UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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-11(c) or Section 240.14a-12
FARMERS & MERCHANTS BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
______________________________________________________________________
2) Aggregate number of securities to which transaction applies:
______________________________________________________________________
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):
______________________________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
5) Total fee paid:
______________________________________________________________________
[ ] 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:
______________________________________________________________________
2) Form, Schedule or Registration Statement No.:
______________________________________________________________________
3) Filing Party:
______________________________________________________________________
4) Date Filed:
March 18, 2008
Dear Fellow Shareholders:
I am pleased to invite you to attend the Annual Meeting of Shareholders of
Farmers & Merchants Bancorp, Inc. The meeting will be held at Founders Hall,
located at Sauder Village, State Route 2, Archbold, Ohio 43502 on THURSDAY,
APRIL 17, 2008 AT 7:00 P.M., (LOCAL TIME). Please note that the timing of the
annual meeting has changed from Saturday afternoon to Thursday evening.
The only item to be considered at this year's Annual Meeting is the election of
directors. The meeting will also provide an opportunity to review with you the
results of Farmers & Merchants Bancorp, Inc. and its subsidiaries during 2007.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. I ENCOURAGE YOU TO
READ THE PROXY STATEMENT CAREFULLY AND THEN TO VOTE YOUR SHARES. IF YOU CHOOSE
NOT TO ATTEND THE ANNUAL MEETING OF SHAREHOLDERS, YOU MAY VOTE BY MAIL BY
SIGNING, DATING AND RETURNING THE PROXY CARD IN THE ACCOMPANYING ENVELOPE. IF
YOU HOLD SHARES OF FARMERS & MERCHANTS BANCORP, INC. COMMON STOCK DIRECTLY IN
YOUR NAME, YOU MAY ALSO VOTE OVER THE INTERNET OR BY TELEPHONE. INTERNET AND
TELEPHONE VOTING INSTRUCTIONS ARE PRINTED ON THE PROXY CARD SENT TO YOU.
If you do attend the meeting and desire to vote in person, you may do so even
though you have previously submitted your proxy. In that case, your vote at the
meeting would supersede your proxy.
Please also return the attached reservation form for the sit down dinner that
will start at 6:00 PM.
We look forward to seeing you at the meeting.
Sincerely,
Farmers & Merchants Bancorp, Inc.
/s/ Paul S. Siebenmorgan
Paul S. Siebenmorgen, President and CEO
FARMERS & MERCHANTS BANCORP, INC.
307-11 NORTH DEFIANCE ST.
ARCHBOLD, OHIO 43502-0216
(419) 446-2501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
APRIL 17, 2008
To Our Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Farmers &
Merchants Bancorp, Inc., an Ohio corporation (the "Corporation"), will be held
at Founders Hall, located at Sauder Village, State Route 2, Archbold, Ohio 43502
on THURSDAY, APRIL 17, 2008 AT 7:00 P.M. (LOCAL TIME), for the following
purposes:
1. ELECTION OF DIRECTORS - To elect the following fourteen (14) nominees to
the Board of Directors to serve until the Annual Meeting of Shareholders in
2009:
Dexter L. Benecke
Joe E. Crossgrove
Steven A. Everhart
Robert G. Frey
Jack C. Johnson
Dean E. Miller
Steven J. Planson
Anthony J. Rupp
David P. Rupp, Jr.
James C. Saneholtz
Kevin J. Sauder
Paul S. Siebenmorgen
Merle J. Short
Steven J. Wyse
2. OTHER BUSINESS - To transact any other business which may properly come
before the meeting or any adjournment of it.
The Board of Directors has fixed the close of business on March 4, 2008, as the
record date for determination of shareholders who are entitled to notice of and
to vote at the meeting.
By Order of the Board of Directors
/s/ Lydia A. Huber
----------------------------------------
Lydia A. Huber, Secretary
Archbold, Ohio
March 18, 2008
If the enclosed proxy statement and annual report are being delivered to two or
more security holders who share the same address, and the security holders
sharing the same address each desires to receive a proxy statement and annual
report, or if there are more than one copy of the proxy statement and annual
report being delivered to security holders who share the same address, and it is
preferred to receive a single copy of such proxy statement and annual report,
please notify Ms. Lydia A. Huber, Secretary of Farmers & Merchants Bancorp, Inc.
This request should be in writing addressed to Ms. Huber at Farmers & Merchants
Bancorp, Inc., 307-11 North Defiance St., Archbold, Ohio 43502-0216. If you have
questions, please contact Ms. Huber by telephone at 419-446-2501.
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
OR FOLLOW THE VOTING INSTRUCTIONS FOR INTERNET OR TELEPHONE VOTING ENCLOSED IF
YOU ARE A SHAREHOLDER OF RECORD.
SHAREHOLDERS WHOSE SHARES ARE REGISTERED IN THE NAME OF A BANK OR BROKERAGE FIRM
MAY BE ELIGIBLE TO VOTE ELECTRONICALLY THROUGH THE INTERNET OR BY TELEPHONE. A
LARGE NUMBER OF BANKS AND BROKERAGE FIRMS ARE PARTICIPATING IN THE ADP INVESTOR
COMMUNICATION SERVICES ONLINE PROGRAM. THIS PROGRAM PROVIDES ELIGIBLE
SHAREHOLDERS THE OPPORTUNITY TO VOTE VIA THE INTERNET OR BY TELEPHONE. VOTING
FORMS WILL PROVIDE INSTRUCTIONS FOR SHAREHOLDERS WHOSE BANK OR BROKERAGE FIRM IS
PARTICIPATING IN ADP'S PROGRAM.
YOU HAVE THE RIGHT TO REVOKE YOUR PROXY AND VOTE IN PERSON AT THE MEETING IF YOU
SO CHOOSE. IF YOU HAVE ANY QUESTIONS PLEASE CONTACT MS. LYDIA A. HUBER,
SECRETARY OF THE CORPORATION AT (419) 446-2501.
The Proxy Statement, proxy card and Farmers & Merchants Bancorp, Inc. 2007
Annual Report will be mailed to shareholders commencing on or about March 18,
2008.
FARMERS & MERCHANTS BANCORP, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 17, 2008
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Farmers & Merchants Bancorp, Inc., an Ohio
corporation ("Corporation"), to be used at the Annual Meeting of Shareholders of
the Corporation, to be held at Founders Hall, located at Sauder Village, State
Route 2, Archbold, Ohio 43502 on Thursday, April 17, 2008 at 7:00 P.M., (local
time), and at any adjournments thereof, pursuant to the accompanying Notice of
Meeting.
GENERAL INFORMATION ABOUT THE MEETING AND VOTING SECURITIES AND PROCEDURES
WHO MAY VOTE AT THE MEETING?
The Board of Directors has fixed the close of business on March 4, 2008 as the
record date for the determination of shareholders who are entitled to notice of
and to vote at the meeting. The transfer books of the Corporation will not be
closed. Subject to your right to vote cumulatively in the election of directors,
if properly implemented, you are entitled to one vote for each share of common
stock you held on the record date, including shares:
- held directly in your name; and
- held for you in an account with a broker, bank or other nominee
(shares held in "street name").
HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
A majority of Farmers & Merchants Bancorp, Inc. outstanding shares of common
stock as of the record date must be present at the meeting in order to hold the
meeting and conduct business. This is called a quorum. On the record date there
were 4,926,600 shares of the Corporation's common stock, without par value
("Common Stock") outstanding, with an additional 17,240 shares subject to
restricted stock grants, the holders of which shares are entitled to vote such
shares. Each of the holders of the outstanding shares and restricted stock
grants totaling 4,943,840 shares are entitled to one vote per share, subject to
the right to vote cumulatively in the election of directors, if properly
implemented. Your shares are counted as present at the meeting if you:
- are present and vote in person at the meeting; or
- have properly submitted a proxy card or have voted electronically or
by telephone prior to the meeting.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business at the meeting.
WHAT PROPOSALS WILL BE VOTED ON AT THE MEETING?
The only proposal scheduled to be voted on at the meeting is the election of
directors of the Corporation.
1
WHO IS REQUESTING MY VOTE?
The solicitation of proxies on the enclosed form is made on behalf of the Board
of Directors of the Corporation and will be conducted primarily through the
mail. Please mail your completed proxy in the envelope included with these proxy
materials. In addition to the use of the mail, members of the Board of Directors
and certain officers and employees of the Corporation or its subsidiaries may
solicit the return of proxies by telephone, facsimile, and other electronic
media or through personal contact. The directors, officers and employees that
participate in such solicitation will not receive additional compensation for
such efforts, but will be reimbursed for out-of-pocket expenses. The cost of
preparing, assembling and mailing this Proxy Statement, the Notice of Meeting
and the enclosed proxy will be borne by the Corporation.
HOW MANY VOTES ARE REQUIRED TO APPROVE EACH PROPOSAL?
Directors will be elected by a plurality of the votes cast at the Annual
Meeting. This means that the 14 nominees who receive the largest number of "FOR"
votes cast will be elected as directors. Many of the Corporation's shareholders
hold their shares in "street name"--in the name of a brokerage firm. If you hold
your shares in "street name," please note that only your brokerage firm can sign
a proxy on your behalf. THE BOARD OF DIRECTORS URGES YOU TO CONTACT THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT TODAY, AND INSTRUCT THEM TO EXECUTE A PROXY ON YOUR
BEHALF FOR THE ANNUAL MEETING.
HOW ARE VOTES COUNTED?
A shareholder may:
- Vote for all of the nominees for director
- Withhold votes on all of the nominees for director
- Withhold votes for one or more nominees
- Abstain from voting
The laws of Ohio, under which the Corporation is incorporated, and the
Corporation's Articles of Incorporation provide if notice in writing is given by
any shareholder to the President, Vice President or the Secretary of the
Corporation not less than 48 hours before the time fixed for holding a meeting
of shareholders for the purpose of electing directors, that he desires that the
voting at that election shall be cumulative, and if an announcement of the
giving of such notice is made upon the convening of the meeting by the Chairman
or Secretary or by or on behalf of the shareholder giving such notice, each
shareholder shall have the right to cumulate such voting power as he possesses
in voting for directors. Cumulative voting rights allow shareholders to vote the
number of shares owned by them times the number of directors to be elected and
to cast such votes for one nominee or to allocate such votes among nominees as
they deem appropriate. Shareholders will not be entitled to exercise cumulative
voting unless at least one shareholder properly notifies the Corporation of
their desire to implement cumulative voting at the Annual Meeting. The
Corporation is soliciting the discretionary authority to cumulate votes
represented by proxy, if such cumulative voting rights are exercised.
2
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
The Board of Directors recommends that you vote "FOR" all of the director
nominees listed in proposal 1. In the absence of instruction, the proxy will be
voted "FOR" the election of the management director nominees listed in this
Proxy Statement and in the discretion of the proxy committee for any other
business that properly comes before the meeting.
HOW DO I VOTE MY SHARES WITHOUT ATTENDING THE MEETING?
Whether you hold shares directly or in street name, you may direct your vote
without attending the Annual Meeting. If you are a shareholder of record, you
may vote by granting a proxy as follows:
- By Mail - You may vote by mail by signing and dating your proxy card
and mailing it in the envelope provided. You should sign your name
exactly as it appears on the proxy card. If you are signing in a
representative capacity (for example as guardian, trustee, custodian,
attorney or officer of a corporation), you should indicate your name
and title or capacity.
- By Phone - You may vote by phone by calling 1-866-598-8811 and
following the instructions given.
- By Internet - You may vote by internet by going to the following web
site, following the instructions given and entering the requested
information on your computer screen:
https://www.proxyvotenow.com/fmao.
Your vote by phone or internet is valid as authorized by the Ohio General
Corporation Law.
For shares held in street name, you should follow the voting instructions
provided by your broker or nominee. You may complete and mail a voting
instruction card to your broker or nominee or, in some cases, submit voting
instructions by telephone or the Internet. If you provide specific voting
instructions by mail, telephone, or Internet, your broker or nominee will vote
your shares as you have directed.
HOW DO I VOTE MY SHARES IN PERSON AT THE MEETING?
Even if you plan to attend the meeting, we encourage you to vote by mail, phone
or internet so your vote will be counted if you later decide not to attend the
meeting.
If you choose to vote at the Annual Meeting:
- If you are a shareholder of record, to vote your shares at the meeting
you should bring the enclosed proxy card and proof of identity.
- If you hold your shares in street name, you must obtain a proxy in
your name from your bank, broker or other holder of record in order to
vote at the meeting.
Bring the proxy (for record holders) or proof of beneficial ownership (for
street name holders) such as a recent brokerage statement or a letter from your
bank or broker, and proof of identity to the meeting.
3
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY?
It likely means you hold shares registered in more than one account. To ensure
that all of your shares are voted, sign and return each proxy.
MAY I CHANGE MY VOTE?
Yes. The proxy may be revoked at any time before it is voted by written notice
to the Corporation prior to the start of the meeting, and any shareholder
attending the meeting may vote in person whether or not he has previously
submitted a proxy.
WHEN WILL THE PROXY AND ANNUAL REPORT BE MAILED TO SHAREHOLDERS?
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and Proxy are being mailed to the Corporation's shareholders on or
about March 18, 2008.
HOW MANY SHARES ARE OWNED BY DIRECTORS AND EXECUTIVE OFFICERS?
All directors and executive officers of the Corporation as a group (comprised of
17 individuals), beneficially held 285,417 shares of the Corporation's common
stock as of March 4, 2008, representing 5.77% of the outstanding common stock of
the Corporation.
[Remainder of this page intentionally left blank.]
4
PROPOSAL 1
ELECTION OF DIRECTORS AND INFORMATION CONCERNING DIRECTORS AND OFFICERS
The Code of Regulations of Farmers & Merchants Bancorp, Inc. provides that the
number of directors to be elected at the Shareholder Meeting will be determined
by the vote of the shareholders, but shall not be less than nine or greater than
twenty. Currently, the number of directors is set at fourteen. Set forth below,
as of the record date, is information concerning the nominees for the election
to the Board of Directors. The following persons have been nominated as
directors by the Board of Directors upon the recommendation of the Corporation's
Nominating and Corporate Governance Committee to serve until the annual meeting
of shareholders in 2009:
YEAR FIRST
PRINCIPAL OCCUPATION OR BECAME
NAME AGE EMPLOYMENT FOR PAST FIVE YEARS DIRECTOR
------------------------- --- ---------------------------------------- ----------
Dexter L. Benecke 65 President, Freedom Ridge, Inc. 1999
Joe E. Crossgrove(1) 71 Chairman of the Corporation and 1992
The Farmers & Merchants State Bank
Steven A. Everhart 53 Secretary/Treasurer, MBC Holdings, Inc. 2003
Robert G. Frey 67 President, E. H. Frey & Sons, Inc. 1987
Jack C. Johnson 55 President, Hawk's Clothing, Inc. 1991
Dean E. Miller 64 Chairman, MBC Holdings, Inc. 1986
Steven J. Planson(2) 48 Self-employed Farmer 2008
Anthony J. Rupp(3) 58 President, Rupp Furniture Co. 2000
David P. Rupp, Jr.(3)(4) 66 Attorney 2001
James C. Saneholtz 61 President, Saneholtz-McKarns, Inc. 1995
Kevin J. Sauder 47 President, Chief Executive Officer, 2004
Sauder Woodworking Co.
Merle J. Short 67 Chairman, ProMow, Inc. 1987
Paul S. Siebenmorgen(5) 58 President and CEO of the Corporation and 2005
The Farmers & Merchants State Bank
Steven J. Wyse 63 Private Investor 1991
----------
(1) Mr. Crossgrove was President and CEO of the Corporation and the Bank prior
to February 18, 2005 when he was named to the position of Chairman.
(2) Mr. Planson was appointed to the Board of Directors of the Company and The
Farmers & Merchants State Bank on January 10, 2008.
(footnotes regarding this table are continued on the following page)
5
(3) Anthony J. Rupp and David P. Rupp Jr., both of whom are being nominated to
the Board of Directors, are brothers.
(4) David P. Rupp Jr. is an attorney with membership in the law firm of
Plassman, Rupp, Short, & Hagans of Archbold, Ohio. The law firm has been
retained by the Corporation, and its subsidiaries, during the past twenty
years and is to be retained currently.
(5) Mr. Siebenmorgen became the President and CEO of the Corporation and the
Bank effective February 18, 2005. From June, 2004 to February 18, 2005 he
was Senior Executive Vice President and Chief Lending Officer of the Bank
and was not a member of the Board of Directors of the Corporation or the
Bank. Prior to joining the Corporation in June of 2004 Mr. Siebenmorgen was
Senior Vice President of Lincoln Bank, Plainfield, Indiana.
Other than the relationship between Mr. Anthony J. Rupp and David P. Rupp, Jr.
noted above, there are no family relationships among any of the directors,
nominees for election as directors and executive officers of the Corporation.
While it is contemplated that all nominees will stand for election, and the
nominees have confirmed this with the Corporation, if one or more of the
nominees at the time of the annual meeting should be unavailable or unable to
serve as a candidate for election as a director of the Corporation, the proxies
reserve full discretion to vote the common shares represented by the proxies for
the election of the remaining nominees and any substitute nominee(s) designated
by the Board of Directors. The Board of Directors knows of no reason why any of
the above-mentioned persons will be unavailable or unable to serve if elected to
the Board. Under Ohio law and the Corporation's Code of Regulations, the
fourteen nominees receiving the greatest number of votes will be elected as
directors. The attached form of proxy grants to the persons listed in such proxy
the right to vote shares cumulatively in the election of directors if a
shareholder properly implements cumulative voting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS TO SHAREHOLDERS THE ELECTION OF
THE ABOVE-LISTED PERSONS AS DIRECTORS FOR THE CORPORATION
The following table sets forth certain information with respect to the executive
officers of the Corporation and the Bank:
OFFICER POSITIONS AND OFFICES HELD WITH CORPORATION AND
NAME AGE SINCE THE BANK & PRINCIPAL OCCUPATION HELD PAST FIVE YEARS
---------------------- --- ------- ----------------------------------------------------
Paul S. Siebenmorgen 58 2004 President and CEO ("PEO")(1)(2)
Edward A. Leininger 52 1981 Executive Vice President and Chief Operating Officer,
was Senior Commercial Loan Officer until July 2004,
and was EVP - Commercial Loans, until April 2001
Rex D. Rice 49 1984 Executive Vice President and Senior Commercial Banking
Director, was Chief Lending Officer until July 2004
Barbara J. Britenriker 46 1992 Executive Vice President and Chief Financial Officer
("PFO")(2), was Senior Vice President until
September 2004, was Vice President until April 2002
----------
(1) Mr. Siebenmorgen became the President and CEO effective February 18, 2005.
Mr. Siebenmorgen was hired as the Senior Executive Vice President and Chief
Lending Officer of the Bank in June 2004.
(2) The designation PEO means principal executive officer and PFO means
principal financial officer under the rules of the SEC.
6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of common stock beneficially
owned at March 4, 2008 by each director and nominee, and all directors and
executive officers as a group. As of the date of this Proxy Statement,
management is not aware of any person who beneficially owns more than five
percent of the Corporation's common stock.
BENEFICIAL OWNERSHIP OF
NOMINEES FOR DIRECTOR AND AMOUNT OF SHARES OF COMMON
NAMED EXECUTIVE OFFICERS STOCK BENEFICIALLY OWNED PERCENT OF TOTAL
------------------------- -------------------------- ----------------
Directors:
Dexter L. Benecke 7,139(1) 0.14%
Joe E. Crossgrove 10,400 0.21%
Steven A. Everhart 4,065(2) 0.08%
Robert G. Frey 19,780(3) 0.40%
Jack C. Johnson 1,260 0.03%
Dean E. Miller 37,972(4) 0.77%
Steven J. Planson 2,347(5) 0.05%
Anthony J. Rupp 12,213(6) 0.25%
David P. Rupp Jr. 30,888(7) 0.62%
James C. Saneholtz 2,100 0.04%
Kevin J. Sauder 3,805(8) 0.08%
Merle J. Short 26,160(9) 0.53%
Paul S. Siebenmorgen 14,237(10) 0.29%
Steven J. Wyse 106,214(11) 2.15%
Executive Officers (other than Mr. Siebenmorgen who is noted above):
Barbara J. Britenriker 2,009(12) 0.04%
Edward A. Leininger 5,620(13) 0.11%
Rex D. Rice 2,908(14) 0.06%
Directors and Executive Officers
as a Group (17 Persons) 285,417 5.77%
----------
(1) Includes 1,829 shares held in a trust, of which Mr. Benecke is one of the
trustees, 569 shares of common stock owned jointly with Mr. Benecke's
spouse and 1,354 shares of common stock owned by his Spouse in trust.
(2) All shares of common stock are owned jointly with Mr. Everhart's spouse.
(3) Includes 600 shares of common stock owned individually by Mr. Frey's
spouse.
(4) Includes 16,037 shares of common stock owned individually by Mr. Miller's
spouse.
(5) Includes 1,128 shares of common stock owned jointly with Mr. Planson's
spouse.
(6) Includes 6,006 shares of common stock owned individually by Mr. Rupp's
spouse.
(7) Includes 3,700 shares owned by a church of which Mr. Rupp serves on the
endowment committee (of which Mr. Rupp disclaims beneficial ownership and
which shares are also included as shares owned by Mr. Siebenmorgen).
(8) Includes 1,902 shares of common stock owned individually by Mr. Sauder's
spouse.
(9) Includes 11,980 shares of common stock owned individually by Mr. Short's
spouse.
(10) Includes 1,220 shares of common stock owned jointly by Mr. Siebenmorgen
with his spouse, 3,700 shares owned by a church of which Mr. Siebenmorgen
serves on the endowment committee (of which Mr. Siebenmorgen disclaims
beneficial ownership and which shares are also included as shares owned by
David Rupp), and 1,800 shares representing restricted stock awards issued
pursuant to the Corporation's Long Term Incentive Plan, 400 of which shares
vest on August 19, 2008, 600 of which vest on August 16, 2009 and 800 of
which vest on August 17, 2010.
(Footnotes regarding this table are continued on the following page)
7
(11) Includes 52,000 shares of common stock owned individually by Mr. Wyse's
spouse and 1,366 shares owned in trusts of which Mr. Wyse is co-trustee.
(12) Includes 1,109 shares of common stock owned jointly with Ms. Britenriker's
spouse and 900 shares representing restricted stock awards issued pursuant
to the Corporation's Long Term Incentive Plan, 160 of which shares vest on
August 19, 2008, 290 of which vest on August 16, 2009 and 450 of which vest
on August 17, 2010.
(13) Includes 4,800 shares of common stock owned jointly with Mr. Leininger's
spouse and 820 shares representing restricted stock awards issued pursuant
to the Corporation's Long Term Incentive Plan, 160 of which shares vest on
August 19, 2008, 290 of which vest on August 16, 2009 and 370 of which vest
on August 17, 2010.
(14) Includes 2,088 shares of common stock owned jointly with Mr. Rice's spouse
and 820 shares representing restricted stock awards issued pursuant to the
Corporation's Long Term Incentive Plan, 160 of which shares vest on August
19, 2008, 290 of which vest on August 16, 2009 and 370 of which vest on
August 17, 2010.
COMMITTEES OF THE BOARD OF DIRECTORS
The following table summarizes the membership of the Board of Directors and each
of its committees, and the number of times each met during 2007.
NOMINATING/
CORPORATE
COMPENSATION GOVERNANCE
BOARD AUDIT COMMITTEE COMMITTEE COMMITTEE
------ --------------- ------------ -----------
Dexter L. Benecke Member Member Member
Joe E. Crossgrove Member Member
Steven A. Everhart Member Member
Robert G. Frey Member Member
Jack C. Johnson Member Member
Dean E. Miller Member Member
Steven J. Planson(1) Member
Anthony J. Rupp Member Member
David P. Rupp Jr. Member
James C. Saneholtz Member Member
Kevin J. Sauder Member Member Member
Merle J. Short Member Member Member
Paul S. Siebenmorgen Member
Steven J. Wyse Member Member Member
NUMBER OF MEETINGS 10 12 4 2
IN 2007
(1) Mr. Planson became a member of the Board of Directors effective January 10,
2008. He will be appointed to committees of the Board at the organizational
meeting of the Company following the annual meeting of shareholders.
The directors of Farmers & Merchants Bancorp, Inc. are also the directors of The
Farmers & Merchants State Bank. The Corporation's Board of Directors met 10
times during 2007 whereas the Board of Directors of the Bank met 14 times in
2007.
During 2007, each director attended 75% or more of the total meetings of the
Board and the committees on which they served (held during the period that each
served as a director) of the Corporation and Farmers & Merchants State Bank, the
primary operating subsidiary of the Corporation, except for Mr. Miller, who
attended 70.73% of such meetings.
8
The Board of Directors of the Corporation's bank subsidiary has an Executive
Salary Committee that also acts as the Compensation Committee for the
Corporation, which committee is responsible for establishing salary levels and
benefits for its executive officers. In determining the compensation of the
executive officers of the Corporation's subsidiaries, the subsidiaries have
sought to create a compensation program that relates compensation to financial
performance, recognizes individual contributions and achievements, and attracts
and retains outstanding executive officers.
The Corporation has a Nominating and Corporate Governance Committee which is
responsible for any recommendations to the full Board of Directors of proposed
Amendments to the Corporation's Articles of Incorporation.
The Corporation also has an Audit Committee established in accordance with 15
U.S.C. 78c(a)(58)(A). The function of the Audit Committee is to review the
adequacy of the Corporation's system of internal controls, to investigate the
scope and adequacy of the work of the Corporation's independent public
accountants and to recommend to the Board of Directors a firm of accountants to
serve as the Corporation's independent public accountants.
CORPORATE GOVERNANCE
Starting in 2003, the Corporation reviewed its corporate governance policies as
a matter of good business practices and in light of the passage of the
Sarbanes-Oxley Act of 2002 ("Sarbanes Oxley") and regulations promulgated by the
Securities and Exchange Commission ("SEC") and listing standards adopted by
NASDAQ. While the corporate governance requirements set forth in the NASDAQ
listing standards are not applicable to the Corporation because it is not listed
on NASDAQ, the Corporation decided to implement most of those corporate
governance policies to encourage appropriate conduct among the members of its
Board of Directors, officers and employees and to assure that the Corporation
operates in an efficient and ethical manner.
COMMITTEE CHARTERS AND BOARD INDEPENDENCE
The Board of Directors has adopted charters for the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee.
The members of each of these three committees are currently, and under the terms
of the respective charters, will continue to be "independent" pursuant to
standards adopted by NASDAQ. Further, the Board of Directors has determined that
under the NASDAQ "independence" standards, a majority of the members of the
Board of Directors are currently independent. In reviewing the independence of
members, the Board of Directors took into account the transactions disclosed
under the caption Director Independence and Related Party Transactions appearing
in this proxy. In making this determination, the Board has concluded that a
majority of the members of the board have no relationship which, in the opinion
of the Board, would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. Copies of the charters for each
of these committees are available on the Bank's website (www.fm-bank.com), and
are available upon request from the Corporation. Shareholders desiring a paper
copy of one or all of the charters should address written requests to Ms. Lydia
A. Huber, Secretary of Farmers & Merchants Bancorp, Inc., 307-11 North Defiance
Street, Archbold, Ohio 43502.
CODE OF CONDUCT AND ETHICS
The Board of Directors has adopted a Code of Business Conduct and Ethics (the
"Code"). The Code applies to all officers, directors and employees of the
Corporation and the Bank. The
9
administration of the Code has been delegated to the Audit Committee of the
Board of Directors, a committee comprised entirely of "independent directors."
The Code addresses topics such as compliance with laws and regulations, honest
and ethical conduct, conflicts of interest, confidentiality and protection of
Corporation assets, fair dealing and accurate and timely periodic reports, and
also provides for enforcement mechanisms. The Board and management of the
Corporation intend to continue to monitor not only the developing legal
requirements in this area, but also the best practices of comparable companies,
to assure that the Corporation maintains sound corporate governance practices in
the future.
A copy of the Corporation's Code is available on the website of the Bank
(www.fm-bank.com). In addition, a copy of the Code is available to any
shareholder free of charge upon request. Shareholders desiring a copy of the
Code should address written requests to Ms. Lydia A. Huber, Secretary of Farmers
& Merchants Bancorp, Inc., 307-11 North Defiance Street, Archbold, Ohio 43502,
and are asked to mark Code of Business Conduct and Ethics on the outside of the
envelope containing the request.
NOMINATIONS FOR MEMBERS OF THE BOARD OF DIRECTORS
As noted above under "Corporate Governance", the Corporation established a
Nominating and Corporate Governance Committee. The current members of the
committee all are "independent" directors (as defined by NASDAQ). The Nominating
and Corporate Governance Committee has developed a policy regarding the
consideration of nominations for directors by shareholders. The policy is posted
on the Bank's website for review by shareholders. As outlined in its policy, the
Nominating and Corporate Governance Committee will consider nominations from
shareholders, although it does not actively solicit such nominations. Proposed
nominations should be addressed to Chairman of the Nominating and Corporate
Governance Committee of Farmers & Merchants Bancorp, Inc., 307-11 North Defiance
Street, Archbold, Ohio 43502. The identification and evaluation of all
candidates for nominee to the Board of Directors are undertaken on an ad hoc
basis within the context of the Corporation's strategic initiatives at the time
a vacancy occurs on the Board. In evaluating candidates, the committee considers
a variety of factors, including the candidate's integrity, independence,
qualifications, skills, experience (including experiences in finance and
banking), familiarity with accounting rules and practices, and compatibility
with existing members of the Board. Other than the foregoing, there are no
stated minimum criteria for nominees, although the committee may consider such
other factors as it may deem at the time to be in the best interest of the
Company and its shareholders, which factors may change from time to time.
The Nominating and Corporate Governance Committee also has been designated by
the Corporation's Corporate Governance Guidelines to receive, review and
respond, as appropriate, to communications concerning the Corporation from
employees, officers, shareholders and other interested parties that such parties
want to address to non-management members of the Board of Directors.
Shareholders that want to direct such questions to the non-management members of
the Board of Directors should address them to the Chairman of the Nominating and
Corporate Governance Committee, Farmers & Merchants Bancorp, Inc., 307-11 North
Defiance Street, Archbold, Ohio 43502.
The Corporation's Corporate Governance Guidelines also contain a provision
stating that it is expected that all members of the Board of Directors shall
attend the Annual Meeting of Shareholders. All of the members of the Board of
Directors attended the 2007 Annual Meeting of Shareholders.
10
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors submits the following report on
the performance of its responsibilities for the year 2007. The purposes and
responsibilities of the committee are elaborated in the committee charter. The
Board of Directors has determined that Steven A. Everhart, one of the members of
the Audit Committee, is a "financial expert" as defined under the regulations
promulgated under the Sarbanes-Oxley Act discussed above. Mr. Everhart and all
of the other members of the Audit Committee have been determined by the Board of
Directors to be "independent" under the listing standards adopted by the NASDAQ
Stock Market.
Management of the Corporation has primary responsibility for the financial
statements and the overall reporting process, including the Corporation's system
of internal controls. The independent auditors are responsible for performing an
independent audit of the Corporation's consolidated financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). This audit serves as a basis for the auditors' opinion in the
annual report to shareholders addressing whether the financial statements fairly
present the Corporation's financial position, results of operations and cash
flows. The Audit Committee's responsibility is to monitor and oversee these
processes.
In reviewing the independence of the Corporation's outside auditors, the
committee has received from Plante & Moran, PLLC the written disclosures and a
letter regarding relationships between Plante & Moran, PLLC and its related
entities and the Corporation and its related entities and has discussed with
Plante & Moran, PLLC its independence from the Corporation as required by
Independence Standards Board Standard No. 1. As part of this review, the
committee considered whether the non-audit services provided by Plante & Moran,
PLLC to the company during 2007 were compatible with maintaining Plante & Moran,
PLLC's independence.
In fulfilling its responsibilities relating to the Corporation's internal
controls, accounting and financial reporting policies and auditing practices,
the committee has reviewed and discussed with management and Plante & Moran,
PLLC the Corporation's audited financial statements for 2007. In this
connection, the committee has discussed with Plante & Moran, PLLC its judgments
about the quality, in addition to the acceptability, of the Corporation's
accounting principles as applied in its financial reporting, as required by
Statement on Auditing Standards No. 61. Based on these reviews and discussions,
the committee recommended to the Board of Directors that the audited financial
statements be included in the Corporation's Annual Report on SEC Form 10-K for
the year ended December 31, 2007, for filing with the Securities and Exchange
Commission.
Respectfully submitted by the members of the Audit Committee:
Steven A. Everhart, Chairman
Dexter L. Benecke
James C. Saneholtz
Merle J. Short
SELECTION OF AUDITORS/PRINCIPAL ACCOUNTING FIRM FEES
The firm of Plante & Moran, PLLC, ("Plante & Moran") independent certified
public accountants, has been retained by the Audit Committee on behalf of the
Corporation as auditors of the Corporation and its subsidiaries for the current
year. Plante & Moran was engaged to provide independent audit services for the
Corporation and its subsidiaries and to provide certain non-
11
audit services including advice on accounting, tax and reporting matters. The
Board of Directors expects that a representative of Plante & Moran will be
present at the annual meeting, will have the opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions.
The Board of Directors has reappointed the firm of Plante & Moran to be auditors
of the Corporation and its subsidiaries for the calendar year ending December
31, 2008. The Corporation has been advised by Plante & Moran that no member of
that firm has any financial interest, either direct or indirect, in the
Corporation or its subsidiaries, other than as a depositor, and it has no
connections with the Corporation or its subsidiaries in any capacity other than
that of public accountants.
Plante & Moran billed the aggregate fees shown below for audit, audit related
matters, tax and other services rendered to the Corporation and its subsidiaries
for the years 2006 and 2007. Audit fees include fees billed in connection with
the audit of the Corporation's annual financial statements, fees billed for the
review of the unaudited financial statements contained in the Corporation's
periodic reports on Form 10-Q, as filed with the Securities and Exchange
Commission and assistance in compliance with the internal control requirements
mandated by Section 404 of Sarbanes-Oxley. Audit related fees include review of
the business continuity plan (disaster recovery), review of mortgage servicing
and allowance for loan and lease losses and accounting assistance in connection
with the acquisition of Knisely Bank. Tax consulting services included
assistance regarding franchise tax and federal income tax planning.
Plante & Moran and its affiliates billed the following amounts to the
Corporation and its subsidiaries during 2006 and 2007, respectively for audit,
audit related fees, tax fees and all other fees:
PLANTE & MORAN - 2006 PLANTE & MORAN - 2007
--------------------- ---------------------
AUDIT FEES $180,600 $187,950
AUDIT RELATED FEES 4,200 15,950
TAX FEES 18,000 18,000
ALL OTHER FEES -0- -0-
-------- --------
TOTAL $202,800 $221,900
======== ========
The Audit Committee of the Corporation considered and concluded that the
provision for non-audit services by Plante & Moran, PLLC and its affiliates was
compatible with maintaining the independent auditors' independence. The Audit
Committee of the Corporation will pre-approve all services to be provided to the
Corporation by Plante & Moran. All the services noted above were approved by the
Audit Committee.
COMPENSATION DISCUSSION AND ANALYSIS
Introduction. The Compensation Committee administers our executive compensation
program. The committee, which is composed entirely of independent directors, is
responsible for reviewing and determining executive officer compensation, for
evaluating the President and Chief Executive Officer, for overseeing the
evaluation of all other officers and employees, for administering our incentive
compensation programs (including the equity incentive plan), for approving and
overseeing the administration of our employee benefits programs, for providing
insight and guidance to management with respect to employee compensation, and
for reviewing and making
12
recommendations to the board with respect to director compensation. The
President and Chief Executive Officer participates with respect to decisions
concerning other executive officers of the Corporation.
The Compensation Committee operates under a charter adopted by the Board of
Directors. The Compensation Committee annually reviews the adequacy of its
charter and recommends changes to the Board for approval. The Compensation
Committee meets at scheduled times during the year and also acts upon occasion
by written consent. The chair of the committee reports on committee activities
and makes committee recommendations at meetings of the Board of Directors.
Compensation Philosophy. Our executive compensation programs seek to achieve and
maintain equity with respect to balancing the interests of shareholders and
executive officers, while supporting our need to attract and retain competent
executive management. The management Compensation Committee has developed an
executive compensation policy, along with supporting executive compensation
plans and programs, which are intended to attain the following objectives:
- Support a pay-for-performance policy that rewards executive officers
for corporate performance.
- Motivate executive officers to achieve strategic business goals.
- Provide competitive compensation opportunities critical to the
Corporation's long-term success.
The committee collects and analyzes comparative executive compensation
information from relevant peer groups, approves executive salary adjustments,
recommends executive discretionary incentive/bonus plans, and administers the
Corporation long term incentive compensation plan. Additionally, from time to
time, the committee reviews other human resource issues, including qualified and
non-qualified benefits, management performance appraisals, and succession
planning.
The committee uses comparisons of competitive executive pay practices taken from
banking industry compensation surveys and, from time-to-time, consultation with
independent executive compensation advisors. Peer groups and competitive
compensation practices are determined using executive compensation packages at
bank holding companies and subsidiaries of comparable size to the Corporation
and its subsidiaries.
There are five components of the compensation program for all executive officers
of the Corporation's subsidiary, The Farmers & Merchants State Bank (the
"Bank"), a base salary component and a discretionary cash incentive component,
which is determined by the Board of Directors in December of each year, a
Restricted Stock Award determined by the Board of Directors at mid-year and the
profit sharing and health and welfare benefit plans participated in by all
employees.
In making its decisions regarding annual salary adjustments, the committee
reviews quantitative and qualitative performance factors as part of an annual
performance appraisal. These are established for each executive position and the
performance of the incumbent executive is evaluated annually against these
standards. This appraisal is then integrated with market-based adjustments to
salary ranges to determine if a base salary increase is merited.
13
The committee also administers the cash incentive program and the long term
equity incentive compensation plan of the Corporation. Cash and equity is
at-risk compensation. Awards are recommended by the committee to the Board of
Directors when, in the judgment of committee members, such awards are justified
by the performance of executive officers in relation to the performance of the
Corporation.
The accounting and tax treatment of particular forms of compensation do not
materially affect the committee's compensation decisions. However, the committee
evaluates the effect of such accounting and tax treatment on an ongoing basis
and will make appropriate modifications to its compensation policies where
appropriate.
Components of Compensation. The elements of total compensation paid by the
Corporation to its senior officers, including the President and Chief Executive
Officer (the "CEO") and the other executive officers identified in the Summary
Compensation Table which appears following this Compensation Discussion and
Analysis (the CEO and the other executive officers identified in that Table are
sometimes referred to collectively as the "Named Executive Officers"), include
the following:
- Base salary;
- Awards under our cash-based incentive compensation program;
- Awards under our long term equity incentive compensation plan;
- Benefits under our Profit Sharing Plan; and
- Benefits under our health and welfare benefits plans.
Base Salary. The base salaries of the Named Executive Officers are reviewed by
the committee annually as well as at the time of any promotion or significant
change in job responsibilities. The committee reviews peer group data to
establish a market-competitive executive base salary program, combined with a
formal performance appraisal system that focuses on awards that are integrated
with strategic corporate objectives. Salary income for each Named Executive
Officer for calendar year 2007 is reported in Column 1 of the Summary
Compensation Table, which appears following this Compensation Discussion and
Analysis.
Incentive Cash Compensation. The Corporation has established a cash bonus plan.
The cash incentive for executive officers under this plan is based upon two
criteria. The first is return on average assets ("ROA") of the Bank. If the ROA
of the Bank equals the average ROA of the Bank for the prior 10 years, the
executive officer receives the full cash incentive amount established. If the
ROA is above 1%, but below such 10-year average, a prorated portion of the cash
incentive is paid. The same prorated portion continues if the ROA is above the
10-year average. No cash incentive is paid if the Bank's ROA for the applicable
year is less than 1%. For the executive officers, the cash incentive is paid
before the end of the first quarter of the year following the year in which it
is earned. The ROA for the Bank on which the incentive was based in 2007 was
1.02%, an amount lower than the 10 year average of 1.11%. Thus the formula for
the cash incentive was adjusted downward for this component.
The second criterion used in determining the cash incentive to be paid to
executive officers is whether the earnings per share for the Corporation reaches
a three-year 6% annual compound growth rate. If such growth rate is less than
6%, that component of the formula for executive
14
officers is adjusted downward. If the three year annual compound growth is under
3%, no incentive is paid. For 2007, the growth rate was less than the base of
3.0% for purposes of determining the cash incentive and therefore no incentive
was paid under this component.
The method used to calculate the cash incentive is different for executive
officers, officers that are not executive officers and non-officer employees.
The methodology used for executive officers is described above. For other
officers, their cash incentive is based upon the Bank's ROA and whether they
attain pre-established goals. For non-officers, the cash incentive is based
solely upon the Bank's ROA.
Incentive Stock Compensation. We use the grant of stock awards under our long
term equity incentive compensation plan as the primary vehicle for providing
long-term incentive compensation opportunities to its officers, including the
Named Executive Officers. We have not adopted any specific policy regarding the
amount or timing of any stock-based compensation under the plan. The number of
shares underlying the award granted to each Named Executive Officer in 2007 is
set forth in the Grants of Plan Based Awards Table and the dollar amount
recognized as compensation cost for financial statement reporting purposes for
calendar year 2007 with respect to each such award (determined in accordance
with FAS 123R) is set forth in column (e) of the Summary Compensation Table,
each of which appears below. Information concerning the number of stock awards
held by each Named Executive Officer as of December 31, 2007 is set forth in the
Outstanding Equity Awards at Fiscal Year-End Table, which appears below.
Profit Sharing Plan. The Bank has established a 401(k) profit sharing plan that
allows eligible employees to save at a minimum one percent of eligible
compensation on a pre-tax basis, subject to certain Internal Revenue Service
limitations. The Bank will match 50% of employee 401(k) contributions up to four
percent of total eligible compensation. In addition the Bank may make a
discretionary contribution from time to time as is deemed advisable. A
participant is 100% vested in the participant's deferral contributions. A
six-year vesting schedule applies to employer discretionary contributions and
employee matching contributions. In order to be eligible to participate, the
employee must be 21 years of age, have completed six months of service, work
1,000 hours in the plan year and be employed on the last day of the year. Entry
dates have been established at January 1 and July 1 of each year. The plan calls
for only lump-sum distributions upon either termination of employment,
retirement, death or disability. The Corporation's contributions to the plan
made on behalf of the Named Executive Officers is included in column (g) as "all
other compensation" in the summary compensation table.
Health and Welfare Benefits. The Corporation provides healthcare, life and
disability insurance and other employee benefits programs to its employees,
including its senior officers. The committee is responsible for overseeing the
administration of these programs and believes that its employee benefits
programs should be comparable to those maintained by other members of the
relevant peer groups so as to assure that the Corporation is able to maintain a
competitive position in terms of attracting and retaining officers and other
employees. Except for our Executive Survivor Income Agreement, our employee
benefits plans are provided on a non-discriminatory basis to all employees.
The Corporation has entered into an Executive Survivor Income Agreement with
some of the Named Executive Officers that provides certain death benefits to the
executive's beneficiaries upon his or her death. The agreements provide a pre-
and post-retirement death benefit payable to the beneficiaries of the executive
in the event of the executive's death. The Corporation has purchased life
insurance policies on the lives of all participants covered by these agreements
in
15
amounts sufficient to provide the sums necessary to pay the beneficiaries. The
actual gross death benefit amounts payable under this plan are disclosed under
Payments and Benefits in Connection with Termination or Change-in-Control.
2007 Executive Officer Compensation. For 2007 the executive officers named in
the Summary Compensation Table received salaries that were intended to maintain
their compensation at a competitive level.
Adjustments in 2007 base salary were based upon each Named Executive Officer's
annual performance review, an annual review of peer compensation, and the
overall performance of the company. These adjustments are consistent with the
company's salary budget which is approved by the compensation committee and
becomes part of the overall budget approved annually by the Board of Directors.
The Corporation provides a reasonable level of personal benefits, and
perquisites to one or more named executive officers to support the business
interests of the bank, provide competitive compensation, and to recognize the
substantial commitment both professionally and personally expected from
executive officers. The aggregate value of perquisites and personal benefits, as
defined under SEC rules, provided to each named executive officer is less than
the reporting threshold value of $10,000.
As part of its compensation program the Corporation has entered into agreements
with some of the Named Executive Officers pursuant to which they will be
entitled to receive severance benefits upon the occurrence of certain enumerated
events following a change in control. The events that trigger payment are
generally those related to termination of employment without cause or
detrimental changes in the executive's terms and conditions of employment. See
Employment Contracts and Payments Upon Termination or "Change in Control" below
for a more detailed description of these events. The Corporation believes that
this structure will help: (i) assure the executives' full attention and
dedication to the company, free from distractions caused by personal
uncertainties and risks related to a pending or threatened change in control,
(ii) assure the executives' objectivity for shareholders' interests, (iii)
assure the executives of fair treatment in case of involuntary termination
following a change in control, and (iv) attract and retain key talent during
uncertain times.
[Remainder of this page intentionally left blank.]
16
SUMMARY COMPENSATION TABLE
STOCK OPTION ALL OTHER
SALARY BONUS AWARDS AWARDS COMPENSATION TOTAL
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) ($)(2) ($)
------------------------------ ---- ------- ------ ------ ------ ------------ -------
Paul S. Siebenmorgen 2007 223,200 43,845 10,142 -0- 18,361 295,548
President and Chief Executive
Officer (PEO)(3) 2006 214,646 74,592 5,333 -0- 18,712 313,283
Barbara J. Britenriker 2007 150,336 22,209 4,726 -0- 16,519 193,790
Executive Vice President (PFO) 2006 144,731 37,829 2,258 -0- 15,189 200,007
Edward A. Leininger 2007 145,974 21,564 4,545 -0- 17,685 189,768
Executive Vice President 2006 141,724 37,043 2,258 -0- 17,907 198,932
Richard J. Lis(4) 2007 143,921 21,712 15,885 -0- 14,472 195,990
Executive Vice President 2006 142,692 37,296 2,258 -0- 15,834 198,080
Rex D. Rice 2007 142,692 21,080 4,545 -0- 16,316 184,633
Executive Vice President 2006 140,654 36,763 2,258 -0- 16,892 196,567
Summary Compensation Table Footnotes:
(1) Reflects the dollar amount recognized for financial statement reporting
purposes with respect to the fiscal year in accordance with FAS 123R.
(2) Includes contributions to the Corporation's defined contribution profit
sharing and 401k plan and certain life insurance premiums paid by the
Corporation for the benefit of the Named Executive Officer.
Name Retirement Contributions ($) Life Insurance Premiums ($) Total ($)
--------------------- ---------------------------- --------------------------- ---------
Paul S. Siebenmorgen 17,130 1,231 18,361
Barbara J. Britenriker 16,090 429 16,519
Edward A. Leininger 17,027 658 17,685
Richard J. Lis 10,778 3,694 14,472
Rex D. Rice 15,887 429 16,316
(3) Fees paid to Mr. Siebenmorgen as a Director of the Corporation and the Bank
(which totaled $11,200 in 2007) are included in the amounts listed above in
the salary column.
(4) Mr. Lis resigned from the Company and the Bank effective October 30, 2007,
but pursuant to agreement with the Company was compensated through December
31, 2007. The acceleration of vesting of certain restricted stock awards in
connection with his resignation resulted in the increase in the "stock
awards" compensation to Mr. Lis shown in the Summary Compensation Table for
2007.
Narrative Explanation to the Summary Compensation table
Named Executive Officers participate in an annual incentive plan that provides
for awards tied to the profit performance of the Corporation during the fiscal
year. The amounts set forth in the bonus column represent the awards made under
the terms of the Plan for 2007 which are payable to the respective Named
Executive Officer during the first quarter of 2008, and similarly for awards
made under the Plan for 2006. Refer to the compensation discussion and analysis
for a complete explanation of the Plan.
17
The stock awards reported in the Summary Compensation Table represent the dollar
amount recognized for financial statement reporting purposes under FAS 123R of
restricted stock awards granted to Named Executive Officers. The grant of
restricted stock awards is made on an entirely discretionary basis by the board
of directors acting upon a recommendation of the compensation committee. The
vesting of all of the awards of restricted stock made to date under the terms of
the long term equity incentive plan occurs three years following the grant.
The Named Executive Officers are participants in the Farmers and Merchants
Profit Sharing and 401(k) plan. The employer contribution amounts for the fiscal
year period for each Named Executive Officer included in the all other
compensation column of the Summary Compensation Table. Employer contributions
under the Plan are structured as a percent of base salary up to statutory
compensation limits. Employer contributions for the fiscal-year include
Safe-Harbor contributions, matching contributions, and discretionary
contributions, applied on a non-discriminatory basis for all Plan participants.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
NUMBER OF SHARES MARKET VALUE OF SHARES
OR UNITS OR UNITS
OF STOCK THAT HAVE OF STOCK THAT HAVE
NOT VESTED (1) NOT VESTED (2)
NAME AND PRINCIPAL POSITION (#) ($)
--------------------------- ------------------ ----------------------
Paul S. Siebenmorgen, President and CEO (PEO) 1,800 36,450
Barbara J. Britenriker, Executive Vice President (PFO) 900 18,225
Edward A. Leininger, Executive Vice President 820 16,605
Rex D. Rice, Executive Vice President 820 16,605
----------
(1) Vesting dates for reported stock awards are as follows:
Number of Shares Vesting Number of Shares Vesting Number of Shares Vesting
Name on 8/19/08 on 8/16/09 on 8/17/10
---- ------------------------ ------------------------ ------------------------
Paul S. Siebenmorgen 400 600 800
Barbara J. Britenriker 160 290 450
Edward A. Leininger 160 290 370
Rex D. Rice 160 290 370
(2) Market value based on market price on December 31, 2007, of $20.25.
18
GRANTS OF PLAN-BASED AWARDS
ALL OTHER STOCK GRANT DATE FAIR
AWARDS: VALUE OF STOCK AND
NUMBER OF SHARES OF OPTION
STOCK OR UNITS AWARDS
NAME AND PRINCIPAL POSITION YEAR GRANT DATE (#) ($)
--------------------------- ---- ---------- ------------------- ------------------
Paul S. Siebenmorgen, President and
CEO (PEO) 2007 9/5/2007 800 16,280
Barbara J. Britenriker, EVP (PFO) 2007 9/5/2007 450 9,158
Richard Lis, EVP 2006 9/5/2007 150 3,053
Edward A. Leininger, EVP 2007 9/5/2007 370 7,530
Rex D. Rice, EVP 2007 9/5/2007 370 7,530
Narrative Explanation to the Grants of Plan-Based Awards table
The above amounts represent information regarding restricted stock awards made
to each of the respective Named Executive Officers during 2007 under the terms
of the Corporation's Long Term Incentive Compensation Plan. The awards vest in
full at the expiration of three years of service of the respective officer. The
vesting of the awards is accelerated in the event of the death or disability of
the officer or upon a change in control. Mr. Lis resigned from the Company
effective October 30, 2007. In connection with his resignation and retirement,
the Company and Mr. Lis agreed that of the 820 restricted shares that he held at
that time, 600 would become immediately vested and the remaining 220 shares
would be forfeited.
POST-EMPLOYMENT COMPENSATION/CHANGE OF CONTROL AGREEMENTS
The Corporation entered into Change in Control Severance Compensation Agreements
on November 27, 2007 with its executive officers, Mr. Siebenmorgen, Mr.
Leininger, Ms. Britenriker and Mr. Rice. These Agreements, which superseded
similar agreements entered into in 2005, provide for payment of an amount equal
to one year's compensation to the executives in the event that their employment
is terminated in connection with a "change in control" as defined in the
Agreements. No payments will be made in such event if the executive is
terminated "for cause." If a change in control had occurred as of December 31,
2007, this would have resulted in payments to the executives as shown on the
following table. In addition to the payment equal to one times their salary, the
Agreements also provide for the continuation of health insurance and other
benefits, which amounts also are included in the table. Finally, included in the
table are amounts that would be payable to the executive or their estate
pursuant to individual executive survivor income agreements ("ESIA").
19
AMOUNT PAID ON CHANGE IN CONTROL
(1 X SALARY AND CONTINUATION OF PAYMENT ON DEATH OR
NAME OF EXECUTIVE BONUS) PERQUISITES TOTAL DISABILITY UNDER ESIAS
----------------- --------------- --------------- -------- ----------------------
Paul S. Siebenmorgen $291,298 $10,048 $301,346 $250,000
Barbara Britenriker $188,236 $13,340 $201,576 $200,000
Edward A. Leininger $184,029 $10,126 $194,155 $200,000
Rex D. Rice $180,716 $10,037 $190,753 $200,000
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for discharging the responsibilities
of the board with respect to the compensation of executive officers. The
Compensation Committee sets performance goals and objectives for the chief
executive officer and the other executive officers, evaluates their performance
with respect to those goals and sets their compensation based upon the
evaluation of their performance. In evaluating executive officer pay, the
Compensation Committee may retain the services of a compensation consultant and
consider recommendations from the chief executive officer with respect to goals
and compensation of the other executive officers. The compensation committee
assesses the information it receives in accordance with its business judgment.
The compensation committee also periodically reviews director compensation. All
decisions with respect to executive and director compensation are approved by
the compensation committee and recommended to the full board for ratification.
The Compensation Committee has reviewed and discussed the Compensation
Discussion and Analysis (the "CD&A") for the year ended December 31, 2007 with
management. In reliance on the reviews and discussions referred to above, the
Compensation Committee recommended to the Board, and the Board has approved,
that the CD&A be included in the proxy statement for the year ended December 31,
2007 for filing with the SEC.
By the Compensation Committee of the Board of Directors:
Jack C. Johnson, Chairman
Dexter L. Benecke
Dean E. Miller
Kevin J. Sauder
Steven J. Wyse
[Remainder of this page intentionally left blank.]
20
DIRECTOR COMPENSATION
NAME FEES EARNED OR PAID IN CASH
---- ---------------------------
Dexter L. Benecke $17,200
Joe E. Crossgrove $20,000
Steven A. Everhart $20,000
Robert G. Frey $15,600
Jack C. Johnson $14,600
Dean E. Miller $12,400
Steven J. Planson(1) -0-
Anthony J. Rupp $15,800
David P. Rupp, Jr. $15,200
James C. Saneholtz $17,300
Kevin J. Sauder $12,600
Merle J. Short $18,000
Steven J. Wyse $12,000
----------
(1) Mr. Planson was appointed to the Board of Directors of the Company and The
Farmers & Merchants State Bank on January 10, 2008, and therefore did not
receive any compensation from the Company in 2007.
DIRECTOR COMPENSATION DISCUSSION
We review the level of compensation of our directors on an annual basis. To
determine the appropriateness of the current level of compensation for our
directors, we have historically obtained data from a number of different sources
including publicly available data describing director compensation in peer
companies and survey data collected by members of the Compensation Committee.
Cash compensation is paid to directors in the form of retainers and meeting
fees. The standard monthly retainer for board service is $500, with the Chairman
receiving a monthly retainer of $800. A $450 fee is paid to a director for each
Bank board meeting attended. Fees ranging from $250 to $400 are paid for each
committee meeting attended depending upon the demands of the committee. Employee
directors are not paid for committee meetings attended.
DIRECTOR INDEPENDENCE AND RELATED PARTY TRANSACTIONS
DIRECTOR INDEPENDENCE
The Governance Committee of the Board of Directors of the Corporation undertakes
a review of director independence annually and reports on its findings to the
full board in connection with its recommendation of nominees for election to the
Board of Directors. Based upon this review, the Board of Directors has
determined that all directors are independent, other than Mr. Siebenmorgen, the
current President and Chief Executive Officer, and David P. Rupp, Jr.
In making its determination regarding the independence of the directors and
nominees for director, the Governance Committee reviewed and the board
considered the following specific relationship.
21
David P. Rupp Jr. is an attorney with membership in the law firm of Plassman,
Rupp, Short, & Hagans of Archbold, Ohio. The law firm has been retained by the
Corporation and its subsidiaries during the past twenty years and is expected to
be retained currently.
TRANSACTIONS WITH RELATED PARTIES
Certain directors, nominees, and executive officers or their associates were
customers of and had transactions with the Corporation or its subsidiaries
during 2007. Transactions that involved loans or commitments by the Bank were
made in the ordinary course of business and on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated persons and did not involve more than the
normal risk of collectability or present other unfavorable features. Except for
the specific transactions described above no director, executive officer or
beneficial owner of more than five percent of the Corporation's outstanding
voting securities (or any member of their immediate families) engaged in any
transaction (other than such a loan transaction as described) with the
Corporation during 2007, or proposes to engage in any transaction with the
Corporation, in which the amount involved exceeds $120,000.
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
The Corporation's Code of Ethics and Business Conduct requires that all related
party transactions be pre-approved by the Corporation's Audit Committee.
Excepted from that pre-approval requirement are routine banking transactions,
including deposit and loan transactions, between our subsidiaries and any
related party that are made in compliance with, and subject to the approvals
required by, all federal and state banking regulations. In making a
determination to approve a related party transaction the Audit Committee will
take into account, among other factors it deems appropriate, whether the
proposed transaction is on terms no less favorable than those generally
available to an unaffiliated third-party under the same or similar circumstances
and the extent of the related party's interest in the proposed transaction.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2007 the Compensation Committee members were Jack C. Johnson, Chairman,
Dexter L. Benecke, Dean E. Miller, Kevin J. Sauder and Steven J. Wyse. None of
the members of the Board's Compensation Committee has had any relationship with
us requiring disclosure under Item 404 of Regulation S-K under the Securities
and Exchange Act of 1934. In addition, no executive officer of the Corporation
or the Bank serves or has served as a member of the Compensation Committee or
Board of Directors of any other company (other than the Bank) which employs any
member of the Corporation's Board of Directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's
officers and directors, and persons who own more than ten percent of a
registered class of the Corporation's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Corporation with copies of all Section 16(a)
forms they file.
Based solely on review of the copies of such forms furnished to the Corporation,
the Corporation believes that during 2007 all Section 16(a) filing requirements
applicable to its officers and
22
directors were met, except for the failure of Director Dean Miller to file one
Form 4 regarding the purchase of 612 shares on December 18, 2007.
PROPOSALS OF SHAREHOLDERS FOR NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2009 Annual
Shareholders' Meeting must be received at the Corporation's offices at 307-11
North Defiance Street, Archbold, Ohio 43502, prior to November 20, 2008 for
inclusion in the proxy statement and form of proxy. Proposals from shareholders
for next year's annual meeting received by the Corporation after February 2,
2009 will be considered untimely. With respect to such proposals, the
Corporation will vote all shares for which it has received proxies in the
interest of the Company as determined in the sole discretion of its Board of
Directors. The Corporation also retains its authority to discretionarily vote
proxies with respect to shareholder proposals received by the Company after
November 20, 2008 but prior to February 2, 2009, unless the proposing
shareholder takes the necessary steps outlined in Rule 14a-4(c)(2) under the
Securities Exchange Act of 1934 to ensure the proper delivery of proxy materials
related to the proposal.
OTHER MATTERS
The Board of Directors does not know of any other matters that are likely to be
brought before the meeting. However, in the event that any other matters
properly come before the meeting, the persons named in the enclosed proxy will
vote said proxy in accordance with their judgment on such matters.
A COPY OF THE CORPORATION'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED
DECEMBER 31, 2007 IS ENCLOSED. A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM
10-K FOR 2007, WITH EXHIBITS, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("2007 10-K"), IS AVAILABLE TO ANY SHAREHOLDER FREE OF CHARGE.
SHAREHOLDERS DESIRING A COPY OF THE 2007 10-K SHOULD ADDRESS WRITTEN REQUESTS TO
MS. BARBARA J. BRITENRIKER, CHIEF FINANCIAL OFFICER OF FARMERS & MERCHANTS
BANCORP, INC., 307-11 NORTH DEFIANCE STREET, ARCHBOLD, OHIO 43502, AND ARE ASKED
TO MARK "2007 10-K REQUEST" ON THE OUTSIDE OF THE ENVELOPE CONTAINING THE
REQUEST.
By Order of the Board of Directors
/s/ Lydia A. Huber
Archbold, Ohio
March 18, 2008 Lydia A. Huber, Secretary
23
PROXY
FARMERS & MERCHANTS BANCORP, INC.
ARCHBOLD, OHIO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joe E. Crossgrove, Dean E. Miller and David P.
Rupp, Jr., or any one or more of them, with full power of substitution, for me
and in my name, place and stead, to vote all the common stock of Farmers &
Merchants Bancorp, Inc. registered in the name of the undersigned as of March 4,
2008, with all powers which the undersigned would possess if personally present
at the Annual Meeting of Shareholders of Farmers & Merchants Bancorp, Inc. to be
held in the Founders Hall at Sauder Village, State Route 2, Archbold, Ohio, on
Thursday, April 17, 2008, at 7:00 P.M., (local time), and at any adjournments
thereof, and to vote as noted below. By appointing the above named persons as
proxy for me, I give them the right to vote cumulatively in the election of
directors and to cast the number of votes among the nominees noted below in such
proportion as they shall deem appropriate, in their sole discretion, unless I
have withheld my vote for any nominee, in which case votes shall not be cast for
that person. This proxy revokes all prior proxies given by the undersigned.
1. ELECTION OF DIRECTORS - To elect the following fourteen (14) nominees to
the Board of Directors to serve until the Annual Meeting of Shareholders in
2009:
Dexter L. Benecke
Joe E. Crossgrove
Steven A. Everhart
Robert G. Frey
Jack C. Johnson
Dean E. Miller
Stephen J. Planson
Anthony J. Rupp
David P. Rupp, Jr.
James C. Saneholtz
Kevin J. Sauder
Merle J. Short
Paul S. Siebenmorgen
Steven J. Wyse
[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY FOR ALL NOMINEES
(TO WITHHOLD AUTHORITY TO VOTE FOR A SPECIFIC NOMINEE(S) WRITE HIS OR HER
NAME(S) ON THE LINE BELOW)
________________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
2. OTHER BUSINESS- To transact any other business which may properly come
before the meeting or any adjournment of it.
THIS PROXY IS SOLICITED BY MANAGEMENT AND CONFERS AUTHORITY TO VOTE "FOR" THE
NOMINEES NOTED ABOVE UNLESS OTHERWISE MARKED. IF ANY OTHER BUSINESS IS PRESENTED
AT THE MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS
OF MANAGEMENT. ALL SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES WILL BE VOTED
AS DIRECTED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTORS NOMINATED BY THE
BOARD OF DIRECTORS. This proxy may be revoked prior to its exercise by either
written notice or personally at the meeting or by a subsequently dated proxy.
DATED: ___________________________, 2008
----------------------------------------
Signature of Shareholder
----------------------------------------
Signature of Joint Shareholder, if any
(If signed in a fiduciary capacity, please give full fiduciary title. If signed
by a corporation, sign the full corporate name followed by the signature of the
duly authorized officer. If signed by an agent, attach the instrument
authorizing the agent to execute the proxy or a photocopy thereof.)
PLEASE SIGN AND DATE THE PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE AT YOUR
EARLIEST CONVENIENCE.
PROXY
FARMERS & MERCHANTS BANCORP, INC.
ARCHBOLD, OHIO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joe E. Crossgrove, Dean E. Miller and David P.
Rupp, Jr., or any one or more of them, with full power of substitution, for me
and in my name, place and stead, to vote all the common stock of Farmers &
Merchants Bancorp, Inc. registered in the name of the undersigned as of March 4,
2008, with all powers which the undersigned would possess if personally present
at the Annual Meeting of Shareholders of Farmers & Merchants Bancorp, Inc. to be
held in the Founders Hall at Sauder Village, State Route 2, Archbold, Ohio, on
Thursday, April 17, 2008, at 7:00 P.M., (local time), and at any adjournments
thereof, and to vote as noted below. By appointing the above named persons as
proxy for me, I give them the right to vote cumulatively in the election of
directors and to cast the number of votes among the nominees noted below in such
proportion as they shall deem appropriate, in their sole discretion, unless I
have withheld my vote for any nominee, in which case votes shall not be cast for
that person. This proxy revokes all prior proxies given by the undersigned.
TELEPHONE AND INTERNET VOTING INSTRUCTIONS. YOU CAN VOTE BY TELEPHONE OR
INTERNET 24 HOURS A DAY 7 DAYS A WEEK! Instead of mailing your proxy, you may
choose one of the two voting methods outlined below to vote your proxy. Your
vote is valid when made by phone or through the internet under the Ohio General
Corporation Law applicable to the Corporation.
TO VOTE USING THE TELEPHONE (WITHIN
U.S. AND CANADA) TO VOTE USING THE INTERNET
- Call toll free 1-866-598-8811 in - Go to the following web site:
the United States or Canada any https://www.proxyvotenow.com/fmao
time on a touch tone telephone.
There is NO CHARGE to you for the
call.
- Follow the simple instructions - Enter the information requested on
provided by the recorded message. your computer screen and follow the
simple instructions.
1. ELECTION OF DIRECTORS - To elect the following fourteen (14) nominees to
the Board of Directors to serve until the Annual Meeting of Shareholders in
2009:
1. Dexter L. Benecke
2. Joe E. Crossgrove
3. Steven A. Everhart
4. Robert G. Frey
5. Jack C. Johnson
6. Dean E. Miller
7. Stephen J. Planson
8. Anthony J. Rupp
9. David P. Rupp, Jr.
10. James C. Saneholtz
11. Kevin J. Sauder
12. Merle J. Short
13. Paul S. Siebenmorgen
14. Steven J. Wyse
[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY FOR ALL NOMINEES
(TO WITHHOLD AUTHORITY TO VOTE FOR A SPECIFIC NOMINEE(S) WRITE HIS OR HER
NAME(S) ON THE LINE BELOW)
________________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
2. OTHER BUSINESS- To transact any other business which may properly come
before the meeting or any adjournment of it.
THIS PROXY IS SOLICITED BY MANAGEMENT AND CONFERS AUTHORITY TO VOTE "FOR" THE
NOMINEES NOTED ABOVE UNLESS OTHERWISE MARKED. IF ANY OTHER BUSINESS IS PRESENTED
AT THE MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS
OF MANAGEMENT. ALL SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES WILL BE VOTED
AS DIRECTED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTORS NOMINATED BY THE
BOARD OF DIRECTORS. This proxy may be revoked prior to its exercise by either
written notice or personally at the meeting or by a subsequently dated proxy.
DATED: ___________________________, 2008
----------------------------------------
Signature of Shareholder
----------------------------------------
Signature of Joint Shareholder, if any
(If signed in a fiduciary capacity, please give full fiduciary title. If signed
by a corporation, sign the full corporate name followed by the signature of the
duly authorized officer. If signed by an agent, attach the instrument
authorizing the agent to execute the proxy or a photocopy thereof.)
PLEASE SIGN AND DATE THE PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE AT YOUR
EARLIEST CONVENIENCE.