed proxy card or other proxy.
On March 16, 2005, the record date, there were 4,509,622 shares of common
stock outstanding. Therefore, at least 2,254,812 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 the approval of the
Deferred Income Plan or any other proposal that may properly be brought before
the meeting.
HOW MANY VOTES MAY I CAST?
Generally, you are entitled to cast one vote for each share of stock you
owned on the record
5
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?
The three individuals receiving the highest number of votes cast "for"
their election will be elected as Class III 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 the Deferred Income Plan and any 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?
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, 2005.
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 three Class III directors
for a term expiring in 2008. The board has nominated Patrick S. Baird, John K.
Lawson and Ronald G. Peterson to serve as Class III directors.
Other than as described above, 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 III directors for three-year terms expiring
in 2008. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ALL OF THE
NOMINEES FOR DIRECTOR.
6
NOMINEES
NAME DIRECTOR
(AGE) SINCE POSITIONS WITH QCR HOLDINGS AND SUBSIDIARIES
------------------ -------- ------------------------------------------------------
CLASS III
(TERM EXPIRES 2008)
Patrick S. Baird 2002 Director of QCR Holdings and Cedar Rapids Bank & Trust
(Age 51)
John K. Lawson 2000 Director of QCR Holdings and Quad City Bank & Trust
(Age 65)
Ronald G. Peterson 1993 Director of QCR Holdings and Quad City Bank & Trust
(Age 61)
CONTINUING DIRECTORS
NAME DIRECTOR
(AGE) SINCE POSITIONS WITH QCR HOLDINGS AND SUBSIDIARIES
------------------ -------- --------------------------------------------------------------
CLASS I
(TERM EXPIRES 2006)
Michael A. Bauer 1993 Chairman of the Board and Director of QCR Holdings; President,
(Age 56) Chief Executive Officer 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
James J. Brownson 1997 Director of QCR Holdings; Secretary and Director of Quad City
(Age 59) Bank & Trust
Henry Royer 2002 Director of QCR Holdings; Chairman of the Board and Director
(Age 73) of Cedar Rapids Bank & Trust
CLASS II
(TERM EXPIRES 2007)
Larry J. Helling 2001 Director of QCR Holdings; President, Chief Executive Officer
(Age 49) and Director of Cedar Rapids Bank & Trust; Director of Quad
City Bank & Trust
Douglas M. Hultquist 1993 President, Chief Executive Officer and Director of QCR
(Age 49) Holdings; Chairman of the Board and Director of Quad City
Bank & Trust; Director of Cedar Rapids Bank & Trust; Director
of Rockford Bank & Trust; President, Chief Executive Officer
and Director of Quad City Bancard
Mark Kilmer 2004 Director of QCR Holdings; Director of Quad City Bank & Trust
(Age 46)
7
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. Royer
is also a director of Media Sciences International, Inc., a company registered
under the Securities Exchange Act, and a trustee of Berthel Growth and Income
Fund I, a business trust registered under the Investment Company Act of 1940.
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., a U.S. subsidiary of the international insurance company, AEGON nv. He is
also an officer and director of many of AEGON USA's life insurance subsidiaries.
He currently serves on the board of directors of the Kirkwood Community College
Foundation, Waypoint (formerly YMCA) and Priority One in Cedar Rapids. Mr. Baird
has been a director of Cedar Rapids Bank & Trust since September 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, Genesis Medical Center, Kahl
Home for the Aged and Infirm, and Davenport ONE. He also currently serves on the
Community Bank Council of the Chicago Federal Reserve. Mr. Bauer is a member of
Rotary Club of Davenport and serves as Chairman of 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 the President of W.E. Brownson Co., a manufacturers'
representative agency located in Davenport, Iowa, and has been in that position
since 1978. Mr. Brownson began his career in 1967 as a staff auditor with Arthur
Young & Co., CPA's, of Chicago, Illinois. From 1969 until 1978, Mr. Brownson was
employed by Davenport Bank & 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 been a director and the Secretary of
Quad City Bank & Trust since October 1993.
Larry J. Helling, prior to founding Cedar Rapids Bank and Trust Company,
Mr. Helling was 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 seven 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 boards of several organizations within the metro area,
including the board of directors of the United Way of East Central Iowa, the
board of the Entrepreneurial Development Center, the board of trustees of Big
Brothers/Big Sisters, board of trustees of Junior Achievement, and is President
Elect and board member of Downtown Rotary. He is actively involved in numerous
school and church related activities, in addition to various committees within
the community.
8
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 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 and The Robert Young
Center for Mental Health and is a member of the Augustana College board of
trustees and serves 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 and is a board member of
the NewVentures Initiative. 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, an 89-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
serves as the Chairman of the Board of Genesis Medical Center and also is a
Board Member of Genesis Health System. He serves on the Board of the PGA TOUR
John Deere Classic and was a two-term Chairman of that organization. He is also
the past Chairman of the Scott County YMCA's Board of Directors. Mr. Kilmer has
served on the Boards of The Genesis Heart Institute, St. Luke's Hospital,
Rejuvenate Davenport, The Vera French Foundation and Trinity Lutheran Church and
was a four-time Project Business consultant for Junior Achievement. Mr. Kilmer
has been a director of Quad City Bank & Trust since February 1996.
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 1960's, 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, 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 company's engineering, business computer systems, quality,
supply management and communications areas. He serves on the board of directors
of the Iowa State University Foundation, Junior Achievement of the Heartland
Foundation, Moline Foundation Finance Committee and the Trinity Healthcare
Foundation. Mr. Lawson also serves as an Advisory Board Member for Varied
Investments, located in Muscatine, Iowa. Mr. Lawson has been director of Quad
City Bank & Trust since July 1997.
9
Ronald G. Peterson is the 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
bank's holding company, Lamoine Bancorp, Inc. He currently serves as President
of the LaHarpe Educational Foundation, Treasurer of the Western Illinois
University Foundation, a member of the McDonough District Hospital Development
Council, and is a member of the Strategic Planning Committee for the Illinois
Bankers Association. Mr. Peterson has been a director of Quad City Bank & Trust
since October 1993.
Henry Royer is a 30-year veteran of the banking industry who served as
President of Merchants National Bank in Cedar Rapids from 1983 to 1994. He is
currently Executive Vice President of Berthel Fisher Planning, Inc., President
of Berthel SBIC, LLC and General Manager of Berthel Growth and Income Trust I.
Mr. Royer currently serves as the Chairman of the board of directors of the
Mid-America Housing Partnership. He is the past President of the Cedar Rapids
Chamber of Commerce and the past Chairman of Priority One. Mr. Royer has served
as a director or trustee for many Cedar Rapids companies and institutions
including the Cedar Rapids Art Museum, Coe College, Iowa Electric Light and
Power Company, Mercy Hospital and United Way. Mr. Royer has been the Chairman of
the board of directors of Cedar Rapids Bank & Trust since September 2001.
CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS
GENERAL. Currently, there are nine members of the board of directors of
QCR Holdings. 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 on a quarterly basis. 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,
Inc., also meets 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).
Directors Baird, Brownson, Kilmer, Lawson, Peterson and Royer are deemed
to be "independent" as that term is defined by Nasdaq. Directors Bauer, Helling
and Hultquist are not considered to be "independent" because they also serve as
executive officers or 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,
www.qcrh.com, as well as on our banking subsidiaries' websites at www.qcbt.com,
www.crbt.com and www.rkfdbank.com. Also posted on the websites is general
information regarding the company and our common stock, many of our corporate
polices and links to our filings with the Securities and Exchange Commission.
A total of nine regularly scheduled and special meetings were held by the
board of directors of QCR Holdings in 2004. During that time, 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 and expect all of our directors to attend. Last year, all nine
directors were present at the annual meeting.
AUDIT COMMITTEE. The Audit Committee consists of directors Baird,
Brownson, Lawson and Royer. 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
director Baird qualifies as an "Audit Committee Financial Expert" under the
regulations of the
10
Securities and Exchange Commission. The board based this decision on director
Baird's educational and professional experience.
The functions performed by the Audit Committee include, but are not
limited to, the following:
- selecting our independent auditors and pre-approving all
engagements and fee arrangements;
- reviewing the independence of the independent auditors;
- reviewing actions by management on recommendations of the
independent auditors and internal auditors;
- meeting with management, the internal auditors and the
independent auditors to review the effectiveness of our system
of internal control and internal audit procedures;
- reviewing our earnings releases and reports filed with the
Securities and Exchange Commission; and
- reviewing reports of bank regulatory agencies and monitoring
management's 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 committee's duties and responsibilities. Our current
charter was attached to our 2004 proxy statement and is available on our
websites at www.qcbt.com, www.crbt.com and www.rkfdbank.com. The Audit Committee
met four times in 2004.
EXECUTIVE COMMITTEE. The Executive Committee is comprised of Messrs.
Baird, Brownson, Kilmer, Lawson, Peterson and Royer, each of whom is considered
"independent" according to the Nasdaq listing requirements, an "outside"
director under Section 162(m) of the Internal Revenue Code of 1986 and a
"non-employee" director pursuant to Section 16 under the Securities Exchange Act
of 1934. Mr. Brownson serves as Chairman of the Executive Committee. The
Executive Committee met five times in calendar 2004. 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 also reviews and monitors our policies, procedures and
structure as they relate to corporate governance. The committee's
responsibilities and functions are further described in its charter, which is
available on our websites at www.qcrh.com, www.qcbt.com, www.crbt.com and
www.rkfdbank.com.
COMPENSATION AND BENEFITS COMMITTEE. The Compensation and Benefits
Committee consists of directors Bauer, Hultquist, Helling, and Lawson, as well
as Arthur L. Christofferson, 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. The Compensation
and Benefits Committee met three times during 2004.
TECHNOLOGY COMMITTEE. The Technology Committee consists of directors
Bauer, Helling and Hultquist, 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
11
plans of QCR Holdings and our subsidiaries for the future. The Technology
Committee met four times during 2004.
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
director 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.
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 websites at www.qcrh.com, www.qcbt.com,
www.crbt.com and www.rkfdbank.com. We recently amended the code to more
specifically address the procedures for dealing with potential conflicts of
interest. 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.
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, at a minimum, 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 Executive Committee reviewed the nominations and determined that
Messrs. Baird, Lawson and Peterson, incumbent directors, would stand as our
nominees for election as Class III directors. The board did not receive any
stockholder nominations for director for the 2005 annual meeting.
12
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 of directors as well as the lead independent director, Mr. 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 year's 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
nominee's 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 stockholder's
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 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 nominee's 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 2006 annual meeting of stockholders,
stockholder proposals must be received by our Corporate Secretary, at the above
address, no later than November 23, 2005, 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
corporation's common stock beneficially owned by the stockholder on the date of
the notice; and (iv) any financial or other interest of the stockholder in
13
the proposal. Stockholder proposals brought under this paragraph will not be
included in our proxy statement.
DIRECTOR COMPENSATION. The director fees approved for 2005 and the fees
paid for 2004 are set forth in the chart below. In 2004, all directors received
quarterly fees and attendance fees for board meetings, with the exception of
directors who were also employees, who did not receive fees for attending
committee meetings. Directors who are also employees of either QCR Holdings or
one of our subsidiaries will not receive any board fees in 2005. However, their
2005 base salaries have been increased to reflect this change of policy.
2005 2004
QCR HOLDINGS
Quarterly Retainer $ 2,500 $ 2,000
Additional Quarterly Retainer
- Audit Committee Chairman $ 1,500 $ 1,000
- Executive Committee Chairman $ 1,500 N/A
- Compensation Committee Chairman $ 250 N/A
- Technology Committee Chairman $ 250 N/A
Attendance at Board Meeting $ 200 $ 100
Attendance at Audit Committee Meetings $ 400 $ 200
Attendance at all other Committee Meetings $ 300 $ 200
QUAD CITY BANK & TRUST
Quarterly Retainer $ 1,600 $ 1,500
Additional Quarterly Retainer
- Loan Committee Chairman $ 500 N/A
- Trust Committee Chairman $ 250 N/A
- Asset/Liability Management Committee Chairman $ 250 N/A
- Board Affairs Committee Chairman $ 250 N/A
Attendance at Board Meeting $ 100 $ 100
Attendance at Committee Meetings $ 250 $ 200
CEDAR RAPIDS BANK & TRUST
Quarterly Retainer $ 1,600 $ 1,500
Additional Quarterly Retainer
- Loan Committee Chairman $ 500 N/A
- Trust Committee Chairman $ 250 N/A
- Asset/Liability Management Committee Chairman $ 250 N/A
Attendance at Board Meeting $ 100 $ 100
Attendance at Committee Meetings $ 250 $ 200
ROCKFORD BANK & TRUST
Attendance at board meeting $ 500 N/A
Quarterly Retainer
- Loan Committee Chairman $ 500 N/A
- Asset/Liability Management Committee Chairman $ 250 N/A
Attendance at Committee Meetings $ 250 N/A
14
Pursuant to the QCR Holdings, Inc. 1997 Deferred Income Plan, a director
may elect to defer all or a portion of the fees and cash compensation payable by
us for the director's service until either the termination of such director's
service on the board or the age specified in the director's deferral election.
During 2004, all but one director deferred 100% of his director fees pursuant to
the plan, and the total expense for the deferred fees with respect to all
participating directors was $293,800 for 2004.
APPROVAL OF DEFERRED INCOME PLAN
On January 26, 2005, our board of directors adopted the QCR Holdings, Inc.
2005 Deferred Income Plan, subject to stockholder approval at the May 4, 2005
stockholder meeting. The plan will permit directors and certain selected key
officers to defer all or a portion of their fees and cash compensation. The
Board believes the design of the plan, and the current selection of our stock as
the only notional investment choice for deferrals, will help to further align
the interest of the participants with those of our stockholders. A summary of
the Deferred Income Plan is set forth below. This summary is qualified in its
entirety by reference to the Deferred Income Plan, a copy of which is attached
as Exhibit A to this proxy statement.
ADMINISTRATION. The Deferred Income Plan is to be administered by a
committee appointed by the board. Among other things, the committee will have
the authority to select key officers who may participate in the plan, to
interpret the provisions of the plan, to correct any defects or inconsistencies
in the plan and to adopt rules, regulations, forms and agreements that it may
deem necessary or advisable for the administration of the plan.
SHARES SUBJECT TO THE PLAN. The maximum number of shares that may be
delivered to participants under the plan is 100,000 shares. Any shares that
remain unissued at the termination of the plan will cease to be subject to the
plan, but until the plan is terminated, we will make available sufficient shares
to meet the requirements of the plan. All shares distributed under the plan
shall come from our treasury shares or from open market purchases.
DEFERRAL OPTION/CONTRIBUTIONS. Upon completing an irrevocable election
once a year to defer all or a portion of the fees and cash compensation for a
particular plan year, the deferred amounts shall be notionally invested in one
of the available investment alternatives. Currently, the committee only permits
notional investments in our common stock.
DISTRIBUTIONS. At the time of his or her deferral election, each
participant shall designate the date on which distribution of his or her account
balances will begin. Distribution dates may be one of the following: (i) the
date the participant separates from service with us (or six (6) months from such
date if the participant is a key employee as defined in Code Section 409A); (ii)
the date the participant attains the age designated on his or her election form;
or (iii) the first or later to occur of either of such dates as set forth on the
election form. In addition to the designated distribution dates, participants
may receive a distribution upon death or unforeseeable financial hardship.
AMENDMENT AND TERMINATION. The board may amend, suspend or terminate the
plan or any portion thereof at any time; provided, however, that no such
amendment, suspension or termination shall impair the rights of any participant
in his or her account under the plan, without such participant's consent.
Notwithstanding the foregoing, the board may amend, suspend or terminate the
plan or any portion thereof at any time, without the consent of the
participants, to the extent deemed necessary by the board in order for the plan
and deferred income to be compliant with the requirements of Code Section 409A.
15
TERM OF THE PLAN. The plan will become effective upon July 1, 2005,
provided that shares of Company common stock may only be issued under the plan
if the plan is approved by the stockholders. It is anticipated that the plan
will be first used beginning January 1, 2006 as a replacement to the current
Deferred Income Plan, unless the current Deferred Income Plan has utilized the
maximum shares available pursuant to its terms, at which time the plan will be
used as a replacement of the current Deferred Income Plan.
STATEMENT OF USAGE. Due to the design of the plan, eligible persons have
the ability to elect to participate by deferring all or a portion of their fees
and cash compensation; therefore, the benefits or amounts that will be received
or allocated to the plan's participants is not determinable at this time. The
committee shall have the authority to determine which key officers may
participate in the plan.
FEDERAL INCOME TAX CONSEQUENCES. The following is a brief summary of the
principal federal income tax consequences under current federal income tax laws
relating to amounts deferred under the plan. This summary is not intended to be
exhaustive and, among other things, does not describe the state or local tax
consequences or tax consequences of non-U.S. jurisdictions. Each participant
should consult a tax advisor concerning the federal, state and local tax
consequences of participating in the plan.
The plan will be administered as a nonqualified deferred income plan for a
select group of management or highly compensated employees. Assuming the plan is
administered in such manner, participation should have the following
implications for federal income tax purposes:
(a) Amounts contributed to participants' deferred income accounts, and the
investment earnings thereon, are not includable in a participant's
federal taxable income until such amounts are actually distributed or
withdrawn from the plan.
(b) Income earned on assets held under any trust arrangement are taxable to
us.
(c) Participants will be subject to federal income taxation on the value of
the amounts distributed or withdrawn from the plan (including any
shares received). For participants who are employees, we are required
to withhold income tax on such distributions. We are authorized to
withhold from any cash income then or thereafter payable to such
individual, to withhold sufficient shares or cash, to pay any tax
required to be withheld by reason of the receipt of such income.
Alternatively, the individual may tender a personal check in the amount
of the tax to be withheld. We will be entitled to a corresponding tax
deduction for the amount included as income for the individual.
(d) Subsequent sales of shares distributed to the participant will result
in a capital gain or loss for the participant.
STOCKHOLDER VOTE NECESSARY FOR APPROVAL OF THE DEFERRED INCOME PLAN. The
affirmative vote of the holders of a majority of the shares of common stock
present in person or by proxy at the annual meeting is required to approve the
Deferred Income Plan. OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE PROPOSED DEFERRED INCOME PLAN.
16
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth the following information as of December 31,
2004 for (i) all compensation plans previously approved by QCR Holdings'
stockholders and (ii) all compensation plans not previously approved by QCR
Holdings' stockholders:
(a) the number of securities to be issued upon the exercise of outstanding
options, warrants and rights;
(b) the weighted-average exercise price of such outstanding options,
warrants and rights; and
(c) other than securities to be issued upon the exercise of such
outstanding options, warrants and rights, the number of securities remaining
available for future issuance under the plans.
EQUITY COMPENSATION PLAN INFORMATION
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED-AVERAGE EXERCISE FUTURE ISSUANCE UNDER
EXERCISE OF PRICE OF OUTSTANDING EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND (EXCLUDING SECURITIES
WARRANTS AND RIGHTS RIGHTS REFLECTED IN COLUMN(a))
PLAN CATEGORY (a) (b) (c)
-------------------------------- -------------------- ------------------------- -------------------------
Equity compensation plans
approved by security holders 247,328 $ 11.61 331,789(1)
Equity compensation plans
not approved by security holders - - -
TOTAL........................... 247,328 $ 11.61 31,789(1)
(1)Includes 128,185 shares available under the QCR Holdings, Inc. Employee Stock
Purchase Plan.
*Share data has been adjusted to effect a 3:2 common stock split, which occurred
on May 28, 2004.
17
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid or granted to QCR Holdings' Chief Executive Officer and the other executive
officers who had an aggregate salary and bonus which exceeded $100,000 for the
year ended December 31, 2004.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------- -------------
(a) (b) (c) (d) (e) (g) (i)
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND CALENDAR COMPENSATION OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR (1) SALARY($)(2) BONUS($)(3) ($)(4) SARs(#) ($)
----------------------- -------- ------------ ----------- ------------ ---------- ------------
Douglas M. Hultquist 2004 $ 175,000 $ 82,396 $ 22,200(5) --- $ 26,112(8)
President and Chief 2003 $ 175,000 $ 94,792 $ 57,556(6) --- $ 27,046(9)
Executive Officer of 2002 $ 172,000 $ 116,146 $ 46,558(7) --- $ 21,701(10)
QCR Holdings,
Chairman of Quad City
Bank & Trust
Michael A. Bauer 2004 $ 175,000 $ 82,396 $ 22,300(5) --- $ 31,112(8)
Chairman of QCR 2003 $ 175,000 $ 94,792 $ 69,881(6) --- $ 32,046(9)
Holdings, President and 2002 $ 172,000 $ 116,146 $ 28,587(7) --- $ 30,213(10)
Chief Executive Officer
of Quad City Bank &
Trust
Larry J. Helling 2004 $ 167,000 $ 94,189 $ 21,300(5) --- $ 23,112(8)
President and Chief 2003 $ 163,000 $ 75,790 $ 14,500(6) --- $ 23,801(9)
Executive Officer of 2002 $ 161,500 $ 49,800 $ 10,300(7) --- $ 21,677(10)
Cedar Rapids Bank &
Trust
Todd A. Gipple 2004 $ 140,500 $ 62,015 $ 8,900(5) 2,250 $ 19,718(8)
Executive Vice 2003 $ 132,600 $ 38,675 --- 2,250 $ 20,333(9)
President and Chief 2002 $ 127,500 $ 58,700 --- 2,363 $ 20,434(10)
Financial Officer of
QCR Holdings
(1) QCR Holdings changed its fiscal year end from June 30 to December 31
following its filed Form 10-K for the fiscal year ended June 30, 2002.
Therefore, the Summary Compensation Table has been restated to include
information regarding the compensation of the named executive officers for
the fiscal years 2004 and 2003 and the calendar year ended December 31,
2002.
(2) Includes amounts deferred under the QCR Holdings, Inc. 401(k)/Profit
Sharing Plan (the "401(k) Plan") and the deferred compensation agreements.
18
(3) As indicated above, bonus payments have been restated to a calendar year
basis from a fiscal year basis for the year 2002. The bonus for 2004 was
paid in February 2005. The bonus for 2003 was paid in February 2004. The
bonus for the six month transition period ended December 31, 2002, was
paid in January 2003 for Messrs. Helling and Gipple, and in two
installments in January 2003 and May 2003 for Messrs. Bauer and Hultquist.
(4) Represents amount of tax benefit rights paid on behalf of Messrs.
Hultquist and Bauer in connection with their exercise of stock options, as
well as director fees paid on behalf of Messrs. Hultquist, Bauer, Helling
and Gipple to the 1997 Deferred Income Plan .
(5) During the 2004 calendar year, each individual had contributions made to
the 1997 Deferred Income Plan for his benefit as follows: Mr. Hultquist -
$22,200; Mr. Bauer - $22,300; Mr. Helling - $21,300; and Mr. Gipple
$8,900.
(6) During the 2003 calendar year, each individual had contributions made to
the 1997 Deferred Income Plan for his benefit as follows: Mr. Hultquist -
$15,800; Mr. Bauer - $15,600 and Mr. Helling - $14,500. Also represents
amount of tax benefit rights paid on behalf of Mr. Hultquist - $41,756 and
Mr. Bauer - $54,281 in connection with their exercise of stock options.
(7) During the 2002 calendar year, each individual had contributions made to
the 1997 Deferred Income Plan for his benefit as follows: Messrs.
Hultquist and Bauer - $13,000 and Mr. Helling - $10,300. Also represents
amount of tax benefit rights paid on behalf of Mr. Hultquist - $33,558 and
Mr. Bauer - $15,587 in connection with their exercise of stock options.
8) During the 2004 calendar year, each individual had contributions made to
the 401(k) Plan for his benefit as follows: Messrs. Hultquist, Bauer and
Helling - $11,062; and Mr. Gipple - $9,668. In addition, each received
term life insurance which had a per person premium cost as follows:
Messrs. Hultquist, Bauer, Helling, and Gipple - $50. In addition, pursuant
to the deferred compensation agreements entered into between QCR Holdings
and each of Messrs. Hultquist, Bauer, Helling and Gipple, QCR Holdings
contributed deferred compensation as follows: Mr. Hultquist - $15,000, Mr.
Bauer - $20,000, Mr. Helling - $12,000, and Mr. Gipple - $10,000.
(9) During the 2003 calendar year, each individual had contributions made to
the 401(k) Plan for his benefit as follows: Messrs. Hultquist and Bauer -
$11,000; Mr. Helling - $10,826; and Mr. Gipple - $9,539. In addition, each
received term life insurance which had a per person premium cost as
follows: Messrs. Hultquist and Bauer - $1,050; Mr. Helling - $978; and Mr.
Gipple - $796. In addition, pursuant to the deferred compensation
agreements entered into between QCR Holdings and each of Messrs.
Hultquist, Bauer, Helling and Gipple, QCR Holdings contributed deferred
compensation as follows: Mr. Hultquist - $15,000, Mr. Bauer - $20,000, Mr.
Helling - $12,000, and Mr. Gipple - $10,000.
(10) During the 2002 calendar year, each individual had contributions made to
the 401(k) Plan for his benefit as follows: Mr. Hultquist - $5,666; Mr.
Bauer - $9,178; Mr. Helling - $8,712; and Mr. Gipple - $9,669. In
addition, each received term life insurance which had a per person premium
cost as follows: Messrs. Hultquist and Bauer - $1,035; Mr. Helling - $965;
and Mr. Gipple - $765. In addition, pursuant to the deferred compensation
agreements entered into between QCR Holdings and each of Messrs.
Hultquist, Bauer, Helling and Gipple, QCR Holdings contributed deferred
compensation as follows: Mr. Hultquist - $15,000, Mr. Bauer - $20,000, Mr.
Helling - $12,000, and Mr. Gipple - $10,000.
19
The following table sets forth certain information concerning the number
and value of stock options granted in 2004 to the individuals named in the
Summary Compensation Table.
OPTION GRANTS IN 2004
------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
% OF TOTAL GRANT DATE
OPTIONS OPTIONS GRANTED EXERCISE OR PRESENT
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION VALUE
NAME (#)(1) YEAR ($/SH) DATE ($) (2)(3)
---- ------- --------------- ----------- --------------- ----------
Douglas M. Hultquist --- --- $ --- --- $ ---
Michael A. Bauer --- --- $ --- --- $ ---
Larry J. Helling --- --- $ --- --- $ ---
Todd A. Gipple 2,250 3.74% $ 18.67 January 5, 2014 $ 17,970
(1) Options vest in five equal annual portions beginning one year from the
date of grant.
(2) The Black-Scholes valuation model was used to determine the grant date
present values. Significant assumptions include: risk-free interest rate,
4.57%; expected option life, 10 years; expected volatility 24.25% and
expected dividends, 0.43%.
(3) The ultimate value of the options will depend on the future market price
of our common stock, which cannot be forecast with reasonable accuracy.
The actual value, if any, an executive may realize upon the exercise of an
option will depend on the excess of the market value of our common stock,
on the date the option is exercised, over the exercise price of the
option.
20
The following table sets forth certain information concerning the number
of stock options at December 31, 2004 held by the individuals named in the
Summary Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN 2004
AND YEAR END OPTION/SAR VALUES
-----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARs
OPTIONS/SARs AT AT
DECEMBER 31, 2004 (#) DECEMBER 31, 2004 ($)
-----------------------------------------------------------------------------------------------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- ------------ ------------- ----------- ------------- ----------- -------------
Douglas M. Hultquist --- --- 27,000 4,125 $ 266,085 $ 53,831
Michael A. Bauer --- --- 26,250 4,125 $ 257,170 $ 53,831
Larry J. Helling --- --- 10,890 10,860 $ 152,469 $ 152,046
Todd A. Gipple --- --- 14,206 10,207 $ 179,476 $ 103,717
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS WITH MICHAEL A. BAUER AND
DOUGLAS M. HULTQUIST. On January 1, 2004, we entered into employment agreements
with Messrs. Bauer and Hultquist. The agreements each have a three-year term and
in the absence of notice from either party to the contrary, the employment term
under each agreement extends for an additional one year on the anniversary of
each agreement. Pursuant to the agreements, Messrs. Bauer and Hultquist will
each receive minimum salaries of $175,000. The agreements include 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 agreements also provide term life insurance coverage of two times the
sum of their respective base salaries and average annual bonuses as of the date
of the agreement, which may be provided through a group term carve-out plan. The
agreements further provide for severance compensation equal to the sum of one
year of their respective salaries plus average annual bonuses in the event they
are terminated without cause and three times the sum of their respective
salaries and average annual bonuses if they are terminated within one year
following a change in control or if they voluntarily terminate employment within
six months of a change in control.
Messrs. Bauer and Hultquist also entered into new deferred compensation
agreements with us on January 1, 2004. Under Mr. Hultquist's agreement, he may
defer all or a portion of his salary or bonus and the Company will match the
deferral up to $15,000 annually. Under Mr. Bauer's agreement, he may defer all
or a portion of his salary or bonus and the Company will match the deferral up
to $20,000 annually. Full benefits under the agreements will be payable to
Messrs. Bauer and Hultquist when they reach 65 years of age.
21
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS WITH TODD A. GIPPLE AND
LARRY J. HELLING. On January 1, 2004, we also entered into new employment
agreements with Todd A. Gipple and Larry J. Helling. Mr. Gipple's 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. Gipple's
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. Mr. Gipple also entered into a deferred compensation agreement with us
on January 1, 2004 under which he may defer all or a portion of his salary or
bonus and we will match the deferral up to $10,000 annually.
Mr. Helling's 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. Helling's 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. Helling's agreement allows him to participate in the
Cedar Rapids Short-term Cash Incentive Compensation Program and the Cedar Rapids
Long-term Deferred Incentive Compensation Program (as described under the
heading "Other Incentive Plans" on pages 24 and 25 of this proxy statement).
Under the agreement, Mr. Helling will be allocated a total of 40% of amounts
paid pursuant to the incentive programs. Mr. Helling also entered into a
deferred compensation agreement with us on January 1, 2004 under which he may
defer all or a portion of his salary or bonus and we will match the deferrals up
to $12,000 annually.
ALL EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS. Amounts deferred by
each of the officers under the respective deferred compensation agreements earn
interest at The Wall Street Journal prime rate, subject to a minimum of 6% and a
maximum of 12%, with such amounts differing depending on the executive. Upon
retirement, the executives will receive the deferral balance in 180 equal
monthly installments.
Additionally, all of the employment agreements are terminable at any time
by either our board of directors or the respective officer. We may terminate
these agreements at any time for cause without incurring any post-termination
obligation to the terminated officer. If the officers are terminated without
cause or upon a change in control, we must make severance payments as described
in the previous sections. If the termination without cause or change in control
provisions were triggered as of the date of this proxy statement, we would owe
the executives the following, approximate, pre-tax amounts: Mr. Bauer - $312,778
for termination without cause and $938,334 for change in control; Mr. Hultquist
-$312,778 for termination without cause and $938,334 for change in control; Mr.
Gipple - $114,065 for termination without cause and $456,260 for change in
control; Mr. Helling- $97,500 for termination without cause and $390,000 for
change in control. This is in addition to any other payments we may owe
22
the executives pursuant to the incentive stock plan, the deferred income plan,
the deferred compensation agreement or pursuant to any other plan or benefit
then due the officer.
Each of the employment agreements also contains a non-compete provision,
which provides that each officer is prohibited from competing with us or our
subsidiaries within a 60-mile radius of any of our offices for a period of two
years following the termination of the agreement.
NON-QUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PROGRAM
In April 2004, the boards of directors of Quad City Bank & Trust and Cedar
Rapids Bank & Trust each adopted a Non-Qualified Supplemental Executive
Retirement Agreement ("SERP") for executive officers. The SERP will provide
supplemental retirement income to certain key executive officers of Quad City
Bank & Trust and Cedar Rapids Bank & Trust. Pursuant to the plan, a
participating executive will receive a supplemental retirement benefit in an
annual pre-tax amount equal to 2-1/2% for each year of full-time service until
the executive reaches age 65 (not to exceed 40 years), multiplied by the
executive's average annual base salary plus cash bonus for the three most
recently completed plan years, subject to a maximum of 70%.
The supplemental retirement benefit will be reduced by any contributions
plus earnings thereon made by us to the credit of the executive pursuant to the
Company's 401(k) 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, we
will pay a supplemental early retirement benefit to the executive. The SERP also
provides for the payment of a survivor's benefit payable to a participating
executive's beneficiary upon the executive's 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 2004, we will owe the following projected annual
amounts: Mr. Bauer - $104,621; Mr. Hultquist - $195,572; Mr. Gipple - $146,382;
Mr. Helling - $103,333. 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.
In 2004, we contributed $134,000 to the SERP, and as of December 31, 2004,
our aggregate liability related to the SERP was $134,000.
401(k) SAVINGS / PROFIT SHARING PLAN
We sponsor 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, we match 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 employee's compensation. Additionally, at our discretion,
we 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 by our named executive
officers are reflected in the Summary Compensation Table on page 18 of this
proxy statement.
23
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 and nonqualified stock options. All of the
options under the plan have been granted, and on June 30, 2003, the plan
expired.
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.
Stockholders approved the 2004 plan 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.
In 2004, we awarded stock options to purchase an aggregate of 51,950
shares of QCR Holdings common stock to thirty employees and aggregate of 8,150
shares of QCR Holdings common stock to sixteen directors. The stock options
awarded to the named executive officers during 2004 are included in the tables
above.
STOCK PURCHASE PLAN. In 2002, we adopted and stockholders approved the QCR
Holdings, Inc. Employee Stock Purchase Plan. 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. 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 2004, 8,917 shares were
granted and 6,438 were purchased under the plan.
OTHER INCENTIVE PLANS
Certain designated officers of Cedar Rapids Bank & Trust, including Mr.
Helling, are also eligible to receive cash compensation pursuant to the Cedar
Rapids Short-Term Cash Incentive Compensation Program and the Cedar Rapids
Long-Term Deferred Incentive Compensation Program.
SHORT-TERM CASH INCENTIVE COMPENSATION PROGRAM. Under the Short-Term Cash
Incentive Compensation Program, we will pay eligible officers of Cedar Rapids
Bank & Trust, based on a fixed percentage allocation, an aggregate target
incentive amount. Based on the performance targets attained for the year 2004,
we paid an aggregate total of $58,500 pursuant to the program, of which Mr.
Helling received $23,400. We will pay up to $75,000 for the year 2005, provided
specified assets and losses/earnings targets are met, of which Mr. Helling could
receive up to $30,000. Pursuant to the program, in the event either target is
not met, a prorata portion of the incentive amount may be payable.
24
LONG-TERM DEFERRED INCENTIVE COMPENSATION PROGRAM. Under the Long-Term
Deferred Incentive Compensation Program, with respect to years ending December
31, 2006 through December 31, 2011, we will contribute up to an aggregate
maximum of $300,000 to a deferred compensation plan for the benefit of eligible
officers of Cedar Rapids Bank & Trust, based on a fixed percentage allocation.
Contributions will only be made under the program if specified levels for return
on equity and ending total assets are attained. The program also provides for
the acceleration of certain future year contributions to the plan in the event
of a change in control. For example, if a change in control had occurred as of
December 31, 2004, the aggregate contributions would be $603,323, which equals
the present value of future estimated contributions made for the years 2006
through 2011.
DEFERRED INCOME PLAN
1997 DEFERRED INCOME PLAN. In 1997, we adopted and stockholders approved
the QCR Holdings, Inc. 1997 Deferred Income Plan to enable directors and
selected key officers of QCR Holdings and its related companies, to elect to
defer a portion of the fees and cash compensation payable to them for their
service as directors or employees. As of December 31, 2004, there were 17,798
shares of common stock remaining under the plan. If approved by stockholders, we
intend to have the 2005 Deferred Income Plan, as described in this proxy
statement, supplement this 1997 plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2004, 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 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, Helling, Lawson, Christofferson and Harris, Ms. Bawden and Ms.
Whiteside. Messrs. Bauer, Hultquist and Helling are executive officers and do
not participate in any decisions involving their own compensation.
EXECUTIVE COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The report of the Executive Committee below 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 or under the
Securities Exchange Act of 1934, except to the extent QCR Holdings specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
GENERAL. The Executive Committee is comprised of six directors of QCR
Holdings. Each of the members is considered "independent" by the board according
to the Nasdaq listing requirements, an "outside" director pursuant to Section
162(m) of the Internal Revenue Code and a "non-employee" director pursuant to
Section 16 of the Securities Exchange Act of 1934. The committee's intention is
to provide a total compensation program that supports our long-term business
strategy and performance culture and creates a commonality of interest within
our stockholders. The Executive Committee is responsible for the oversight of
executive compensation and reviews the compensation program of QCR Holdings on
an ongoing basis.
25
The overall philosophy used by the Executive Committee when making
decisions is as follows:
- to provide incentives for executive officers to work toward
achieving successful short- term and long-term goals and
objectives;
- to provide significant reward for achievement of superior
performance, as well as significant risk to penalize
substandard performance;
- to create opportunity and incentive for executives to be
long-term stockholders;
- to link executive compensation rewards to increases in
stockholder value, as measured by favorable long-term results
and continued strengthening of our financial condition;
- to provide flexibility to recognize, differentiate and reward
individual performance; and
- to facilitate stock ownership through granting of stock
options.
For each executive officer, the Executive Committee was responsible for
the establishment of base salary and bonuses paid, as well as an award level for
the annual incentive compensation program, each of which is subject to the
approval of the non-employee directors. The Executive Committee was also
responsible for the administration of the stock programs for the executive
officers, as well as recommendations regarding other executive benefits and
plans, subject to the same approval process.
In reviewing an executive's compensation, the Executive Committee
considers and evaluates all components of the executive officer's total
compensation package. This involves reviewing the executive's salary, bonus,
incentive stock awards, perquisites, participation in our 401(k) plan, deferred
compensation plans, the supplemental retirement plan, payments due upon
retirement or a change of control, if any, and all other payments and awards
that the executive officer earns.
SALARY AND BONUS. The Executive Committee reviews each executive's base
salary on an annual basis. It is the Executive Committee's policy that the base
salaries of our executives should offer each executive security and allow us to
attract qualified executives and maintain a stable management team and
environment. The Executive Committee targets base salaries at levels comparable
to those of comparable positions within the market place. In January 2004, we
entered into new employment contracts with each of our executive officers. The
base salary provided in the agreements may be increased to reflect the executive
officer's performance, as well as our overall financial performance.
Additionally, base salaries are determined by examining, among other things, the
executive's level of responsibility, prior experience, length of time with us as
an employee, breadth of knowledge and internal performance objectives. An
executive's current salary in relation to the executive's salary range and the
median salary practices of the market place are also considered. All of the
factors described herein are considered on a subjective basis in the aggregate,
and none of the factors is accorded a specific weight.
Annual adjustments to an executive's base salary are driven by corporate
and individual performance. Corporate performance, measured primarily in terms
of earnings per share, return on equity and enhancement of total assets, impacts
an executive's base salary. In addition, the Executive Committee will also
measure individual performance. When measuring individual performance, the
Executive Committee considers the individual's efforts in achieving established
financial and business objectives, managing and developing employees and
enhancing long-term relationships with customers.
26
Each executive's annual cash bonus is also driven by corporate and
individual performance. Specifically, each executive has measurable goals
determined by the Executive Committee regarding earnings per share, return on
equity, asset growth, and other financial performance measures.
Annually, the Executive Committee evaluates four primary areas of
performance in determining the Chief Executive Officer's level of compensation.
These areas are:
- our long-range strategic planning and implementation;
- our financial performance;
- our compliance with regulatory requirements and relations with
regulatory agencies; and
- the individual's effectiveness of managing relationships with
stockholders and the board of directors.
LONG-TERM INCENTIVE PROGRAMS. Our current long-term incentive plans are
intended to promote equity ownership in QCR Holdings by the directors and
selected officers and employees, to increase their proprietary interest in our
success and to encourage them to remain with us as directors and employees. They
also promote tax efficiency and replacement of benefit opportunities lost to
regulatory limits. We have established the QCR Holdings, Inc. 401(k)/Profit
Sharing Plan, the QCR Holdings, Inc. Employee Stock Purchase Plan and the QCR
Holdings, Inc. 1997 Deferred Income Plan, each of which allows participants to
acquire shares of our common stock. We are asking stockholders to approve the
proposed Deferred Income Plan as a supplement to the current deferred income
plan adopted in 1997.
We have also granted stock options through the QCR Holdings, Inc. 1993
Stock Option Plan, the 1997 Stock Incentive Plan and the 2004 Stock Incentive
Plan. We use stock options in our compensation program to reinforce our
long-term perspective and to retain valued executives. Pursuant to the 1997 and
2004 Stock Incentive Plans, we have also granted tax benefit rights and stock
appreciation rights to certain participants at the same time as options were
awarded. We did not grant options to most of our executive officers in 2004
however, options were granted to our named executive officers in January 2005,
as follows: Mr Hultquist - 5,000 options; Mr. Bauer - 5,000 options; Mr. Helling
- 2,000 options and Mr. Gipple - 3,000 options.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. The base salary paid to Mr.
Hultquist, as President and Chief Executive Officer, during 2004 was also based
in part upon the Executive Committee's satisfaction with our profitability,
asset growth and risk management. The primary evaluation criteria are considered
to be essential to our long-term viability. The Executive Committee considered
Mr. Hultquist's personal performance as President and Chief Executive Officer,
his previous years' salaries and the salary levels of other similarly situated
financial institutions, his participation in employee benefit plans and the
perquisites he receives in setting his base salary at $175,000 for 2004. Mr.
Hultquist also received a bonus in the amount of $82,396 for 2004. His bonus was
based on our 2004 financial performance as compared to measurable goals for
earnings per share, return on equity, asset growth, asset quality, and other
subjective factors determined by the Executive Committee. Mr. Hultquist also
received $26,112 in other compensation that is primarily attributable to our
matching contribution pursuant to the 401(k) plan as well as contributions
pursuant to his deferred compensation arrangement.
COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE OF 1986.
Section 162(m) of the Internal Revenue Code limits the deductibility of annual
compensation in excess of $1.0 million paid to our Chief Executive Officer and
any of the four other highest paid officers, to the extent they are listed
27
officers on the last day of any given tax year. However, compensation is exempt
from this limit if it qualifies as "performance based compensation." Performance
based compensation generally includes only payments that are contingent on
achievement of performance objectives, and excludes fixed or guaranteed
payments. We believe performance based compensation is an important tool to
provide incentive to senior executives, matching their compensation levels to
our performance. Accordingly, performance based compensation comprises a
significant portion of the compensation package for our senior executives. This
also has the effect of preserving the deduction that might otherwise be affected
by the $1.0 million limit.
Although we will consider deductibility under Section 162(m) with respect
to the compensation arrangements for executive officers, deductibility will not
be the sole factor used in determining appropriate levels or methods of
compensation. Since our objectives may not always be consistent with the
requirements for full deductibility, we may enter into compensation arrangements
under which payments would not be deductible under Section 162(m).
CONCLUSION. The Executive Committee believes these executive compensation
policies and programs effectively serve the interests of stockholders and QCR
Holdings. The Executive Committee believes these policies motivate executives to
contribute to our overall future success, thereby enhancing the value of QCR
Holdings for the benefit of all stockholders.
Executive Committee:
Patrick S. Baird
James J. Brownson
Mark C. Kilmer
John K. Lawson
Ronald G. Peterson
Henry Royer
28
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
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 performance graph and related information unless
such graph and related information are specifically stated to be incorporated by
reference into such document.
The following graph indicates, for the period commencing December 31,
1999, a comparison of cumulative total returns for QCR Holdings, the Nasdaq
Stock Market (US Companies) and the SNL Midwest Bank Index prepared by SNL
Securities, Charlottesville, Virginia. The graph below was prepared at our
request by SNL Securities.
QCR HOLDINGS, INC.
[PERFORMANCE GRAPH]
PERIOD ENDING
---------------------------------------------------------------------
INDEX 06/30/00 06/30/01 06/30/02 12/31/02 12/31/03 12/31/04
--------------------- -------- -------- -------- -------- -------- --------
QCR Holdings, Inc. 100.00 64.19 91.78 105.12 175.00 197.67
NASDAQ Composite 100.00 54.63 37.11 33.95 51.19 55.87
SNL NASDAQ Bank Index 100.00 140.30 158.03 146.69 189.34 217.01
29
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding our common
stock beneficially owned on December 31, 2004, 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,
2004.
NAME OF INDIVIDUAL AND AMOUNT AND NATURE OF PERCENT
NUMBER OF PERSONS IN GROUP BENEFICIAL OWNERSHIP(1) OF CLASS
----------------------------------------------- ----------------------- --------
DIRECTORS
Patrick S. Baird 36,989 (2) *
Michael A. Bauer 56,909 (3) 1.27%
James J. Brownson 32,369 (4) *
Larry J. Helling 48,897 (5) 1.08%
Douglas M. Hultquist 56,684 (6) 1.26%
Mark C. Kilmer 26,618 (7) *
John K. Lawson 12,317 (8) *
Ronald G. Peterson 15,926 (9) *
Henry Royer 10,317(10) *
OTHER NAMED EXECUTIVE OFFICER
Todd A. Gipple 41,080(11) *
5% STOCKHOLDER
Banc Funds 317,153(12) 7.00%
All directors and executive officers as a group
(17 persons) 432,634(13) 9.54%
* Less than 1%.
(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.
(2) Includes 240 shares subject to options which are presently exercisable and
over which Mr. Baird has no voting and sole investment power. Also
includes 34,421 shares held jointly by Mr. Baird and his spouse and 2,328
shares held in a trust, over which he has shared voting and investment
power. Excludes 660 option shares not presently exercisable.
30
(3) Includes 3,392 shares held by Mr. Bauer's children, 6,862 shares held in
an IRA account, 8,339 shares held in a trust, 7,189 shares held in the
401(k) Plan and 18 shares held by his wife, all of which he has shared
voting and investment power.
(4) Includes 2,250 shares subject to options which are presently exercisable
and over which Mr. Brownson has no voting and sole investment power. Also
includes 3,240 shares held jointly by Mr. Brownson and his spouse, 2,025
shares held by his spouse, 8,159 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 5,900 option shares not presently exercisable.
(5) Includes 10,890 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, 3,670 shares held in a
trust and 1,889 shares held in the 401(k) Plan, all of which he has shared
voting and investment power. Excludes 7,260 option shares not presently
exercisable.
(6) Includes 9,337 shares held by his spouse or for the benefit of his
children, 4,050 shares held in an IRA account, 8,493 shares held in a
trust and 3,844 shares in the 401(k) Plan, all of which Mr. Hultquist has
shared voting and investment power.
(7) Includes 1,125 shares subject to options which are presently exercisable
and over which Mr. Kilmer has no voting and sole investment power. Also
includes 5,084 shares held by his spouse or minor children, 5,034 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 450 option shares not
presently exercisable.
(8) Includes 960 shares subject to options which are presently exercisable and
over which Mr. Lawson has no voting and sole investment power. Also
includes 6,857 shares held in trust, over which shares he has shared
voting and investment power. Excludes 840 option shares not presently
exercisable.
(9) Includes 2,250 shares subject to options which are presently exercisable
and over which Mr. Peterson has no voting and sole investment power. Also
includes 8,726 shares held in a trust, over which shares he has shared
voting and investment power. Excludes 900 option shares not presently
exercisable.
(10) Includes 240 shares subject to options which are presently exercisable and
over which Mr. Royer has no voting and sole investment power. Includes
6,750 shares held in an IRA account and 3,327 shares held in a trust, over
all of which Mr. Royer has shared voting and investment power. Excludes
660 option shares not presently exercisable.
(11) Includes 11,956 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, 1,672 shares held in the 401(k) Plan, and 447 shares
held in a trust, over which he has shared voting and investment power.
Excludes 8,707 option shares not presently exercisable.
(12) Includes shares held by Banc Fund IV L.P., Banc Fund V L.P. and Banc Fund
VI L.P. as reported in a Schedule 13G/A filed on February 14, 2005.
(13) Excludes 29,191 option shares not presently exercisable.
31
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 2004,
we are not aware of any failures to comply with the filing requirements of
Section 16(a) during 2004 with the exception of the following: During the year,
one Form 4 was filed late for each of the following: Ms. Joyce Bawden -
acquisition of 1,207 shares and an exercise of 450 options into common stock;
Ms. Ann Lipsky - acquisition of 2,414 shares; Mr. Ronald Peterson - exercise of
1,575 option into common stock; Mr. John H Harris II - acquisition of 10,214
shares; Mr. James Brownson - grant of 5,000 shares; and Ms. Shellee Showalter -
grant of 500 options.
TRANSACTIONS WITH MANAGEMENT
Our directors and officers and their associates were customers of and had
transactions with QCR Holdings and our subsidiaries during 2004. 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.
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 fiscal year ended December 31, 2004 with our management and
McGladrey & Pullen, LLP, our independent registered public accounting firm. 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 fiscal year ending December 31, 2004 for
filing with the Securities and Exchange Commission.
Audit Committee:
Patrick S. Baird James J. Brownson
John K. Lawson Henry Royer
32
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
AUDIT FEES. The aggregate amount of fees billed by McGladrey & Pullen, LLP
in connection with the audit of our annual financial statements and Quad City
Bank's internal control attestation for fiscal years 2004 and 2003 and for its
required reviews of our unaudited interim financial statements included in our
Form 10-Q's filed during fiscal 2004 and 2003, as well as assistance with other
SEC filings, were $145,692 and $99,797, respectively. The increased level of
audit fees was primarily the result of our growth in total assets, combined with
additional services related to FDICIA attestation at Quad City Bank & Trust, the
private placement memorandum in connection with our offering of common stock in
the Rockford, Illinois community, the review of our various filings on Form 8-K,
and initial work related to our compliance with Section 404 of the
Sarbanes-Oxley Act of 1992.
AUDIT RELATED FEES. The aggregate amount of audit related fees billed by
McGladrey & Pullen, LLP for fiscal years 2004 and 2003 were $9,273 and $7,035,
respectively. The majority of these services were related to research and
consultations concerning financial accounting and reporting matters.
TAX FEES. The aggregate amount of tax related services billed by RSM
McGladrey, Inc. for fiscal years 2004 and 2003 were $756 and $3,756,
respectively, for professional services rendered for tax advice.
ALL OTHER FEES. We incurred other fees from RSM McGladrey, Inc. in the
amount of $5,408 during fiscal year 2004 for consulting services related to
internal controls. We did not incur any other fees from RSM McGladrey, Inc. or
McGladrey & Pullen, LLP in fiscal year 2003.
The Audit Committee, after consideration of the matter, does not believe
that the rendering of these services by McGladrey & Pullen, LLP and RSM
McGladrey, Inc. to be incompatible with maintaining McGladrey & Pullen, LLP's
independence as our principal accountant.
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 Committee's policy is to approve, on a case-by-case basis, all audit and
permissible non-audit services provided by McGladrey & Pullen, LLP and RSM
McGladrey, Inc. These services include audit and audit-related services, tax
services and other services. The Audit Committee does have a policy of
pre-approving any of these services.
33
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
Michael A. Bauer Douglas M. Hultquist
Chairman President
Moline, Illinois
March 23, 2005
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
34
(QCR HOLDINGS, INC. LOGO)
ANNUAL MEETING OF SHAREHOLDERS
MAY 4, 2005
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 PHONE, 3) BY INTERNET.
See the reverse side of this sheet for instructions.
IF YOU ARE NOT VOTING BY TELEPHONE OR BY INTERNET, 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 and 2.
(QCR HOLDINGS, INC. LOGO)
If you plan to personally attend the
Annual Meeting of Stockholders, please
VOTER CONTROL NUMBER check the box below and list the names
ABOVE NAME HERE of attendees on the reverse side.
Return this stub in the enclosed
COMMON envelope with your completed proxy card.
Signature I/We do plan to attend the 2005
------------------------- meeting. [ ]
Signature
-------------------------
Date , 2005
------------------------
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. PLEASE COMPLETE BOTH
SIDES, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
TO VOTE BY MAIL
To vote by mail, complete both sides, sign, date and return this proxy in the envelope provided.
TO VOTE BY TELEPHONE
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.
Please note that all votes cast by telephone must be submitted prior to Monday, May 2, 2005 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 THIS PROXY BY MAIL.
TO VOTE BY INTERNET
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.EPROXYVOTE.COM/IST-QCRCM/ 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 submitted prior to Monday, May 2, 2005 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 YOU VOTE BY INTERNET PLEASE DO NOT RETURN THIS PROXY BY MAIL.
--------------------------------------------------------------------------------------------
NAMES OF PERSONS PLANNING QCR HOLDINGS, INC. PROXY COMMON
TO ATTEND THE 2005 MEETING --------------------------------------------------------------------------------------------
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
-------------------------- FOR THE ANNUAL MEETING OF STOCKHOLDERS - MAY 4, 2005
-------------------------- 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 Lodge, 900 Spruce Hills Drive, Bettendorf, Iowa, on Wednesday, May 4, 2005, 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 Patrick S. Baird 02 John K. Lawson 03 Ronald G. Peterson
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
----------------------------------------------
2. Approve the QCR Holdings, Inc. 2005 Deferred Income Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN