April 3, 2000
It is important that your shares be represented at the
meeting. Even if you expect to attend the meeting,
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY. |
PROXY STATEMENT
CHOICEONE FINANCIAL SERVICES, INC.
109 East Division
Sparta, Michigan 49345 ANNUAL MEETING OF SHAREHOLDERS
April 27, 200024, 2008
PROXY STATEMENT
Meeting Information
Time and Place of Meeting You are invited to attend the annual meeting of shareholders of ChoiceOne Financial Services, Inc. that will be held on Thursday, April 24, 2008, at Moss Ridge Golf Club, 13545 Apple Avenue, Ravenna, Michigan, at 11:00 a.m. local time. This Proxy
Statementproxy statement and the accompanying form ofenclosed proxy are being furnished to holders
of common stock ("Common Stock") of ChoiceOne Financial Services, Inc.
(the "Corporation")you on and after April 3, 2000,March 24, 2008, in connection with the solicitation of proxies by the Corporation'sChoiceOne's Board of Directors to be votedfor use at the annual meetingmeeting. In this proxy statement, "we," "us," "our" and "ChoiceOne" refer to ChoiceOne Financial Services, Inc. and "you" and "your" refer to ChoiceOne shareholders. Purpose of the Corporation's shareholders (the "Annual Meeting")
to be held on April 27, 2000, and any adjournment of that meeting. The
Annual Meeting will be held in the Gymnasium at Sparta Ridgeview Elementary
School, 557 South State Street, Sparta, Michigan, at 7:00 p.m. local time. The purpose of the Annual Meetingannual meeting is to consider and vote upon the following matters:
(i) election of directors; (ii) approvaldirectors and adoption ofto consider and vote upon an amendment to theChoiceOne's Restated Articles of Incorporation to increase the number of authorized
shares of Common Stock;authorized capital stock from 4,100,000 to 7,100,000.Your Board of Directors recommends that you vote FOR each of the nominees discussed in this proxy statement and (iii) approval of andFOR adoption of the Amended
and Restated Executive Stock Incentive Plan. If a proxy in the form distributed
by the Corporation is properly signed and returnedproposed amendment to the Corporation,Restated Articles of Incorporation.
How to Vote Your Shares You may vote at the meeting if you were a shareholder of record of ChoiceOne common stock on February 28, 2008. You are entitled to one vote per share of ChoiceOne common stock that you own on each matter presented at the annual meeting. As of February 28, 2008, there were 3,230,863 shares represented by that proxyof ChoiceOne common stock issued and outstanding. Your shares will be voted at the Annual Meetingannual meeting if you properly sign and any adjournment of that meeting.return to us the enclosed proxy. If a shareholder specifiesyou specify a choice, theyour proxy will be voted as specified. If noyou do not specify a choice, is specified, theyour shares
represented by the proxy will be voted for the election of all nominees
of the Board of Directorseach nominee for director named in this Proxy Statement,proxy statement and for approvaladoption of the proposed amendment to the Restated Articles of Incorporation, and for approvalIncorporation. If other matters are presented at the annual meeting, the individuals named in the enclosed proxy will vote your shares on those matters in their discretion. As of the Amended and Restated Executive Stock Incentive Plan. The Corporation's
management doesdate of this proxy statement, we do not know of any other mattermatters to be presentedconsidered at the Annual
Meeting. If other matters are presented, all shares represented by theannual meeting. You may revoke your proxy will be voted in accordance with the judgment of the persons named
as proxies with respect to those other matters. A proxy may
be revoked at any time prior to its exercise by written notice delivered
to the Secretary of the Corporation. A proxy may also be revoked by attending
and voting at the Annual Meeting.before it is exercised by:
• | delivering written notice to the Secretary of ChoiceOne; or | • | attending and voting at the annual meeting. |
Solicitation
of proxies will be made initially by mail. Who Will Solicit Proxies
Directors, officers and employees of the CorporationChoiceOne and ChoiceOne Bank (the(referred to as the "Bank") will initially solicit proxies by mail. They also may solicit proxies in person, by telephone or by other means, withoutbut they will not receive any additional compensation.
In addition, proxies may be solicited by nomineescompensation for these efforts. Nominees, trustees and other fiduciaries who hold stock on behalf of beneficial owners of ChoiceOne common stock may mail material to or otherwise communicate with the beneficial owners of shares held by them. Allmail or otherwise and may forward proxy materials to and solicit proxies from the beneficial owners. ChoiceOne will pay all expenses of solicitation of proxies will be
paid by the Corporation. Election of Directors
The Board of
Directors has nominated the following threepersons for reelectionrelated to the Corporation's Board of Directors for terms expiring at the annual
meeting of shareholders to be held in 2003:
soliciting proxies.William F. Cutler, Jr.
Paul L. Johnson
Andrew W. Zamiara
Each nominee
is presently a director of the Corporation whose term will expire at the
Annual Meeting. Seven other directors are serving terms that will expire
in 2001Required Vote and 2002. It is the intent of the persons named in the enclosed
proxy to vote for the election of the threenominees listed above.
The proposed nominees are willing to be elected and to serve. If any nominee
is unable to serve or is otherwise unavailable for election, which is not
contemplated, the incumbent Board of Directors may or may not select a
substitute nominee. If a substitute nominee is selected, all proxies will
be voted for the person so selected. If a substitute nominee is not selected,
all proxies will be voted for the election of the remaining nominees. Proxies
will not be voted for a greater number of persons than the number of nominees
named above.
Quorum A plurality of the shares represented in person or by proxy and voting onat the election
of directorsannual meeting is required to elect directors. ForThis means that if there are more nominees than director positions to be filled, the purpose ofnominees for whom the most votes are cast will be elected. In counting votes on the election of directors, abstentions, broker non-votes and other shares not voted will not be counted as shares voted, and the number of shares of which a plurality is required will be reduced by the number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
Approval and AdoptionThe affirmative vote of Amendmenta majority of the outstanding shares of common stock is required to adopt the proposed amendment to ChoiceOne's Restated Articles of IncorporationIncorporation. In counting votes on the proposed amendment, abstentions, broker non-votes and other
shares not voted will be counted as voted against adoption of the proposed amendment.
A majority of the shares entitled to Increasevote at the Numberannual meeting must be present or represented at the meeting to constitute a quorum. If you submit a proxy or attend the meeting in person, your shares will be counted towards the quorum, even if you abstain from voting on some or all of Authorized Sharesthe matters introduced at the meeting. Broker non-votes also count for quorum purposes. Election of CommonDirectors
The Board of Directors presently consists of fourteen individuals divided into three classes. Each class of directors is as nearly equal in number as possible and serves for a three-year term of office. The term of office of one class of directors expires at the annual meeting each year. An individual may not continue to serve on the Board of Directors after he or she becomes 70 years old. The Board of Directors proposes that the following nominees be elected as directors for terms expiring at the annual meeting of shareholders to be held in 2011: Jerome B. Arends
K. Timothy Bull
Dennis Nelson
Jon E. Pike
Donald VanSingel Each proposed nominee currently serves as a director of ChoiceOne. The persons named in the enclosed proxy intend to vote for the election of the five nominees listed. The proposed nominees are willing to be elected and serve as directors. If a nominee is unable to serve or is otherwise unavailable for election - which we do not anticipate - the incumbent Board of Directors may or may not select a substitute nominee. If a substitute nominee is selected, your proxy will be voted for the person so selected. If a substitute nominee is not selected, your proxy will be voted for the election of the remaining nominees. No proxy will be voted for a greater number of persons than the number of nominees named. ChoiceOne's Board of Directors and Executive Officers
Biographical information is presented below concerning the nominees for director, current directors whose term of office will continue after the annual meeting and ChoiceOne's executive officers. All of the directors of ChoiceOne also serve as directors of the Bank. Except as otherwise indicated, each nominee, current director and executive officer has had the same principal employment for over five years.
Nominees for Election as Directors with Terms Expiring in 2011
Jerome B. Arends(age 62) has been a director of ChoiceOne and the Bank since the merger (the "Merger") of Valley Ridge Financial Corp. ("Valley Ridge") with and into ChoiceOne and, prior to that, was a director of Valley Ridge and Valley Ridge Bank and/or Kent City State Bank ("Kent City") since 1987. Mr. Arends was Chief Executive Officer and President of Ravenna Farm Equipment, Inc., a distributor of farm implements and equipment, until early 1999. Mr. Arends was Store Manager and a salesman for Kent Power Equipment, Inc., a distributor of farm equipment, from 1999 until his retirement in 2000. K. Timothy Bull(age 59) has been a director of ChoiceOne and the Bank since the Merger and, prior to that, was a director of Valley Ridge and Valley Ridge Bank and/or Kent City since 1993 and was also a director of Valley Ridge and Kent City from 1988 until 1991. Mr. Bull is President and sole shareholder of Moon Lake Orchards, Inc., a producer of fruit. Dennis Nelson(age 59) has been a director of ChoiceOne and the Bank since the Merger and was a director of Valley Ridge Bank after the consolidation of Kent City and The Grant State Bank ("Grant") on December 6, 2006 to form Valley Ridge Bank (the "Consolidation"), a director of Valley Ridge since it merged with Community Bank Corporation ("Community") on July 1, 1996 (the "Valley Ridge/Community Merger") and a director of Community and/or Grant, the subsidiary bank of Community, from 1985 until the Valley Ridge/Community Merger and the Consolidation. Mr. Nelson is a dentist practicing in Grant, Michigan.
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Jon E. Pike (age 66) was reappointed as Chairman of the Board of Directors of ChoiceOne and the Bank in May 2007. Mr. Pike is a Certified Public Accountant and Chairman of Beene Garter LLP, Certified Public Accountants, of Grand Rapids, Michigan. Mr. Pike previously served as Chairman of the Board of Directors from August 1998 until the Merger and has been a director of ChoiceOne and the Bank since September 1990. Mr. Pike serves as a director of Porter Hills Retirement Community and Services, Wolverine World Wide YMCA Board of Managers, Seidman Dean's Advisory Board, Seidman College of Business Grand Valley State University and Sparta Foam, Inc. Donald VanSingel(age 64) has served as Vice Chairman of the Board of Directors of ChoiceOne and the Bank since May 2007, and has been a director of ChoiceOne and the Bank since the Merger. Prior to the Merger, Mr. VanSingel was Vice Chairman and a director of Valley Ridge since the Valley Ridge/Community Merger, a director of Valley Ridge Bank after the Consolidation, Chairman of Community and/or Grant from 1982 until the Valley Ridge/Community Merger and the Consolidation, and a director of Community and/or Grant from 1973 until the Valley Ridge/Community Merger. Mr. VanSingel has been a consultant for Governmental Consultant Services, Inc. since 1993. Prior to that, Mr. VanSingel served in the Michigan House of Representatives. Your Board of Directors Recommends that You
Vote FOR the Election of All Nominees as Directors
Continuing Directors with Terms Expiring in 2009
James A. Bosserd(age 58) has been a director of ChoiceOne and the Bank since he was appointed to those boards in April 2001. Mr. Bosserd has been President and Chief Executive Officer of ChoiceOne and the Bank since April 2001. Mr. Bosserd has also been President of ChoiceOne Insurance Agencies, Inc. since April 2001 and President of ChoiceOne Mortgage Company of Michigan since January 2002. Prior to joining ChoiceOne and the Bank, Mr. Bosserd was Senior Vice President-Retail Group Manager with Huntington National Bank, a commercial bank, since October 1997 and Senior Vice President-Private Banking Manager with Huntington National Bank since April 1999. Mr. Bosserd also served as President and Chief Executive Officer of FMB State Savings Bank, a commercial bank in Lowell, Michigan, from 1992 through 1997. Mr. Bosserd has also been a director of West Shore Computer Services, Inc., a data processing company in which the Bank owns a 25% interest, since February 2002. Mr. Bosserd is a director of the Sparta Rotary Board, the Michigan Bankers' Association, Sparta Downtown Development, Wolverine World Wide YMCA, Harvest Way Community, and the Michigan FFA Foundation. William F. Cutler Jr.(age 60) is the former Vice President of the H. H. Cutler Company, an apparel manufacturer. Mr. Cutler joined the H. H. Cutler Company in 1970 and served in various management and executive capacities until January 1994. The H. H. Cutler Company was sold to VF (Vanity Fair) Corporation in January 1994. Mr. Cutler has been a director of ChoiceOne and the Bank since October 1993. Mr. Cutler serves as a director of Spartan Distributors and served as a director of the Sparta Health Center from 1981 until 1996. Richard L. Edgar(age 63) served as Chairman of the Board of Directors of ChoiceOne and the Bank from the Merger to May 2007. Prior to that, Mr. Edgar was a director of Valley Ridge and Valley Ridge Bank and/or Kent City since 1974. Until the Merger, Mr. Edgar had been President and Chief Executive Officer of Valley Ridge since 1988, and President and Chief Executive Officer of Valley Ridge Bank (and, before the Consolidation, Kent City) since 1987. Prior to that, Mr. Edgar served Kent City in various management and other capacities since 1963. Mr. Edgar is also a director of the Michigan Association of Community Bankers. Paul Johnson(age 58) is President of and owns Falcon Resources, Inc. in Belmont, Michigan, a sales, engineering and design firm for the automotive and furniture industries. Mr. Johnson has been a director of ChoiceOne and the Bank since July 1999. Mr. Johnson has been a director of ChoiceOne Insurance Agencies, Inc. since November 2000. Andrew Zamiara(age 67) is a registered pharmacist and is the owner and President of Sparta Village Pharmacy, Inc. which owns and operates Momber Hallmark in Rockford, Michigan. Mr. Zamiara has been a director of ChoiceOne and the Bank since August 1990.
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Continuing Directors with Terms Expiring in 2010
Frank Berris(age 60) is President and Chief Executive Officer of and owns American Gas & Oil, Inc., a distributor of petroleum products and operator of gas stations. Mr. Berris is also a member of the Michigan Petroleum Association/Michigan Association of Convenience Stores. Mr. Berris has been a director of ChoiceOne and the Bank since August 1991. Stuart Goodfellow(age 64) owns Goodfellow Blueberry Farms and Goodfellow Vending Services, L.L.C., a vending company. Mr. Goodfellow is also past Vice President and a director of the Michigan Blueberry Growers Association. Mr. Goodfellow has been a director of ChoiceOne and the Bank since August 1991. Gary Gust(age 62) has been a director of ChoiceOne and the Bank since the Merger and, prior to that, was a director of Valley Ridge and Valley Ridge Bank and/or Kent City since 1991. Mr. Gust is President and sole shareholder of Gust Construction Company, a general contractor. Robert Humphreys (age 69) has been a director of ChoiceOne and the Bank since the Merger and, prior to that, was a director of Valley Ridge and Valley Ridge Bank and/or Kent City since 1988. Mr. Humphreys was Chairman of the Board of Valley Ridge and Valley Ridge Bank (and, before the Consolidation, Kent City) from 1993 until the Merger. Mr. Humphreys owns and operates Humphreys Orchards, a producer of fruit. Executive Officers who are not Directors
Sheila Clark(age 52) has been a Senior Vice President of the Bank since January 2007, was a Vice President of the Bank since the Merger and, prior to that, was a Vice President of Valley Ridge Bank since June 1999. Ms. Clark has been employed by either the Bank or Valley Ridge Bank since July of 1982 serving in various management and executive capacities. Prior to her employment with Valley Ridge Bank, Ms. Clark was owner/operator of a floral business since 1979. Ms. Clark was employed by Sparta State Bank (now the Bank) from Fall 1973 to Spring 1979. Ms. Clark also serves as a director of Mid-Michigan Banking Group. Mary J. Johnson (age 44) has been a Vice President of the Bank since September 1998. Prior to that, Ms. Johnson was employed by the Bank, serving in various management and executive capacities since April 1993. Ms. Johnson serves as an officer of Johnson & Johnson Builders, Inc., a construction company. Louis D. Knooihuizen (age 58) has been Senior Vice President, Commercial Loans of the Bank since December 2001. Mr. Knooihuizen was elected an officer of ChoiceOne Mortgage Company of Michigan in 2003. Prior to his employment with ChoiceOne, Mr. Knooihuizen was employed by Bank West, a commercial bank in Grand Rapids, Michigan, as Senior Vice President, Commercial Loans since May 1999 and by National City Bank, a commercial bank, as Vice President, Commercial Loans since February 1995. Mr. Knooihuizen also serves as a director of Mid-Michigan Banking Group and Sparta Rotary. Thomas L. Lampen (age 52), a Certified Public Accountant, has been Vice President and Chief Financial Officer of the Bank since January 1992 and Treasurer of ChoiceOne since April 1987. Mr. Lampen has been the Treasurer of ChoiceOne Insurance Agencies, Inc. since January 1996 and the Treasurer of ChoiceOne Mortgage Company of Michigan since January 2002. Prior to his employment with ChoiceOne, Mr. Lampen was employed by Grant Thornton, a national accounting firm. Michael E. McHugh(age 58) has been employed by the Bank as a Senior Vice President since the Merger. Prior to the Merger, Mr. McHugh was a director of Valley Ridge and Valley Ridge Bank and/or Kent City since 1989. Mr. McHugh was Secretary, Treasurer and Chief Financial Officer of Valley Ridge. Mr. McHugh was also an Executive Vice President of Valley Ridge Bank (and, before the Consolidation, Kent City) since 1987. Linda R. Pitsch (age 60) was a director of ChoiceOne and the Bank from December 1994 until the Merger. Ms. Pitsch has served as Secretary of ChoiceOne and the Bank since February 1995. Ms. Pitsch also has served as Senior Vice President and Cashier of the Bank since January 1993. Ms. Pitsch has been an employee of the Bank since September 1969, serving in various management and executive capacities. Ms. Pitsch is a director of ChoiceOne Mortgage Company of Michigan and has served as its Secretary since January 2002. Ms. Pitsch has been a director and Secretary of ChoiceOne Insurance Agencies, Inc. since December 1998. Ms. Pitsch is an instructor at Davenport University, and President and a director of Strawberry Pines Condominium Association. Kelly Potes (age 46) has been Senior Vice President and General Manager of ChoiceOne Insurance Agencies, Inc. since January 2001. Prior to that, Mr. Potes was President of Kent-Ottawa Financial Advisors, Inc., a financial consulting firm, since December 1998 and Vice President, Retail Services of the Bank since May 1984. Mr. Potes has been a director of ChoiceOne Insurance Agencies, Inc. since January 2001. Mr. Potes serves as a Trustee of the Sparta Board of Education.
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Corporate Governance
Independence The Board of Directors has determined that the following 11 of its 14 directors meet the applicable Nasdaq Stock Market ("Nasdaq") standards for independence (including the heightened independence criteria applicable to audit committee members under the Nasdaq and Securities and Exchange Commission ("SEC") independence standards), have no material relationship with ChoiceOne, and therefore are independent: Jerome B. Arends
Frank Berris
K. Timothy Bull
William F. Cutler, Jr.
Stuart Goodfellow
Robert Humphreys
Paul Johnson
Dennis Nelson
Jon E. Pike
Donald VanSingel
Andrew Zamiara Mr. Gust is not considered independent because he performed construction services for the Bank that exceeded the materiality threshold set by Nasdaq rules. In making this determination, the Board of Directors considered the performance of maintenance services for the Bank by Mr. Arends and rental payments made to a company owned by Mr. Berris. In all such cases, the amounts paid by the Bank were below the materiality thresholds set by Nasdaq rules. Committees of the Board of Directors The Board of Directors has established the following four standing committees: • | Audit Committee | • | Executive and Loan Review Committee | • | Governance and Nominating Committee | • | Personnel and Benefits Committee |
Audit Committee.The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the independent public accountants. The Audit Committee oversees the financial reporting and accounting processes of ChoiceOne. The Audit Committee reviews their fees for audit and non-audit services and the scope and results of audits performed by them. The Audit Committee also reviews ChoiceOne's internal accounting controls, the proposed form of its financial statements, the results of internal audits and compliance programs, and the results of the examinations received from regulatory authorities. The Audit Committee operates pursuant to a written charter, which was adopted by the Board of Directors. A current copy of the Audit Committee charter can be found on ChoiceOne's website at www.choiceone.com. As of the date of this proxy statement, Jon E. Pike (Chairman), William F. Cutler, Jr., Dennis Nelson and Donald VanSingel serve on the Audit Committee. ChoiceOne has designated Mr. Pike as its audit committee financial expert as defined by the SEC. All of the members of the Audit Committee are "independent" directors as defined by the rules of the SEC and the Nasdaq Stock Market. The Audit Committee met six times during 2007. Executive and Loan Review Committee. The Executive and Loan Review Committee reviews all aspects of the Bank's loan activity, including new loans of $25,000 or more, problem or other loans identified by examiners, loans 60 days or more past due and non-accrual loans. The Executive and Loan Review Committee also approves loan charge-offs and extensions of credit of up to 15% of the capital and surplus of the Bank. The Executive and Loan Review Committee may also act in other capacities if the Board of Directors so authorizes. As of the date of this proxy statement Jerome Arends (Chairman), James A. Bosserd, Jon E. Pike, Frank Berris, Stuart Goodfellow, Gary Gust, William F. Cutler Jr., and Paul Johnson serve on the Executive and Loan Review Committee. There are no requirements that members of this committee be "independent." The Executive and Loan Review Committee met 12 times during 2007. Governance and Nominating Committee.The Governance and Nominating Committee administers the process of nominations for directorships and coordinates ChoiceOne's corporate governance initiatives and policies. The Governance and Nominating Committee operates pursuant to a written charter, which was adopted by the Board of Directors. A current copy of the Governance and Nominating Committee charter can be found on ChoiceOne's website at www.choiceone.com. As of the date of this proxy statement, Jon E. Pike (Chairman), William F. Cutler, Jr. and Robert Humphreys serve on the Governance and Nominating Committee. All of the members of the Governance and Nominating Committee are "independent" directors as defined by the rules of Nasdaq. The Governance and Nominating Committee met twice during 2007.
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Personnel and Benefits Committee. The Personnel and Benefits Committee performs the functions of a compensation committee. The Personnel and Benefits Committee: • | Reviews from time to time the personnel policies and programs of ChoiceOne, and submits recommendations to the Board of Directors; | • | Administers the equity plans of ChoiceOne that are approved by the Board of Directors; | • | Reviews the administration of and proposed changes to the retirement and welfare benefit plans of ChoiceOne that are approved by the Board of Directors; | • | Makes recommendations to the Board of Directors with respect to incentive compensation plans and equity-based plans; | • | Makes any determinations and approvals relating to incentive-based compensation (with the ratification of the Board of Directors) as required to comply with applicable tax laws; | • | While meeting outside of the presence of the Chief Executive Officer, reviews and approves corporate goals and objectives relevant to the compensation of the Chief Executive Officer, evaluates the performance of the Chief Executive Officer in light of those corporate goals and objectives, and determines the compensation of the Chief Executive Officer based on the evaluation; and | • | While meeting outside of the presence of the Chief Executive Officer, determines the long-term incentive component of the compensation of the Chief Executive Officer, taking into consideration ChoiceOne's performance and relative shareholder return, the value of similar incentive awards to chief executive officers at comparable companies, and the awards given to ChoiceOne's Chief Executive Officer in past years. |
The Personnel and Benefits Committee operates pursuant to a written charter, which was adopted by the Board of Directors. A current copy of the Personnel and Benefits Committee charter can be found on ChoiceOne's website at www.choiceone.com. Other than Frank Berris, all of the members of the Personnel and Benefits Committee are "independent" directors as defined by the rules of Nasdaq. As of the date of this proxy statement, Andrew W. Zamiara (Chairman), Frank Berris, and Donald VanSingel serve on the Personnel and Benefits Committee. James A. Bosserd attends meetings but is not a member of this committee. The Personnel and Benefits Committee met four times during 2007. Shareholder Nominations The Governance and Nominating Committee will consider director candidates recommended by shareholders, directors, officers, third party search firms and other sources. Shareholders may recommend individual nominees for consideration by the Governance and Nominating Committee by communicating with the committee as described under the heading "Communicating with the Board of Directors." The Governance and Nominating Committee will ultimately determine whether a shareholder recommendation will result in a nomination under this process. In considering potential nominees, the committee will review all candidates in the same manner, regardless of the source of the recommendation. In evaluating the skills and characteristics required of board members, the committee considers various factors and believes that each candidate should: • | be chosen without regard to sex, race, religion or national origin; | • | be an individual of the highest character and integrity and have an inquiring mind, vision and the ability to work well with others; | • | be free of any conflict of interest that would violate any applicable law or regulation or interfere with the proper performance of the responsibilities of a director; | • | possess substantial and significant experience that would be of particular importance to ChoiceOne in the performance of the duties of a director; | • | have sufficient time available to devote to the affairs of ChoiceOne in order to carry out the responsibilities of a director; and | • | have the capacity and desire to represent the balanced, best interests of the shareholders as a whole. |
To make a direct shareholder nomination, you must send a notice to the Secretary of ChoiceOne that sets forth with respect to each proposed nominee: • | the name, age, business address and residence address of the nominee; | • | the principal occupation or employment of the nominee; | • | the number of shares of common stock of ChoiceOne that the nominee beneficially owns; | • | a statement that the nominee is willing to be nominated and to serve; and |
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such other information concerning the nominee as would be required under the rules of the SEC to be included in a proxy statement soliciting proxies for the election of the nominee. You must send this notice to the Secretary not less than 120 days prior to the date of notice of an annual meeting and not more than seven days following the date of notice of a special meeting called for election of directors. Board Meetings and Attendance During 2007, the ChoiceOne Board of Directors held 12 regular meetings and no special meetings. All directors attended at least 75% of the aggregate number of meetings of the Board of Directors and meetings of committees on which they served during the year (during the periods that they served). Annual Meeting Attendance ChoiceOne expects all of its directors to attend the annual meeting. In 2007, all directors attended the annual meeting. Communicating with the Board of Directors Shareholders and interested parties may communicate with members of ChoiceOne's Board of Directors by sending correspondence addressed to the board as a whole, a specific committee, or a specific board member c/o Linda R. Pitsch, Secretary, ChoiceOne Financial Services, Inc., 109 East Division, Sparta, Michigan 49345. All correspondence will be forwarded directly to the applicable members of the Board of Directors. Amendment of the Restated Articles of Incorporation
The Board of Directors proposes to amend the Third Article III of the Corporation'sChoiceOne's Restated Articles of Incorporation to increase the number ofChoiceOne's authorized capital stock from 4,100,000 shares, of Common
Stock from 2,000,000which 4,000,000 are shares of Common Stockcommon stock, to 4,000,0007,100,000 shares, of Common
Stock.which 7,000,000 would be shares of common stock. The purpose of the amendment is to provide additional shares of common stock for possible future issuance.
As of March
8, 2000,February 28, 2008, there were 1,106,391 authorized3,230,863 shares of Common Stockcommon stock issued and outstanding. The Board of Directors has approved a five-for-four stock
split payable on May 22, 2000 to shareholders of record as of April 27,
2000, contingent upon shareholder approval of the proposed amendment.
The Board of Directors believes that it is advisable to have the additional authorized shares of common stock available to give ChoiceOne the ability to react quickly to opportunities. Although the Board of Directors has no present plans or commitments for the issuance of any of the additional shares that would be authorized upon approval of this amendment, such shares would be available for equity incentive plans, possible future stock splits and dividends, employee
benefit plans,public or private offerings of common stock or securities convertible into common stock, equity-based acquisitions and other corporate purposes that might be proposed in the future. The Boardproposed. If ChoiceOne's authorized capital stock is not increased, as of Directors has authorized
the issuanceFebruary 28, 2008, it would have fewer than 800,000 shares of sharescommon stock available for such purposes in the past. However, the Corporation
has no present plans or proposals to issue shares that would be authorized
by the proposed amendment.uses.
Management
continues to seek favorable acquisition opportunities. It has in the past
had, and anticipates that it will from time to time in the future have,
discussions with other organizations that might be interested in being
acquired. Authorized but unissued shares of Common Stock, or funds raised
in a public offering of shares, may be used for these purposes.
All of the additional shares resulting from the increase in the number ofChoiceOne's authorized shares of the Corporation's Common Stockcommon stock would be of the same class with the same dividend, voting and liquidation rights as the shares of Common
Stockcommon stock presently outstanding. ChoiceOne's authorized capital stock also includes, and will continue to include without increase, 100,000 shares of preferred stock, none of which is currently outstanding. Shareholders have no preemptive rights to acquire shares issued by the CorporationChoiceOne under its existing Restated Articles of Incorporation and shareholders would not acquire any suchpreemptive rights with respect to such additional shares under the proposed amendment to the Corporation'sChoiceOne's Restated Articles of Incorporation. Under some circumstances, the issuance of additional shares of Common Stock could dilute the voting rights, equity and earnings per share of existing shareholders.
If the proposed amendment is adopted, the newly authorized shares would be unreserved and available for issuance. Noissuance by ChoiceOne without further shareholder authorization would be required
prior toauthorization.
Although the issuanceBoard of suchDirectors has no present intention of issuing any additional shares byof common stock as an anti-takeover measure, the Corporation. Thisproposed increase in authorized but unissued Common Stockcommon stock could be considered an anti-takeover measure because the additional authorized but unissued shares of Common
Stockcommon stock could be used by the Board of Directors to make a change in control of the CorporationChoiceOne more difficult. The Board of Directors' purpose in recommending
this proposal is for the reasons discussed above and not as an anti-takeover
measure.
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The first paragraph of the Third Article III of the Corporation'sChoiceOne's Restated Articles of Incorporation, as amended, would read as follows (changed text is underlined): "The total authorized capital stock of the corporation isSeven Million One Hundred Thousand shares of stock divided into two classes, as follows:
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| "The total authorized
capital stock of the corporation is Four Million One Hundred Thousand (4,100,00)
shares of stock divided into two classes, as follows: | | | | | | A. | Four Million (4,000,000) shares
of common stock, which shall be called "Common Stock." | | | | | | | B. | One Hundred Thousand (100,000)
shares of preferred stock, which shall be called "Preferred Stock." | |
A. Sevenmillion (7,000,000) shares of common stock, which shall be called "Common Stock."
B. One Hundred Thousand (100,000) shares of preferred stock, which shall be called "Preferred Stock." The affirmative vote of holders of a majority of the outstanding shares entitled to vote at the annual meeting of Common Stockshareholders is required to approve and adopt the proposed amendment to the Corporation'sChoiceOne's Restated Articles of Incorporation. For the purpose of counting votes on
this proposal, abstentions, broker non-votes and other sharesShareholders are not voted
have the same effect as a vote against the proposal.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENT TO THE CORPORATION'S
RESTATED ARTICLES OF INCORPORATION
Approval of Amended and Restated Executive Stock Incentive
Plan The Board of
Directors believes that the Corporation's long-term interests will be best
advanced by aligning the interests of its key employees with the interests
of its shareholders. Therefore,entitled to retain and motivate officers and key
management employees of exceptional abilities, and in recognition of the
significant and extraordinary contributions to the long-term performance
and growth of the Corporation and its subsidiaries made by these individuals,
the Board of Directors and shareholders adopted the Executive Stock Incentive
Plan of 1997 (the "Plan"). The Board of Directors now desires to amend
the Plan, subject to Shareholder approval, to provide for an automatic
renewal each year of shares available for awards under the Plan (the "Amendment").
The Plan has primarily been used to grant stock options to senior officers
of the Corporation and its subsidiaries. However, the Board believes it
will in the future need to expand the group of employees to whom options
are granted in order to continue to attract and retain talented and motivated
employees. The Plan also permits the award of stock appreciationany dissenter's rights
and stock awards to officers and key employees of the Corporation and its
subsidiaries (together with stock options, "Incentive Awards").
Currently,
a maximum of 33,075 shares of Common Stock are available for Incentive
Awards under the Plan (subject to certain antidilution adjustments). The
proposed amendment would initially authorize for awards under the Plan
a number of shares of Common Stock equal to 5% of the total number of issued
and outstanding shares of Common Stock on the date the Amendment is approved
by the Corporation's shareholders, plus an additional amount of up to 2%
of the number of issued and outstanding shares of Common Stock on an annual
basis during the term of the Plan. The effect of the Amendment would be
to maintain on an annual basis, in addition to the initial authorization
of shares, a maximum number of shares available for awards under the Plan
equal to 2% of the number of issued and outstanding shares of Common Stock.
The Amendment would also extend the current term of the Plan until April
26, 2010.
Persons eligible
to receive Incentive Awards under the Plan include corporate executive
officers (5 persons as of March 2000) and other corporate and subsidiary
officers and key employees (an indeterminate number of persons) of the
Corporation and its subsidiaries. Additional individuals may become executive
officers, corporate or subsidiary officers or key employees in the future
and could participate in the Plan. Officers and key employees of the Corporation
and its subsidiaries may be considered to have an interest in the Plan
because they may receive Incentive Awards under the Plan. The benefits
payable under the Plan are presently not determinable and the benefits
that would have been payable had the Plan been in effect during the most
recent fiscal year are similarly not
3
determinable. The Plan is not qualified
under Section 401 (a) of the Internal Revenue Code of 1986, as amended
(the "Code") and is not subject to the Employee Retirement Income Security
Act of 1974. The following
is a summary of the principal features of the Plan. This summary is qualified
in its entirety by reference to the terms of the Plan set forth in Appendix
A to this Proxy Statement.
The Plan is
administered by the Personnel and Benefits Committee of the Board of Directors
or such other committee as the Board may designate for that purpose (the
"Committee"). The Committee makes determinations, subject to the terms
of the Plan, as to the persons to receive Incentive Awards, the amount
of Incentive Awards to be granted to each person, the time of each grant,
the terms and duration of each grant and all other determinations necessary
or advisable for administration of the Plan.
The principal
stock option features of the Plan provide that the Corporation may grant
to participants options to purchase shares of Common Stock at stated prices
for specified periods of time. Options may qualify as incentive stock options
as defined in Section 422 of the Code ("Incentive Stock Options") or not
("Nonqualified Stock Options"), as determined by the Committee. The Committee
can award options for any amount of consideration, or no consideration,
as may be determined by the Committee.
The Committee
sets forth the terms of individual grants of stock options in stock option
agreements. The stock option agreements contain such terms, conditions
and restrictions, consistent with the provisions of the Plan, as the Committee
determines to be appropriate. These restrictions could include vesting
requirements. Stock option agreements may provide for automatic regrants
of options with respect to shares surrendered to the Corporation in connection with the exercise of an outstanding stock option. The exercise price per
share is determined by the Committee and must be a price equal to or higher
than the par value of Common Stock on the date of grant. The exercise price
of Incentive Stock Options must be at least equal to the market value on
the date of grant. On December 31, 1999, the market value of Common Stock,
based on the average of the bid and asked prices quoted to the Corporation
by the market makers in the Corporation's Common Stock, was $27.42 per
share. When exercising all or a portion of a stock option, a participant
can pay with cash or, with the consent of the Committee, with shares of
Common Stock or other consideration. If shares of Common Stock are used
to pay the exercise price and the Committee consents, a participant can
use the value of shares received upon exercise for further exercises in
a single transaction, permitting a participant to fully exercise a large
stock option with a relatively small initial cash or stock payment. The
Committee can also authorize payment of all or a portion of the stock option
price in the form of a promissory note or installments on terms approved
by the Committee.proposed amendment.
Although the
term of each stock option would be determined by the Committee, no stock
option is exercisable under the Plan after the expiration of 10 years from
the date it was granted. Stock options generally are exercisable for limited
periods of time in the event a stock option holder dies, becomes disabled
or is terminated without cause. If a stock option holder is terminated
for cause, the stock option holder would forfeit all rights to exercise
any outstanding stock options. If a stock option holder retires after age
55 and after completing 6 years of service, or as otherwise determined
by the Committee, the option holder could exercise options for the shorter
of 3 years or the remainder of the terms of the options, but only to the
extent the participant is entitled to exercise the options on the date
of retirement. If a stock option holder terminates employment due to consensual
severance (as defined in the Plan), the Committee may, in its discretion,
permit the participant to exercise options for a period of time not exceeding
3 years after such termination. Incentive Stock Options granted to participants
under the Plan generally are not transferable except by will or by the
laws of descent and distribution. Nonqualified Stock Options are transferable
unless transfer is restricted by the terms of the grant.
For federal
income tax purposes, a participant does not recognize income and the Corporation
does not receive a deduction at the time an Incentive Stock Option is granted.
A participant exercising an Incentive Stock Option does not recognize income
at the time of the exercise. The difference between the market value and
the exercise price is, however, a tax preference item for purposes of calculating
alternative minimum tax. Upon sale of the stock, as long as the participant
held the stock for at least 1 year after the exercise of the stock option
and at least 2 years after the grant of the stock option, the participant's
basis would equal the exercise price, the participant would pay tax on
the difference between the sale proceeds and the exercise price as capital
gain, and the Corporation would receive no deduction for federal income
tax purposes. If, before the expiration of either of the above holding
4
periods, the participant sold shares acquired under an Incentive Stock
Option, the tax deferral would be lost, the participant would recognize
compensation income equal to the difference between the exercise price
and the fair market value at the time of exercise (but not more than the
maximum amount that would not result in a loss on the disposition), and
the Corporation would receive a corresponding deduction for federal income
tax purposes. Additional gains, if any, recognized by the participant would
result in the recognition of short- or long-term capital gain. Under current
federal income tax laws, a participant does not recognize any income and
the Corporation does not receive a deduction at the time a Nonqualified
Stock Option is granted. If a Nonqualified Stock Option is exercised, the
participant would recognize compensation income in the year of exercise
equal to the difference between the exercise price and the fair market
value on the date of exercise and the Corporation would receive a corresponding
deduction for federal income tax purposes. The participant's tax basis
in the shares acquired would be increased by the amount of compensation
income recognized. Sale of the stock after exercise would result in recognition
of short- or long-term capital gain or loss.
The Corporation
can withhold from any cash otherwise payable to a participant or require
a participant to remit to the Corporation an amount sufficient to satisfy
federal, state and local withholding taxes and employment-related tax requirements.
Tax withholding obligations may be satisfied by withholding Common Stock
to be received upon exercise of an option or by delivery to the Corporation
of previously owned shares of Common Stock.
In addition
to stock options, the Committee can also grant stock appreciation rights
that would be subject to such terms and conditions as the Committee determines.
A stock appreciation right could relate to a particular option and could
be granted at the same time or after a related option is granted. A stock
appreciation right granted in tandem with an option would permit a participant
to receive, in exchange for the right to exercise a related option, a payment
from the Corporation in cash, stock or other consideration equal to the
difference between the market value of the shares at the time of exercise
of the stock appreciation right and the exercise price of such option.
The Plan also
gives the Committee authority to make stock awards. A stock award of the
Corporation's Common Stock is subject to terms and conditions determined
by the Committee at the time of the award. Stock award recipients generally
have all voting, dividend, liquidation and other rights with respect to
shares of Common Stock received upon becoming the holder of record of the
Common Stock. However, the Committee can impose restrictions on the assignment
or transfer of Common Stock awarded under a stock award.
The Committee
may include in an Incentive Award provisions for the acceleration of any
vesting or other similar requirements, for the elimination of any restrictions
upon an Incentive Award, or for participants to receive cash in lieu of
outstanding stock options upon a "change in control" (as defined in the
Plan or otherwise in an Incentive Award) of the Corporation.
TheYour Board of Directors may terminate the Plan at any time and may from time to time
amend the Plan. No amendment may impair any outstanding Incentive Award
without the consentrecommends that you voteFOR adoption of the participant except accordingamendment to the termsChoiceOne's Restated Articles of the Plan or Incentive Award. No termination, amendment or modification
may become effective with respect to any Incentive Award outstanding under
the Plan without the prior written consentIncorporation.
8
Ownership of the participant holding the
award unless the amendment or modification operates to the benefitChoiceOne Common Stock
Ownership of the
participant. Subject to shareholder approval, the Amendment would take
effect on April 27, 2000. Unless previously terminatedChoiceOne Stock by the Board of
Directors no awards could be made under the Plan after April 26, 2010. The affirmative
vote of the holders of a majority of the shares of Common Stock present
in person or by proxy and voting on this proposal is required to approve
the Amendment. For purposes of counting votes on this proposal, abstentions,
broker non-votes and other shares not voted will not be counted as shares
voted on the proposal, and the number of shares of which a majority is
required will be reduced by the number of shares not voted.Executive Officers
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR APPROVAL OF THE AMENDED AND RESTATED EXECUTIVE
STOCK
INCENTIVE PLAN
5
Voting Securities Holders of record
of Common Stock at the close of business on March 8, 2000, will be entitled
to vote at the Annual Meeting on April 27, 2000, and any adjournment of that
meeting. As of March 8, 2000, there were 1,106,391 shares of Common Stock issued
and outstanding. Each share of Common Stock is entitled to one vote on each
matter submitted for shareholder action.
As of March 8, 2000
no shareholder is known to the Corporation's management to have been the beneficial
owner of more than 5% of the outstanding shares of Common Stock.
The following table sets forth information concerning the number of shares of Common StockChoiceOne common stock held as of December 31, 1999,2007, by each of the Corporation'sChoiceOne's directors and nominees for director, each of the named executive officers and all of the Corporation'sChoiceOne's directors, nominees for director and executive officers as a group:
| Amount and Nature of
Beneficial Ownership of Common Stock (1)
| | |
Name of
Beneficial Owner
| Sole Voting
and
Dispositive
Power
|
| Shared
Voting or
Dispositive
Power (2)
|
| Shares
Underlying
Unexercised
Options
|
|
Total
Beneficial
Ownership
|
|
Percent
of
Class
| Jerome B. Arends | 30,217 | | 18,572 | | - | | 48,789 | | 1.5 | Frank G. Berris | 25,628 | | - | | - | | 25,628 | | - | James A. Bosserd | 4,974 | | 3,376 | | 11,827 | | 20,177 | | - | K. Timothy Bull | 50,355 | | 3,102 | | - | | 53,457 | | 1.7 | William F. Cutler, Jr. | - | | 32,667 | | - | | 32,667 | | 1.0 | Richard L. Edgar | 57,786 | | 17,287 | | - | | 75,073 | | 2.3 | Stuart Goodfellow | 40,880 | | 5,939 | | - | | 46,819 | | 1.4 | Gary Gust | 58,021 | | - | | - | | 58,021 | | 1.8 | Robert Humphreys | 67,216 | | 55,912 | | - | | 123,128 | | 3.8 | Paul Johnson | - | | 37,683 | | - | | 37,683 | | 1.2 | Dennis Nelson | 8,202 | | - | | - | | 8,202 | | - | Jon E. Pike | 3,405 | | 15,786 | | - | | 19,191 | | - | Donald VanSingel | 6,026 | | 6,205 | | - | | 12,231 | | - | Andrew W. Zamiara | 1,326 | | 10,236 | | - | | 11,562 | | - | Michael McHugh | 29,972 | | 3,400 | | - | | 33,372 | | 1.0 | Louis Knooihuizen | 4,349 | | - | | 3,938 | | 8,287 | | - | All directors and
executive officers
as a group (3) |
399,517
| |
228,548
| |
28,882
| |
656,947
| |
20.3
|
*Less than 1%. (1) | | Amount and Nature of
Beneficial Ownership of Common Stock(1)
| | | Name of
Beneficial Owner | | Sole Voting
and
Dispositive
Power
| | Shared
Voting or
Dispositive
Power(2)
| | Total
Beneficial
Ownership
| | Percent
of
Class
|
| | | | | | | | | | | Frank G. Berris | | 12,187
| | --
| | | 12,187
| | 1.1%
| | Lawrence D. Bradford | | 358
| | 12,127
| | | 12,485
| | 1.1%
| | William F. Cutler, Jr. | | --
| | 10,056
| | | 10,056
| | *
| | Lewis G. Emmons | | 10,386
| | --
| | | 10,386
| | *
| | Stuart Goodfellow | | 17,534
| | 358
| | | 17,892
| | 1.6%
| | Paul L. Johnson | | --
| | 11,019
| | | 11,019
| | 1.0%
| | Jae M. Maxfield | | 11,897
| (3) | 6,923
| (4) | | 18,820
| (3)(4) | 1.7%
| | Jon E. Pike | | 1,852
| | 1,618
| | | 3,470
| | *
| | Linda R. Pitsch | | 321
| | 473
| | | 794
| | *
| | Andrew W. Zamiara | | 1,806
| | 674
| | | 2,480
| | *
| | | | | | | | | | | | | All directors and
executive officers
as a group | | 57,182
| (3) | 43,317
| (4) | | 100,499
| (3)(4) | 9.0%
| |
____________________________
* | Less than 1%. | | | (1) | The numbers of shares stated are based on information furnished by each person listed and include shares personally owned of record by that person and shares that under applicable regulations are considered to be otherwise beneficially owned by that person.
Voting power includes the power to vote or direct the voting of the security.
Dispositive power includes the power to dispose or direct the disposition
of the security. A person is considered the beneficial owner of a security
if the person has a right to acquire beneficial ownership of the security
within 60 days. | | | (2) | These numbers include shares as to which the listed person is legally entitled to share voting or dispositive power by reason of joint ownership, trust or other contract or property right, and shares held by spouses, certain relatives and minor children over whom the listed person may have influence by reason of relationship. | | | (3) | These numbers include 8,269Total beneficial ownership includes 161,839 shares of Common Stock that may be acquired by Mr. Maxfield through the exercise
ofChoiceOne common stock options within 60 days of December 31, 1999. | | |
6
(4) | Includes 6,923 shares of Common Stock held by the ChoiceOne Bank 401(k) and Employee Stock Ownership Plan in the accounts of other employees, of which Mr. Maxfield is an administrator.
Mr. Maxfield disclaimsexecutive officers of ChoiceOne are administrators. Of the 161,839 shares of ChoiceOne common stock in this plan, the directors and executive officers have included 93,135 shares in this table as beneficially owned with sole voting and dispositive power. The remaining 68,704 shares are reported as beneficially owned with shared voting or dispositive power and the officers and directors disclaim beneficial ownership of such shares. Of such 6,923 |
9
Five Percent Shareholders As of February 28, 2008, one entity beneficially owns five percent of the outstanding shares of ChoiceOne's common stock, namely the ChoiceOne Bank 401(k) and Employee Stock Ownership Plan. |
Amount and Nature of Beneficial Ownership of Common Stock (1)
| | |
Name and Address of
Beneficial Owner
|
| Sole
Voting
Power
|
| Shared
Voting
Power
|
| Sole
Dispositive
Power
|
| Shared
Dispositive
Power (2)
|
| Total
Beneficial
Ownership
|
|
Percent of
Class
| | ChoiceOne Bank 401(k) and
Employee Stock Ownership Plan
109 East Division
Sparta, Michigan 49345 | | - | | 161,839 | | - | | 161,839 | | 161,839 | | 5.0 | % |
(1) See Notes to prior table. Employment Contracts As an inducement for Mr. Bosserd's agreement to serve as a director and President and Chief Executive Officer of ChoiceOne and the Bank, ChoiceOne entered into a three-year employment agreement with Mr. Bosserd in 2007 that extends each year for one additional year, unless either ChoiceOne or Mr. Bosserd provides notice of termination. Under this agreement, ChoiceOne agreed to: • | pay Mr. Bosserd a salary of Common Stock, 1,393 shares have been included$160,000 per year as beneficially
ownedmay be adjusted, less taxes and withholdings, plus possible bonuses; | • | pay Mr. Bosserd the regular director's fee for attending Board meetings; | • | provide Mr. Bosserd with an automobile allowance of $600 per month; | • | reimburse Mr. Bosserd for all documented business expenses; | • | continue to pay Mr. Bosserd his base salary for the remainder of the term if Mr. Bosserd is terminated, without cause, or quits for "good reason" following a change in control of ChoiceOne; | • | provide Mr. Bosserd with thirty sick and personal days per year; and | • | provide Mr. Bosserd with the same health and other employee benefits provided to other executive employees of ChoiceOne and the Bank. |
Mr. Bosserd agreed not to compete with ChoiceOne or the Bank during the term of his employment agreement unless his employment is terminated by the Company without cause or by Mr. Bosserd for "good reason" after a change in control. 401(k) Plan The ChoiceOne Bank 401(k) and Employee Stock Ownership Plan is qualified under Section 401(a) of the Internal Revenue Code of 1986 (the "Code"). The purpose of the 401(k) plan is to permit Bank employees, including the named executive officers, to save for retirement on a pre-tax basis. In addition to an employee's pre-tax contributions, the Bank may contribute discretionary matching and/or employee stock ownership plan payments to the 401(k) plan. If the Bank contributes matching and/or employee stock ownership plan payments to the 401(k) plan, those contributions will become fully vested after six years of a participant's vesting service. The Bank has generally made a contribution to the 401(k) plan each year. Each participant in the 401(k) plan has an account to record the participant's interest in the plan. Amounts contributed by or on behalf of a participant are credited to his or her account. A participant's benefit from the 401(k) plan is equal to the vested amount in the participant's account when he or she terminates employment with the Bank. The employee stock ownership plan provisions provide that the 401(k) plan, in part, is designed to invest primarily in stock of ChoiceOne.
10
The Impact of Accounting and Tax Treatment on Compensation Section 162(m) of the Code provides that publicly held companies may not deduct compensation paid to certain executive officers in excess of $1,000,000 annually, with certain exceptions for qualified "performance-based" compensation. ChoiceOne believes its compensation policies reflect due consideration of Section 162(m) due to the relatively conservative amount of annual compensation. The Compensation Committee regularly reviews the tax and accounting implications of all of its elements of compensation, including incentive stock options. The Compensation Committee believes that ChoiceOne's compensation structure is appropriately balanced in regards to the tax and accounting implications to both ChoiceOne and the employees. Change in Control Provisions Mr. Bosserd's employment agreement provides that after a "change in control" in the event that Mr. Bosserd's employment is terminated without cause or Mr. Bosserd terminates his employment for a "good reason," then Mr. Bosserd will be entitled to continuation of his salary and benefits through the term of his employment agreement. Good reason is defined in the agreement to include, among other things, a material demotion, assignment of duties inconsistent with Mr. Bosserd's status as President and Chief Executive Officer, a relocation of Mr. Bosserd, failure of ChoiceOne to elect Mr. Bosserd as Chief Executive Officer of ChoiceOne or the Bank, or a material breach by ChoiceOne of any provision of the agreement. Under Mr. Bosserd's agreement, a change in control is deemed to have occurred as of the first day that there is a change in the ownership, the effective control, or the ownership of a substantial portion of ChoiceOne's assets. The Personnel and Benefits Committee believes the "double trigger" of re quiring both a change in control and termination of employment provides an appropriate balance of protection for both ChoiceOne and Mr. Bosserd. As mentioned above, ChoiceOne has granted certain stock options pursuant to the Executive Stock Incentive Plan that are subject to accelerated vesting upon a change in control of ChoiceOne. Summary of Executive Compensation The following table shows certain information concerning the compensation earned by the Chief Executive Officer and each of ChoiceOne's two most highly compensated executive officers who served in positions other than Chief Executive Officer (together, the "named executive officers") during the fiscal year ended December 31, 2007. SUMMARY COMPENSATION TABLE Name and
Principal Position | Year | Salary | Bonus | Option
Awards
(1) | Non-Equity
Incentive Plan
Compensation | All other
Compensation | Total | James A. Bosserd,
President and
Chief Executive Officer | 2007 | 216,200(2) | 0 | 11,760 | N/A | 14,640 | 242,600 | Michael McHugh
Senior VP of Bank
VP of holding company | 2007 | 129,503 | 0 | - | N/A | 9,416 | 138,919 | Louis Knooihuizen
Senior VP
VP of holding company | 2007 | 112,600 | 0 | 5,880 | N/A | 8,145 | 126,625 |
(1) | See [Note 15] to ChoiceOne's Consolidated Financial Statements for the assumptions underlying the values in this column. | | | (2) | The amount reported includes $16,200 in directors' fees paid to Mr. Bosserd. |
11
Outstanding Equity Awards at Fiscal Year-End The following table provides information concerning unexercised options for each named executive officer outstanding as of December 31, 2007. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | Option Awards | Name | Number of Securities
Underlying Unexercised
Options
Exercisable | Number of Securities
Underlying Unexercised
Options
Unexercisable (1) | Option
Exercise
Price | Option
Expiration
Date
| James A. Bosserd | 276
276
275
275
394
394
394
393
657
656
656
656
788
788
787
625
625
750 |
787
625
625
750
750
750
| $13.04
13.04
13.04
13.04
13.70
13.70
13.70
13.70
16.31
16.31
16.31
16.31
21.43
21.43
21.43
18.85
18.85
17.95
21.43
18.85
18.85
17.95
17.95
17.95 | 2/20/12
2/20/12
2/20/12
2/20/12
1/15/13
1/15/13
1/15/13
1/15/13
1/21/14
1/21/14
1/21/14
1/21/14
1/19/15
1/19/15
1/19/15
1/17/16
1/17/16
1/17/17
1/19/15
1/17/16
1/17/16
1/17/17
1/17/17
1/17/17 | Michael McHugh | 0 | 0 | 0 | N/A |
12
| Option Awards | Name | Number of Securities
Underlying Unexercised
Options
Exercisable | Number of Securities
Underlying Unexercised
Options
Unexercisable (1) | Option
Exercise
Price | Option
Expiration
Date
| Louis Knooihuizen | 132
131
131
131
132
131
131
131
196
197
197
197
197
197
197
188
187
375 |
197
188
187
375
375
375
| 13.70
13.70
13.70
13.70
13.70
13.70
13.70
13.70
16.31
16.31
16.31
16.31
21.43
21.43
21.43
18.85
18.85
17.95
21.43
18.85
18.85
17.95
17.95
17.95 | 6/19/12
6/19/12
6/19/12
6/19/12
1/15/13
1/15/13
1/15/13
1/15/13
1/21/14
1/21/14
1/21/14
1/21/14
1/19/15
1/19/15
1/19/15
1/17/16
1/17/16
1/17/17
1/19/15
1/17/16
1/17/16
1/17/17
1/17/17
1/17/17 |
(1) | The following table by other directors andsets for the vesting dates for unvested option awards to each named executive officers.officer as of December 31, 2007: |
Executive Officer | Vesting Date | Number
of
Options
Vesting | James A. Bosserd | 1/19/08
1/18/08
1/18/09
1/18/08
1/18/09
1/18/10 | 787
625
625
750
750
750 | Michael McHugh | N/A | 0 | Louis Knooihuizen | 1/19/15
1/17/16
1/17/16
1/17/17
1/17/17
1/17/17 | 197
188
187
375
375
375 |
Directors and Executive OfficersOption Exercises
None of the named executive officers exercised any options during 2007.
13
Pension Benefits ChoiceOne's named executive officers do not participate in a defined benefit pension plan or supplemental executive retirement plan. Director Compensation The Corporation's
Board of Directors is divided into three classes, which are as nearly equal
in number as possible. Each classfollowing table provides information concerning the compensation of directors serves a successive three-year
termfor ChoiceOne's last completed fiscal year. DIRECTOR COMPENSATION Name | Fees Earned
or Paid in
Cash (1) | Stock
Awards
(1) | All Other
Compensation
(2) | Total | Jerome B. Arends | 17,100 | | | 17,100 | Frank G. Berris | | 16,550 | | 16,550 | K. Timothy Bull | 16,650 | | | 16,650 | William F. Cutler, Jr. | | 17,237 | | 17,237 | Richard L. Edgar | 16,800 | | 171,216 | 188,016 | Stuart Goodfellow | | 17,887 | | 17,887 | Gary Gust | 15,250 | | | 15,250 | Robert Humphreys | | 14,800 | | 14,800 | Paul L. Johnson | 16,850 | | | 16,850 | Dennis Nelson | 14,750 | | | 14,750 | Jon E. Pike | | 17,587 | | 17,587 | Donald VanSingel | 16,000 | | | 16,000 | Andrew W. Zamiara | | 15,287 | | 15,287 |
(1) | Directors may elect to use fees otherwise payable in cash to instead receive stock awards pursuant to the Director's Stock Purchase Plan described in the narrative below. Such amounts are reflected in the "Stock Awards" column. | (2) | The amount reported for Mr. Edgar includes: (a) $25,000 in consulting fees and (b) $146,216 representing payments under his change in control agreement. |
14
Directors who were not employees of office. An individual may not continue to serve onChoiceOne or the Bank received $150 per meeting of any committee of the Board of Directors after attaining age 70. Three memberson which they served. During 2007, the Bank compensated its directors at the rate of $800 per meeting attended. During 2007, a retainer of $1,000 was paid for ChoiceOne and a retainer of $5,000 was paid for the Bank. The Chairman of the present Board and the President of Directors are standing for reelection. Seven other directors
are serving termsChoiceOne each received an additional $600 retainer.
Under ChoiceOne's Directors' Stock Purchase Plan, a director may elect to receive payment of 25%, 50% 75% or 100% of his or her director's fees in the form of ChoiceOne common stock. On each quarterly payment date, a director participating in this plan receives a number of shares of ChoiceOne common stock (rounded to the nearest whole share) determined by dividing the dollar amount of fees payable that will expire in 2001the director has elected to receive as ChoiceOne common stock by the market value of ChoiceOne common stock determined by a poll of ChoiceOne's market makers on the last day of the month preceding the quarterly payment date. Potential Payments Upon Termination or Change-in-Control The following table summarizes the potential payments and 2002. Biographical information
concerning the Corporation's directors andbenefits payable to each of ChoiceOne's named executive officers includingupon termination of employment in connection with each of the three nominees who are nominatedtriggering events set forth in the table below, assuming, in each situation, that the termination of employment took place on December 31, 2007.
Triggering Event and
Payments/Benefits | James A. Bosserd | Michael McHugh | Louis Knooihuizen | | | | | Change in Control (1)(2)(3) | $493,510 | 0 | 0 | | | | | Death (4) | $200,000 | $0 | $112,600 |
| (1) | Upon change in control of ChoiceOne, the executives' outstanding options become fully vested. | | (2) | The payments and benefits are triggered after certain terminations of employment following a change in control of ChoiceOne, which are discussed under the caption "Compensation Discussion and Analysis" under the heading "Change in Control Provisions" | | (3) | The payments to Mr. Bosserd under his employment agreement after a change in control are limited by Section 280G of the Code. The amount reported is the maximum amount permissible under Section 280G. | | (4) | The Bank obtained Bank Owned Life Insurance on key executives and, if the executive dies while still working for the Bank, the estate will receive one full year of compensation. |
15
Audit Committee Report
The Audit Committee reviews and supervises ChoiceOne's procedures for election torecording and reporting the Boardfinancial results of Directors at the
Annual Meeting, is presented below. Except as otherwise indicated, all directors,
nominees for director and executive officers have had the same principal employment
for over five years. All executive officers are appointed annually and serve
at the pleasureits operations on behalf of the Board of Directors. AllChoiceOne's management has primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its supervisory duties, the Audit Committee has reviewed ChoiceOne's audited financial statements for the year ended December 31, 2007 included in the 2007 Annual Report to Shareholders and has discussed those financial statements with ChoiceOne's management, including a discussion of the directorsquality, not just the acceptability, of the Corporation
also serve as directorsaccounting principles, the reasonableness of significant judgments, and the clarity of the Bank.
| Nominees for Election as Directors
with Terms Expiring in 2003 | | | | | |
William F. Cutler, Jr. (age 52) is the former Vice President of the
H. H. Cutler Company, an apparel manufacturer. Mr. Cutler joined the H.
H. Cutler Company in 1970 and served in various management and executive
capacities until January 1994. The H. H. Cutler Company was sold to VF (Vanity
Fair) Corporation in January 1994. Mr. Cutler has been a director of the
Corporation and the Bank since October 1993. Mr. Cutler served as a director
of the Sparta Health Center from 1981 until 1996. | | | | | |
Paul L. Johnson (age 50) is President of Falcon Resources Inc. in
Grand Rapids, Michigan, a furniture design consulting firm. Mr. Johnson
has been a director of the Corporation and the Bank since July 1999. | | | | | |
Andrew W. Zamiara (age 59) is a registered pharmacist and President/Manager
of Momber Pharmacy and Gift Shop in Sparta, Michigan and Momber Hallmark
in Rockford, Michigan. Mr. Zamiara has been a director of the Corporation
and the Bank since August 1990. | | | | | | Directors with Terms Expiring
in 2002: | | | | | |
Jae M. Maxfield (age 54) has been a director and President and Chief
Executive Officer of the Corporation and the Bank since January 1995 and
a director of ChoiceOne Insurance Agencies, Inc. since January 1996. From
1993 until January 1995, Mr.. Maxfield operated Maxfield Associates, an
association of financial advisors engaged in providing financial services
to business and professional occupations. Mr. Maxfield served as President
and Chief Executive Officer of Society Bank in Monroe, Michigan, formerly
a subsidiary of First of America Bank, from 1988 until 1993 and, before
that, served Society Bank in various executive capacities. Mr. Maxfield
also is a director of West Shore Computer Services, Inc., a data processing
company, in which the Bank owns a 20% interest and a director of Michigan
Bankers Title of West Michigan, L.L.C., a title insurance agency, in which
the Bank owns a 6% interest. | | | | | |
Jon E. Pike (age 58) is a certified public accountant and Chairman
of the Board of Beene Garter LLP, certified public accountants, of Grand
Rapids, Michigan. Mr. Pike has been Chairman of the Board of Directors since
August 1998 and a director of the Corporation and the |
7
| Bank since September 1990. Mr. Pike
is also a director of Wm. A. Rogers & Co., a retail hardware business
in Sparta, Michigan, and President and a director of B.G. Systems, Inc.,
a computer software business affiliated with Beene Garter LLP. | | | | | |
Linda R. Pitsch (age 52) has been a director of the Corporation and
the Bank since December 1994 and Secretary of the Corporation and the Bank
since February 1995. Ms. Pitsch also has served as Senior Vice President
and Cashier of the Bank since January 1993. Ms. Pitsch has been an employee
of the Bank since September 1969, serving in various management and executive
capacities. Ms. Pitsch has been a director and Secretary of the Board for
ChoiceOne Insurance Agencies, Inc. since December 1998 and a director and
Secretary of ChoiceOne Travel, Inc. since August 1997. Ms. Pitsch is an
instructor at Davenport College of Business, serving on its Accounting Advisory
Board, and Secretary, Treasurer and Director of Strawberry Pines Condo Association. | | | | | | Directors with Terms Expiring
in 2001 | | | | | |
Frank G. Berris (age 52) is President of and owns American Gas &
Oil, Inc., a distributor of petroleum products and operator of gas stations.
Mr. Berris is also Past President of West Michigan Oilman's Club and a member
of the Michigan Petroleum Association/Michigan Association of Convenience
Stores. Mr. Berris has been a director of the Corporation and the Bank since
August 1991. | | | | | |
Lawrence D. Bradford (age 60) is President of ChoiceOne Insurance
Agencies, Inc., an insurance agency that is a subsidiary of the Bank. Mr.
Bradford was a co-owner of the insurance agency prior to its acquisition
by the Bank in January 1996. Mr. Bradford has been a director of the Corporation
since 1986 and a director of the Bank since 1974. | | | | | |
Lewis G. Emmons (age 55) is President and a director of Emmons Development-Real
Estate and Special Projects Coordinator for Great Day Food Stores. Mr. Emmons
has been a director of the Corporation since 1986 and a director of the
Bank since 1978. | | | | | |
Stuart Goodfellow (age 56) owns Goodfellow Blueberry Farms and Goodfellow
Vending Services, a vending company. Mr. Goodfellow is also past Vice President
and a director of the Michigan Blueberry Growers Association. Mr. Goodfellow
has been a director of the Corporation and the Bank since August 1991. | | | | | | Executive Officers who are
not Directors | | | | | |
Denis L. Crosby (age 57) has been Vice President of the Corporation
since 1991. Mr. Crosby has been Senior Vice President of Commercial Services
at the Bank since 1990 and Vice President of Loans at the Bank since 1986.
From 1972 until joining the Bank in 1986, Mr. Crosby was a commercial loan
officer at various affiliates of Michigan National Bank. Mr. Crosby is a
member of the Sparta Downtown Development Authority and a member of the
Economic Development Foundation of Western Michigan. | | | | | |
Deanne L. Gavalis (age 34) has been Vice President of Retail Services
for the Bank since January 1999. Prior to her employment at the Bank, Ms.
Gavalis was employed by National City Bank, formerly known as First of America
Bank, for over 10 years. | | | | | |
Thomas L. Lampen (age 44), a Certified Public Accountant, has been
Vice President and Chief Financial Officer of the Bank since January 1992
and Treasurer of the Corporation since |
8
| April 1987. Prior to his employment
with the Corporation, Mr. Lampen was employed by Grant Thornton, a national
accounting firm. | |
disclosures in the financial statements.The Audit Committee has also reviewed with ChoiceOne's independent auditors - who are responsible for expressing an opinion on the conformity of those financial statements with generally accepted accounting principles - the judgments of the independent auditors concerning the quality, not just the acceptability, of the accounting principles and such other matters that are required under generally accepted auditing standards to be discussed with the independent auditors. In addition, the Audit Committee has received from the independent auditors the written disclosures required by the Independence Standards Board, Committeeshas discussed with them their independence from ChoiceOne's management and MeetingsChoiceOne, and has considered the compatibility of nonaudit services with their independence. The Corporation'sAfter and in reliance on the reviews and discussions described above, the Audit Committee recommended to ChoiceOne's Board of Directors has, among others,that the following standing committees:
Audit Committee.
The members ofaudited financial statements for the Audit Committee as of March 8, 2000, were year ended December 31, 2007 be included in ChoiceOne's Annual Report on Form 10-K for the year then ended to be filed with the SEC.
Respectfully submitted, Jon E. Pike (Chairman),
Lewis G. Emmons, Stuart Goodfellow and Paul L. Johnson. The Audit Committee
is responsible for causing a suitable examination of the financial records and
operations of the Corporation and the Bank to be made by the internal auditor
of the Corporation through a program of continuous internal audits. The Audit
Committee recommends to the Corporation's Board of Directors independent certified
public accountants for employment to examine the financial statements of the
Corporation and make such additional examinations as the committee considers
advisable. The Audit Committee also reviews reports of examination of the Corporation
and the Bank received from regulatory authorities and reports to the Board of
Directors at least once each calendar year the results of examinations made
and such conclusions and recommendations as the committee considers appropriate
concerning the scope of the Corporation's and the Bank's procedures for internal
auditing and the results thereof. The Audit Committee met 3 times during 1999. Personnel and
Benefits Committee. The members of the Personnel and Benefits Committee
as of March 8, 2000, were Andrew W. Zamiara (Chairman),
William F. Cutler, Jr.,
Lewis G. Emmons, Stuart Goodfellow and Paul L. Johnson. Mr. Maxfield attends
meetings but is not a member of this committee. The Personnel and Benefits Committee
performs the function of a compensation committee and receives recommendations
from senior management and makes recommendations to the Board of Directors concerning
the compensation and benefits of the officers of the Corporation and the Bank.
The Personnel and Benefits Committee also reviews the provisions of the Personnel
Manual and sets the parameters for the Bank's incentive bonus plan. The Personnel
and Benefits Committee met 3 times during 1999.
Donald VanSingel
Dennis Nelson
Executive and
Loan Review Committee. The members of the Executive and Loan Review
Committee as of March 8, 2000, were Jon E. Pike (Chairman), Frank G. Berris,
Lawrence D. Bradford, William F. Cutler, Jr., Lewis G. Emmons, Stuart Goodfellow,
Paul L. Johnson, Jae M. Maxfield, Andrew W. Zamiara and Denis L. Crosby. Mr.
Crosby is an executive officer of the Bank. This committee reviews all aspects
of loan activity for the Bank for the preceding months, including new loans
of $25,000 or more, problem loans and loans identified by examiners, loans 60
days or more past due and non-accrual loans. This committee also approves loan
charge-offs and extensions of credit of up to 15% of the capital and surplus
of the Bank. The Executive and Loan Review Committee may also act in other capacities
as authorized by the Board of Directors. The Executive and Loan Review Committee
met 19 times during 1999.Related Matters
Branching and
Acquisitions Committee. The members of the Branching and Acquisitions
Committee as of March 8, 2000, were Frank G. Berris, Lawrence D. Bradford, William
F. Cutler, Jr., Paul L. Johnson, Jae M. Maxfield and Jon E. Pike. The purpose
of this committee is to consider potential acquisitions by the Bank and/or the
Corporation. The Branching and Acquisitions Committee did not meet during 1999.
Compliance/CRA
Committee. The members of the Compliance/CRA Committee as of March 8,
2000, were Linda R. Pitsch (Chairperson), Lawrence D. Bradford, Jae M. Maxfield
and the following individuals who are officers of the Bank: Mary J. Johnson,
Karen M. Gilbert, Deanne L. Gavalis and Denis L. Crosby. The Compliance/CRA
Committee is responsible for compliance with various federal banking regulations
and the Community Reinvestment Act of 1977. The Compliance/CRA Committee met
3 times during 1999.
Nominating Committee.
The members of the Nominating Committee as of March 8, 2000, were William F.
Cutler, Jr., Jae M. Maxfield and Jon E. Pike. The Corporation will consider
nominations of candidates for the Board of Directors submitted by shareholders.
Any shareholder who desires to nominate a candidate for the Board of Directors
at a meeting must deliver, not less than 120 days prior to the date of notice
of the meeting in the case of an annual meeting, and not more than seven days
following the date of notice of the meeting in the case of a special
9
meeting, a notice to the Secretary of the Corporation setting forth:
(i) the name, age, business address and residence address of each nominee proposed
in such notice; (ii) the principal occupation or employment of each such nominee;
(iii) the number of shares of capital stock of the Corporation that are beneficially
owned by each such nominee; (iv) a statement that each such nominee is willing
to be nominated and serve; and (v) such other information concerning each such
nominee as would be required under the rules of the Securities and Exchange Commission
in a proxy statement soliciting proxies for the election of such nominees. The
Nominating Committee met once during 1999. During 1999, the Corporation's
Board of Directors held 14 regular and special meetings. All directors attended
at least 75% of the aggregate number of meetings of the Board of Directors and
meetings of committees on which they served during the year.
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 as amended, requires directors and officers of the CorporationChoiceOne and persons who beneficially own more than 10% of the outstanding shares of Common Stockits common stock to file reports of beneficial ownership and changes in beneficial ownership of shares of Common Stockcommon stock with the Securities and Exchange
Commission. Directors, officers and greater than 10% beneficial owners are required
by Securities and Exchange CommissionSEC. SEC regulations require such persons to furnish the CorporationChoiceOne with copies of all Section 16(a) reports they file. Based solely on itsour review of the copies of such reports received by itus or written representations from certain reporting persons that no Forms 5 were required for those persons, the
Corporation believeswe believe that, except as described below, all applicable Section 16(a) reporting and filing requirements were satisfied by such persons from January 1, 1999,2007 through December 31, 1999,
except one2007. One report for Deanne Gavalis coveringMr. Humphreys reporting one supplemental investment transaction under the Dividend Reinvestment Plan was filed late.
This delinquency was due to an inadvertent oversight by the Corporation's personnel
and an appropriate report was filed to correct it as soon as it was discovered.
Personnel and Benefits Committee Report on Executive Compensation
The Personnel and
Benefits Committee of the Corporation's Board of Directors (the "Committee")
administers benefit plans, reviews the Corporation's key personnel policies
and programs, including individual salaries of executive officers, and submits
recommendations to the Board of Directors. Directors who are also employees
of the Corporation or the Bank may not serve as voting members of the Committee.
Successful long-term
financial performance and increasing shareholder value are the Corporation's
primary corporate goals. The Corporation's executive compensation practices
are intended to encourage successful financial performance and attract and retain
talented key executives who are critical to the Corporation's long-term success.
The Corporation's
executive compensation program consists of three components: base salary, annual
cash incentive bonus opportunities and long-term incentives through awards of
stock options. In determining the levels of some components, the Committee considers
corporate performance alone. In determining the levels of other components,
such as base salary and annual cash incentive bonus opportunities, the Committee
will consider a number of factors in addition to corporate performance.
The Committee's primary
goal in establishing base salary levels is to be competitive. The Committee
establishes ranges for base salaries of executive officers by comparing the
Corporation to other more or less comparable bank holding companies. In general,
salaries paid to the Corporation's executives have been closer to the median
rather then either the high or low end of each range. Although corporate performance
is considered by the Committee in establishing base salary levels, corporate
performance is not the most important factor. A discretionary assessment of
job performance is another factor considered by the Committee in establishing
base salary levels.
Annual cash incentive
bonuses are based upon performance at three levels: corporate, business unit
and individual. The weighting of each level of assessment for each participant
is approved annually by the Committee. During 1999, Mr. Maxfield's cash incentive
bonus was based 100 percent on corporate performance. Target awards
10
are established by the Committee for participants in the cash incentive
plan. Target awards range from 19% to 24% of base salary. Long-term incentives
are provided to reward executives for achieving the long-term goal of increasing
shareholder value. All of the Corporation's long-term incentives have involved
awards of stock options. Stock ownership is considered important. Through stock
ownership, the interests of executives are joined with those of the shareholders.
Under the Corporation's Executive Stock Incentive Plan of 1997, executives may
be rewarded for the enhancement of shareholder value through the increase in
the value of shares received. During 1999, the Committee made no awards of stock
options.
The Corporation generally
maintains a conservative level of perquisites and personal benefits. The dollar
value of perquisites and personal benefits provided to executive officers does
not exceed 10 percent of the applicable executive officer's annual salary and
bonus.
Mr. Maxfield, the
Corporation's President and Chief Executive Officer, also serves as President
and Chief Executive Officer of the Bank. In determining Mr. Maxfield's base
salary for 1999, the Committee acknowledged the effectiveness of Mr. Maxfield's
leadership in directing corporate growth and in delivering consistently strong
financial performance. The year ended 1998 provided solid earnings per share,
and total shareholder return approximated 12.01 percent for the year. In setting
his 1999 salary at $120,750, the Committee's goal was to make Mr. Maxfield's
compensation comparable to that of chief executive officers of other bank holding
companies with assets of $100 million to $200 million. Mr. Maxfield's 1999 incentive
bonus was based entirely on corporate performance as measured by return on equity.
Mr. Maxfield was not awarded any stock options during 1999.
In 1993, Congress
amended the federal Internal Revenue Code to add Section 162(m). Section 162(m)
provides that publicly held corporations may not deduct compensation paid to
certain executive officers in excess of $1 million annually, with certain exemptions.
The Corporation has examined its executive compensation policies in light of
Section 162(m) and the regulations that have been issued by the Internal Revenue
Service to implement that section. It is not expected that any portion of the
Corporation's deductions for employee remuneration will be disallowed in 2000
or in future years by reason of actions expected to be taken in 2000.
During 1999, all recommendations
of the Committee were approved by the Board of Directors without modification.
| Respectfully submitted,Andrew W. Zamiara, Chairman
William F. Cutler, Jr.
Lewis G. Emmons
Stuart Goodfellow
Paul L. Johnson
|
11
Stock Performance
The following graph
compares the cumulative total shareholder return on the Corporation's Common
Stock to the Standard & Poor's 500 Stock Index and the KBW 50 Index. The
Standard & Poor's 500 Stock Index is a broad equity market index published
by Standard & Poor's. The KBW 50 Index is a market capitalization weighted
bank stock index published by Keefe, Bruyette & Woods, Inc., an investment
banking firm that specializes in the banking industry. The KBW 50 Index is composed
of 50 money center and regional bank holding companies. The Standard & Poor's
500 Stock Index and the KBW 50 Index both assume dividend reinvestment. Cumulative
total return is measured by dividing the sum of the cumulative amount of dividends
for the measurement period, assuming dividend reinvestment, and the difference
between the share price at the end and the beginning of the measurement period
by the share price at the beginning of the measurement period.
STOCK PERFORMANCE GRAPH
Five Year Cumulative Total Shareholder Return
The dollar values
for total shareholder return plotted in the graph above are shown in the table
below:
| December 31, | | Corporation | | KBW 50 | | S & P 500 | |
| | | | | | | | | | 1994 | | $100.0
| | $ 100.0
| | $ 100.0
| | | 1995 | | 124.5
| | 160.2
| | 137.6
| | | 1996 | | 141.3
| | 226.6
| | 169.2
| | | 1997 | | 162.2
| | 331.2
| | 225.6
| | | 1998 | | 213.1
| | 358.6
| | 290.1
| | | 1999 | | 240.5
| | 346.2
| | 351.1
| |
Compensation of Executive Officers and Directors
General.
The following table shows certain information concerning
the compensation earned by the Chief Executive Officer of the Corporation for
services rendered to the Corporation or the Bank during each year in the three-year
period ended December 31, 1999. No other executive officer of the Corporation
had cash compensation in excess of $100,000 during 1999. Mr. Maxfield was compensated
by the Bank in the capacity indicated in the table.
12
SUMMARY COMPENSATION TABLE
Name and | | | | Annual Compensation
| | Long-Term Compensation
Awards
| | |
Principal
Position
| | Year
| | Salary(1)
| | Bonus(2)
| | Number of Shares
Underlying Options
| | All Other
Compensation(3)
| |
Jae M. Maxfield | 1999 | | $128,450
| | $29,529
| | -- | | $ 11,011
| | Director, President
and Chief | 1998 | | 120,600
| | 35,306
| | -- | | 11,063
| | Executive Officer
of the | 1997 | | 115,600
| | 17,092
| | 11,025* | | 14,931
| | Corporation and
the Bank | | | | | | | | | | |
___________________________________
*Adjusted for stock splits and dividends
(1) | Includes compensation deferred under
the Bank's 401(k) and Employee Stock Ownership Plan and director fees paid
by the Corporation and the Bank. | | | (2) | Includes compensation deferred under
the Bank's 401(k) and Employee Stock Ownership Plan. | | | (3) | All other compensation for Mr. Maxfield
in 1999 includes amounts paid by the Bank for (i) life insurance ($672);
and (ii) Bank contributions under the Bank's 401(k) and Employee Stock Ownership
Plan ($10,339). |
The
following table sets forth information regarding stock options held by Mr. Maxfield
at the end of the last fiscal year. Mr. Maxfield was not granted and did not
exercise any stock options during 1999.
FISCAL YEAR-END OPTION VALUES
| | Number of
Shares Underlying Unexercised
Options at Fiscal Year-End
| | Value of Unexercised
In-the-Money Options at
Fiscal Year-End (1)
| | Name
| | Exercisable
| | Unexercisable
| | Exercisable
| | Unexercisable
| | | | | | | | | | | | Jae M. Maxfield | | 8,269 | | 2,756 | | $ 76,736 | | $ 25,576 | |
(1) | Based on a market value of $27.42
per share at December 31, 1999, adjusted to reflect stock dividends and
splits. |
The
Corporation's Executive Stock Incentive Plan of 1997 (the "Plan") provides that
options to purchase shares of Common Stock, stock appreciation rights and stock
awards (collectively, "Incentive Awards") may be granted to officers and other
key employees of the Corporation and its subsidiaries. A stock option entitles
the recipient to purchase shares of Common Stock for a specified period of time
at a specified price. Subject to certain restrictions, the Personnel and Benefits
Committee of the Corporation's Board of Directors determines who will be granted
options, the number of shares subject to each option, the form of consideration
that may be paid upon exercise of an option and other matters related to the
Plan. Stock appreciation rights and stock awards granted under the Plan are
subject to terms and conditions determined by the Personnel and Benefits Committee
at the time of the award. The Personnel and Benefits Committee may include in
any Incentive Award provisions for acceleration of any vesting or other similar
requirements or for the elimination of any restrictions upon Incentive Awards
upon a Change in Control (as defined in the Plan) of the Corporation. The Personnel
and Benefits Committee also may include provisions for participants to receive
cash in lieu of outstanding stock options upon a Change in Control (as defined
in the Plan) of the Corporation.
13
Employment Contracts.
Mr. Maxfield has an employment agreement with the Bank. Under this agreement,
Mr. Maxfield shall be employed as President and Chief Executive Officer of the
Bank and the Corporation unless his employment is terminated by him or he is
dismissed at the pleasure of the Board of Directors of the Bank. Under this
agreement, Mr. Maxfield is entitled to a base salary to be reviewed annually
by the Board of Directors of the Bank, participation in the Bank's incentive
bonus plan, payment of director fees normally payable to directors of the Corporation
and the Bank for meetings attended and other benefits generally available to
all Bank employees. Mr. Maxfield has agreed not to compete in any way with the
business of the Bank and the Corporation while in the employ of the Bank and
for one year after termination of his employment with the Bank.
401(k) Plan.
The ChoiceOne Bank 401(k) and Employee Stock Ownership Plan ("401(k) Plan")
is qualified under Section 401(a) of the Code.
The
purpose of the 401(k) Plan is to permit Bank employees, including Mr. Maxfield,
to save for retirement on a pre-tax basis. In addition to the pre-tax contributions
by Bank employees, the Bank may make discretionary matching and/or employee
stock ownership plan ("ESOP") contributions to the 401(k) Plan. If matching
and/or ESOP contributions are made to the 401(k) Plan, a participant is fully
vested in those contributions after six years of vested service.
Each
participant in the 401(k) Plan has an account to record the participant's interest
in the plan. The amount of the contributions made by or on behalf of the participants
are credited to their accounts. A participant's benefit from the 401(k) Plan
is equal to the vested amount in the participant's account under the plan when
he or she terminates employment with the Bank. Under the ESOP provisions, part
of the 401(k) Plan is designed to invest primarily in stock of the Corporation.
Incentive Bonus
Plan. The Bank's incentive bonus plan (the "Bonus Plan") was established
for all of the Bank's officers in 1985. The Bonus Plan has applied to all employees
(both officer and non-officer personnel) since the 1986 fiscal year. The purposes
of the Bonus Plan are to (i) motivate all personnel of the Bank, (ii) encourage
growth of profits and maximization of return on equity and (iii) provide an
opportunity for participants to be rewarded for individual effort and performance
that is considered by the Personnel and Benefits Committee to be above average.
The
Bonus Plan is based on return on equity. A funding range of 11.25% through 12.25%
was established for 1999. If return on equity is below 11.25%, or the "threshold,"
no bonus based on Bank profits will be paid. Bonuses payable under the Bonus
Plan begin to accrue at 11.25% return on equity. One quarter of the targeted
bonus amount is payable for each one quarter of one percentage point increase
in return on equity above 11.25%, with 100% of the targeted bonus amount payable
at 12.25% return on equity. There was no maximum bonus payable under the Bonus
Plan, such that any increase in return on equity over 12.25% provided a bonus
greater than 100% of the targeted bonus.
Determinations
of eligibility, funding, allocations and amounts of awards are subject to the
review and final approval of the Board of Directors of the Bank. The Bank's
executive officers, as a group, who are also executive officers of the Corporation,
received incentive bonuses totaling $74,863 under the Bonus Plan for the 1999
fiscal year.
During
1999, the Corporation compensated its directors at the rate of $50 per monthly
meeting of the Board attended and an additional $250 for each quarterly meeting
of the Board attended. Directors who were not employees of the Corporation or
the Bank received $60 per hour for each meeting of any committee of the Board
of Directors on which they served other than the Executive and Loan Review Committee.
During 1999, the Bank compensated its directors at the rate of $450 per meeting
attended. The Chairman of the Board of the Bank received an additional $100
per meeting attended.
14
Certain Relationships and Related Transactions Directors, nominees for director and executive officers of the CorporationChoiceOne and members of their immediate families were customers of and had transactions with the Bank in the ordinary course of business between January 1, 1999,2007, and March 8,
2000. It is anticipatedDecember 31, 2007. We anticipate that such transactions will take place in the future in the ordinary course of business. All loans and commitments included in such transactions were made 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.
The Bank has paid $189,246 to Gust Construction Company, a general contractor, for construction services provided to the Bank and its branches. Gary Gust, a director of ChoiceOne and the Bank, is the President and sole shareholder of Gust Construction Company. Gust Construction Company was awarded the contract pursuant to a competitive bidding process.
16
Independent Certified Public Accountants Crowe,
Chizek and Company LLP, certified public accountants, servedPlante & Moran, PLLC ("Plante Moran"), has been selected to serve as the Corporation'sChoiceOne's principal accountant for 1999. The Board of Directors of the Corporation has
selected Crowe, Chizek and Company LLP to act2008. Plante Moran also served as the Corporation'sChoiceOne's principal accountant for 2000. 2007.
Representatives of Crowe, Chizek and Company LLPPlante Moran are not expected to be present atattend the Annual Meeting.annual meeting. If a representative of Crowe,
Chizek and Company LLPPlante Moran attends the meeting, the representative will have an opportunity to make a statement if he or she desires to do so and will be expected to be available to respond to appropriate questions. In accordance with SEC rules, ChoiceOne's Audit Committee has adopted a Pre-Approval Policy. Under the Pre-Approval Policy, all audit and non-audit services need to be pre-approved by the Audit Committee. ProposalsThe Pre-Approval Policy permits the Audit Committee to delegate to one or more of Shareholdersits members pre-approval decisions. The member or members to whom such authority is delegated shall report, for informational purposes, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
ProposalsThe Audit Committee has identified certain services that do not impair the independence of shareholdersthe independent auditors and granted general pre-approval for those services. All services that do not have general pre-approval must be specifically pre-approved by the Audit Committee. The Audit Committee will periodically set pre-approval fee levels for all services to be provided by the independent auditors. Any proposed services exceeding these levels require specific pre-approval by the Audit Committee.
The Pre-Approval Policy requires the independent auditors to provide detailed back-up documentation, which will be provided to the Audit Committee, regarding specific services to be provided. Requests or applications to provide services that require separate pre-approval by the Audit Committee will be submitted to the Audit Committee by both the independent auditors and the Chief Executive Officer or Chief Financial Officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence. All fees paid to Plante Moran for services performed in 2006 and 2007 were pre-approved pursuant to this policy. Audit Fees. ChoiceOne paid to Plante Moran $69,450 during 2007 and $43,000 during 2006 for the audit of ChoiceOne's annual financial statements and review of financial statements included in ChoiceOne's quarterly reports on Form 10-Q, or services that are intendednormally provided by the auditors in connection with statutory and regulatory filings. Audit-Related Fees. ChoiceOne paid to Plante Moran $0 during 2007 and $37,880 during 2006 for assurance and related services that were reasonably related to the performance of the audit or review of ChoiceOne's financial statements and are not reported under "Audit Fees" above. Tax Fees. ChoiceOne paid to Plante Moran $12,000 during 2007 and $0 during 2006 for tax compliance, tax advice and tax planning. Tax services included preparing ChoiceOne's federal and state tax returns. All Other Fees. ChoiceOne paid to Plante Moran $7,500 during 2007 and $29,800 during 2006 for services other than those services described above. In 2007 and 2006, these services included general consultations. Shareholder Proposals If you would like a proposal to be presented at the 20012008 annual meeting of shareholders and that the proponentif you would like includedyour proposal to be considered for inclusion in the Corporation'sChoiceOne's proxy statement and form of proxy relating to that meeting, you must be madesubmit the proposal to ChoiceOne in accordance with Securities and Exchange Commission Rule 14a-8 and14a-8. ChoiceOne must receive your proposal by November 24, 2008 for your proposal to be received by the
Corporation by December 4, 2000 for considerationeligible for inclusion in the proxy statement and form of proxy relating to that meeting. To be considered timely, allany other proposals of shareholders intendedproposal that you intend to be presentedpresent at the 20012008 annual meeting of shareholders of the Corporation must similarly be received by the
CorporationChoiceOne by December 4, 2000.November 24, 2008. Form 10-K Report Available The Corporation'sChoiceOne's Form 10-KSB10-K Annual Report to the Securities and Exchange Commission, including financial statements and financial statement schedules, will be provided to you without charge to shareholders upon written request. Requests should be directedPlease direct your requests to Mr. Thomas L. Lampen, Treasurer, ChoiceOne Financial Services, Inc., 109 East Division, Sparta, Michigan 49345.
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APPENDIX A
CHOICEONE FINANCIAL SERVICES, INC.
AMENDED AND RESTATED EXECUTIVE STOCK INCENTIVE PLAN SECTION1
EstablishmentofPlan; PurposeofPlan 1.1
EstablishmentofPlan. The Company hereby
establishes the AMENDED AND RESTATED EXECUTIVE STOCK INCENTIVE PLAN (the "Plan")
for its corporate and Subsidiary officers and other key employees. The Plan
permits the grant and award of Stock Options, Stock Appreciation Rights and
Stock Awards.
1.2
PurposeofPlan. The purpose of the Plan
is to provide officers and key management employees of the Company and its Subsidiaries
with an increased incentive to make significant and extraordinary contributions
to the long-term performance and growth of the Company and its Subsidiaries,
to join the interests of officers and key employees with the interests of the
Company's shareholders through the opportunity for increased stock ownership
and to attract and retain officers and key employees of exceptional abilities.
The Plan is further intended to provide flexibility to the Company in structuring
long-term incentive compensation to best promote the foregoing objectives.
SECTION2
Definitions
The following words have the following meanings unless a different meaning
is plainly required by the context:
2.1
"Act" means the Securities Exchange Act of 1934, as amended.
2.2
"Board" means the Board of Directors of the Company.
2.3
"Change in Control," unless otherwise defined in an Incentive Award
agreement, means an occurrence of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A issued under the
Act. Without limiting the inclusiveness of the definition in the preceding sentence,
a Change in Control of the Company shall be deemed to have occurred as of the
first day that any one or more of the following conditions is satisfied: (a)
any Person is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding securities;
(b) the failure at any time of the Continuing Directors to constitute at least
a majority of the Board; or (c) any of the following occur: (i) any merger or
consolidation of the Company, other than a merger or consolidation in which
the voting securities of the Company immediately prior to the merger or consolidation
continue to represent (either by remaining outstanding or being converted into
securities of the surviving entity) 60% or more of the combined voting power
of the Company or surviving entity immediately after the merger or consolidation
with another entity; (ii) any sale, exchange, lease, mortgage, pledge, transfer
or other disposition (in a single transaction or a series of related transactions)
of assets or earning power aggregating more than 50% of the assets or earning
power of the Company on a consolidated basis; (iii) any complete liquidation
or dissolution of the Company; (iv) any reorganization, reverse stock split
or recapitalization of the Company which would result in a Change in Control
as otherwise defined in this Plan; or (v) any transaction or series of related
transactions having, directly or indirectly, the same effect as any of the foregoing.
2.4
"Code" means the Internal Revenue Code of 1986, as amended.
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2.5
"Committee" means the Personnel and Benefits Committee of the Board
or such other committee as the Board shall designate to administer the Plan.
The Committee shall consist of at least two members of the Board and all of
its members shall be "non-employee directors" as defined in Rule 16b-3 issued
under the Act.
2.6
"Common Stock" means the Common Stock of the Company.
2.7
"Company" means ChoiceOne Financial Services, Inc., a Michigan corporation,
and its successors and assigns.
2.8
"Consensual Severance" means the voluntary termination of all employment
by the Participant with the Company or any of its Subsidiaries that the Committee
determines to be in the best interests of the Company.
2.9
"Continuing Directors" means the individuals constituting the Board
as of the date this Plan was adopted and any subsequent directors, if appointed
or nominated by at least a majority of the Continuing Directors in office at
the time of the nomination or appointment, but specifically excluding any individual
whose initial assumption of office occurs as a result of either an actual or
threatened solicitation in opposition to any Continuing Director subject to
Rule 14a-12(c) of Regulation 14A issued under the Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board.
2.10
"Employee Benefit Plan" means any plan or program established by the
Company or a Subsidiary for the compensation or benefit of employees of the
Company or any of its Subsidiaries.
2.11
"Incentive Award" means the award or grant of a Stock Option, Stock
Appreciation Right or Stock Award to a Participant pursuant to the Plan.
2.12
"Market Value" of any security on any given date means: (a) if the security
is listed for trading on The Nasdaq Stock Market or one or more national securities
exchanges, the last reported sales price on the date in question, or if the
security shall not have been traded on the principal exchange on the applicable
date, the last reported sales price on the first day before that date on which
such security was so traded; (b) if the security is not so listed for trading
but is traded in the over-the-counter market, the mean of highest bid and lowest
asked prices for the security on the date in question, or if there are no bid
and asked prices for the security on that date, the mean of the highest bid
and lowest asked prices on the first day before that date on which such prices
existed; or (c) if neither (a) nor (b) is applicable, the value as determined
by any means considered fair and reasonable by the Committee, which determination
shall be final and binding on all parties.
2.13
"Participant" means a corporate officer or any key employee of the Company
or its Subsidiaries who is granted an Incentive Award under the Plan.
2.14
"Person" has the same meaning as set forth in Sections 13(d) and 14(d)(2) of
the Act.
2.15
"Plan Year" means the 12-month period beginning January 1 of each year, except
that the Plan Year for purposes of the year in which the Plan becomes effective
shall be that period between the effective date of the Plan and December 31
of such year.
2.16
"Retirement" means the voluntary termination of all employment by the
Participant after the Participant has attained 55 years of age and completed
six years of service with the Company or any of its Subsidiaries or as otherwise
may be set forth in the Incentive Award agreement or other grant document with
respect to a Participant and a particular Incentive Award.
2.17
"Stock Appreciation Right" means any right granted to a Participant
pursuant to Section 6 of the Plan.
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2.18
"Stock Award" means an award of Common Stock awarded to a Participant
pursuant to Section 7 of the Plan.
2.19
"Stock Option" means the right to purchase Common Stock at a stated
price for a specified period of time. For purposes of the Plan, a Stock Option
may be either an incentive stock option within the meaning of Section 422(b)
of the Code or a nonqualified stock option.
2.20
"Subsidiary" means any corporation or other entity of which 50% or more
of the outstanding voting stock or voting ownership interest is directly or
indirectly owned or controlled by the Company or by one or more Subsidiaries
of the Company.
SECTION3
Administration
3.1
PowerandAuthority. The Committee shall administer
the Plan. The Committee may delegate record keeping, calculation, payment and
other ministerial administrative functions to individuals designated by the
Committee, who may be employees of the Company and its Subsidiaries. Except
as limited in this Plan, the Committee shall have all of the express and implied
powers and duties set forth in this Plan, shall have full power and authority
to interpret the provisions of the Plan and Incentive Awards granted under the
Plan and shall have full power and authority to supervise the administration
of the Plan and Incentive Awards granted under the Plan and to make all other
determinations considered necessary or advisable for the administration of the
Plan. All determinations, interpretations and selections made by the Committee
regarding the Plan shall be final and conclusive. The Committee shall hold its
meetings at such times and places as it deems advisable. Action may be taken
by a written instrument signed by a majority of the members of the Committee
and any action so taken shall be fully as effective as if it had been taken
at a meeting duly called and held. The Committee shall make such rules and regulations
for the conduct of its business as it deems advisable.
3.2
GrantsorAwardstoParticipants.
In accordance with and subject to the provisions of the Plan, the Committee
shall have the authority to determine all provisions of Incentive Awards as
the Committee may deem necessary or desirable and as are consistent with the
terms of the Plan, including, without limitation, the following: (a) the persons
who shall be selected as Participants; (b) the nature and extent of the Incentive
Awards to be made to each Participant (including the number of shares of Common
Stock to be subject to each Incentive Award, any exercise price, the manner
in which an Incentive Award will vest or become exercisable and the form of
payment for the Incentive Award); (c) the time or times when Incentive Awards
will be granted; (d) the duration of each Incentive Award; and (e) the restrictions
and other conditions to which payment or vesting of Incentive Awards may be
subject.
3.3
AmendmentsorModificationsofAwards.
The Committee shall have the authority to amend or modify the terms of any outstanding
Incentive Award in any manner, provided that the amended or modified terms are
not prohibited by the Plan as then in effect, including, without limitation,
the authority to: (a) modify the number of shares or other terms and conditions
of an Incentive Award; (b) extend the term of an Incentive Award; (c) accelerate
the exercisability or vesting or otherwise terminate any restrictions relating
to an Incentive Award; (d) accept the surrender of any outstanding Incentive
Award; and (e) to the extent not previously exercised or vested, authorize the
grant of new Incentive Awards in substitution for surrendered Incentive Awards.
3.4
IndemnificationofCommitteeMembers.
Neither any member or former member of the Committee nor any individual to whom
authority is or has been delegated shall be personally responsible or liable
for any act or omission in connection with the performance of powers or duties
or the exercise of discretion or judgment in the administration and implementation
of the Plan. Each person who is or shall have been a member of the Committee
shall be indemnified and held harmless by the Company from and against any cost,
liability or
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expense imposed or incurred in connection with such person's or
the Committee's taking or failing to take any action under the Plan. Each such
person shall be justified in relying on information furnished in connection with
the Plan's administration by any appropriate person or persons.
SECTION4
SharesSubjecttothePlan
4.1
NumberofShares. Subject to adjustment as provided
in Section 4.2 of the Plan, the total number of shares of Common Stock available
for Incentive Awards under the Plan shall be (a) for the initial Plan Year,
5% of the total number of shares of Common Stock outstanding at the time the
Plan becomes effective; plus (b) in each subsequent Plan Year, an additional
number of shares of Common Stock not to exceed 2% of the number of shares of
Common Stock outstanding as reported in the Company's Annual Report on Form
10-K for the fiscal year ending immediately before such Plan Year such that
at the beginning of each Plan Year after the initial Plan Year there shall be
available, in addition to any amount of shares remaining from the 5% authorization
for the initial Plan Year, a minimum number of shares equal to 2% of the number
of shares of Common Stock outstanding; plus (c) there shall be carried forward
and available for Incentive Awards under the Plan all of the following (subject
to adjustment as provided in Section 4.2): (i) shares subject to Incentive Awards
that are canceled, surrendered, modified, exchanged for substitute Incentive
Awards or expire or terminate prior to the exercise or vesting of the Incentive
Award in full; (ii) with respect to any succeeding Plan Year, any unused portion
of the amount set forth in subsection (a) above; and (iii) shares that are surrendered
to the Company in connection with the exercise or vesting of an Incentive Award,
whether previously owned or otherwise subject to such Incentive Award. Such
shares shall be authorized and may be either unissued or treasury shares.
4.1
Adjustments.
(a)
StockDividendsandDistributions. If the
number of shares of Common Stock outstanding changes by reason of a stock
dividend, stock split, recapitalization or other general distribution of
Common Stock or other securities to holders of Common Stock, the number
and kind of securities subject to Incentive Awards and reserved for issuance
under the Plan, together with applicable exercise prices, as well as the
number of shares available for issuance under the Plan, shall be adjusted
appropriately. No fractional shares shall be issued pursuant to the Plan
and any fractional shares resulting from such adjustments shall be eliminated
from the respective Incentive Awards. (b)
OtherActionsAffectingCommonStock.
If there occurs, other than as described in the preceding subsection, any
merger, business combination, recapitalization, reclassification, subdivision
or combination approved by the Board that would result in the Persons who
were shareholders of the Company immediately prior to the effective time
of any such transaction owning or holding, in lieu of or in addition to
shares of Common Stock, other securities, money and/or property (or the
right to receive other securities, money and/or property) immediately after
the effective time of such transaction, then the outstanding Incentive
Awards and reserves for Incentive Awards under this Plan shall be adjusted
in such manner and at such time as shall be equitable under the circumstances.
It is intended that in the event of any such transaction, Incentive Awards
under this Plan shall entitle the holder of each Incentive Award to receive
(upon exercise in the case of Stock Options), in lieu of or in addition
to shares of Common Stock, any other securities, money and/or property
receivable upon consummation of any such transaction by holders of Common
Stock with respect to each share of Common Stock outstanding immediately
prior to the effective time of such transaction; upon any such adjustment,
holders of Incentive Awards under this Plan shall have only the right to
receive in lieu of or in addition to shares of Common Stock such other
securities, money and/or other property as provided by the adjustment.
If the agreement, resolution or other document approved by the Board to
effect any such transaction provides for the adjustment of Incentive
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Awards under the Plan in connection with such transaction,
then the adjustment provisions contained in such agreement, resolution or other
document shall be final and conclusive.
SECTION5StockOptions
5.1
Grant. A Participant may be granted one or more Stock Options
under the Plan. The Committee, in its discretion, may provide in the initial
grant of a Stock Option for the subsequent automatic grant of additional Stock
Options for the number of shares that are subject to the initial Stock Option
and surrendered to the Company in connection with the exercise of the initial
or any subsequently granted Stock Option. Stock Options shall be subject to
such terms and conditions, consistent with the other provisions of the Plan,
as may be determined by the Committee in its sole discretion. The Committee
may vary, among Participants and among Stock Options granted to the same Participant,
any and all of the terms and conditions of the Stock Options granted under the
Plan. The Committee shall have complete discretion in determining the number
of Stock Options granted to each Participant. The Committee may designate whether
or not a Stock Option is to be considered an incentive stock option as defined
in Section 422(b) of the Code; provided, that the number of shares of
Common Stock that may be designated as subject to incentive stock options for
any given Participant shall be limited to that number of shares that become
exercisable for the first time by the Participant during any Plan Year (under
all plans of the Company and its Subsidiaries) and have an aggregate Market
Value less than or equal to $100,000 (or such other amount as may be set forth
in the Code) and all shares subject to an Incentive Award that have a Market
Value in excess of such aggregate amount shall automatically be subject to Stock
Options that are not incentive stock options.
5.2
StockOptionAgreements. Stock Options shall
be evidenced by stock option agreements containing such terms and conditions,
consistent with the provisions of the Plan, as the Committee shall from time
to time determine. To the extent not covered by the stock option agreement,
the terms and conditions of this Section 5 shall govern.
5.3
StockOptionPrice. The per share Stock
Option price shall be determined by the Committee, but shall be a price that
is equal to or higher than the par value of the Company's Common Stock; provided
that the per share Stock Option price for any shares designated as incentive
stock options shall be equal to or greater than 100% of the Market Value on
the date of grant.
5.4
MediumandTimeofPayment.
The exercise price for each share purchased pursuant to a Stock Option granted
under the Plan shall be payable in cash or, if the Committee consents, in shares
of Common Stock (including Common Stock to be received upon a simultaneous exercise)
or other consideration substantially equivalent to cash. The time and terms
of payment may be amended with the consent of a Participant before or after
exercise of a Stock Option. The Committee may from time to time authorize payment
of all or a portion of the Stock Option price in the form of a promissory note
or other deferred payment installments according to such terms as the Committee
may approve. The Board may restrict or suspend the power of the Committee to
permit such loans and may require that adequate security be provided.
5.5
StockOptionsGrantedtoTenPercentShareholders. No Stock Option granted to any Participant who at
the time of such grant owns, together with stock attributed to such Participant
under Section 424(d) of the Code, more than 10% of the total combined voting
power of all classes of stock of the Company or any of its Subsidiaries may
be designated as an incentive stock option, unless such Stock Option provides
an exercise price equal to at least 110% of the Market Value of the Common Stock
and the exercise of the Stock Option after the expiration of five years from
the date of grant of the Stock Option is prohibited by its terms.
5.6
LimitsonExercisability. Except as provided in Section
5.5, Stock Options shall be exercisable for such periods, not to exceed 10 years
from the date of grant, as may be fixed by the Committee. At the time of the
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exercise of a Stock Option, the holder of the Stock Option, if requested
by the Committee, must represent to the Company that the shares are being acquired
for investment and not with a view to the distribution thereof. The Committee
may in its discretion require a Participant to continue the Participant's service
with the Company and its Subsidiaries for a certain length of time prior to a
Stock Option becoming exercisable and may eliminate such delayed vesting provisions. 5.7
RestrictionsonTransferability.
(a)
General. Unless the Committee otherwise consents (before or after the
option grant) or unless the stock option agreement or grant provides otherwise;
(i) no incentive stock options granted under the Plan may be sold, exchanged,
transferred, pledged, assigned or otherwise alienated or hypothecated except
by will or the laws of descent and distribution; and (ii) all Stock Options
that are not incentive stock options may be transferred, provided, that
as a condition to any such transfer the transferee must execute a written agreement
permitting the Company to withhold from the shares subject to the Stock Option
a number of shares having a Market Value at least equal to the amount of any
federal, state or local withholding or other taxes associated with or resulting
from the exercise of the Stock Option. All provisions of a Stock Option that
are determined with reference to the Participant, including without limitation
those that refer to the Participant's employment with the Company or its Subsidiaries,
shall continue to be determined with reference to the Participant after any
transfer of a Stock Option. (b)
OtherRestrictions. The Committee may impose other restrictions
on any shares of Common Stock acquired pursuant to the exercise of a Stock
Option under the Plan as the Committee deems advisable, including, without
limitation, restrictions under applicable federal or state securities laws.
5.8
TerminationofEmployment. (a)
General. If a Participant is no longer employed by the Company or its
Subsidiary for any reason other than the Participant's Consensual Severance,
Retirement, death, disability or termination for cause, the Participant may
exercise his or her Stock Options in accordance with their terms for a period
of three months after such termination of employment unless the terms of the
applicable stock option agreement or grant provide otherwise, but only to the
extent the Participant was entitled to exercise the Stock Options on the date
of termination. For purposes of the Plan: (i) a transfer of an employee from
the Company to any Subsidiary; (ii) a leave of absence, duly authorized in writing
by the Company, for military service or for any other purpose approved by the
Company if the period of such leave does not exceed 90 days; and (iii) a leave
of absence in excess of 90 days, duly authorized in writing by the Company,
provided the employee's right to reemployment is guaranteed either by statute,
contract or written policy of the Company shall not be deemed a termination
of employment. For purposes of the Plan, termination of employment shall be
considered to occur on the date on which the employee is no longer obligated
to perform services for the Company or any of its Subsidiaries and the employee's
right to reemployment is not guaranteed either by statute, contract or written
policy of the Company, regardless of whether the employee continues to receive
compensation from the Company or any of its Subsidiaries after such date. (b)
ConsensualSeverance. If a Participant ceases to be employed
by the Company or one of its Subsidiaries due to Consensual Severance, the
Committee may, in its sole discretion, permit the Participant to exercise
his or her Stock Options in accordance with their terms and to the extent
that the Participant was entitled to exercise the Stock Options on the date
of termination for a period of time after such termination of employment as
may be determined by the Committee, provided, that such period may not extend
beyond the earlier of three years after the date of termination or the dates
on which such Stock Options expire by their terms.
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(c)
Retirement. If a Participant ceases to be employed by the Company or
one of its Subsidiaries due to Retirement, the Participant may exercise his
or her Stock Options in accordance with their terms for a period of three years
after such termination of employment unless such Stock Options earlier expire
by their terms, but only to the extent that the Participant was entitled to
exercise the Stock Options on the date of termination. (d)
Disability. If a Participant ceases to be employed by the Company or
one of its Subsidiaries due to the Participant's disability, he or she may
exercise his or her Stock Options in accordance with their terms for one year
after he or she ceases to be employed unless such Stock Options earlier expire
by their terms, but only to the extent that the Participant was entitled to
exercise the Stock Options on the date of such termination.
(e)
Death. If a Participant dies either while an employee or otherwise
during a time when the Participant could have exercised a Stock Option, the
Stock Options issued to such Participant shall be exercisable in accordance
with their terms by the personal representative of such Participant or other
successor to the interest of the Participant for a period of one year after
such Participant's death to the extent that the Participant was entitled to
exercise the Stock Options on the date of death but not beyond the original
term of the Stock Options.
(f)
TerminationforCause. If a Participant's employment
is terminated for cause, the Participant shall have no further right to exercise
any Stock Options previously granted him or her.
SECTION6StockAppreciationRights
6.1
Grant. A Participant may be granted one or more Stock Appreciation Rights
under the Plan and such Stock Appreciation Rights shall be subject to such terms
and conditions, consistent with the other provisions of the Plan, as shall be
determined by the Committee in its sole discretion. A Stock Appreciation Right
may relate to a particular Stock Option and may be granted simultaneously with
or subsequent to the Stock Option to which it relates. Stock Appreciation Rights
shall be subject to the same restrictions and conditions as Stock Options under
subsections 5.6, 5.7 and 5.8 of the Plan. To the extent granted in tandem with
a Stock Option, the exercise of a Stock Appreciation Right shall, in exchange
for the right to exercise a related Stock Option, entitle a Participant to an
amount equal to the appreciation in value of the shares covered by the related
Stock Option surrendered. Such appreciation in value shall be equal to the excess
of the Market Value of such shares at the time of the exercise of the Stock
Appreciation Right over the option price of such shares.
6.2
Exercise; Payment. To the extent granted in tandem with a Stock
Option, Stock Appreciation Rights may be exercised only when a related Stock
Option could be exercised and only when the Market Value of the stock subject
to the Stock Option exceeds the exercise price of the Stock Option. The Committee
shall have discretion to determine the form of payment made upon the exercise
of a Stock Appreciation Right, which may take the form of shares of Common Stock.
SECTION7
StockAwards
7.1
Grant. A Participant may be granted one or more Stock Awards under the Plan.
Stock Awards shall be subject to such terms and conditions, consistent with
the other provisions of the Plan, as may be determined by the Committee in its
sole discretion.
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7.2
RightsasaShareholder. A Participant shall have
all voting, dividend, liquidation and other rights with respect to shares of
Common Stock issued to the Participant as a Stock Award under this Section 7
upon the Participant becoming the holder of record of the Common Stock granted
pursuant to such Stock Awards; provided,that the Committee may
impose such restrictions on the assignment or transfer of Common Stock awarded
pursuant to a Stock Award as it deems appropriate and may require the Participant
to continue in the employ of the Company or a Subsidiary for a specified period
of time after the award.
SECTION8
ChangeinControl
Without in any way limiting the Committee's discretion, the Committee may include
in any Incentive Award provisions for acceleration of any vesting or other similar
requirements or for the elimination of any restrictions upon Incentive Awards
upon a Change in Control of the Company. The Committee also may include provisions
for Participants to receive cash in lieu of outstanding Stock Options upon a
Change in Control of the Company.
SECTION9
GeneralProvisions
9.1
NoRightstoAwards. No Participant or other person
shall have any claim to be granted any Incentive Award under the Plan and there
is no obligation of uniformity of treatment of Participants or holders or beneficiaries
of Incentive Awards under the Plan. The terms and conditions of Incentive Awards
of the same type and the determination of the Committee to grant a waiver or
modification of any Incentive Award and the terms and conditions thereof need
not be the same with respect to each Participant or among awards to the same
Participant.
9.2
Withholding. The Company or a Subsidiary shall be entitled to (a) withhold
and deduct from future wages of a Participant (or from other amounts that may
be due and owing to a Participant from the Company or a Subsidiary), or make
other arrangements for the collection of, all amounts necessary to satisfy any
and all federal, state and local withholding and employment-related tax requirements
attributable to an Incentive Award or any action related to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or payment
of dividends with respect to, an Incentive Award or a disqualifying disposition
of Common Stock received upon exercise of an incentive stock option; or (b)
require a Participant promptly to remit the amount of such withholding to the
Company before taking any action with respect to an Incentive Award. Unless
the Committee determines otherwise, withholding may be satisfied by withholding
Common Stock to be received upon exercise or by delivery to the Company of previously
owned Common Stock. The Company may establish such rules and procedures concerning
timing of any withholding election as it deems appropriate.
9.3
ComplianceWithLaws; ListingandRegistrationofShares. All Incentive Awards granted under the Plan (and all
issuances of Common Stock or other securities under the Plan) shall be subject
to all applicable laws, rules and regulations and to the requirement that if
at any time the Committee shall determine, in its discretion, that the listing,
registration or qualification of the shares covered thereby upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or
in connection with, the grant of such Incentive Award or the issue or purchase
of shares thereunder, such Incentive Award may not be exercised in whole or
in part, or the restrictions on such Incentive Award shall not lapse, unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
A-8
9.4
NoLimitonOtherCompensationArrangements.
Nothing contained in the Plan shall prevent the Company or any Subsidiary from
adopting or continuing in effect other or additional compensation arrangements,
including the grant of stock options and other stock-based awards and such arrangements
may be either generally applicable or applicable only in specific cases.
9.5
NoRighttoEmployment. The grant of an Incentive
Award shall not be construed as giving a Participant the right to be retained
in the employ of the Company or any Subsidiary. The Company or any Subsidiary
may at any time dismiss a Participant from employment, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan
or in any written agreement with a Participant.
9.6
SuspensionofRightsunderIncentiveAwards.
The Company, by written notice to a Participant, may suspend a Participant's
and any transferee's rights under any Incentive Award for a period not to exceed
30 days while the termination for cause of that Participant's employment with
the Company and its Subsidiaries is under consideration.
9.7
GoverningLaw. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Michigan and applicable federal law.
9.8
Severability. If any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
provisions of the Plan and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
9.9
ChangeofName. The Plan shall be automatically amended
to reflect any change in the name of the Company.
SECTION10
TerminationandAmendment
The Board may terminate the Plan at any time, or may from time
to time amend the Plan as it deems proper and in the best interests of the Company,
provided that no such amendment may impair any outstanding Incentive Award without
the consent of the Participant, except according to the terms of the Plan or
the Incentive Award. No termination, amendment or modification of the Plan shall
become effective with respect to any Incentive Award previously granted under
the Plan without the prior written consent of the Participant holding such Incentive
Award unless such amendment or modification operates solely to the benefit of
the Participant.
SECTION 11
EffectiveDateandDurationofthePlan
This Plan shall take effect April 27, 2000, subject to approval
by the shareholders. No Incentive Award shall be granted under the Plan after
April 26, 2010.
A-9
CHOICEONE FINANCIAL SERVICES, INC.
| P R O X Y | 109 East Division
Sparta, Michigan 49345
Annual Meeting of Shareholders - April 24, 2008 | |
Sparta, Michigan 49345
Annual Meeting of Shareholders - April 27, 2000 The undersigned shareholder appoints Jae M. MaxfieldJames A. Bosserd and Linda R. Pitsch,Richard L. Edgar, or either of them, each with the power to appoint his or her substitute, attorneys and proxies to represent the shareholder and to vote and act with respect to all shares that the shareholder would be entitled to vote at the annual meeting of shareholders of ChoiceOne Financial Services, Inc. referred to above and any adjournment of that meeting, on all matters that come before the meeting.
| | | [ ] | FOR all nominees listed below | [ ] | WITHHOLD AUTHORITY | | |
(except as indicated below) | [ ] | WITHHOLD AUTHORITY
to vote for all nominees listed below |
Jerome B. Arends | K. Timothy Bull | Dennis Nelson | Jon E. Pike | Donald VanSingel |
| William F. Cutler, Jr. | Paul L. Johnson | Andrew W. Zamiara |
(Instruction: To withhold authority to vote for any individual nominee, writestrike out that nominee's name in the space provided below.list above.) Your Board of Directors recommends that you voteFOR all nominees
2. | Proposal to Approve and Adoptapprove the Amendmentamendment to the Restated Articles of Incorporation to Increaseincrease the Numbernumber of Authorized Sharesauthorized shares of Common Stock common stock. |
| [ ] FOR | FOR | [ ] AGAINST | AGAINST | [ ] ABSTAIN | ABSTAIN |
Your Board of Directors recommends that you voteFOR the Proposalproposal
3. | Proposal to Approve and Adopt
the Amended and Restated Executive Stock Incentive Plan |
| [ ] | FOR | [ ] | AGAINST | [ ] | ABSTAIN |
Your Board of Directors recommends that you vote FOR
the Proposal
This proxy is solicited by the Board of Directors. If this proxy is properly executed and delivered, the shares represented by this proxy will be voted as specified. If no specification is made, the shares will be voted for election of all nominees named on this proxy and for each proposal identified
on this proxy. The shares represented by this proxy will be voted in the discretion of the proxies on any other matters that may come before the meeting or any adjournment of the meeting.
Dated: _________________, 2000____________, 2008 | Please sign exactly as your name
appearsname(s) appear(s) on this proxy. If signing for estates, trusts or corporations, title or capacity should be stated.If shares are held jointly, each holder should sign.
| | | | | |
| | Signature |
| | | | |
| | Signature if held jointly |
IMPORTANT -- Please Mark, Sign, Date and Return Promptly in the Enclosed Envelope
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