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
Exchange National Bancshares, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(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:
--------------------------------------------------------------------------------
EXCHANGE NATIONAL BANCSHARES, INC.
132 EAST HIGH STREET,
JEFFERSON CITY, MISSOURI 65101
May 3, 2002
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders
of Exchange National Bancshares, Inc., to be held at The Exchange National Bank
of Jefferson City's facility, located at 3701 West Truman Boulevard, Jefferson
City, Missouri, on Wednesday, June 12, 2002, commencing at 9:00 a.m., local
time. The business to be conducted at this meeting is described in the
accompanying notice of annual meeting and proxy statement. In addition, there
will be an opportunity to meet with members of senior management and review the
business and operations of our Company.
Your board of directors joins with me in urging you to attend the
meeting. Whether or not you plan to attend the meeting, however, please sign,
date and return the enclosed proxy card promptly. A prepaid return envelope is
provided for this purpose. You may revoke your proxy at any time before it is
exercised and it will not be used if you attend the meeting and prefer to vote
in person.
Sincerely yours,
James E. Smith
Chairman of the Board
and Chief Executive Officer
EXCHANGE NATIONAL BANCSHARES, INC.
132 EAST HIGH STREET
JEFFERSON CITY, MISSOURI 65101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 12, 2002
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
Exchange National Bancshares, Inc., a Missouri corporation, will be held at The
Exchange National Bank of Jefferson City's facility, located at 3701 West Truman
Boulevard, Jefferson City, Missouri, on Wednesday, June 12, 2002, commencing at
9:00 a.m., local time, and thereafter as it may from time to time be adjourned,
for the following purposes:
1. To elect three Class I directors to hold office for a term
expiring at the 2005 annual meeting of the shareholders of our
Company and until their respective successors are duly elected
and qualified or until their respective earlier resignation or
removal;
2. To consider and act upon ratification and approval of the
selection of the accounting firm of KPMG LLP as the
independent auditors of our Company for the year ending
December 31, 2002; and
3. To transact such other business as properly may come before
the meeting.
Our board of directors has fixed the close of business on April 17,
2002 as the record date for determination of the shareholders entitled to notice
of, and to vote at, the annual meeting.
All shareholders are cordially invited to attend the meeting. Whether
or not you intend to be present at the meeting, our board of directors solicits
you to sign, date and return the enclosed proxy card promptly. A prepaid return
envelope is provided for this purpose. You may revoke your proxy at any time
before it is exercised and it will not be used if you attend the meeting and
prefer to vote in person. Your vote is important and all shareholders are urged
to be present in person or by proxy.
By Order of the Board of Directors
James E. Smith
Chairman of the Board
and Chief Executive Officer
May 3, 2002
Jefferson City, Missouri
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING IN PERSON.
EXCHANGE NATIONAL BANCSHARES, INC.
132 EAST HIGH STREET
JEFFERSON CITY, MISSOURI 65101
------------------
PROXY STATEMENT
------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 12, 2002
------------------
INTRODUCTION
The board of directors of Exchange National Bancshares, Inc. solicits
your proxy for use at the annual meeting of shareholders to be held on
Wednesday, June 12, 2002, and at any adjournment or adjournments thereof. The
annual meeting will commence at 9:00 a.m., local time, and will be held at The
Exchange National Bank of Jefferson City's facility located at 3701 West Truman
Boulevard, Jefferson City, Missouri. Our Company's principal business activity
is the ownership, directly or indirectly, of all the issued and outstanding
stock of The Exchange National Bank of Jefferson City, Citizens Union State Bank
& Trust of Clinton, and Osage Valley Bank of Warsaw.
Our principal executive offices are located at 132 East High Street,
Jefferson City, Missouri, 65101. This proxy statement and the enclosed form of
proxy were first mailed to shareholders on or about May 3, 2002.
INFORMATION ABOUT THE MEETING AND VOTING
PURPOSE OF THE MEETING
The purposes of the annual meeting are:
- to elect three Class I directors to hold office for a term
expiring at the 2005 annual meeting of the shareholders of our
Company;
- to consider and vote upon ratification and approval of the
selection of the accounting firm of KPMG LLP as the
independent auditors of our Company for the current year; and
- to transaction such other business as may properly come before
the annual meeting, including a proposal to adjourn or
postpone the meeting.
SHAREHOLDERS ENTITLED TO VOTE AT THE MEETING
Shareholders of record as of the close of business on the April 17,
2002 record date are entitled to notice of, and to vote at, the annual meeting
or any adjournment or adjournments thereof. As of the record date, 2,834,145
shares of our Company's common stock were issued and outstanding and an
additional 29,348 shares were issued and held in treasury. Each such share of
common stock is entitled to one vote on each matter properly to come before the
annual meeting.
ATTENDING THE MEETING AND VOTING IN PERSON
If you plan to attend the annual meeting and vote in person, we will
give you a ballot when you arrive. However, if your shares are held in the name
of your broker, bank or other nominee (commonly referred to as being held in
"street" name), proof of ownership may be required for you to be admitted to the
meeting. A recent brokerage statement or letter from a bank or broker are
examples of proof of ownership. If you want to vote your shares of common stock
held in street name in person at the meeting, you will have to get a written
proxy in your name from the broker, bank or other nominee who holds your shares.
A-1
VOTING BY PROXY
This proxy statement is being sent to you by our board of directors for
the purpose of requesting that you allow your shares of common stock to be
represented at the annual meeting by the persons named in the enclosed proxy
card. We urge you to complete, date and sign the enclosed form of proxy and
return it promptly in the enclosed postage prepaid envelope. If you properly
complete and sign your proxy card and send it to us in time to vote, the shares
represented by your proxy will be voted as you have directed. If you sign the
proxy card but do not make specific voting instructions, your shares will be
voted as follows:
- "FOR" the election of the nominees for director named in this
proxy statement, and
- "FOR" ratification of the selection of the accounting firm of
KPMG LLP as our Company's independent auditors for the current
year.
If any other matter is properly brought before the annual meeting, your
shares will be voted in accordance with the discretion and judgment of the
appointed proxies. A shareholder who has given a proxy may revoke it at any time
before it is exercised at the annual meeting by filing written notice of
revocation with the Secretary of our Company, by executing and delivering to the
Secretary of our Company a proxy bearing a later date, or by appearing at the
annual meeting and voting in person.
If your shares of common stock are held in street name, you will
receive instructions from your broker, bank or other nominee that you must
follow in order to have your shares voted. Your broker or bank may allow you to
deliver your voting instructions via the telephone or the Internet.
If you participate in The Exchange National Bank of Jefferson City
Profit Sharing Trust, a form of proxy/direction to trustee will be furnished to
you which represents a voting instruction to the trustee of the plan as to the
number of shares in your plan account. Each participant in the plan may direct
the trustee as to the manner in which shares of common stock allocated to the
participant's plan account are to be voted.
QUORUM REQUIREMENT
A quorum of shareholders is necessary to hold a valid meeting. The
presence in person or by proxy of shareholders holding a majority of the total
outstanding shares of our Company's common stock will constitute a quorum at the
annual meeting. Shares of common stock represented by a proxy which directs that
the shares be voted to abstain or to withhold a vote on any matter will be
counted in determining whether a quorum is present. Shares of common stock as to
which there is a broker non-vote (i.e., when a broker holding shares for clients
in street name is not permitted to vote on certain matters without instruction)
also will be counted for quorum purposes. If a quorum should not be present, the
annual meeting may be adjourned from time to time until a quorum is obtained.
REQUIRED VOTE TO APPROVE EACH PROPOSAL
Election of Directors. Directors are elected by a majority of the votes
cast, in person or by proxy, of shareholders entitled to vote at the annual
meeting for that purpose. Shareholders can withhold authority to vote for one or
more nominees for director. Votes withheld from a particular nominee will have
the same effect as a vote against the nominee. Shareholders do not have
cumulative voting rights in the election of directors.
Selection of Auditors and Other Matters. The affirmative vote of a
majority of the shares of our Company's common stock, represented in person or
by proxy and entitled to vote at the annual meeting, is required for (i) the
ratification of the selection of KPMG LLP as our Company's independent auditors,
and (ii) the approval of such other matters as properly may come before the
annual meeting or any adjournment thereof. Shareholders can abstain from voting
on these proposals. If you abstain from voting on any of these proposals, it has
the same effect as a vote against the proposal.
Effect of Broker Non-Votes. If your broker does not vote your shares on
any proposal, such "broker non-votes" do not count as shares present for
purposes of such proposal. This means that a broker non-vote would reduce the
number of affirmative votes that are necessary to approve the proposal.
2
SOLICITATION OF PROXIES
This solicitation of proxies for the annual meeting is being made by
our Company's board of directors. Our Company will bear all costs of such
solicitation, including the cost of preparing and mailing this proxy statement
and the enclosed form of proxy. After the initial mailing of this proxy
statement, proxies may be solicited by mail, telephone, facsimile transmission
or personally by directors, officers, employees or agents of our Company,
Exchange National Bank, Citizens Union State Bank or Osage Valley Bank.
Brokerage houses and other custodians, nominees and fiduciaries will be
requested to forward soliciting materials to beneficial owners of shares held of
record by them, and their reasonable out-of-pocket expenses, together with those
of our Company's transfer agent, will be paid by our Company.
A list of shareholders entitled to vote at the annual meeting will be
available for examination at least ten days prior to the date of the annual
meeting during normal business hours at the registered office of our Company
located at 132 East High Street, Jefferson City, Missouri. The list also will be
available at the annual meeting.
ITEM 1: ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS
Through March 30, 2002, our Company's board of directors consisted of
nine directors. On March 30, 2002, Donald L. Campbell retired from the board and
simultaneously resigned as Chairman and President. At its March 14, 2002
meeting, the board of directors voted unanimously to reduce its size from nine
to eight directors effective March 30, 2002. The articles of incorporation of
our Company divide the board of directors into three classes of directors, with
the directors serving staggered terms of three years and until their respective
successors are duly elected and qualified or until their respective earlier
resignation or removal. The present terms of Charles G. Dudenhoeffer, Jr.,
Philip D. Freeman and James E. Smith, the three directors in Class I, expire at
this annual meeting. Directors in Class II (David R. Goller, James R. Loyd and
Gus S. Wetzel, II) and Class III (Kevin L. Riley and David T. Turner) have been
elected to terms expiring at the time of the annual meeting of shareholders in
2003 and 2004, respectively. Prior to his retirement on March 30, 2002, Donald
L. Campbell was a director in Class III.
One of the purposes of this annual meeting is to elect three directors
in Class I to serve for a three-year term expiring at the annual meeting of
shareholders in 2005 and until their respective successors are duly elected and
qualified or until their respective earlier resignation or removal. The board of
directors has designated Charles G. Dudenhoeffer, Jr., Philip D. Freeman and
James E. Smith as the three nominees proposed for election at the annual
meeting. Unless authority to vote for the nominees or a particular nominee is
withheld, it is intended that the shares represented by properly executed
proxies in the form enclosed will be voted for the election as directors of
these three nominees. In the event that one or more of the nominees should
become unavailable for election, it is intended that the shares represented by
the proxies will be voted for the election of such substitute nominee or
nominees as may be designated by the board of directors, unless the authority to
vote for all nominees or for the particular nominee who has ceased to be a
candidate has been withheld. Each of the nominees has indicated his willingness
to serve as a director if elected, and the board of directors has no reason to
believe that any nominee will be unavailable for election.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
CHARLES G. DUDENHOEFFER, JR., PHILIP D. FREEMAN AND JAMES E. SMITH AS CLASS I
DIRECTORS.
NOMINEES AND DIRECTORS CONTINUING IN OFFICE
The following table sets forth certain information with respect to each
person nominated by the board of directors for election as a Class I director at
the annual meeting and each director whose term of office will continue after
the annual meeting.
3
POSITION COMPANY
NAME AGE WITH OUR COMPANY DIRECTOR SINCE
---- --- ---------------- --------------
NOMINEES
CLASS I: TERM TO EXPIRE IN 2005
Charles G. Dudenhoeffer, Jr. 62 Director 1993
Philip D. Freeman 48 Director 1993
James E. Smith 57 Chairman, CEO 1997
and Director
DIRECTORS CONTINUING IN OFFICE
CLASS II: TERM TO EXPIRE IN 2003
David R. Goller 70 Director 1993
James R. Loyd 70 Director 1993
Gus S. Wetzel, II 61 Director 1999
CLASS III: TERM TO EXPIRE IN 2004
Kevin L. Riley 46 Director 1995
David T. Turner 45 President 1997
and Director
The business experience during the last five years of each person
nominated by the board of directors for election as a Class I director at the
annual meeting and each director whose term of office will continue after the
annual meeting is as follows:
Charles G. Dudenhoeffer, Jr. has served as a Director of Exchange
National Bank since 1978 and of our Company since 1993. Mr. Dudenhoeffer served
as Vice President and Trust Officer of Exchange National Bank from 1974 until
June 1992. He served as Senior Vice President and Trust Officer of Exchange
National Bank from June 1992 until June 2000. He served as Senior Vice President
of our Company from 1993 through June 2000.
Philip D. Freeman has served as a Director of Exchange National Bank
since 1990 and of our Company since 1993. He has been the Owner/Manager of
Freeman Mortuary, Jefferson City, Missouri since 1974. Mr. Freeman also serves
on our Company's Audit, Compensation and Incentive Stock Option Committees.
James E. Smith has served as a Director of Citizens Union State Bank
since 1975, of our Company since 1997, of Osage Valley Bank since January 2000
and of Exchange National Bank since March 2002. He served as Vice Chairman of
our Company from 1998 through March 2002 when he assumed the responsibilities of
Chairman and Chief Executive Officer, as President and Secretary of Citizens
Union State Bank from 1975 through May 2000 when he was promoted to Chairman and
Chief Executive Officer, and as President of Osage Valley Bank since January
2000.
David R. Goller has served as a Director of Exchange National Bank
since 1975 and of our Company since 1993. He has been an attorney with the law
firm of Goller, Gardner & Feather, P.C. (formerly Goller & Associates, P.C.),
Jefferson City, Missouri, counsel for Exchange National Bank, since 1975. Mr.
Goller also serves on our Company's Audit, Compensation and Incentive Stock
Option Committees.
James R. Loyd has served as a Director of Exchange National Bank since
1974 and of our Company since 1993. He served as Executive Vice President of
Exchange National Bank from 1974 until October 1996 and as
4
Executive Vice President of our Company from 1993 until October 1996. Mr. Loyd
also serves on our Company's Compensation and Incentive Stock Option Committees.
Gus S. Wetzel, II has served as a Director of Citizens Union State Bank
since 1974, and of our Company since 1999. He served as Chairman of Citizens
Union State Bank from 1974 until May 2000. Dr. Wetzel has served as a
physician/surgeon with the Wetzel Clinic, Clinton, Missouri since 1972. He also
serves on our Company's Audit and Incentive Stock Option Committees.
Kevin L. Riley has served as a Director of Exchange National Bank since
1995 and of our Company since 1995. He has been co-owner of Riley Chevrolet,
Inc. and Riley Oldsmobile, Cadillac, Inc., each a Jefferson City, Missouri
automobile dealership, since 1986 and 1992, respectively. Mr. Riley also serves
on our Company's Audit, Compensation and Incentive Stock Option Committees.
David T. Turner has served as a Director of Exchange National Bank and
of our Company since January 1997 and of Citizens Union State Bank since April
2002. Mr. Turner served as Vice Chairman of our Company from June 1998 through
March 2002 when he assumed the position of President. From 1993 until June 1998,
he served as Senior Vice President of our Company. Mr. Turner served as
President of Exchange National Bank from January 1997 through March 2002 when he
assumed the position of Chairman, Chief Executive Officer and President. He
served as Senior Vice President of Exchange National Bank from June 1992 through
December 1996 and as Vice President from 1985 until June 1992.
There is no arrangement or understanding between any director and any
other person pursuant to which such director was selected as a director.
COMPENSATION OF DIRECTORS
Only outside (non-employee) members of our Company's board of directors
receive compensation for their service to our Company as a director. Each of
these outside (non-employee) directors is paid $300 for each meeting of the
Board attended in person. Each member of our Company's Audit Committee receives
$700 for each committee meeting attended. Each member of our Company's
Compensation and Incentive Stock Option Committee receives $300 for each meeting
attended.
All directors of our Company (other than Mr. Wetzel) are also directors
of Exchange National Bank, and in that capacity may receive compensation from
Exchange National Bank. Each of Exchange National Bank's outside (non-employee)
directors is paid a monthly $500 retainer and $300 for each meeting of the Board
attended in person. In addition, these directors are eligible for a $2,400 bonus
if Exchange National Bank meets certain financial goals and the director attends
at least 80% of the Board meetings held (which could include one telephone
conference meeting). All of Exchange National Bank's non-employee directors
received this bonus for 2001.
Three of our Company's directors-- Mr. Smith, Mr. Turner and Mr.
Wetzel-- also are directors of Citizens Union State Bank. Mr. Smith and Mr.
Turner are not eligible to receive compensation for their service to Citizens
Union State Bank as a director. For his service to Citizens Union State Bank as
a director, Mr. Wetzel is paid a quarterly $300 retainer plus $300 for each
meeting of the Board that he attends in person. Mr. Wetzel also receives $100
for each meeting of Citizens Union State Bank's Trust Committee held, and $50
for each meeting of Citizens Union State Bank's Loan (Discount) Committee that
he attends. One of our Company's directors-- Mr. Smith--also is a director of
Osage Valley Bank, but is not eligible to receive compensation for his service
in that capacity.
MEETINGS OF THE BOARD AND COMMITTEES
During 2001 the board of directors of our Company held five meetings.
All directors attended at least 75% of the meetings of the board of directors
which were held during 2001. It should be noted that our Company's directors
discharge their responsibilities throughout the year, not only at such board of
directors and committee meetings, but through personal meetings and other
communications with members of management and others regarding matters of
interest and concern to our Company.
5
Our Company's board of directors has established an Audit Committee.
The Audit Committee assists the Board in fulfilling its responsibilities with
respect to accounting and financial reporting practices and the scope and
expense of audit and related services provided by external auditors, among
others. The Audit Committee is responsible for apprising the Board of
management's compliance with Board mandated policies, internal procedures and
applicable laws and regulations. The committee works with the internal audit
department and external auditors and supervises the internal audit function
directly, reviews and approves the hiring of audit personnel and evaluates the
performance of the internal audit function and the external auditors. The
committee also has the duty to make, or cause to be made, a suitable examination
and audit of the financial affairs of our Company and its subsidiaries at least
annually, and to report thereon to the board of directors. Members of the Audit
Committee currently are Messrs. Freeman, Goller, Riley and Wetzel. Each
committee member attended at least 75% of the committee meetings held during
2001. The Audit Committee met six times during 2001. The Audit Committee has
adopted a written charter, which was attached to the proxy statement with
respect to the 2001 annual meeting of shareholders.
In January 2000, our Company established a Compensation Committee which
assumed the responsibility to make recommendations to the board of directors
regarding the compensation and benefits of our executive officers and directors
and the establishment and administration of our Company's executive compensation
program. The members of the Compensation Committee currently are Messrs.
Freeman, Goller, Riley and Loyd. Each committee member attended at least 75% of
the committee meetings held during 2001. The Compensation Committee held one
meeting during 2001.
In February 2000, our board of directors approved an Incentive Stock
Option Plan under which an Incentive Stock Option Committee was established. The
committee is authorized to construe, interpret and administer the Plan, and to
exercise exclusive authority over the grant of options under the Plan. Members
of the committee are Messrs. Freeman, Goller, Riley, Loyd and Wetzel. The
Incentive Stock Option Committee did not meet in 2001.
With the exception of the Audit, Compensation and Incentive Stock
Option Committees, there currently are no other standing compensation,
executive, nominating or other committees of our Company's board of directors,
or committees performing similar functions of the Board.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
REPORT ON EXECUTIVE COMPENSATION
This report has been prepared by the Compensation Committee of our
Company's board of directors (the "Committee") which has general responsibility
for the establishment, direction and administration of all aspects of the
compensation policies and programs for the executive officers of our Company and
its affiliate banks. Under an agreement between our Company and Exchange
National Bank, employees of our Company and Exchange National Bank, including
persons who are employees of both our Company and Exchange National Bank, are
compensated as such by Exchange National Bank. Our Company's executive
compensation program, insofar as it pertains to the Chairman of the Board and
Chief Executive Officer (the "Chief Executive Officer") and the Vice Chairmen of
our Company (the "Vice Chairmen"), is administered by the Committee. The
Committee is composed of four independent outside directors, none of whom is an
officer or employee of our Company or any affiliate bank. Our Company's
executive compensation program, insofar as it pertains to executive officers
other than the Chief Executive Officer and the Vice Chairmen, is administered by
the Chief Executive Officer and the Vice Chairmen. Mr. Donald Campbell, the
Chief Executive Officer, and certain other executive officers of our Company and
affiliate banks, may attend meetings of the Committee, but are not present
during discussions or deliberations regarding their own compensation.
COMPENSATION POLICY. Our Company's executive compensation policy is
premised upon three basic goals: (1) to attract and retain qualified individuals
who provide the skills and leadership necessary to enable our Company and its
affiliate banks to achieve earnings growth, capital compliance and return on
investment objectives, while maintaining a commitment to equal employment
opportunity and affirmative action guidelines and practices; (2) to create
incentives to achieve company and individual performance objectives through the
use of performance-based compensation programs; and (3) to create a mutuality of
interest between executive officers and shareholders through compensation
structures that create a direct link between executive compensation and
shareholder return.
6
In determining the structure and levels of each of the components of
executive compensation needed to achieve these goals, all elements of the
compensation package are considered in total, rather than any one component in
isolation. As more fully described below, the determination of such levels of
executive compensation is a subjective process in which many factors are
considered, including our Company's and/or affiliate banks' performance and the
individual executive's specific responsibilities, historical and anticipated
personal contribution to our business, and length of service with our Company or
affiliate banks.
COMPENSATION COMPONENTS. The Committee, as well as the Chief Executive
Officer and the Vice Chairmen, reviews our Company's compensation program
annually to ensure that compensation levels and incentive opportunities are
competitive and reflect the performance of our Company and its affiliate banks
as well as performance of the individual executive officer. The particular
elements of the compensation program for executive officers are base salary,
incentive compensation and periodic stock option grants. The Committee believes
that these compensation components together advance both the short- and
long-term interests of our shareholders. In this regard, the Committee believes
that the long-term interests of our shareholders are advanced by designating a
portion of executive compensation to be at risk: namely, incentive compensation
(which permits individual performance to be recognized on an annual and
long-term basis based, in part, on an evaluation of the executive's contribution
to our Company's and/or affiliate bank's performance) and the grant of stock
options (which directly ties a portion of the executive's long-term remuneration
to stock price appreciation realized by shareholders). Each of the components of
the compensation program is addressed separately below.
Base Salary. The base salary for each executive officer is reviewed
from the previous year. In determining whether to adjust base salary levels,
management's recommendations and subjective assessments of each executive's
growth and effectiveness in the performance of his or her duties are taken into
account. In addition, the performance of our Company and/or the affiliate bank
is considered. The increases in the base salaries of executives of our Company
and affiliate banks for 2001 were based primarily upon a subjective analysis of
our Company's and/or the banks' performance during the period since the last
salary increase and the individual executive's role in generating that
performance. In this regard, the analysis of performance included a review of
our Company's and/or affiliate bank's earnings and return on investment for the
prior year. The analysis of the role played by each individual executive in
generating our Company's and/or bank's performance included a consideration of
the executive's specific responsibilities, contributions to our Company's and/or
bank's business, and length of service. The factors impacting base salary levels
are not independently assigned specific weights. Rather, all of these factors
are reviewed, and specific base pay recommendations are made which reflect an
analysis of the aggregate impact of these factors. The Committee and the Chief
Executive Officer and the Vice Chairmen believe that base pay levels for the
executive officers are maintained within a range that is considered to be
appropriate and necessary.
Incentive Compensation. After careful analysis of our Company's needs
and an examination of the competitive practices among peer companies, the
Committee recommended, and the full board of directors approved, the adoption of
an incentive bonus program. As a result, our Company's and affiliate banks'
officers are eligible to receive incentive bonus awards. Each of the officers
who are eligible to receive bonus awards are assigned to one of four bonus
tiers, which assignments are made primarily according to job category. Tier one
consists of the Chief Executive Officer. Tier two consists of our Company's Vice
Chairmen and affiliate bank presidents. Tier three consists of senior officers
of our Company and affiliate banks. Tier four includes officers of affiliate
banks.
Officers identified by the Chief Executive Officer and the Vice
Chairmen and the Committee are eligible to receive incentive bonuses. These
officers may earn annual awards only upon the achievement of performance
objectives which are established at the beginning of the year. Threshold, target
and maximum levels of awards are established, and no awards are paid if the
threshold is not met. The performance objectives are weighted based upon their
relative importance to each individual. The performance objectives for
participants may include corporate performance objectives and personal targeted
objectives for performance. The performance objectives may include functional or
operating unit objectives. Each participant's target bonus is expressed as a
percentage of his or her base salary, dependent on responsibility and function.
The target award is 30% of base salary in the case of the Chief Executive
Officer, and in the case of the Vice Chairmen, Presidents, senior officers and
other officers, the target award ranges from 20% to 10% of base pay. Earned
awards may range from 0% to 150% of the target award. In 2001, the Committee
granted an incentive bonus award of $63,000, or 30% of base pay, to Mr.
Campbell, the Chief Executive Officer, for the 2000 fiscal year.
7
Incentive bonus awards to the Vice Chairmen are allocated based upon
the recommendation of the Chief Executive Officer. In allocating bonus awards
among the other participants, the Chief Executive Officer and the Vice Chairmen
exercise their discretion and judgment after considering the individual
participant's performance, responsibilities and contributions to our Company
and/or affiliate banks, and subjectively analyzing the basis of their aggregate
impact on the success of our Company and/or affiliate banks for the preceding
year.
Stock Options. The Committee believes that in order to enhance
long-term shareholder value it must provide incentives that provide motivation
beyond short-term results. In February 2000, our board of directors adopted, and
our shareholders subsequently approved, a stock option plan. The objective of
stock option grants is to advance the longer term interests of our Company and
its shareholders and complement incentives tied to annual performance by
rewarding executives upon the creation of incremental shareholder value. Stock
options only produce value to executives if the price of our Company' common
stock appreciates, thereby directly linking the interests of executives with
those of shareholders. Therefore, in order to provide long-term incentives to
executive officers and other employees related to long-term growth in the value
of our Company's common stock, it is intended that stock options be granted to
such persons under our Company' stock option plan. The selection of the persons
eligible to receive stock options and the designation of the number of stock
options to be granted to such persons are made by our Company's Incentive Stock
Option Committee after taking into account management's assessment of each
person's relative level of authority and responsibility with the Bank, years of
service and base salary, among other factors.
COMPENSATION COMMITTEE
Philip D. Freeman David R. Goller Kevin L. Riley James R. Loyd
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Compensation Committee are Mr. Freeman, the Chairman,
Mr. Goller, Mr. Riley and Mr. Loyd. As discussed above under "Report on
Executive Compensation", in 2001 Mr. Campbell, the Chief Executive Officer, and
Messrs. Smith and Turner, Vice Chairmen, administered the executive compensation
program insofar as it pertained to executive officers other than the Chief
Executive Officer and the Vice Chairmen. All decisions relating to the
compensation of executive officers are reviewed by, and subject to the approval
of, the Compensation Committee. Among the members of the banks' board of
directors, Messrs. Smith and Turner are officers and employees of the Company
and affiliate banks. Mr. Campbell is a former officer and employee of the
Company and its affiliate banks.
None of the members of the Committee were an officer or employee of our
Company or any of its subsidiaries during 2001. Messrs. Freeman, Riley and
Goller, and certain corporations and firms in which such persons have interests,
have obtained loans from the affiliate banks. Each of such loans are believed to
have been made to such persons, corporations or firms 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.
EXECUTIVE OFFICERS
Executive officers of our Company are appointed by the board of
directors and serve at the discretion of the Board. The following table sets
forth certain information with respect to all executive officers of our Company.
NAME AGE POSITION
---- --- --------
James E. Smith 57 Chairman, Chief Executive Officer and Director
David T. Turner 45 President and Director
Richard G. Rose 50 Treasurer
Kathleen L. Bruegenhemke 36 Senior Vice President and Secretary
8
The business experience of the executive officers of our Company (with
the exception of those executive officers previously described under the caption
"Election of Directors--Nominees and Directors Continuing in Office") during the
last five years is as follows:
Richard G. Rose has served as Treasurer of our Company since July 1998
and as Senior Vice President and Controller of Exchange National Bank since July
1998. Prior to that he served as Senior Vice President and Controller of the
First National Bank of St. Louis from June 1979 until June 1998.
Kathleen L. Bruegenhemke has served as Senior Vice President and
Secretary of our Company since November 1997. From January 1992 until November
1997, she served as Internal Auditor of Exchange National Bank. Prior to joining
Exchange National Bank, Ms. Bruegenhemke served as a Commissioned Bank Examiner
for the Federal Deposit Insurance Corporation from 1986 to 1992.
There is no arrangement or understanding between any executive officer
and any other person pursuant to which such executive officer was selected as an
officer.
EXECUTIVE COMPENSATION
Our Company does not pay compensation to its officers. The following
table sets forth for the years ended December 31, 2001, 2000 and 1999,
respectively, the compensation paid or accrued by our Company's subsidiaries to
the chief executive officer of our Company and the only three other executive
officers whose remuneration for 2001 was in excess of $100,000 for services to
our Company and its subsidiaries in all capacities:
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
--------------------------------------------------------------
Other Annual Securities All Other
Name and Compen- Underlying Compen-
Principal Position Year Salary Bonus sation (1) Options/SARs sation (2)
---------------------------------------------------------------------------------------------------------------
2001 $211,368 $ 63,000 $ 0 0 $26,705
Donald L. Campbell 2000 $214,104 $ 63,000 $ 0 8,571 $25,609
*Chairman of ENB 1999 $214,104 $ 63,000 $ 0 0 $22,094
James E. Smith 2001 $140,000 $ 32,500 $ 0 0 $ 8,625
Chairman and 2000 $130,000 $ 25,103 $ 0 5,306 $ 6,500
CEO of USB 1999 $125,516 $ 23,480 $ 0 0 $ 6,248
2001 $144,802 $ 34,400 $ 0 0 $26,705
David T. Turner 2000 $143,360 $ 26,780 $ 0 5,684 $25,609
President of ENB 1999 $138,004 $ 26,000 $ 0 0 $22,094
2001 $ 94,886 $ 12,780 $ 0 0 $16,940
Richard G. Rose 2000 $ 93,989 $ 10,526 $ 0 1,862 $15,925
CFO of ENB 1999 $ 90,288 $ 4,300 $ 0 0 $ 6,234
-------------
* Mr. Campbell retired as Chairman and Director of Exchange National Bank
on March 31, 2002.
(1) Excludes perquisites and other benefits, unless the aggregate amount of
such compensation is equal to the lesser of either $50,000 or 10% of
the total of annual salary and bonus reported for the named executive
officer.
(2) All Other Compensation includes (i) Exchange National Bank's
contributions to the Exchange National Bank profit-sharing plan and
trust for 2001, 2000 and 1999 of $26,705, $25,609 and $22,094,
respectively, allocated to Mr. Campbell's account; $26,705, $25,609 and
$22,094, respectively, allocated to Mr. Turner's account, and $16,940,
$15,925 and $6,234, respectively, allocated to Mr. Rose's account, and
(ii) Citizens Union State Bank's contributions to the Citizens Union
State Bank profit-sharing plan for 2001, 2000 and 1999 of $8,625,
$6,500 and $6,248, respectively, allocated to Mr. Smith's account.
9
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to each named
executive officer concerning the exercise of options during 2001 and unexercised
options held as of December 31, 2001.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 2001 OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Shares Options/SARs at Money Options/SARs at
Acquired December 31, 2001 December 31, 2001(1)
on Value ---------------------------------------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------------------------------------------------------------------------------------------------------------
Donald L. Campbell -- -- 8,162 409 $12,243 $ 614
James E. Smith -- -- 1,326 3,980 $1,989 $5,970
David T. Turner -- -- 1,421 4,263 $2,132 $6,395
Richard G. Rose -- -- 465 1,397 $698 $2,096
-------------------
(1) Based on the $26.00 per share fair market value of our Company's common
stock on the last trading day of 2001, less the option exercise price.
EXCHANGE NATIONAL BANK PROFIT-SHARING TRUST
Exchange National Bank established a profit-sharing plan and trust in
1951, which has been amended and restated from time to time, and was most
recently amended and restated effective January 1, 2001. All employees of
Exchange National Bank who have completed one year of service are eligible to
participate. Exchange National Bank makes all contributions except for voluntary
contributions by participants who are not highly compensated employees. Exchange
National Bank is required to make an annual contribution to the trust in an
amount equal to 6% of its income before provision for Federal and state income
taxes and before provision for contributions to the profit-sharing plan and
retirement plan, limited, however, to the maximum amount deductible for Federal
income tax purposes. Exchange National Bank's contribution to the trust for any
given year is allocated to the accounts of the participants in direct proportion
to the compensation of the participants for such year. The trust can invest up
to 60% of the value of its assets in our Company's stock, and such common stock
held by the trust is allocated to the accounts of the participants. The interest
of a participant in Exchange National Bank contributions does not vest prior to
the completion of five years of service. After five years of service a
participant becomes fully vested in the value of his or her employer
contribution account. A participant whose employment with Exchange National Bank
terminates because of his normal retirement, death, or permanent disability is
also fully vested. Payments are made to participants upon termination of
service. If cash instead of stock is distributed, any shares of our Company's
stock previously allocated to the terminating participant's account would be
reallocated among the remaining participants' accounts. A participant may
withdraw his or her own contributions, but a participant may not borrow from the
trust. Each participant may direct the trustee with respect to the voting of
shares of our Company's stock allocated to his account on such matters upon
which shareholders are entitled to vote. Exchange National Bank serves as
trustee of the trust, and the trust is administered by a retirement committee
which is appointed by the board of directors of Exchange National Bank. As of
December 31, 2001, the trust held assets with an aggregate book value of
$10,525,951.
As of March 15, 2002, the trust held 183,519 shares (or 6.5%) of our
Company's common stock.
CITIZENS UNION STATE BANK PROFIT-SHARING PLAN
Citizens Union State Bank established the Citizens Union State Bank &
Trust of Clinton Profit Sharing Plan (the "Plan") in 1963. The Plan was restated
in 1994. All employees of Citizens Union State Bank who have completed one year
of service and are twenty-one years old are eligible to participate in the Plan.
Eligible Plan participants may make elective deferrals up to a maximum of 8% of
such participant's compensation. Under the
10
terms of the Plan, a matching contribution will be made on behalf of each
participant by Citizens Union State Bank in an amount of 33.33% of the
participant's elective deferrals. In addition to the employer matching
contributions, Citizens Union State Bank may make a discretionary annual profit
sharing contribution to the Plan. Both the employer matching contribution and
the discretionary employer profit sharing contribution are subject to the Plan's
vesting schedule. Under the Plan's vesting schedule, a participant's interest in
employer contributions does not begin to vest until the participant has
completed three years of service. A participant becomes fully vested after he or
she has completed seven years of service. Unless a participant terminates
employment due to death, disability or retirement, a participant is not eligible
to receive an employer matching or employer profit sharing contribution for a
specific Plan year unless the participant has completed 1,000 hours or more of
service during the Plan year and is employed on the last day of the Plan year. A
participant may take a total distribution of his or her vested account balance
upon his or her termination from employment. Under the terms of the Plan,
in-service hardship withdrawals are allowed. Plan loans, however, are not
permitted. Citizens Union State Bank currently serves as the trustee and plan
administrator of the Plan.
As of December 31, 2001, the trust held assets with an aggregate book
value of $970,174.
STOCK OPTION PLAN
On February 29, 2000, our board of directors adopted the Exchange
National Bancshares, Inc. Incentive Stock Option Plan. The Plan is sponsored by
our Company for key employees of our Company and its subsidiaries, and is
intended to encourage such employees to participate in the ownership of our
Company, and to provide additional incentive for them to promote the success of
our business through sharing in the future growth of our business. As of March
15, 2002, our Company had granted options to purchase a total of 64,357 shares
of common stock pursuant to the Plan.
The Plan is administered by a committee composed of Messrs. Freeman,
Goller, Riley, Loyd and Wetzel. The Plan committee has the power to determine in
its discretion the persons to whom options are granted under the Plan, the
number of shares covered by those options, and the time at which an option
becomes exercisable, subject in each case to the limitations set forth in the
Plan. Options can be granted under the Plan only to key employees of our Company
or any of its subsidiary corporations. The eligibility of the persons to whom
options may be granted under the Plan is limited to those persons whom the Plan
committee determines have made, or are expected to make, material contributions
to the successful performance of our Company. The period of up to ten years
during which an option may be exercised, and the time at which it becomes
exercisable, are fixed by the Plan committee at the time the option is granted.
No option granted under the Plan is transferable by the holder other than by
will or the laws of descent and distribution.
The aggregate number of shares of our common stock that may be issued
pursuant to the exercise of options granted under the Plan is limited to 300,000
shares, subject to increase or decrease in the event of any change in our
Company's capital structure. Shares subject to options granted under the Plan
which expire or terminate without being exercised in full become available, to
the extent unexercised, for future grants under the Plan. No consideration is
paid to our Company by any optionee in exchange for the grant of an option. The
per share exercise price for an option granted under the Plan is determined by
the Plan committee but may not be less than the greater of the par value or the
fair market value of our common stock on the date that the option is granted.
The Plan provides for automatic adjustments to prevent dilution or enlargement
of the optionee's rights in the event of a stock split, stock dividend,
reorganization, merger, consolidation, liquidation, combination or exchange of
shares, or other change in the capital structure of our Company.
PENSION PLAN
Concurrently with the creation of the profit-sharing plan and trust in
1951, Exchange National Bank established a defined benefit plan for its
employees, which has been amended and restated from time to time, and was most
recently amended and restated effective January 1, 2001. Under the plan, all
full-time employees become participants on the earlier of the first of June or
the first of December coincident with or immediately following the later to
occur of (i) the completion of one year of service or (ii) the attainment of the
age of 21, and continue to participate so long as they continue to be full-time
employees, until their retirement, death or termination of employment prior to
normal retirement date. The plan has a five-year vesting schedule under which a
participant
11
becomes fully vested in his accrued benefit after completing five years of
service. This plan provides for the payment of retirement and death benefits
that are funded by investments which, at December 31, 2001, had an aggregate
book value of $3,578,493.
The normal retirement benefits provided under the plan for an employee
with at least 25 years of continuous service are based upon 45% of his/her
average compensation over a ten-year period, less 50% of his social security
benefit. Compensation covered by the plan includes wages, salaries and overtime
pay but excludes directors' fees, commissions, bonuses, expense allowances, and
other extraordinary compensation. Amounts reported in the compensation table
include salaries, directors' fees, commissions and bonuses. For employees with
less than 25 years of continuous service, retirement benefits are reduced
proportionally. Provision is made for early or late retirement and optional
payment provisions are available.
The table below illustrates the projected amount of annual retirement
income, based on a straight line annuity, available under the plan for a person
retiring at 65 years of age at various levels of average annual compensation and
years of service classifications, with an assumed annual social security benefit
of $10,000.
AVERAGE TEN-
YEAR ANNUAL 10 YEARS 15 YEARS 20 YEARS 25 YEARS
COMPENSATION SERVICE SERVICE SERVICE SERVICE
------------ ------- ------- ------- -------
$ 50,000 $ 7,000 $10,000 $14,000 $17,500
100,000 16,000 24,000 32,000 40,000
150,000 25,000 37,500 50,000 62,500
200,000 34,000 51,000 68,000 85,000
The amounts shown above reflect benefits payable in the normal payment
form. For a married participant, payment is by monthly benefit to the
participant during his or her lifetime, and 50% of that amount is paid to the
spouse monthly during the spouse's life after the participant's death. For an
unmarried participant, payment is by a lifetime monthly benefit, with payments
guaranteed for the first 120 months.
Mr. Campbell and Mr. Turner have 50 years and 23 years of respective
continuous service under the plan. Mr. Smith is not a participant in the plan.
Mr. Rose has 4 consecutive years of service.
CAMPBELL RETENTION/ASSET GROWTH INCENTIVE AGREEMENT
In 1997, our Company agreed to provide for a $126,000 bonus to be paid
to Donald L. Campbell upon his retirement if he would remain as Chief Executive
Officer of our Company through March 2002. In addition, our Company agreed to
provide for a $126,000 bonus to be paid at retirement if desired asset growth
targets for our Company were achieved. Each of these payments have been made to
Mr. Campbell.
SMITH EMPLOYMENT AGREEMENT
Our Company has entered into an employment agreement with James E.
Smith. The agreement had an initial three-year term which expired on November 3,
2000, but is subject to automatic extensions of one additional year upon the
expiration of each year prior to Mr. Smith's 62nd birthday (unless either party
gives notice not to so extend the term). The agreement provides for an
annualized base salary of $110,000, and eligibility for merit-based increases.
In addition to base salary, the agreement also provides that Mr. Smith is
eligible to participate in bonus and other incentive compensation plans made
available to employees having responsibilities comparable to those of Mr. Smith.
Mr. Smith's employment is subject to early termination in the event of
his death, disability or adjudication of legal incompetence, and otherwise may
be terminated only for cause (as defined). The employment agreement prevents Mr.
Smith from competing with our Company, soliciting customers or hiring employees
during the term of the agreement and for a period of two years thereafter. In
addition, the employment agreement requires Mr. Smith to maintain the
confidentiality of our Company's confidential information prior to its
disclosure by our Company.
12
CHANGE OF CONTROL AGREEMENT
Our Company has entered into change of control agreements with 12
executive officers, including Messrs. Campbell, Turner, Smith and Rose. These
agreements provide that if, within two years after a change in control (as
defined below), our Company or any subsidiary that is the primary employer of
the executive terminates the executive's employment other than by reason of the
executive's death, disability or for cause (as defined) or if the executive
terminates his or her employment for good reason (as defined), the executive
will be entitled to receive:
- an amount equal to one to three years' of the executive's
salary (based on the executive's highest monthly base salary
for the preceding twelve-month period);
- an amount equal to one to three times the executive's
incentive bonus for the preceding year;
- the proportionate amount of any incentive bonus and other
compensation, payments and benefits which would otherwise have
been received by the executive for the year in which
employment was terminated; and
- any accrued and unpaid vacation pay.
The total payments made under the change of control agreements and under any
other agreements, plans or arrangements as a result of a change in control is
not permitted to be in excess of 5% of the aggregate cash consideration that our
shareholders would receive as a result of a change of control. Our Company will
reimburse the executive for any excise taxes that result from any of such
payments being considered "excess parachute payments" under Section 280G of the
Internal Revenue Code of 1986, and will make a gross-up payment to reimburse the
executive for any income or other tax attributable to the excess parachute
payment and to the tax reimbursement payments themselves. The change of control
agreements require the executives to maintain the confidentiality of our
confidential information prior to its disclosure by our Company.
A "change in control" generally is defined to take place when (a) a
person or group (other than our Company and various affiliated persons or
entities) becomes the beneficial owner, directly or indirectly, of 50% or more
of the total voting power of our Company's outstanding securities, (b) our
shareholders approve a merger or consolidation involving our Company in which at
least 50% of the total voting power of the voting securities of the surviving
corporation is held by persons who were not previously shareholders of our
Company, or (c) our shareholders approve a plan of complete liquidation of our
Company or an agreement for the sale or disposition by our Company of all or
substantially all of its assets.
COMPANY PERFORMANCE
The following performance graph shows a comparison of cumulative total
returns for our Company, the Nasdaq Stock Market (U.S. Companies) and a peer
index of financial institutions having total assets of between $500 million and
$1 billion (as calculated by SNL Securities LC) for the period from January 1,
1997, through December 31, 2001. The cumulative total return on investment for
each of the periods for our Company, the Nasdaq Stock Market (U.S. Companies)
and the peer index is based on the stock price or index at January 1, 1997. The
performance graph assumes that the value of an investment in our Company's
common stock and each index was $100 at January 1, 1997 and that all dividends
were reinvested. The information presented in the performance graph is
historical in nature and is not intended to represent or guarantee future
returns.
13
COMPARISON OF CUMULATIVE TOTAL RETURNS
(EXCHANGE, NASDAQ, PEER INDEX)
TOTAL RETURN PERFORMANCE
[LINE GRAPH]
The comparison of cumulative total returns presented in the above graph was
plotted using the following index values and common stock price values:
1/1/97 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
------ -------- -------- -------- -------- --------
Exchange National $100.00 $111.25 $121.97 $217.20 $174.74 $201.12
Bancshares
Nasdaq Stock Market $100.00 $122.48 $172.68 $320.89 $193.01 $153.15
(U.S. Companies)
Peer Index $100.00 $162.56 $159.83 $147.95 $141.62 $183.73
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of March 15, 2002
regarding the beneficial ownership of our Company's common stock by each person
known to the board of directors to own beneficially 5% or more of our Company's
common stock, by each director of our Company, by each executive officer named
in the Summary Compensation Table under "Executive Officers and
Compensation--Executive Compensation" and by all directors and officers of our
Company as a group. All information with respect to beneficial ownership has
been furnished by the respective directors, officers or 5% or more shareholders,
as the case may be.
14
AMOUNT AND NATURE OF PERCENTAGE OF
NAME BENEFICIAL OWNERSHIP(1) SHARES OUTSTANDING(1)
---- ----------------------- ---------------------
Exchange National Bank of 183,519.00 6.5%
Jefferson City Profit-Sharing
Trust/Exchange National
Bank of Jefferson City,
Trustee (2)(3)
Donald L. Campbell (2)(4) 164,155.01 5.8
Charles G. Dudenhoeffer, Jr. (5) 34,171.00 1.2
Philip D. Freeman (6) 20,000.00 *
David R. Goller (7) 40,696.00 1.4
James R. Loyd (8) 64,398.00 2.3
Kevin L. Riley (9) 4,620.00 *
James E. Smith (10) 13,328.00 *
David T. Turner (11) 17,484.88 *
Gus S. Wetzel, II (12) 41,502.00 1.5
Richard G. Rose (13) 2,018.42 *
All directors & executive officers 405,684.31 14.2
as a group (11 persons) (14)
-----------------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting
power and/or investment power with respect to those securities. Unless
otherwise indicated, the persons or entities identified in this table
have sole voting and investment power with respect to all shares shown
as beneficially owned by them. Percentage ownership calculations are
based on 2,834,145 shares of common stock outstanding.
(2) The address for The Exchange National Bank of Jefferson City
Profit-Sharing Trust/The Exchange National Bank of Jefferson City,
Trustee and for Mr. Campbell is 132 East High Street, Jefferson City,
Missouri 65101.
(3) Participants in The Exchange National Bank of Jefferson City
Profit-Sharing Trust have the right to vote shares which have been
allocated to such participants in the Profit-Sharing Trust.
Accordingly, the Profit-Sharing Trust/Trustee has investment power but
not voting power as to the shares shown as owned by it.
(4) Includes 103,452 shares owned of record by Campbell Family L.P.,
37,133.01 shares held in The Exchange National Bank of Jefferson City
Profit-Sharing Trust for the benefit of Mr. Campbell, and 11,785 shares
issuable upon the exercise of outstanding stock options. Mr. Campbell
has the right to vote, but has no investment power, with respect to the
37,133.01 shares held in the Profit-Sharing Trust.
(5) Includes 12,300 shares held jointly by Mr. Dudenhoeffer and his spouse.
Mr. Dudenhoeffer and his spouse share voting and investment power with
respect to 12,300 shares.
(6) All 20,000 shares are held of record by a revocable living trust, of
which Mr. Freeman is a trustee, for the benefit of Mr. Freeman and his
wife.
(7) Includes 18,140 shares held of record by Mr. Goller as trustee of the
David R. Goller Trust. Also includes 9,160 shares held of record by the
Goller, Gardner & Feather, P.C. Profit Sharing Trust, of which Mr.
Goller is trustee, and 13,396 shares held of record by two family
trusts for which he acts as sole trustee.
(8) Includes 34,950 shares held by Mr. Loyd's spouse as trustee of a family
trust, as to which Mr. Loyd and his spouse share voting and investment
power.
(9) Includes 3,900 shares held jointly by Mr. Riley and his spouse, as to
which they share voting and investment power.
(10) Includes 10,200 shares held jointly by Mr. Smith and his spouse, as to
which they share voting and investment power, and 1,326 shares issuable
upon the exercise of outstanding stock options.
(11) Includes 1,334 shares held jointly by Mr. Turner and his spouse,
10,979.88 shares held in The Exchange National Bank of Jefferson City
Profit-Sharing Trust for his benefit and 1,421 shares issuable upon the
15
exercise of outstanding stock options. Mr. Turner and his spouse share
voting and investment power with respect to 1,334 shares, and Mr.
Turner has the right to vote, but has no investment power, with respect
to the 10,979.88 shares held in the Profit-Sharing Trust.
(12) Includes 41,500 shares held by Wetzel Investments, Ltd.
(13) Includes 500 shares held jointly by Mr. Rose and his spouse, 1,053.42
shares held in The Exchange National Bank of Jefferson City
Profit-Sharing Trust for his benefit and 465 shares issuable upon the
exercise of outstanding stock options. Mr. Rose and his spouse share
voting and investment power with respect to 500 shares, and Mr. Rose
has the right to vote, but has no investment power, with respect to the
1,053.42 shares held in the Profit-Sharing Trust.
(14) Includes 51,901.01 shares held in The Exchange National Bank of
Jefferson City Profit-Sharing Trust and allocated to participant
accounts which the participant has the right to vote but not investment
power. Also includes 15,373 shares issuable upon the exercise of
outstanding stock options.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
As part of the consideration provided by our Company for its November
1997 acquisition of Union State Bancshares, Inc. and Union State Bank, our
Company issued a promissory note to James E. Smith in the principal amount of
$2,000,000, a promissory note to Gus S. Wetzel, II in the principal amount of
$5,000,000, and four promissory notes to Mr. Wetzel's children in the aggregate
principal amount of $892,472. The six promissory notes each matures on November
1, 2002, with quarterly installments of accrued interest to be made on each
February 1, May 1, August 1 and November 1 of the loan term at the rate of 7%
per annum. Our Company has reserved the right to prepay the promissory notes at
any time on or after November 1, 2000. The promissory notes, and one other
promissory note issued to a former shareholder of Union, are secured by Union's
pledge of the shares of Union State Bank capital stock owned by it.
In connection with our Company's acquisition of Union State Bank in
November 1997, our Company entered into noncompetition agreements with James E.
Smith and Gus S. Wetzel, II. The agreements prevent Mr. Smith and Dr. Wetzel
from competing with our Company, soliciting customers or hiring employees during
the six-year term of the agreement in exchange for our Company's agreement to
pay each of them six annual installments of $50,000 each (without interest), the
first of which installments was paid on November 3, 1997.
The officers and directors of our Company and of its subsidiaries, some
of their family members and our Companies with which some of the directors are
associated, were customers of, and had banking transactions with, Exchange
National Bank, Citizens Union State Bank and Osage Valley Bank in the ordinary
course of Exchange National Bank's, Citizens Union State Bank's and Osage Valley
Bank's respective businesses during 2000 and 2001. During each of these years
Exchange National Bank, Citizens Union State Bank and Osage Valley Bank each
continued its policy of making loans and loan commitments in the ordinary course
of business to its employees, officers and directors, and their affiliates, only
on substantially the same terms, including interest rates, collateral and
repayment terms, as those prevailing at the time for comparable transactions
with other persons. In the opinion of the board of directors of Exchange
National Bank, Citizens Union State Bank and of Osage Valley Bank, respectively,
none of its transactions with such persons involved more than a normal risk of
collectability or other unfavorable features.
David R. Goller, a director of our Company and Exchange National Bank,
is a member of the firm Goller, Gardner & Feather, P.C., which Exchange National
Bank has retained and expects in the future to retain as its general counsel.
During 2001, Exchange National Bank paid legal fees to Goller, Gardner &
Feather, P.C. in the amount of $619.
ITEM 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The board of directors has selected the independent certified public
accounting firm of KPMG LLP as our Company's independent auditors to audit the
books, records and accounts of our Company for the year ending
16
December 31,
2002. Shareholders will have an opportunity to vote at the annual meeting on
whether to ratify the Board's decision in this regard.
KPMG LLP has served as our Company's independent auditors since our
Company commenced business operations in 1993. A representative of KPMG LLP is
expected to be present at the annual meeting. Such representative will have an
opportunity to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
Submission of the selection of the independent auditors to the
shareholders for ratification will not limit the authority of the board of
directors to appoint another independent certified public accounting firm to
serve as independent auditors if the present auditors resign or their engagement
otherwise is terminated. Shareholder ratification of the board of directors'
selection of KPMG LLP as our Company's independent auditors is not required by
any statute or regulation or by our Company's bylaws. Nevertheless, if the
shareholders do not ratify the selection of KPMG LLP at the annual meeting, the
selection of independent auditors for the current year will be reconsidered by
the board of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
SELECTION OF KPMG LLP.
AUDIT AND NON-AUDIT FEES
The following table presents fees for professional audit services
rendered by KPMG LLP for the audit of our Company's annual financial statements
for 2001, and fees billed for other services rendered by KPMG LLP.
Audit fees, excluding audit related $ 81,700
========
Financial information systems design and implementation fees $ 0
========
All other fees:
Audit related fees (1) $ 37,700
Other non-audit services (2) $ 93,710
--------
Total all other fees $131,410
========
-------------
(1) Audit related fees consisted principally of required statutory
and subsidiary audits, audits of financial statements of
certain employee benefit plans, acquisition related work, and
review of registration statements and issuance of consents.
(2) Other non-audit fees consisted of tax compliance and other tax
related work.
AUDIT COMMITTEE REPORT TO SHAREHOLDERS
The Audit Committee of our board of directors assists the Board in
fulfilling its responsibilities with respect to accounting and financial
reporting practices and the scope and expense of audit and related services
provided by external auditors, among others. The Audit Committee is composed of
four directors, each of whom is independent as defined by the National
Association of Securities Dealers' listing standards. The Audit Committee has
adopted a written charter, which was attached to the proxy statement for the
2001 annual meeting of shareholders.
In connection with these responsibilities, the Audit Committee met with
management to review and discuss the December 31, 2001 financial statements. The
Audit Committee also discussed with the independent accountants the matters
required by Statement on Auditing Standards No. 61, Communication with Audit
Committees. The Audit Committee received written disclosures from the
independent accountants required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and the Audit Committee
discussed with the independent accountants that firm's independence. The Audit
Committee has considered whether the services provided under financial
information systems design and implementation and other non-audit services are
compatible with maintaining the independence of KPMG LLP.
17
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management, the Audit Committee recommended that the board of directors
include the audited consolidated financial statements in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001, to be filed with the
Securities and Exchange Commission.
AUDIT COMMITTEE
Philip D. Freeman David R. Goller Kevin L. Riley Gus S. Wetzel, II
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
Company's directors and executive officers, and persons who own more than 10% of
any class of equity securities of our Company registered pursuant to Section 12
of the Exchange Act, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership in such securities and
other equity securities of our Company. Securities and Exchange Commission
regulations require directors, executive officers and greater than 10%
shareholders to furnish our Company with copies of all Section 16(a) reports
they file.
To our Company's knowledge, based solely on review of the copies of
such reports furnished to our Company and written representations that no other
reports were required, during the year ended December 31, 2001, all Section
16(a) filing requirements applicable to its directors, executive officers and
greater than 10% shareholders were complied with.
OTHER BUSINESS OF THE MEETING
The board of directors is not aware of, and does not intend to present,
any matter for action at the annual meeting other than those referred to in this
proxy statement. If, however, any other matter properly comes before the annual
meeting or any adjournment, it is intended that the holders of the proxies
solicited by the board of directors will vote on such matters in their
discretion in accordance with their best judgment.
ANNUAL REPORT
Our Company's Annual Report to Shareholders, containing consolidated
financial statements for the year ended December 31, 2001, is being mailed with
this proxy statement to all shareholders entitled to vote at the annual meeting.
Such Annual Report is not to be regarded as proxy solicitation material.
A COPY OF OUR COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2001, EXCLUDING EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY
SHAREHOLDER OF RECORD AS OF APRIL 17, 2002, UPON WRITTEN REQUEST TO KATHLEEN L.
BRUEGENHEMKE, EXCHANGE NATIONAL BANCSHARES, INC., 132 EAST HIGH STREET,
JEFFERSON CITY, MISSOURI 65101. Our Company will provide a copy of any exhibit
to the Form 10-K report to any such person upon written request and the payment
of our Company's reasonable expenses in furnishing such exhibits.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
It is anticipated that the 2003 annual meeting of shareholders will be
held on June 11, 2003. Any shareholder who intends to present a proposal at the
2003 annual meeting must deliver the proposal to our Company at 132 East High
Street, Jefferson City, Missouri 65101, Attention: President by the applicable
deadline below:
- If the shareholder proposal is intended for inclusion in our Company's
proxy materials for that meeting pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, our Company must receive the proposal
no event later than December 4, 2002. Such proposal must also comply
with the other requirements of the proxy solicitation rules of the
Securities and Exchange Commission.
18
- If the shareholder proposal is to be presented without inclusion in our
Company's proxy materials for that meeting, our Company must receive the
proposal no event later than May 13, 2003 in accordance with the advance
notice provisions of our Company's articles of incorporation and bylaws.
See "Advance Notice of Shareholder Proposals."
Proxies solicited in connection with the 2003 annual meeting of shareholders
will confer on the appointed proxies discretionary voting authority to vote on
shareholder proposals that are not presented for inclusion in the proxy
materials unless the proposing shareholder notifies our Company by May 13, 2003
that such proposal will be made at the meeting.
ADVANCE NOTICE OF SHAREHOLDER PROPOSALS
Our Company's articles of incorporation and bylaws provide that advance
notice of shareholder nominations for the election of directors or other
business must be given. With respect to this annual meeting, written notice of
the shareholder's intent to make a nomination at the meeting must be received by
our Company's Secretary at our Company's principal executive offices not later
than the close of business on May 14, 2002. At future meetings of shareholders,
notice of nominations or other business to be brought before the meeting must be
delivered to our Company's Secretary at our principal executive offices not less
than 60 days (30 days in the case of nominations for the election of directors)
prior to the first anniversary of the previous year's annual meeting. In the
event that the date of the annual meeting of shareholders is advanced by more
than 30 days or delayed by more than 60 days from such anniversary date,
however, notice by the shareholder to be timely must be so delivered not later
than the close of business on the later of (i) the 60th day (in the case of
nominations, the 30th day) prior to such annual meeting or (ii) the tenth day
following the date on which public announcement of the date of such meeting is
first made.
The shareholder's notice of nomination must contain (i) the name and
address of the nominating shareholder, of each person to be nominated and of the
beneficial owner (as defined in the articles of incorporation), if any, on whose
behalf the nomination is made, (ii) a representation that the nominating
shareholder is the holder of record of our Company's common stock entitled to
vote in the election of directors at the meeting and intends to appear at the
meeting to nominate the person or persons specified in the notice, (iii) the
number of shares of our Company's common stock owned beneficially and of record
by the nominating shareholder and by each person to be nominated, (iv) a
description of all arrangements or understandings between the nominating
shareholder 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 shareholder, (v) the consent of each nominee to serve as a director if so
elected, and (vi) such other information regarding each nominee proposed by the
nominating shareholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission, as
then in effect, if our Company were soliciting proxies for the election of such
nominees. If no such notice has been received, the chairman of the annual
meeting is entitled to refuse to acknowledge the nomination of any person which
is not made in compliance with the foregoing procedure. The board of directors
does not know if, and has no reason to believe that, anyone will attempt to
nominate another candidate for director at this annual meeting.
By Order of the Board of Directors
James E. Smith
Chairman of the Board
and Chief Executive Officer
April 3, 2002
Jefferson City, Missouri
19
P R O X Y
ANNUAL MEETING OF THE SHAREHOLDERS
OF
EXCHANGE NATIONAL BANCSHARES, INC.
JUNE 12, 2002
The undersigned hereby appoints William H. Case and Harry F. Goldammer, and each of them, jointly and
severally, the agents and proxies of the undersigned, each with full power of substitution, to attend the Annual
Meeting of the Shareholders of Exchange National Bancshares, Inc. (the "Company") to be held at The Exchange
National Bank of Jefferson City's facility located at 3701 West Truman Boulevard, Jefferson City, Missouri, on
Wednesday, June 12, 2002, commencing at 9:00 a.m., local time, and any adjournment thereof (the "Meeting"), and
to vote all of the stock of the Company, standing in the name of the undersigned on its books as of the close of
business on April 17, 2002, and which the undersigned would be entitled to vote, if present, with the same force
and effect as if voted by the undersigned and especially to vote said stock with respect to the following matters:
1. ELECTION OF THREE CLASS I DIRECTORS.
(INSTRUCTIONS: To vote FOR, or to WITHHOLD AUTHORITY to vote for (i.e., AGAINST) any individual nominee
named below, mark the appropriate box next to each such nominee's name. Please mark only one box next
to each such name.)
FOR the WITHHOLD AUTHORITY
nominee to vote for the nominee
|_| |_| Charles G. Dudenhoeffer, Jr.
|_| |_| Philip D. Freeman
|_| |_| James E. Smith
2. Proposal to ratify the selection by the Board of Directors of the Company of the accounting
firm of KPMG LLP as the Company's independent auditors for the current year.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Such other matters, related to the foregoing or otherwise, as properly may come before said
Meeting or any adjournment thereof. The Board of Directors has advised that at present it knows of no
other business to be presented by or on behalf of the Company or its management at the Meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement, dated May 3,
2002.
Dated: , 2002
------------------- --------------------------------------------------------------
No. of Shares:
--------------------------------------------------------------
(Sign exactly as your name appears on your stock
certificate. Where shares are held in the name of
-------------------------------- two or more persons, all should sign individually.
A corporation should sign by authorized officer and
affix corporate seal.)
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE THREE (3) PERSONS LISTED ABOVE AS CLASS I DIRECTORS OF THE COMPANY FOR THE NEXT THREE YEARS, AND
FOR THE RATIFICATION OF THE SELECTION OF THE ACCOUNTING FIRM OF KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
IN THEIR DISCRETION, THE APPOINTED PROXIES AND AGENTS ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY
PROPERLY BE PRESENTED AT THE MEETING. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.