UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement | ||
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
þ Definitive Proxy Statement | ||
o Definitive Additional Materials | ||
o Soliciting Material Pursuant to §240.14a-12 |
OHIO LEGACY CORP
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ | No fee required. |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
o | Fee paid previously with preliminary materials. |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
OHIO LEGACY CORP
305WESTLIBERTY STREET
WOOSTER, OHIO 44691
305WESTLIBERTY STREET
WOOSTER, OHIO 44691
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To our Shareholders:
The 2006 Annual Meeting of Shareholders of Ohio Legacy Corp will be held at 10:00 a.m., on April 27, 2006, at the Wooster Country Club at 1251 Oak Hill Road, Wooster, Ohio, for the following purposes:
1. | To elect three (3) Class I directors to serve until the 2009 Annual Meeting and until their successors are elected and qualified. | ||
2. | To elect one (1) Class III director to serve until the 2007 Annual Meeting and until their successors are elected and qualified. | ||
3. | To act upon such other matters as may properly come before the Annual Meeting or any adjournments thereof. |
Shareholders of record as of close of business on March 1, 2006, are entitled to notice of and to vote at the Annual Meeting.
Whether you expect to attend the meeting or not, please mark, date, sign and return the enclosed proxy in the enclosed, self-addressed envelope as promptly as possible. You have the option to revoke your proxy at any time prior to the Annual Meeting regardless of your voting method, or to vote your shares personally on request if you attend the meeting.
By Order of the Board of Directors | ||
Daniel H. Plumly Secretary and Chairman |
March 15, 2006
OHIO LEGACY CORP
305 WEST LIBERTY STREET
WOOSTER, OHIO 44691
305 WEST LIBERTY STREET
WOOSTER, OHIO 44691
PROXY STATEMENT
VOTING INFORMATION
The accompanying proxy is solicited by the Board of Directors of the Company and will be voted in accordance with the instructions given, unless revoked. If no direction is indicated, such shares will be voted in favor of all the proposals set forth in this Proxy Statement and in favor of the election to the Board of Directors of the nominees named in this Proxy Statement. A shareholder may revoke his or her proxy without affecting any vote previously taken by giving notice to the Secretary of the Company in writing or by voting in person at the Annual Meeting.
The record date for determination of shareholders entitled to vote at the Annual Meeting is March 1, 2006. On that date, the number of outstanding common shares, without par value, of the Company was 2,214,564. Each shareholder will be entitled to one vote per share on all matters to be submitted at the Annual Meeting. Shareholders representing the majority of the then outstanding shares entitled to vote at the Annual Meeting shall constitute a quorum. An abstention will be considered present at the meeting for purposes of determining a quorum, but will not be counted as voting for or against the issue to which it relates.
The approximate date upon which this Proxy Statement and proxy will first be mailed to shareholders is March 15, 2006. All costs associated with the solicitation of proxies will be paid by the Company. Proxies will be solicited primarily by mail, but certain officers and employees of the Company, or its subsidiary, Ohio Legacy Bank, N.A., may solicit proxies, personally or by telephone, without additional compensation.
PROPOSAL 1
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The terms of office of the current Class I directors of the Company will expire on the day of the 2006 Annual Meeting, upon the election of their successors. Additionally, Mr. D. Michael Kramer, the Company’s President and Chief Executive Officer (CEO), is being nominated to be elected a Class III director at the Annual Meeting.
Proxies will be voted for the election of the following Class I director nominees to serve for three-year terms expiring in 2009 and until their successors are elected and qualified: J. Edward Diamond, L. Dwight Douce and Daniel H. Plumly. D. Michael Kramer is nominated to fill the unexpired Class III director term of Michael D. Meenan who resigned from the Board February 23, 2006. Mr. Diamond has been determined by the Board of Directors to be independent under the rules of the National Association of Securities Dealers (NASD). All nominees have consented to be named in this Proxy Statement and have agreed to serve if elected. If, prior to election, any nominee becomes unable or unwilling to serve, and the number of directors is not decreased accordingly, proxies will be voted for such other nominee as the Board of Directors may select. However, the Company has no reason to believe that any of the nominees will not be available. Biographical information is set forth below for each nominee for director and each director who will continue in office after the Annual Meeting.
The nominees who receive the greatest number of votes for the director positions to be filled will be elected to those positions.
The Board of Directors recommends that you voteFOR election of the Company’s nominees for director.
- 1 -
Nominees to the Board of Directors
Class I Directors — Term ending in 2009
Class I Directors — Term ending in 2009
J. Edward Diamond (age 67)
Director since 1999, Independent
Director since 1999, Independent
Mr. Diamond, a private investor since 1984 in the Canton area, is the retired Chairman of Glendale Oxygen Company, a Canton-based supplier of cryogenic gases and welding supplies. He has served on the boards of Arrowhead Country Club, The Canton Club, The Canton Ballet and The Canton Symphony Orchestra Association. He is a graduate of the University of Virginia and has been a lifelong Canton resident.
L. Dwight Douce (age 57)
Director since 1999, Employee Director
Director since 1999, Employee Director
Mr. Douce is Executive Vice President of the Company. Mr. Douce served as President and CEO of the Company from January 1, 2000 until December 31, 2005, and has more than 30 years of financial institution experience in a diverse number of positions, with 22 years of experience in the Wooster area. From October 1996 to February 1999, Mr. Douce served as President-Chief Operating Officer of Signal Bank, N.A. From 1983 to October 1996, Mr. Douce served as Executive Vice President and Chief Financial Officer of First Federal Savings and Loan Association (Signal Bank’s predecessor). During Mr. Douce’s tenure, Signal Bank grew in assets from a $200 million community bank to a $1.8 billion financial services institution. Mr. Douce graduated from Capital University with a B.S. in Business Administration. He has been a resident of the Wooster area for the last 22 years and has been very active in community organizations, including the American Red Cross, the Wooster Chamber of Commerce Board, Kiwanis International and the United Way.
Daniel H. Plumly (age 52)
Director since 1999, Chairman and Secretary
Director since 1999, Chairman and Secretary
Since 1981, Mr. Plumly has been a member of Critchfield, Critchfield & Johnston, Ltd., and currently serves as its Managing Member. The law firm has five offices located in north central Ohio. Mr. Plumly served on the Board of Directors of Signal Corporation and Signal Bank, N.A., from 1986 to 1999. Mr. Plumly graduated from Muskingum College in 1975 with a B.A. in History, where he currently sits on his alma mater’s Board of Trustees, and received his J.D. from Case Western Reserve University in 1978. Mr. Plumly is a Past President of Meals on Wheels of Stark and Wayne Counties and currently serves on that Board. Mr. Plumly has been involved in coaching youth football, basketball and lacrosse. He also serves as a member of the Board of Trustees of the United Methodist Church and is a member of the Wayne County Children Services Advisory Board. Mr. Plumly previously served on the board of Goodwill Industries of Wayne County, Inc., Board of Directors of Main Street, Inc., as President and Trustee of the Wooster Lacrosse Club, as President of the Board of Trustees of Wooster Country Club and as Chairman of the Board of Governors of Wooster Country Club.
Class III Directors — Term ending in 2007
D. Michael Kramer (age 48)
New nominee recommended by non-employee directors, Employee Director
New nominee recommended by non-employee directors, Employee Director
Mr. Kramer joined the Company in May of 2005 as Executive Vice President and Chief Operating Officer and was appointed President and CEO of the Company on January 1, 2006. From 1999 through 2004 Mr. Kramer served as Executive Vice President of Integra Bancorporation, a $3.0 billion community bank holding company, headquartered in Evansville Indiana. Before joining Integra, Mr. Kramer was Senior Vice President and Manager of the Financial Institutions Division of Star Bancorporation (now US Bank). Mr. Kramer received a Bachelor of Arts degree in 1980 from Gove City College, where he now serves as a member of the Entrepreneurship Advisory Council. Mr. Kramer is past Chairman of the Board of the Beacon Group, a non-profit corporation dedicated to assisting small and emerging businesses, a past Secretary/Treasurer of the Finance Advisory Board of the Lakota School Board and a past Chairman of the West Chester Ohio Zoning Board. He and his wife Meg have served as the Chair-couple of the Young Life Adult Committees in both Cincinnati and Newburgh, Indiana. Mr. Kramer recently relocated his family to the Wooster area, where he plans to be an active member of the community.
- 2 -
Continuing Directors
Class III Directors —Term ending in 2007
Class III Directors —Term ending in 2007
D. William Allen (age 54)
Director since 1999, Independent
Director since 1999, Independent
Mr. Allen is the Chief of Staff and Director of Budget for the City of Canton, Ohio. Mr. Allen also is President of SPC Realty Company since 1994, a real estate investment company. From 1994 to 1997, Mr. Allen served as the President, Chief Operating Officer and owner of Service Packaging Corporation. Mr. Allen is the immediate past President of Congress Lake Club and Secretary of the Board of Governors of Mercy Medical Hospital. Mr. Allen is also involved with the Pro Football Hall of Fame Festival, where his involvement spans 28 years, and served as its General Chairman in 1993. Mr. Allen served as Chairman of the Board of Trustees of the Greater Canton Chamber of Commerce in 2002 and is currently serving as its Treasurer. He also served as President of Meals on Wheels of Stark and Wayne Counties in 1999 and 2000.
Scott J. Fitzpatrick (age 53)
Director since 1999, Independent
Director since 1999, Independent
Since 1973, Mr. Fitzpatrick has served as a partner in Fitzpatrick Enterprises in Canton, Ohio. Mr. Fitzpatrick is primarily involved in the development of commercial real estate for his own portfolio.
Class II Directors — Term ending in 2008
Robert F. Belden (age 58)
Director since 1999, Independent
Director since 1999, Independent
Since 1995, Mr. Belden has served as the President of the Belden Brick Company, a company based in Canton since 1885. From 1983 to 1995, Mr. Belden served as the Vice President of Marketing for Belden Brick. Mr. Belden served as a director of Signal Corporation and Signal Bank, N.A., from 1988 to 1999. He graduated from the University of Notre Dame in 1969 with a B.S. degree in Mathematics and then graduated from the University of Michigan Graduate School of Business in 1971. Mr. Belden has been very active in community affairs including the American Red Cross, Canton Regional Chamber of Commerce, Junior Achievement of Stark County, Stark County Foundation and other community groups.
Gregory A. Long (age 56)
Director since 1999, Independent, Audit Committee Financial Expert
Director since 1999, Independent, Audit Committee Financial Expert
Mr. Long is a licensed CPA with over 30 years experience as an accountant. He graduated from Kent State University in 1971. Mr. Long currently serves as the President of Long, Cook & Samsa, Inc., CPA’s of Wooster. Mr. Long is actively involved as a board member and Past-President of the Wayne County Historical Society and is the past President of Buckeye Council, Inc., and Boy Scouts of America. He is also Treasurer of the Wooster Rotary Club and Chairman of the Wooster Area Chamber of Commerce, board member of Wooster Youth Baseball, and Boys’ Village, Inc., and is Troop Committee Chairman of Boy Scout Troop 61 of Wooster. Mr. Long is retired from the Army Reserve as a Lieutenant Colonel.
Melvin J. Yoder (age 60)
Director since 2005, Independent
Director since 2005, Independent
Mr. Yoder is Vice President and Corporate Operations Officer of Yoder Lumber Co., Inc., of Millersburg, Ohio and has been in a management role with the Company since 1970. He is also part owner of Tri-County Lumber, LLC, and Buckhorn Woods, LLC, which are real estate holding companies, and Rolling Ridge Woods, LLC, a log and timber procurement company. Mr. Yoder currently serves on the board of Joel Pomerene Foundation and the East Holmes Council. He served as past President of the Ohio Forestry Association.
- 3 -
EXECUTIVE OFFICERS
Mr. Kramer is the President and CEO of the Company and Mr. Douce is Executive Vice President of the Company. Their biographical information appears above.
Steven G. Pettit, age 48, is Senior Loan Officer and President — Stark County Region, Ohio Legacy Bank, N.A. Mr. Pettit has 20 years of commercial banking experience in a diverse number of lending positions in both Stark and Wayne Counties. From February to September 1999, Mr. Pettit held the position of Senior Vice President, Senior Loan Officer for two regions of FirstMerit Bank, N.A. From March 1996 to February 1999, Mr. Pettit held the same position at Signal Bank, N.A. From January 1994 to March 1996, Mr. Pettit served as Manager of Commercial Lending for FirstMerit. Mr. Pettit graduated from the University of Tennessee with a B.S. degree in Business Administration and from Ashland University with an MBA in Executive Management. Mr. Pettit has been a resident of the Canton area his entire life and has been active in various social and civic activities, including Meals on Wheels of Stark and Wayne Counties, Mercy Medical Center, Boy Scouts of America and Plain Local Schools.
Robert E. Boss, age 49, is the Senior Vice President of Commercial Lending and the President - Holmes County Region of Ohio Legacy Bank, N.A. Mr. Boss has more than 22 years of financial institution experience in a variety of lending positions. From January 1990 to March 2000, Mr. Boss held several positions at the Commercial and Savings Bank of Millersburg, Ohio, the last of which was the position of Senior Vice President and Senior Lending Officer. Mr. Boss previously worked in various loan areas for Bank One of Wooster from 1987 to 1990. Mr. Boss is President of the board of the Holmes County Training Center, past President of the Holmes County Chamber of Commerce, Treasurer of the Holmes County Economic Development Council and a director of the Buckeye Council of the Boy Scouts of America. Mr. Boss is a graduate of Mount Union College with a B.A. in Accounting.
Derek Williams age 47 is Senior Vice President — Chief Deposit Officer, Ohio Legacy Bank, N.A., which he joined in October 2005. Mr. Williams previously served as Senior Vice President — Chief Deposit Officer, Unizan Bank, N.A. where he was employed for over 27 years. Mr. Williams graduated from GlenOak High School and has been a resident of the Canton area his entire life. Mr. Williams has been active in various social and civic activities and is a graduate of the 16th class of Leadership Stark County.
- 4 -
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
The Chairman of the Board of Directors receives $1,000 per month as compensation for his services. Each non-employee director receives $250 per monthly board meeting attended. The following table summarizes the fees paid to non-employee directors for their attendance at each committee meeting:
Committee | Committee | |||||||
Chairperson | Member | |||||||
Committees of Ohio Legacy Corp: | ||||||||
Audit and Compliance | $ | 300 | $ | 200 | ||||
Corporate Governance and Nominating | 200 | 150 | ||||||
Compensation | 200 | 150 | ||||||
Committees of Ohio Legacy Bank, N.A.: | ||||||||
Asset / Liability and Interest Rate Risk | * | $ | 150 | |||||
Community Reinvestment Act / Fair Lending | * | 150 | ||||||
Executive | $ | 200 | 150 | |||||
Investment | * | 150 | ||||||
Loan (fees paid quarterly, not per meeting) | * | 200 |
* — Committee is chaired by an employee director or a non-director employee
In addition, subject to compliance with the restrictions and requirements of the FDIC stock benefit plan policy, each non-employee director of the Company and its subsidiary will receive automatic awards of nonqualified stock options under the Company’s Omnibus Stock Option, Stock Ownership and Incentive Plan (Stock Ownership Plan) consisting of initial options to purchase 2,500 common shares of the Company awarded on the date of commencement of service as a non-employee director, and, thereafter, annual options to purchase 1,000 common shares of the Company. Initial options vest and become exercisable over a period of five years at the rate of 20% per year, while annual options vest and become exercisable upon their grant dates. For fiscal year 2005, the Company granted annual options to non-employee directors to purchase 13,500 common shares of the Company at an exercise price of $12.00 per share. For fiscal year 2006, the Company will grant annual options to non-employee directors to purchase 11,000 common shares of the Company at an exercise price equal to the closing price of the Company’s stock on the date of the Annual Meeting.
- 5 -
Executive Compensation
Summary Compensation Table
The following table sets forth certain information concerning the annual and long-term compensation of the CEO of the Company and other executive officers who received an annual salary or bonus during the last completed fiscal year that exceeded $100,000.
Annual Compensation | ||||||||||||||||||||
Other | ||||||||||||||||||||
Fiscal | Annual | Stock Options | ||||||||||||||||||
Year | Salary | Bonus(1) | Compensation(2)(5) | Granted | ||||||||||||||||
D. Michael Kramer(3) | 2005 | $ | 117,788 | $ | — | $ | 37,565 | 15,000 | ||||||||||||
President and Chief Executive Officer | ||||||||||||||||||||
L. Dwight Douce(3) | 2005 | $ | 128,500 | $ | — | $ | 3,783 | 5,000 | ||||||||||||
Executive Vice President | 2004 | 128,501 | 12,000 | 2,329 | 5,000 | |||||||||||||||
2003 | 116,050 | — | 3,172 | 5,000 | ||||||||||||||||
Steven G. Pettit | 2005 | $ | 132,674 | $ | — | $ | 4,935 | 4,000 | ||||||||||||
Senior Loan Officer and | 2004 | 128,501 | 17,000 | 3,435 | 4,000 | |||||||||||||||
President — Stark County Region | 2003 | 116,050 | 4,000 | 4,553 | 5,000 | |||||||||||||||
Robert E. Boss | 2005 | $ | 108,000 | $ | — | $ | 3,357 | 4,000 | ||||||||||||
Senior Vice President of | 2004 | 104,600 | 12,000 | 1,905 | 4,000 | |||||||||||||||
Commercial Lending and President — Holmes County Region | ||||||||||||||||||||
Eric S. Nadeau(4) | 2005 | $ | 105,000 | $ | — | $ | — | 4,000 | ||||||||||||
Chief Financial Officer and | 2004 | 90,001 | 10,000 | — | 4,000 | |||||||||||||||
Treasurer |
(1) | Bonus amounts are reported in the year to which they are earned. Payment is made to the executive in the following fiscal year. | |
(2) | Other annual compensation includes dues for country club membership for Messrs. Douce, Pettit and Boss. | |
(3) | Mr. Kramer was hired in April 2005 as the Company’s Executive Vice President and Chief Operating Officer. Mr. Douce served as President and CEO of the Company and its subsidiary during 2005 and until December 31, 2005. On January 1, 2006, Mr. Kramer was appointed to President and CEO of the Company and its subsidiary. Mr. Kramer’s annual salary in 2006 will be $175,000. | |
(4) | Mr. Nadeau resigned from his positions with the Company and its subsidiary effective February 2, 2006. | |
(5) | Mr. Kramer received a signing bonus of $16,000 and assistance with relocation costs of $21,565 during 2005. |
- 6 -
Option Grants In Last Fiscal Year
The following table sets forth information regarding stock option grants to the named executives during the 2005 fiscal year. All options were awarded at exercise prices that were equal to the market price of the Company’s common shares on the date of grant and vest on the third anniversary of the grant date. Any unexercised shares lapse on the earlier of 10 years from the grant date or 90 days after termination of employment with the Company.
% of Total | ||||||||||||||||
Number of | Options | |||||||||||||||
Securities | Granted To | |||||||||||||||
Underlying | Employees | Exercise | ||||||||||||||
Named | Options | in Fiscal | Price | |||||||||||||
Executive | Granted | Year | ($/Share) | Expiration Date | ||||||||||||
D. Michael Kramer | 15,000 | 22.4 | % | $ | 12.00 | April 28, 2015 | ||||||||||
L. Dwight Douce | 5,000 | 7.5 | 12.00 | April 28, 2015 | ||||||||||||
Steven G. Pettit | 4,000 | 6.0 | 12.00 | April 28, 2015 | ||||||||||||
Robert E. Boss | 4,000 | 6.0 | 12.00 | April 28, 2015 | ||||||||||||
Eric S. Nadeau | 4,000 | 6.0 | 12.00 | April 28, 2015 |
Aggregated Option Exercises and Fiscal Year-End Option Value Table
No stock options were exercised by the named executives during fiscal years 2005 or 2004. On December 20, 2005, the Compensation Committee of the Board of Directors approved the accelerated vesting of outstanding, unvested stock options awarded to recipients under the Stock Ownership Plan with an exercise price higher than the closing market price of the Company’s common stock on December 20, 2005, which was $9.25. The following table details the options whose vesting was accelerated that were granted directors and named executives:
Original Vesting | Exercise | Accelerated Options Granted To: | ||||||||||
Date | Price | Directors | Executives | |||||||||
2/19/2006 | $ | 10.00 | 5,500 | — | ||||||||
2/17/2007 | $ | 12.00 | — | 17,000 | ||||||||
2/19/2007 | $ | 10.00 | 5,500 | — | ||||||||
4/28/2006 | $ | 12.00 | 500 | — | ||||||||
4/28/2007 | $ | 12.00 | 500 | — | ||||||||
4/28/2008 | $ | 12.00 | 500 | 32,000 | ||||||||
8/16/2008 | $ | 10.00 | — | — | ||||||||
4/28/2009 | $ | 12.00 | 500 | — | ||||||||
4/28/2010 | $ | 12.00 | 500 | — | ||||||||
13,500 | 49,000 |
The following table sets forth certain information concerning the value of unexercised stock options granted under the Stock Ownership Plan and held as of December 31, 2005, by the named executives.
Number of Securities | Value of Unexercised | |||||||||||||||
Underlying Unexercised | In-the-Money Options at | |||||||||||||||
Options at Fiscal Year End (#) | Fiscal Year End ($) | |||||||||||||||
Named Executive | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||
D. Michael Kramer | 15,000 | — | $ | — | $ | — | ||||||||||
L. Dwight Douce | 20,000 | 5,000 | — | 4,500 | ||||||||||||
Steven G. Pettit | 18,000 | 5,000 | — | 4,500 | ||||||||||||
Robert E. Boss | 18,000 | 4,000 | — | 3,600 | ||||||||||||
Eric S. Nadeau | 8,000 | 5,000 | — | 4,500 |
- 7 -
Employment and Severance Agreements
The Company and Ohio Legacy Bank, N.A., have entered into employment agreements with Messrs. Kramer, Pettit and Boss. Each employment agreement renews annually, automatically, for an additional year unless either party furnishes at least 60 days prior notice to the other of its intent to terminate the agreement. Upon a change in control of the Company or a diminution in the officer’s duties, each will have the right to terminate his employment and receive a severance payment equal to 2.99 times his current annual compensation. In addition, all stock options previously granted will vest in the event of a termination of employment upon a change in control or a diminution in the officer’s duties.
The Ohio Legacy Bank has entered into an employment and consulting agreement with Mr. Douce. The employment and consulting agreement was executed to assist the Ohio Legacy Bank in an orderly implementation of the companies’ management and succession plans and will replace the previous employment agreement dated November 29, 1999, between the companies and Mr. Douce. The term of this employment agreement shall be for two years commencing on the first day of January 2006, and continuing through December 31, 2007. Mr. Douce shall be an Executive Vice President of the Bank during 2006, and 2007.
Report of the Compensation Committee
The general philosophy of the Compensation Committee is to provide executive compensation programs designed to enhance shareholder value, including annual compensation, which consists of salary and bonus awards, and long-term incentive compensation, consisting of stock options. The Committee designs compensation and incentive plans to align the financial interests of the Company’s executive officers to the interests of its shareholders and to attract and retain talented leadership. In making decisions affecting executive compensation, the Committee reviews the nature and scope of the executive officer’s responsibilities as well as his or her effectiveness in supporting the Company’s long-term goals. The Committee also considers the compensation practices of other companies of similar size and complexity to determine an appropriate level of executive compensation.
The Compensation Committee grants options to purchase shares of the Company’s common shares to executive officers under the Stock Ownership Plan. During 2005, the Committee granted options to the executives of the Company to purchase an aggregate of 32,000 shares of stock at an exercise price of $12.00 per share. These options were granted at an exercise price that was equal to the fair value of the Company’s common shares on the date of grant.
On December 20, 2005, the Compensation Committee approved the accelerated vesting of outstanding, unvested stock options awarded to recipients under the Stock Ownership Plan, as amended, with an exercise price higher than the closing market price of the Company’s common stock on December 20, 2005. The closing price of the Company’s common stock on that date was $9.25. The exercise price and exercise period of the accelerated options remain unchanged. Options with exercise prices below the closing market price of the Company’s common stock on December 20, 2005, remain unchanged, including the original vesting date and related terms.
The decision to accelerate the vesting was made primarily to reduce non-cash compensation expense that the Company would have recorded in its income statement in future periods upon the adoption of Statement of Financial Accounting Standard 123(R). The Compensation Committee believes it is in the best interest of the Company’s shareholders to accelerate the vesting of these options to eliminate compensation expense in future periods. The impact of this action is described above under Executive Compensation — Aggregated Option Exercises and Fiscal Year-End Option Value Table.
On January 1, 2006, the Committee implemented an Incentive Bonus Plan for the following executive officers. Messrs. Kramer, Pettit and Williams that develops an incentive bonus pool, as defined by the Incentive Bonus Plan, which may be allocated to each Incentive Bonus Plan participant based upon specific financial and personal performance goals. The Incentive Bonus Plan seeks to first challenge executive officers to exceed financial performance goals in order to develop the incentive bonus pool, from which bonuses may be paid. Allocations are then made to participants based on their ability to meet other specific criteria. The bonus pool is created if actual net earnings exceed budgeted net earnings. If budgeted net earnings are met, the pool is equal to 10% of earnings before income taxes. Messrs. Kramer, Pettit and Williams are eligible to earn incentive compensation equal to 40%, 22.5%
- 8 -
and 10%, respectively, of the bonus pool. If the incentive bonus pool does not have enough funds to meet the sum of those bonuses, allocations are made on a pro rata share basis. If the incentive bonus pool exceeds the sum of the bonuses prescribed, the committee may, at its sole and complete discretion, further allocate the pool among participants in a manner of its own choosing, or it may withdraw those funds from the pool and not allocate it further.
Mr. Douce served as the Company’s President and CEO through December 31, 2005. Mr. Douce received an annual base salary of $128,500 during 2005, which represents no increase over his base salary during 2004. Mr. Douce has an employment and consulting agreement with the Company’s subsidiary, which is described more fully under “Employment Agreements” above. Mr. Kramer succeeded Mr. Douce as President and CEO on January 1, 2006. Mr. Kramer’s base salary for 2006 is $175,000. Mr. Kramer will receive a signing bonus and assistance with relocation expenses up to $100,000. During 2005, Mr. Kramer received $16,000 of his signing bonus and was reimbursed $21,565 for relocation expenses. An additional $62,435 remains to be distributed to Mr. Kramer under his offer letter. Mr. Kramer is eligible to participate in the Company’s 401(k) Plan, Stock Ownership Plan and Bonus Plan. The Summary Compensation Table under Compensation of Directors and Executive Officers above details other information regarding compensation and benefits paid to the CEO and Mr. Kramer’s employment agreement is described in “Employment Agreements” above.
The Compensation Committee also considers the potential impact of Section 162(m) of the Internal Revenue Code of 1986, as amended, which disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1.0 million in any taxable year for the CEO and other executive officers, other than compensation that is performance-based under a plan that is approved by the shareholders of the corporation. Based on these requirements, the committee has determined that Section 162(m) will not prevent the Company from receiving a tax deduction for any of the compensation paid to executive officers during 2005.
Submitted by the Compensation Committee
Robert F. Belden, Chairperson
D. William Allen
J. Edward Diamond (appointed 2/27/2006)
Robert F. Belden, Chairperson
D. William Allen
J. Edward Diamond (appointed 2/27/2006)
- 9 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Management and Directors
Information is set forth below regarding beneficial ownership of common shares of the Company by each current director, each nominee, each named executive officer and all directors and executive officers as a group. Except as otherwise noted, each person has sole voting and investment power as to his common shares. The information set forth below is as of March 1, 2006.
Common Shares | ||||||||||||||||
Underlying | ||||||||||||||||
Common | Warrants and | |||||||||||||||
Shares | Options | Percent | ||||||||||||||
Beneficially | Exercisable | Of | ||||||||||||||
Name | Owned | Within 60 Days | Total | Class | ||||||||||||
D. William Allen | 13,000 | 16,500 | 29,500 | 1.2 | % | |||||||||||
Robert F. Belden(1) | 99,700 | 21,500 | 121,200 | 4.7 | ||||||||||||
Robert E. Boss | 20,200 | 22,000 | 42,200 | 1.6 | ||||||||||||
J. Edward Diamond | 160,000 | 23,500 | 183,500 | 7.2 | ||||||||||||
L. Dwight Douce | 70,530 | 42,000 | 112,530 | 4.4 | ||||||||||||
Scott J. Fitzpatrick | 80,000 | 24,500 | 104,500 | 4.1 | ||||||||||||
D. Michael Kramer | 1,700 | 15,000 | 16,700 | * | ||||||||||||
Gregory A. Long | 42,193 | 24,500 | 66,693 | 2.6 | ||||||||||||
Michael D. Meenan | 21,750 | 24,500 | 46,250 | 1.8 | ||||||||||||
Eric S. Nadeau | 500 | 13,000 | 13,500 | * | ||||||||||||
Steven G. Pettit | 18,300 | 23,000 | 41,300 | 1.6 | ||||||||||||
Daniel H. Plumly | 28,700 | 53,500 | 82,200 | 3.2 | ||||||||||||
Melvin J. Yoder | 150 | 3,500 | 3,650 | * | ||||||||||||
All Directors(2) and Executive Officers as a Group (15 persons) | 687,727 | 344,500 | 1,032,227 | 40.3 |
* — Ownership less than 1%
(1) | Includes 72,000 common shares held by Belden Brick Company. Mr. Belden disclaims beneficial ownership of those shares and warrants. | |
(2) | Includes Directors of the Company’s subsidiary. |
- 10 -
Security Ownership of Certain Beneficial Owners
Information is provided below about each person known by the Company to be the beneficial owner of more than 5% of its outstanding common shares at March 1, 2006.
Common Shares | ||||||||||||||||
Common | Underlying | |||||||||||||||
Shares | Warrants and | |||||||||||||||
Name and Address of | Beneficially | Options Exercisable | Percent of | |||||||||||||
Beneficial Owner | Owned | Within 60 Days | Total | Class(6) | ||||||||||||
Wellington Management Company, LLP(2) | 194,200 | - 0 - | 194,200 | 8.8 | % | |||||||||||
75 State Street Boston, Massachusetts 02109 | ||||||||||||||||
J. Edward Diamond(3) | 160,000 | 23,500 | 183,500 | 8.3 | ||||||||||||
P.O. Box 9187 Canton, OH 44711 | ||||||||||||||||
Tontine Financial Partners, L.P.(4) | 169,315 | - 0 - | 169,315 | 7.6 | ||||||||||||
Tontine Management, L.L.C. Jeffrey L. Gendell 55 Railroad Avenue, 3rd Floor, Greenwich, Connecticut 06830 | ||||||||||||||||
Bay Pond Partners, L.P.(5) | 153,000 | - 0 - | 153,000 | 6.9 | ||||||||||||
75 State Street Boston, Massachusetts 02109 | ||||||||||||||||
United Community Financial Corp.(4) | 146,000 | - 0 - | 146,000 | 6.6 | ||||||||||||
275 Federal Plaza West Youngstown, Ohio 44503-1203 | ||||||||||||||||
Robert F. Belden(1), (3) | 99,700 | 21,500 | 121,200 | 5.5 | ||||||||||||
P.O. Box 20910 Canton, Ohio 44701 | ||||||||||||||||
L. Dwight Douce(3) | 70,530 | 42,000 | 112,530 | 5.1 | ||||||||||||
305 W. Liberty Street Wooster, Ohio 44691 |
(1) | Includes 72,000 common shares held by Belden Brick Company. Mr. Belden disclaims beneficial ownership of those shares and warrants. | |
(2) | Obtained ownership share through SEC reporting | |
(3) | Obtained ownership share through SEC reporting filed by Company | |
(4) | Obtained ownership share through NASDAQ Corporate Services Network | |
(5) | Obtained ownership share through direct contact with the Company | |
(6) | Calculated based on the number of shares outstanding as of 3/1/2006 |
- 11 -
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 2005, certain directors and executive officers and their associates were customers of, or had transactions with the Company’s subsidiary, Ohio Legacy Bank, N.A. All outstanding loans that were part of such transactions were made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties, and did not involve more than a normal risk of loss or present other unfavorable features. The Company expects that similar transactions will occur in the future.
Loans to individual directors and officers also must comply with Ohio Legacy Bank’s lending policies, regulatory restrictions and statutory lending limits, and directors with personal interest in any loan application are excluded from the consideration of that loan application. As of December 31, 2005, the aggregate balance of all such loans was approximately $2.9 million, or 1.8% of the total net loans then outstanding.
The Ohio Legacy Bank’s Holmes County banking center is leased from an entity that is owned by Messrs. William T. Baker and Randy G. Jones, who are each directors of Ohio Legacy Bank. The term of the lease is fifteen years, which commenced upon occupancy of the property in March 2002. Rent is $87,000 annually for the first five years with increases to $96,000 for years six through ten and to $105,000 for years eleven through fifteen.
During fiscal year 2005, the law firm of Critchfield, Critchfield & Johnston, Ltd., and an affiliated company, Heartland Title Agency, provided legal and other services to the Company and Ohio Legacy Bank. Mr. Plumly is the Chairman and Secretary of the boards of the Company and Ohio Legacy Bank and also is the Managing Member of the law firm of Critchfield, Critchfield & Johnston, Ltd. During 2005, the Company and Ohio Legacy Bank paid $92,241 to the law firm of Critchfield, Critchfield & Johnston, Ltd., and $2,530 to Heartland Title Agency. Management and the board believe the cost of services they provided is comparable to that available from a non-affiliated firm.
The Bank constructed a full service branch office facility located in North Canton, Ohio which opened in late 2005. The land on which the office was constructed was purchased from TAAK Properties, a real estate development partnership owned by two members of the Ohio Legacy Bank board of directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (SEC). Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
Based on review of Forms 3 , 4 and 5 and amendments thereto, completed and submitted by the Company on behalf of the officers and directors the following was noted. One Form 3 was filed late on behalf of Mr. Williams for the granting of stock options upon commencement of employment. Seven Forms 4 were filed late on behalf of Mr. Pettit, Mr. Boss, Mr. Meenan, Mr. Jones, Mr. Douce, Mr. Baker and Mr. Allen all of which were for the redemption of their stock warrants. One other Form 4 was filed late on behalf of Mr. Plumly relating to the exercise of his stock warrants.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Audit and Compliance Committee has the sole authority to select, compensate, oversee, evaluate and, where appropriate, replace the Company’s independent auditor. Additionally, the charter requires the Audit and Compliance Committee to review and approve in advance any audit and non-audit services to be provided by the Company’s independent auditor, other than “prohibited non-auditing services.” The Committee has the sole authority to make these approvals, although such approval has been delegated to the Chairman of the Audit and Compliance Committee. Any actions taken by the Chairman are subsequently presented to the Committee for ratification. The Committee approved all services provided by the Company’s independent auditor in 2005.
- 12 -
Crowe Chizek and Company LLC has acted as the principal independent accountant of the Company since October 2000. The Audit and Compliance Committee has appointed Crowe Chizek to continue as the Company’s independent external auditors for fiscal year 2006. Representatives of Crowe Chizek will be at the 2005 Annual Meeting of Shareholders. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. During 2005 and 2004, the Company paid fees in the aggregate of $88,950 and $50,250, respectively, to Crowe Chizek for various accounting services. Those fees and services are detailed below.
Audit Fees
The following table summarizes the aggregate fees billed for each of the last two fiscal years for professional services rendered by Crowe Chizek for the audit of the Company’s annual financial statements and the review of financial statements included in the Company’s Form
10-QSB:
10-QSB:
2005 | 2004 | |||||||
Audit fees | $ | 82,000 | $ | 45,600 | ||||
Audit related fees | — | — | ||||||
All other fees | — | — | ||||||
Total audit fees | $ | 82,000 | $ | 45,600 | ||||
Tax Fees
The Company engaged Crowe Chizek to assist management with the preparation of the Company’s 2005 and 2004 federal income tax returns and the State of Ohio franchise tax returns. Fees related to these tax compliance services were $6,950 and $4,650 during fiscal years 2005 and 2004, respectively. Crowe Chizek did not perform tax planning services on a contingency fee basis.
Audit-Related and All Other Fees
There were no other services provided by Crowe Chizek during 2005 and 2004 that are not reported in the sections above.
INFORMATION REGARDING BOARD MEETINGS AND
COMMITTEES OF THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS
During 2005, the Board of Directors of the Company met 12 times. Additionally, the independent directors of the Company met 12 times during 2005 without members of management and employee directors present. During 2005, each director attended at least 75% of the total number of meetings of the Board of Directors of the Company and the board committees on which he served. Although the Company does not have a formal policy regarding attendance by members of the Board of Directors at the Company’s Annual Meeting of Shareholders, directors are encouraged to attend and historically have done so.
Corporate Governance Program
In order to place an enhanced focus on the processes utilized by the Company in the conduct of its business, the Company’s Board of Directors has implemented a corporate governance program. The highlights of the program are as follows:
§ | the positions of CEO and Chairman are held by different people. The separation of these offices provides focused leadership at the board level that is independent of management; | ||
§ | charters have been adopted for the Corporate Governance and Nominating Committee, the Audit and Compliance Committee, Compensation Committee and the Executive Committee; |
- 13 -
§ | the board has adopted and implemented a Code of Ethics for Senior Financial Officers, a Director Code of Conduct and a Code of Business Conduct and Ethics for all employees of the Company and its subsidiary; | ||
§ | the Board of Directors established a Corporate Governance and Nominating Committee that is responsible for implementing the corporate governance program and any additional requirements mandated by law or deemed necessary or appropriate by the Board of Directors; and | ||
§ | the Audit and Compliance Committee has developed a process for the receipt, retention and investigation of anonymous submissions by employees or external parties of concerns regarding questionable accounting or auditing matters. |
Charters for the Audit and Compliance Committee, the Nominating and Corporate Governance Committee, the Compensation Committee and the Executive Committee, as well as the Codes of Conduct and Ethics, are available, free of charge, on the Company’s website, http://www.ohiolegacycorp.com. The development and implementation of this corporate governance program is intended to be proactive in nature, comprehensive in scope and forceful in application. The goal of this program is to establish a governance process that fosters, promotes and mandates that appropriate actions are taken and appropriate behavior is maintained, at both the corporate and employee level, to ensure the ongoing success of the Company.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee is comprised of three directors whom the board has determined are independent under rules of the NASD. Messrs. Belden, Diamond and Fitzpatrick are members, with Mr. Diamond serving as the committee Chairperson. Mr. Meenan served and was Chairperson of the Corporate Governance and Nominating Committee until he resigned on February 23, 2006. The members of this Committee are appointed by the Board of Directors and each may be removed, with or without cause, by a majority vote of the Board of Directors. The Corporate Governance and Nominating Committee met four times during 2005.
A summary of the duties of the Corporate Governance and Nominating Committee are as follows:
§ | make recommendations regarding the size and composition of the board, determine the appropriate committee structure of the board and recommend board committee assignments and any changes to such assignments; | ||
§ | establish criteria for the selection of new directors to serve on the Board of Directors and identify individuals qualified to become board members; | ||
§ | make recommendations to the board regarding the director nominees for the next Annual Meeting of Shareholders or the filling of any vacancies on the board; | ||
§ | oversee the evaluation of the board and the board’s effectiveness in fulfilling its role, including a review and evaluation, at least annually, of the performance of the Nominating and Corporate Governance Committee, and make periodic recommendations for improving the board’s effectiveness, at least annually; | ||
§ | act as a forum to hear special concerns relating to substantive and material issues that might arise which require the attention of non-employee directors; and | ||
§ | develop and recommend to the board a set of corporate governance principles applicable to the Company. |
- 14 -
Director qualifications and nominations
The committee’s goal is to assemble a Board of Directors that brings to the Company a variety of perspectives and skills derived from high quality business and professional experience. Although the committee has not adopted specific minimum criteria for director nominees, the committee considers the following factors when evaluating nominees:
§ | the appropriate size of the Company’s Board of Directors; | ||
§ | specific needs of the Company with respect to the particular talents and experience of its directors; | ||
§ | the knowledge, skills and experience of nominees, including experience in business, finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the board; | ||
§ | experience with accounting rules and practices and the financial services industry; and | ||
§ | the desire to balance the benefit of continuity with the fresh perspective provided by new members. |
The committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service. Current members of the board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination. If any member of the board does not wish to continue in service, or if the committee decides not to nominate a member for re-election, the committee first considers the appropriateness of the size of the board. If the committee determines the board seat should remain and a vacancy exists, the committee identifies the desired skills and experience of a new nominee in light of the factors described above. The committee may poll existing board members for candidates or engage a third party to identify, evaluate or assist in the selection of a candidate to fill the vacancy for the unexpired term. To date, the committee has not utilized or paid a third party to assist in the process of identifying and evaluating candidates
Nominations of candidates for election as directors of the Company may be made at a meeting of shareholders by or at the direction of the directors, by any nominating committee or person appointed by the directors, or by any shareholder of the Company entitled to vote for the election of directors who complies with the notice procedures set forth in the Company’s Code of Regulations. Nominations by shareholders are to be made pursuant to timely notice in writing to the Secretary of the Company, as described more fully under “Shareholder Proposals for the 2007 Annual Meeting” below.
Such shareholder nominations must set forth:
(a) | as to each person who is not an incumbent director whom the shareholder proposes to nominate for election as a director: |
(i) | the name, age, business address and residence address of such person; | ||
(ii) | the principal occupation or employment of such person; | ||
(iii) | the class and number of shares of the Company which are beneficially owned by such person; and | ||
(iv) | any other information relating to such person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934 (or any comparable successor rule or regulation under such Act), |
and
(b) | as to the shareholder giving the notice: |
(i) | the name and record address of such shareholder; and |
- 15 -
(ii) | the class and number of shares of the Company that are beneficially owned by the shareholder. Such notice shall be accompanied by the written consent of each proposed nominee to serve as a director of the Company, if elected. |
To date, the Company has not received a shareholder nominee for director.
According to Section 10 of the Company’s Code of Regulations, except as otherwise provided by Ohio law, any director(s) may be removed from office, with or without assigning any cause, by the affirmative vote of at least eighty percent (80%) of the outstanding voting stock present in person or represented by proxy, entitled to vote in respect thereof, at an annual meeting or at any special meeting duly called.
Shareholder communications and proposals
The Company’s Code of Regulations provides guidance for shareholders as to the information required to be submitted to the Company and the manner of communications with the Board of Directors, as well as defining timely submissions by shareholders. The information required by the Code of Regulations related to shareholder nominees to the Board of Directors is provided above under “Director qualifications and nominations.” Timely submissions and the manner of their delivery are described under “Shareholder Proposals for the 2006 Annual Meeting” below.
Audit and Compliance Committee
The Company’s Board of Directors has created a separately-designated standing Audit and Compliance Committee comprised of four independent directors, as defined by Rule 10A-3 of the Exchange Act, Section 301(3)(B) of the Sarbanes Oxley Act of 2002, and applicable NASD rules. The Board of Directors has granted specific authority and responsibilities to the Audit and Compliance Committee through the Audit and Compliance Committee Charter. This charter was filed with the SEC and is available on the Company’s website. The Audit and Compliance Committee was formed with the purpose of, among other duties described in the charter, overseeing the Company’s accounting and financial reporting processes and audits of the Company’s financial statements. Messrs. Long, Fitzpatrick, Yoder and Allen are members of the Audit and Compliance Committee. Mr. Meenan served on the Audit and Compliance Committee until he resigned on February 23, 2006. The Audit and Compliance Committee met ten times during 2005.
The Audit and Compliance Committee has designated Mr. Long to serve as the committee’s chairperson and the Company’s Audit Committee Financial Expert. The Committee determined Mr. Long has an understanding of generally accepted accounting principles and financial statements and the ability to assess the general application of those principles in connection with the accounting for estimates, accruals and reserves. Mr. Long has an understanding of internal control over financial reporting and the functions of an audit committee. He acquired these attributes through his education and experience in preparing, auditing and analyzing financial statements.
The Audit and Compliance Committee has developed procedures for the receipt, retention and treatment of complaints received by the Company from shareholders regarding accounting, internal accounting controls or auditing matters and a process for receiving and investigating confidential, anonymous submission by employees of the Company or its subsidiary of concerns regarding questionable accounting or auditing matters. Any such submissions, as well as any other communications from shareholders, may be made to the Chairperson of the Audit and Compliance Committee at the following address and phone number:
Mr. Gregory A. Long
Long, Cook & Samsa, Inc., CPAs
505 North Market Street
Wooster, Ohio 44691
330-262-7111
Long, Cook & Samsa, Inc., CPAs
505 North Market Street
Wooster, Ohio 44691
330-262-7111
- 16 -
Compensation Committee
The Compensation Committee of the Board of Directors is comprised of three directors, each of whom has been determined by the Board of Directors to be independent under NASD rules and satisfies the requirements of an outside director for purposes of Section 162(m) of the Internal Revenue Code. The members of the Committee may be removed, with or without cause, by a majority vote of the Board of Directors. Messrs. Belden, Diamond and Allen currently serve on the committee. Mr. Meenan served on the Compensation Committee until he resigned on February 23, 2006. The committee met ten times during 2005.
Under the committee’s charter, the committee’s primary duties include:
§ | approving corporate goals and objectives relevant to the compensation of the CEO and reviewing and approving the goals and objectives of executive officers as proposed by the CEO; | ||
§ | reviewing and evaluating the performance of the CEO, executive officers and key employees of the Company in light of the goals and objectives of the Company and approving their annual compensation packages, including base salaries and bonuses, stock options and other stock-based incentives, variable pay amounts and variable pay metrics, based on these evaluations; | ||
§ | reviewing and approving executive incentive compensation plans and equity-based plans in which executive officers and members of the Board of Directors are eligible to participate; and | ||
§ | supervising the administration of the Company’s incentive compensation and stock programs, and providing oversight with respect to the financial aspects of the Company’s benefit plans, including funding policies and investment performance. |
Report of the Audit and Compliance Committee
The Audit and Compliance Committee has reviewed and discussed with the Company’s management the audited financial statements of the Company for the fiscal year ended December 31, 2005. The committee has also discussed with Crowe Chizek all matters required by Statements on Auditing Standards No. 61,Communications with Audit Committees. The committee has also received the written disclosures and the letter from Crowe Chizek required by Independence Standards Board Standard No. 1, and has discussed with Crowe Chizek its independence.
Based on the review and discussions noted above, the Audit and Compliance Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005, for filing with the SEC.
Submitted by the Audit and Compliance Committee
Gregory A. Long, Chairperson
Scott J. Fitzpatrick
Melvin J. Yoder
D. William Allen (appointed 2/27/2006)
Gregory A. Long, Chairperson
Scott J. Fitzpatrick
Melvin J. Yoder
D. William Allen (appointed 2/27/2006)
- 17 -
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the Company’s common shares from December 19, 2002, until December 31, 2005, with the cumulative total return, including reinvestment of dividends, of the NASDAQ Composite Index and the NASDAQ Bank Index. The graph assumes the investment of $100 in the Company’s common shares, the NASDAQ Composite Index and the NASDAQ Bank Index.
12/19/2002 | 12/31/2002 | 12/31/2003 | 12/31/2004 | 12/31/2005 | ||||||||||||||||
Ohio Legacy Corp (OLCB) | 100 | 101 | 128 | 177 | 110 | |||||||||||||||
NASDAQ Composite Index | 100 | 99 | 147 | 160 | 164 | |||||||||||||||
NASDAQ Bank Index | 100 | 101 | 130 | 148 | 145 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Board of Directors who served on the Compensation Committee during fiscal year 2005 were our officers or employees or had any relationship with us that would be required to be disclosed by us under Item 404 of Regulation S-K promulgated by the Securities and Exchange Commission.
- 18 -
SHAREHOLDER PROPOSALS FOR THE 2007 ANNUAL MEETING
To be considered timely, a shareholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 75 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 15th day following the earlier of the day on which such notice of the date of the meeting was mailed or such public disclosure was made.
The 2007 Annual Meeting of Shareholders of Ohio Legacy Corp is scheduled to be held on April 26, 2007. Any shareholder who intends to present a proposal at that meeting, and who wishes to have the proposal included in the Company’s proxy statement and form of proxy for that meeting, must deliver the proposal to the Company not later than November 15, 2006. Any shareholder who intends to present a proposal at the 2007 Annual Meeting other than for inclusion in the Company’s proxy statement and form of proxy must deliver the proposal to the Company no later than February 25, 2007 (60 days prior to the meeting), and no earlier than January 26, 2007 (90 days prior to the meeting), to be considered a timely submission. The Company reserves the right to exercise discretionary voting authority with respect to any untimely shareholder proposals.
All written submissions of candidates for nomination to the Board of Directors of the Company and other proposals for inclusion in the proxy statement or annual meeting should be made to the Secretary of the Company as follows:
Mr. Daniel H. Plumly
Critchfield, Critchfield & Johnston, Ltd.
225 N. Market Street
Wooster, Ohio 44691
Critchfield, Critchfield & Johnston, Ltd.
225 N. Market Street
Wooster, Ohio 44691
The Secretary shall document the receipt of the notice and forward the notice to the Chairperson of the Corporate Governance and Nominating Committee for review and consideration by the entire committee.
OTHER MATTERS
The Board of Directors is unaware of any matters other than those outlined in this Proxy Statement that may be presented at the Annual Meeting for action on the part of the shareholders. In case any other matters should properly come before the Annual Meeting, or any adjournment thereof, it is the intention of the person named in the enclosed proxy to vote in accordance with his best judgment.
By Order of the Board of Directors | ||
Daniel H. Plumly Secretary and Chairman |
March 15, 2006
- 19 -
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Please complete, date, sign and mail the detached proxy card in the
enclosed postage-prepaid envelope.
enclosed postage-prepaid envelope.
DETACH PROXY CARD HERE | |||||||||||||||||
OHIO LEGACY CORP | |||||||||||||||||
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS | |||||||||||||||||
IMPORTANT | |||||||||||||||||
THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-ADDRESSED, POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. | |||||||||||||||||
Print your name(s) here | |||||||||||||||||
Signature | |||||||||||||||||
Signature, if jointly held | |||||||||||||||||
Date | , 2006 | ||||||||||||||||
NOTE: The signature(s) on this Proxy should correspond with the name(s) in which your shares are registered. When shares are registered jointly in the names of two or more persons, all should sign. When signing as an attorney, executor, administrator, trustee or guardian, please give your full title as such. A proxy given by a corporation should be signed in the corporate name by the Chairman of its Board of Directors, its President, Vice President, Secretary or Treasurer. |
OHIO LEGACY CORP
PROXY
ANNUAL MEETING OF SHAREHOLDERS
April 27, 2006
This proxy is solicited on behalf of the Board of Directors of Ohio Legacy Corp
The undersigned hereby appoints D. Michael Kramer, the proxy of the undersigned, with full power of substitution to vote all common shares of Ohio Legacy Corp, which the undersigned is entitled to vote at the Annual Meeting of shareholders of Ohio Legacy Corp, to be held April 27, 2006 as specified below:
1. | Election of Directors: | |||||||||||
Class III: | 01 D. Michael Kramer | Class I: | 02 | J. Edward Diamond | ||||||||
03 | L. Dwight Douce | |||||||||||
04 | Daniel H. Plumly | |||||||||||
[ ]FORall Nominees | [ ]WITHHOLD AUTHORITYto vote for all Nominees |
(Instructions: If you wish to withhold authority to vote for any individual nominee, write that nominee’s name in the space below.)
2. | In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. |
Important: Please sign and date this proxy on the reverse side.
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-ADDRESSED, POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.