FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street, Columbia, Tennessee 38402-1148
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on the 17th day of April, 2001
To the Stockholders of First Farmers and Merchants Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
First Farmers and Merchants Corporation will be held at the Memorial Building,
308 West 7th Street, Columbia, Tennessee 38401, on the 17th day of April,
2001 at 4:00 o'clock P.M., local time, for the following purposes:
1. Election of Directors: Election of sixteen (16) persons listed in the
Proxy Statement dated March 26, 2001, accompanying the notice of said
meeting.
2. Transacting such other business as may properly be brought before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on March 2, 2001, are
entitled to notice of and to vote at the meeting.
To assure that your shares are represented at the meeting, please mark,
date, sign and promptly return the enclosed proxy. The proxy is revocable and
will not affect your right to vote in person in the event you are able to
attend the meeting.
By order of the Board of Directors
Martha M. McKennon
Secretary
March 26, 2001
FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street
Columbia, Tennessee 38402-1148
PROXY
March 26, 2001
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Stockholder
of First Farmers and Merchants Corporation of Columbia, Tennessee do nominate,
constitute, and appoint Edward A. Cox, Bettye Cornwell, and C. Allan Kerley
or any of them with full power to act alone, my true and lawful representative
with respect to all shares of Common Stock of First Farmers and Merchants
Corporation which the undersigned would be entitled to vote, at the Annual
Meeting of Stockholders to be held on April 17, 2001, at 4:00 p.m., local time
at the office of the Memorial Building, 308 West 7th Street, Columbia,
Tennessee 38401, or any adjournment thereof, with all the powers the
undersigned would possess if personally present, as follows:
1. Election of the sixteen (16) persons listed below as Directors:
FOR all nominees listed below [ ] AGAINST all nominees listed below [ ]
(Except as marked to the contrary)
Kenneth A. Abercrombie W. J. Davis, Jr. Waymon L. Hickman Dan C. Wheeler
James L. Bailey, Jr. Tom Napier Gordon Dr. Joseph W. Remke, III Dr. David S. Williams
Hulet M. Chaney Edwin W. Halliday T. Randy Stevens David I. Wise
H. Terry Cook, Jr. Dr. O. Rebecca Hawkins John P. Tomlinson, III W. Donald Wright
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE LISTED ABOVE,
LINE THROUGH OR STRIKE OUT THE NOMINEE'S NAME.
2. At their discretion, Edward A. Cox and/or Bettye Cornwell and/or C. Allan
Kerley are authorized to vote upon such other business as may properly
come before the meeting.
Management at present knows of no other business to be presented by or on
behalf of its management at the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY
MAY BE REVOKED PRIOR TO ITS EXERCISE.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, or guardian, please give full
title. If more than one trustee, all should sign. All joint owners must
sign. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name
by authorized person.
Dated the __________ day of __________, 2001
_________________________________________
_________________________________________
(Signature of Shareholder)
No. of Shares _____ PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
______ I will attend the meeting/reception. ______ Number attending
______ I will not attend the meeting/reception.
FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street
Columbia, Tennessee 38402-1148
BALLOT
March 26, 2001
1. Election of the sixteen (16) persons listed below as Directors:
FOR all nominees listed below [ ] AGAINST all nominees listed below [ ]
(Except as marked to the contrary)
Kenneth A. Abercrombie W. J. Davis, Jr. Waymon L. Hickman Dan C. Wheeler
James L. Bailey, Jr. Tom Napier Gordon Dr. Joseph W. Remke, III Dr. David S. Williams
Hulet M. Chaney Edwin W. Halliday T. Randy Stevens David I. Wise
H. Terry Cook, Jr. Dr. O. Rebecca Hawkins John P. Tomlinson, III W. Donald Wright
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE LISTED ABOVE, LINE
THROUGH OR STRICK OUT THE NOMINEE'S NAME.
Dated the _________ day of ____________, 2001
______________________________________
______________________________________
(Signature of Stockholder)
No. of Shares ____________
FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street
Columbia, Tennessee 38402-1148
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on The 17th day of April, 2001
The accompanying proxy is solicited by and on behalf of the Board of
Directors of First Farmers and Merchants Corporation (the "Corporation") for
use at the Nineteenth Annual Meeting of Stockholders to be held on the 17th
day of April, 2001, and any adjournment thereof. The time and place of the
meeting are set forth in the accompanying Notice of Meeting. All expenses of
preparing, printing, and mailing the proxy and all materials used in the
solicitation thereof will be borne by the Corporation. In addition to the
use of the mails, proxies may be solicited by personal interview, telephone
and telegraph by directors, officers, and other personnel of the Corporation
or its affiliate, none of whom will receive additional compensation for such
services. The Corporation will also request custodians and nominees to
forward soliciting materials to the beneficial owners of stock held of record
by them and will pay reasonable expenses of such persons for forwarding such
material. The date on which this Proxy Statement and the accompanying proxy
are first being mailed to stockholders of the Corporation is the 26th day of
March, 2001.
PURPOSES OF THE MEETING
The Annual Stockholders' Meeting will be held for the purposes of (i)
electing directors and (ii) transacting whatever business may properly be
brought before the meeting or any adjournment thereof.
QUORUM AND VOTING
At the closing of business on March 2, 2001, the Corporation had issued
and outstanding 2,920,000 shares of its common stock. Only holders of record
of Common Stock of the Corporation at the close of business on March 2,
2001, (the "Record Date"), are entitled to notice of and to vote on matters
to come before the Annual Meeting or any adjournment thereof.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock of the Corporation entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting or
any adjournment thereof. A stockholder is entitled to one vote in person or
by proxy at the Annual Meeting for each share of Common Stock of the
Corporation held of record in his/her name.
In each case where the stockholder has appropriately specified how the
proxy is to be voted, it will be voted in accordance with his/her
specifications. Stockholders may designate a person or persons other than
those named in the enclosed proxy to vote their shares at the Annual Meeting
or any adjournment thereof. As to any other matters of business which may be
brought before the Annual Meeting or any adjournment thereof, a vote may be
cast pursuant to the accompanying proxy in accordance with the judgment of
the person or persons voting the same in the best interests of the
Corporation, but management does not know of any other matter of business.
Any stockholder has the power to revoke his/her proxy at any time, insofar as
it has not been exercised, by written notice or subsequently dated proxy,
received by the Corporation, or by revocation given by the stockholder in
person at the Annual Meeting or any adjournment thereof.
PRINCIPAL HOLDERS OF VOTING SECURITIES
As of March 2, 2001, no individual or corporation owned beneficially,
directly or indirectly, more than 5% of the Corporation's voting securities.
As of March 2, 2001, the First Farmers and Merchants National Bank of
Columbia (the "Bank"), the Corporation's subsidiary, held in a fiduciary
capacity as trustee, personal representative, agent or otherwise, 297,105
shares or approximately 10.2% of the Corporation's outstanding Common Stock,
and has the sole right to vote all of these shares. The trust shares will be
voted in a manner consistent with the best interests of the beneficiaries
as determined by the Bank as fiduciary.
The following tabulation sets forth the amount and percentage of the
Corporation Common Stock owned beneficially (as determined in accordance with
the rules and regulations of the Securities and Exchange Commission) as of
March 2, 2001, by all directors and executive officers of the Corporation as a
group. For tabulation of beneficial ownership of Corporation by individual
directors, see ELECTION OF DIRECTORS.
Number of shares owned Beneficially Percentage of
by Directors and Executive Officers Common Stock
as a Group (a total of 19 persons) 2,920,000 shares
____________________________________ ________________
375,030 12.8
ELECTION OF DIRECTORS
At the meeting, sixteen (16) nominees will be proposed for election as
directors to serve until the next Annual Meeting of Stockholders or until
their successors are qualified and elected. The Corporation's Bylaws provide
in Article III, Section 2, that there shall be at least five (5) and not more
than twenty-five (25) Directors. The Board of Directors believes it advisable
that there be sixteen (16) Directors of the Corporation at this time. Proxies
cannot be voted for a greater number than sixteen (16) nominees.
The Board of Directors proposes the election of the nominees listed to
serve until the next Annual Meeting or until their successors are duly
qualified and elected. Fifteen of the nominees are presently serving as
Directors. Mr. Flavius Barker, who is a present member of the Board, has
attained mandatory retirement age. The new proposed Director is Dr. David S.
Williams.
Dr. Williams is a native of Saint Louis, Missouri, and received his
bachelor's degree from Vanderbilt University, Doctor of Dental Surgery degree
from the University of Tennessee College of Dentistry and Master of Science
degree from Saint Louis University Graduate Orthodontic Department. Dr.
Williams resides in Columbia with his wife Nanette and their three children
and has been in private practice in Columbia since 1976. He is a past
president of the Saint Louis University Orthodontic Alumni Association, board
member from Tennessee for the Southern Association of Orthodontists Board of
Directors, board member and president of the Tennessee Association of
Orthodontists and Orthodontic Consultant to the Tennessee Board of Dentistry.
He is currently serving as a board member for the Charles H. Tweed
International Foundation for Education and Research, Secretary-Treasurer of
the Southern Association of Orthodontists and Secretary-Treasurer of the
Tennessee Association of Orthodontists. Active in the First United Methodist
Church in Columbia, Dr. Williams is a past member of the Administrative Board.
Dr. Williams also serves on the Advisory Board for First Farmers and
Merchants National Bank.
Unless contrary instructions are received, it is intended that the shares
represented by proxies solicited by the Board of Directors will be voted in
favor of the election as Directors of all of the nominees named. If for any
reason any one of such nominees is not available for election, the persons
named in the form of proxy have advised that they will vote for such
substitute nominees as the Board of Directors of the Corporation may propose.
The Board of Directors has no reason to expect that any of these nominees will
fail to be candidates at the meeting, and, therefore, does not at this time
have any substitute nominee under consideration. The names and certain
information relating to the sixteen (16) nominees set forth below has been
furnished to the Corporation by the individuals named.
The following information is furnished with respect to the
nominees on the next two pages:
Position Position Business
and Office and Office Director Experience %
Held with Held with of Bank During Last 3/02/01 1 of
Name Age Corporation Bank Since Five (5) Years Class
Kenneth A. Abercrombie 58 Director Director 1988 President, Loretto Casket Co.,Inc. 2,400 0.082%
James L. Bailey, Jr. 58 Director Director 1973 Pharmacist 8,544 0.293%
Flavius A. Barker 70 Director Director 1996 President, Tennessee Farm 518 2 0.018%
(Retires 4/17/01) Bureau Federation
Hulet M. Chaney 56 Director Director 1997 CEO, Tennessee Farmers 6,818 3 0.233%
Insurance Companies
H. Terry Cook, Jr. 60 Director Director 1980 President, Cook Properties, Inc. 25,363 4 0.869%
W. J. Davis, Jr. 54 Director Director 1982 Chairman and CEO, Davis 81,801 5 2.801%
Group, Inc.
Tom Napier Gordon 49 Director Director 1986 Managing Partner, Gordon 68,324 6 2.340%
Brothers Properties
Edwin W. Halliday 68 Director Director 1974 Farmer 8,448 7 0.289%
Dr. O. Rebecca Hawkins 60 Director Director 1999 President, Columbia State 400 0.014%
Community College
Waymon L. Hickman 66 Director Director 1967 Chairman and CEO of the 70,808 8 2.425%
Chairman Chairman Corporation and Bank
and CEO and CEO
Dr. Joseph W. Remke, III 50 Director Director 1999 Optometrist 2,600 0.089%
T. Randy Stevens 49 Director, Director, 1991 President and COO of the 36,400 9 1.247%
President President Corporation and Bank
and COO and COO
John P. Tomlinson III 50 Director, Director, 2000 Senior Executive V.P. of the 7,217 10 0.247%
Senior Senior Corporation and Bank
Executive Executive
V.P. V.P.
Dan C. Wheeler 58 Director Director 1993 Commissioner TN Department 6,634 11 0.227%
of Agriculture
Dr. David S. Williams 54 Orthodontist 2,400 0.082%
(Nominated to
replace retiree)
David I. Wise 69 Director Director 1967 Senior Executive Vice President 43,133 12 1.477%
of the Bank Retired
W. Donald Wright 61 Director Director 1992 Pharmacist 1,016 0.034%
_______ _______
372,824 12.768%
_______ _______
_______ _______
Footnotes
_________
[FN]
<F1>
/1 Unless otherwise indicated, all shares are owned of record.
<F2>
/2 518 shares are registered to Flavius A. Barker or Naomi
Barker, Mr. Barker's wife.
<F3>
/3 4,180 shares are registered to Hulet M. Chaney and Joyce A.
Chaney, Mr. Chaney's wife.
<F4>
/4 8,354 shares are registered to Griffitha G. Cook, Mr. Cook's wife.
<F5>
/5 12,995 shares are registered to Wayne Pressnell Testamentary Trust
number one.
1,600 shares are registered to Estate of W. J. Davis, Sr.
13,010 shares are registered to Winfred J. Davis & Starling Pressnell
Davis, Co-Trustees.
16,651 shares are registered to W. J. Davis, Jr., Trustee, the Davis
Group
640 shares are registered to Mrs. W. J. Davis.
205 shares are registered to Davis Radio Corp.
200 shares are registered to Maury Historic Development
<F6>
/6 9,060 shares are registered to Thomas Napier Gordon, Jr.,
minor son of Mr. Gordon.
9,060 shares are registered to Edward Bradshaw Gordon,
minor son of Mr. Gordon.
400 shares are registered to Teri Hasenour Gordon, wife
of Mr. Gordon.
<F7>
/7 7,280 shares are registered to Polly Ann Halliday, Mr. Halliday's wife.
<F8>
/8 38,044 shares are registered to Waymon L. Hickman and Carey B. Hickman,
Mr. Hickman's wife, joint tenants.
<F9>
/9 400 shares are registered to T. Randy Stevens, custodian
for Branson James Stevens.
12,000 shares are registered to Leesa M. Stevens, Mr. Stevens' wife.
<F10>
/10 50 shares are registered to Teresa J. Beck, wife of Mr. Tomlinson.
<F11>
/11 1,100 shares are registered to Mary Carol Wheeler, wife of Mr. Wheeler.
<F12>
/12 2,000 shares are registered to Mary Neil P. Wise, wife of Mr. Wise.
6,750 shares are registered to David I. Wise 1999 Charitable Remainder
Annuity Trust.
6,887 shares are registered to David I. Wise 1999 Charitable Lead Trust.
</FN>
COMMITTEES OF THE BOARD
There are no standing committees of the Board of Directors of the
Corporation. The Board of Directors of the Corporation met four (4) times
during 2000.
The Board of Directors of the Bank has designated seven (7) standing
committees. They are as follows:
Audit/Compliance/CRA Committee (5 members)
Compensation Committee (7 members)
Deferred Profit Sharing Benefit Committee (5 members)
Executive Committee (7 members)
Trust Committee (5 members)
Risk Management Committee (7 members)
Business Development Committee (11 members)
Audit/Compliance/CRA Committee
______________________________
Functions: The Committee provides assistance to the Board of Directors
in fulfilling their responsibility to the shareholders and potential
shareholders relating to accounting procedures, reporting practices,
regulatory compliance and quality, and integrity of the financial reports of
the Bank. The Committee is composed of directors who are independent of
the management of the Bank, as defined by the New York Stock Exchange, and are
free of any relationship that, in the opinion of the Board of Directors or
Stockholders, would interfere with their exercise of independent judgment as
a committee member. Refer to the Audit/Compliance/CRA Committee Report on
pages 14 through 15.
Number of 2000 meetings: 12
Membership: The Committee membership is made up of five (5) directors
who are not officers of the Bank. They are W. Donald Wright, Chairman, James
L. Bailey, Jr., Edwin W. Halliday, Dan C. Wheeler, and Dr. O. Rebecca Hawkins.
Compensation Committee
______________________
Functions: The Committee recommends to the Board of Directors fees for
board meetings and fees for committee meetings for directors. The Committee
reviews, evaluates and recommends to the Boards of the Corporation and the
Bank officers' compensation program and deferred profit sharing contributions
for all eligible employees. See Compensation Committee Report on executive
compensation on pages 9 through 11.
Number of 2000 meetings: 3
Membership: The membership of the Committee is made up of one (1)
director who is an officer of the Corporation and of the Bank and six (6)
directors who are not officers of the Corporation or the Bank. They are H.
Terry Cook, Jr., Chairman, Kenneth A. Abercrombie, Hulet M. Chaney, W. J.
Davis, Jr., Dan C. Wheeler, W. Donald Wright, and Waymon L. Hickman.
Deferred Profit Sharing Benefit Committee
_________________________________________
Functions: The Committee determines the eligibility of employees to
participate in the Profit Sharing Plan. It supervises records pertaining to
continuity of service and acts on applications for retirement benefits,
applications for leaves of absence, and requests for distribution of
participants' accounts. The Committee is also responsible for preparing annual
reports and financial statements, disclosing benefits to participants, and
reporting to the IRS and the Department of Labor.
Number of 2000 meetings: 1
Membership: The membership of the Committee is made up of one (1)
director who is an officer of the Corporation and the Bank, two (2) directors
who are not officers of the Corporation or the Bank, one (1) advisory director
who is not a director of the Corporation or the Bank, and one (1) employee
who is not a director of the Corporation or the Bank. They are T. Randy
Stevens, Chairman, Tom Napier Gordon, Flavius A. Barker, Bobby Sands
(Advisory), and Amy B. Slagle (Employee).
Executive Committee
___________________
Functions: The Committee reviews and recommends to the Board of
Directors for its approval selected actions with regard to the general
direction and conduct of the Corporation and the Bank. The Committee acts on
loan applications and reviews overdrafts, cash items, loans, lines of credit,
and loan reviews in accordance with Bank's policies which have been approved
by the Board of Directors.
Number of 2000 meetings: 45
Membership: The membership of the Committee is made up of two (2)
directors who are officers of the Corporation and the Bank, four (4) other
directors, none of whom is an officer of the Corporation or the Bank and one
(1) Honorary Director of the Bank, who is not an officer of the Corporation
or the Bank. They are Waymon L. Hickman, Chairman, Virgil H. Moore, Jr.,
Honorary Chairman, James L. Bailey, Jr., H. Terry Cook, Jr., Edwin W.
Halliday, T. Randy Stevens, and David I. Wise.
Trust Committee
_______________
Functions: The Committee supervises the operations of the Trust
Department to ensure proper exercise of the fiduciary powers of the bank.
Number of 2000 meetings: 12
Membership: The membership of the Committee is made up of two (2)
directors who are officers of the Corporation and the Bank and three (3)
directors who are not officers of the Corporation or the Bank. They are
Waymon L. Hickman, Chairman, T. Randy Stevens, Vice Chairman, H. Terry Cook,
Jr., Tom Napier Gordon, and Hulet M. Chaney.
Risk Management Committee
_________________________
Functions: The purpose of the Committee is to study areas of risk within
the bank with emphasis on insurance coverage and bonding requirements.
Number of 2000 meetings: 1
Membership: The membership of the Committee is made up of one (1)
director who is an officer of the Corporation and the Bank, five (5) directors
who are not officers of the Corporation or the Bank and one (1) Advisory
Director of the Bank. They are T. Randy Stevens, Chairman, Flavius A. Barker,
W. J. Davis, Jr., Dr. Joseph W. Remke, III, David I. Wise, Dan C. Wheeler and
Clarence A. Powell, (Advisory). John P. Tomlinson, III serves as Secretary of
the Committee.
Business Development Committee
______________________________
Functions: The purpose of the Committee is to oversee and advise bank
management in the development and execution of its marketing and business
development plans.
Number of 2000 meetings: 1
Membership: The membership of the Committee is made up of two (2)
directors who are officers of the Corporation and the Bank, five (5) directors
who are not officers of the Corporation or the Bank, and four (4) advisory
directors of the bank. They are W. J. Davis, Jr., Chairman, Kenneth
Abercrombie, Dr. O. Rebecca Hawkins, Waymon L. Hickman, Dr. Joseph W.
Remke, III, T. Randy Stevens, W. Donald Wright, Dr. Charles A. Ball
(Advisory), Dr. H. Pitts Hinson (Advisory), and Christa S. Martin (Advisory).
Kim M. Doddridge serves as Committee Coordinator.
Director Attendance
___________________
During fiscal year 2000, there were four (4) meetings of the Board of
Directors of the Corporation and thirteen (13) meetings of the Board of
Directors of the Bank. Each member of the Board, attended at least 75% of
the aggregate meetings of the Boards and committees of which they were members
with the exception of one director who attended an aggregate of 68% of the
Board meetings and Committee meetings to which he was assigned.
COMPENSATION OF DIRECTORS AND OFFICERS
During the fiscal year 2000 each director and officer of the Corporation
received an annual retainer of $1,500.00 and was paid a fee of $425.00 for
each Board meeting attended up to four meetings. Each Active Bank Director
received $425.00 for each Bank Board of Directors' meeting attended. Each
Honorary Bank Director received $400.00 for each Bank Board of Directors'
meeting attended. Each Bank Advisory Director received $250.00 for each Bank
Board of Directors' meeting attended. Each member of the Bank's Executive
Committee received a $6,250.00 annual retainer. Each Active, Honorary and
Advisory Bank Director (excluding salaried officers) received $200.00 for
attendance at any scheduled or officially called Committee meeting of any
standing or specially appointed committee. Active Corporation and Bank
Directors may defer fees payable to them under the Corporation's and Bank's
Directors Deferred Compensation Plans. During the fiscal year 2000, the
Corporation and the Bank paid total cash directors' fees of $124,800.00, and
directors' fees were deferred in the amount of $155,915.00.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
Decisions on compensation of the Bank's executives are made by the seven
member Compensation Committee of the Board. The Compensation Committee
believes that the actions of each executive officer have the potential to
impact the short-term and long-term profitability of the Corporation and the
Bank. Consequently, the Compensation Committee places considerable importance
on its task of designing and administering an executive compensation program.
The Bank has an executive compensation program that is focused on
Corporation shareholder value and the overall performance of the Corporation
and the Bank. The two main components of the executive compensation program
are base salary and bonus.
Compensation
The Compensation Committee's executive compensation program is designed
to provide competitive levels of compensation that are integrated with the
Corporation's and Bank's annual and long-term goals. Executive compensation
is reviewed by the Committee relative to peer group executive compensation
based on national and state survey information. The peer group
used from the national and state surveys utilized institutions in the asset
size range from $500,000,000 to $750,000,000. The national survey also
includes data on adjoining states.
The Compensation Committee approved cash compensation opportunities for
executive officers in 2000 that are consistent with the Compensation
Committee's executive compensation program.
Base Salary
Base salary represents a fixed labor cost and is designed so that senior
management receives acceptable salaries, thereby helping the Corporation and
Bank keep the talent needed to meet the challenges in the financial service
industry. Many factors are included in determining base salaries, such as the
responsibilities borne by the executive officer, the scope of the position,
length of service with the Corporation and Bank; and individual performance;
and what companies in the Peer Group are paying for similar positions. The
Compensation Committee believes that executive officer base salaries should
be slightly above the median of a market-competitive range. Salaries are
reviewed annually.
Bonus
The second component in the executive compensation program is a bonus
plan. Certain strategic goals from the Corporation and the Bank's strategic
plan and financial budget are allocated points relating to goal achievement.
Achievement of all the listed goals would have been a bonus of 25% of base
salaries to all senior officers. Progress towards these goals was graded as
well as individual performance. During fiscal year 2000, a bonus of 12.6%
was paid to eight senior officers and a bonus of 25.2% was paid to the Chief
Executive Officer. Executive officers received bonus payments as follows:
Waymon L. Hickman - $47,977, T. Randy Stevens - $14,251, and John P.
Tomlinson, III - $10,776 (see Summary Compensation Table on page 12).
Chief Executive Officer Compensation
The executive compensation program described above is applied in setting
Mr. Hickman's compensation. Mr. Hickman participates in the same executive
compensation program available to the other executive officers. The
Compensation Committee reviews the executive compensation program in
relationship to the performance of the Corporation's net income and stock
value. Net income for the Corporation and the Bank totaled $8,326,000 for
fiscal year 2000, representing a 10.5% increase above the previous year.
Stock value increased from $55.00 per share at December 31, 1999 to $58.00
per share at December 31, 2000 representing a $3.00 per share increase. The
increase represents an annualized gain of 5.5%, plus $.76 per share in cash
dividends declared in 2000. Based upon these and other factors the 2000 cash
compensation of Mr. Hickman was $266,392. Mr. Hickman had a base salary of
$212,100 which is slightly above the median salary in comparison to his peers
in the national and state surveys indicated above. Mr. Hickman earned a bonus
in the amount of $47,977 that was based on the Corporation's financial results
in 2000.
Conclusion
The Compensation Committee believes that this mix of market-based
salaries and bonus represents a balance that will motivate the management team
to continue to produce strong returns. The Compensation Committee further
believes this program strikes an appropriate balance between the interests and
needs of the Corporation and the Bank in operating its business.
Submitted by the Compensation Committee of the Company's Board of
Directors.
H. Terry Cook, Jr., Chairman
Kenneth A. Abercrombie
Hulet M. Chaney
W. J. Davis, Jr.
Waymon L. Hickman
Dan C. Wheeler
W. Donald Wright
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Cook, Abercrombie, Chaney, Davis, Hickman, Wheeler, and Wright
served as members of the Compensation Committee throughout 2000. During 2000,
the Corporation's bank subsidiary engaged in customary banking transactions
and had outstanding loans to certain of the Corporation's and Bank's
directors, including Messrs. Cook, Abercrombie, Chaney, Davis, Wheeler, and
Wright, and members of the immediate families of such directors and executive
officers. Messrs. Cook, Abercrombie, Chaney, Davis, Wheeler, and Wright,
their affiliates, families, and companies in which they hold ten percent or
more ownership had outstanding loan balances of $352,004 at December 31, 2000.
These loans were made in the ordinary course of business and were made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with others. In the
opinion of management, these loans do not involve more than the normal risk of
collectibility or present other unfavorable features.
REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth the aggregate remuneration accrued or paid
by the Corporation or the Bank during the fiscal years ending December 31,
2000, 1999, and 1998, to the highest compensated officers or directors whose
aggregate remuneration exceeds $100,000.00.
SUMMARY COMPENSATION TABLE
Name of Individual Other Annual All Other
and Principal Position Year Salary/1 Bonus/2 Compensation/3 Compensation/4
Waymon L. Hickman, 2000 $ 212,100 $ 58,992 $ 25,500 $ 42,681
Chairman of the Board, 1999 212,100 23,322 24,000 39,946
Chief Executive Officer & 1998 200,100 19,762 24,000 51,530
Director of
Corporation and Bank
T. Randy Stevens, 2000 $ 126,000 $ 14,251 $ 18,900 $ 21,531
President, Chief 1999 123,504 6,191 18,526 13,214
Operating Officer & 1998 111,600 5,731 16,741 12,250
Director of
Corporation and Bank
John P. Tomlinson, III 2000 $ 95,280 $ 10,965 $ 14,320 $ 6,709
Senior Executive Vice 1999 90,720 11,137 17,758 -
President of Corporation 1998 85,500 4,402 15,827 -
and Bank
<FN>
<F13>
/1 Salaries, cash corporation and bank committee fees.
<F14>
/2 Bonus includes executive bonus incentives, group term
replacement insurance provided, and use of auto.
<F15>
/3 Other annual compensation is the bank's contribution to
the Deferred Profit Sharing Plan. This benefit provided by the
Bank does not discriminate in favor of officers and directors
and is available generally to all salaried employees.
<F16>
/4 Deferred Salary Continuation Plan, Deferred Corporation
and Bank Committee Fees.
</FN>
Fees paid to external auditors required to be disclosed were as follows.
Audit, review of Form 10-Qs, and attestation for
Internal Controls as required by FDICIA $79,000
Information Technology 0
Other $43,000
Shareholder Return
Set forth below is a graph comparing the yearly change in the cumulative
total shareholder return on Corporation Common Stock against the cumulative
total return of the S&P Composite-500 Stock Index and the S&P Major Regional
Bank Composite Index for the period of six years commencing December 31, 1995
and ending December 31, 2000.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The graph displaying the contents of the table below will be
mailed to our stockholders.
VALUE OF $100 INVESTED ON DECEMBER 31, 1995 AT:
1995 1996 1997 1998 1999 2000
FF&M 100.00 120.37 146.47 178.88 216.60 231.41
Regional Banks 100.00 136.67 205.55 227.17 194.75 248.12
S&P 500 100.00 122.08 162.80 209.33 253.38 230.25
<FN>
<F17>
* Assumes that the value of the investment in Common Stock and each index was
$100 on December 31, 1995 and that all dividends were reinvested.
</FN>
DEFERRED PROFIT SHARING PLAN
The Bank has a Deferred Profit Sharing Plan and Trust which has been
approved by the Internal Revenue Service for deferral of income taxation. The
plan includes all eligible employees. All employees who attain age twenty (20)
years, and who complete one (1) year of service with the Bank are eligible to
participate. Participants receive a vested percentage of 25% after two (2)
years of service and 15% each year thereafter until 100% vested at the end of
seven (7) years of participation in the plan. The Bank's contribution to the
Plan and Trust is determined by the annual performance of the Bank and is
subject to approval by the Board of Directors of the Bank annually. The
aggregate amount placed in Trust for the two hundred-fifteen (215)
participants during fiscal year 2000 was $874,565. On December 31, 2000, the
total ending value of Mr. Waymon L. Hickman's account in the Profit Sharing
Plan was $2,117,626. Mr. T. Randy Stevens' account was $802,758, and Mr. John
P. Tomlinson's account was $745,514.
Deferred Profit Sharing Plan
____________________________
Years of Service Amount Vested
________________ __________________
1 No Participation
More than 1 but
Less than 2 0%
2 25%
3 40%
4 55%
5 70%
6 85%
7 100%
REPORT OF THE AUDIT/COMPLIANCE/CRA COMMITTEE
The following Report of the Audit/Compliance/CRA Committee does not
constitute soliciting material and should not be deemed filed or incorporated
by reference in to any other Corporation filing under the Securities Act of
1933 or the Securities Exchange Act of 1934, except to the extent the
Corporation specifically incorporates this Report by reference therein.
During fiscal 2000, the Audit/Compliance/CRA Committee of the Board of
Directors developed a charter for the Committee, which was approved by the
full Board on August 15, 2000. The complete text of the new charter, which
reflects standards set forth in new SEC regulations, is reproduced in the
appendix to this proxy statement.
As set forth in more detail in the charter, the Audit/Compliance/CRA
Committee's primary responsibilities fall into three broad categories:
- The Committee is charged with monitoring the preparation of quarterly
and annual financial reports prepared by the management of First
Farmers and Merchants Corporation and its wholly owned subsidiary,
First Farmers and Merchants National Bank. The Committee's monitoring
includes discussing with management and external auditors draft annual
financial statements and key accounting and reporting matters.
- The Committee is responsible for matters concerning the relationship
between the Corporation and its wholly owned subsidiary and its
external auditors. This relationship includes recommending the
appointment or removal of external auditors; reviewing the scope of
their audit services and related fees, as well as any other services
being provided; and determining whether the external auditors are
independent.
- The Committee oversees management's implementation of effective
systems of internal controls, including the review of the activities
and recommendations of the Bank's internal auditing program.
The Committee has implemented procedures to ensure that during the course
of each fiscal year it devotes the attention that it deems necessary or
appropriate to each of the matters assigned to it under the Committee's
charter. To carry out its responsibilities, the Committee met twelve times
during fiscal 2000.
In overseeing the preparation of the Corporation and its wholly owned
subsidiary's financial statements, the Committee met with both management and
external auditors to review and discuss all financial statements prior to
their issuance and to discuss significant accounting issues. Management
advised the Committee that all financial statements were prepared in
accordance with generally accepted accounting principles. The Committee
discussed the statements with both management and the external auditors. The
Committee's review included discussion with the external auditors of matters
required to be discussed pursuant to Statement on Auditing Standards No. 61
(Communication With Audit Committees).
The Committee continued to monitor the scope and adequacy of the internal
auditing program, including proposals for adequate staffing and to strengthen
internal procedures and controls where appropriate.
On the basis of these reviews and discussions, the Committee recommended
to the Board of Directors that the Board approve the inclusion of the audited
financial statements of First Farmers and Merchants Corporation and its wholly
owned subsidiary, First Farmers and Merchants National Bank, in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2000, for filing
with the Securities and Exchange Commission.
Submitted by the Audit/Compliance/CRA Committee of the Company's Board of
Directors.
W. D. Wright, Chairman
J. L. Bailey, Jr.
E. W. Halliday
Dr. O. R. Hawkins
D. C. Wheeler
CERTIFIED PUBLIC ACCOUNTING FIRM
Upon the recommendation of the Audit Committee of the Bank, the firm of
Kraft Bros., Esstman, Patton & Harrell, PLLC has been selected by the Board of
Directors of both the Corporation and the Bank to serve as principal
accountants for the Corporation and the Bank for the current year. The firm
of Kraft Bros., Esstman, Patton & Harrell, PLLC and its predecessors has
served as principal accountants for more than 39 years. A representative of
the firm will be present at the stockholders meeting and will have the
opportunity to make a statement if he/she so desires.
OTHER MATTERS
As of the date of this Proxy Statement, the management of the Corporation 3
and the Bank knows of no other business that will be presented at this meeting.
ITEMS OF BUSINESS FOR 2002 ANNUAL MEETING OF STOCKHOLDERS
Any proposals by stockholders to be included in the Proxy Statement and
Proxy for consideration at the next Annual Meeting of Stockholders must be
received by management at 816 South Garden Street, Columbia, Tennessee
38402-1148, no later than November 30, 2001.
ANNUAL REPORTS
The annual report of the Corporation to stockholders for the calendar
year 2000 is enclosed, but is not intended to be part of this Proxy Statement.
COPIES OF THE CORPORATION'S ANNUAL REPORT TO SECURITIES AND EXCHANGE
COMMISSION (FORM 10-K) WILL BE MAILED TO STOCKHOLDERS WITHOUT CHARGE UPON
WRITTEN REQUEST MADE TO: PATRICIA N. MCCLANAHAN, TREASURER, FIRST FARMERS AND
MERCHANTS CORPORATION, P. O. BOX 1148, COLUMBIA, TENNESSEE 38402-1148.
By the order of the Board of Directors
Martha M. McKennon
Secretary
March 26, 2001
APPENDIX
First Farmers and Merchants National Bank
Charter and Powers of the Audit Committee
Organization
There shall be a committee of the Board of Directors to be known as the
Audit/Compliance/CRA Committee. This committee shall be composed of directors
who are independent of the management of the Bank and are free of any
relationship that, in the opinion of the Board of Directors or Stockholders,
would interfere with their exercise of independent judgment as a committee
member.
Statement of Policy
The Audit/Compliance/CRA Committee shall provide assistance to the Board of
Directors in fulfilling their responsibility to the shareholders and
potential shareholders relating to accounting procedures, reporting practices,
regulatory compliance and quality and integrity of the financial reports of
the Bank. In so doing, it is the responsibility of the Audit/Compliance/CRA
Committee to maintain free and open means of communication between directors,
independent auditors, internal auditors, compliance personnel, financial
management, officers and employees of the Bank.
Responsibilities
The Committee's duties include basic oversight responsibilities to ensure to
the Directors and shareholders that the accounting and reporting practices of
the Bank are of the highest quality. In addition, their responsibility is to
serve in a capacity which will provide efficiency and control in a changing
and dynamic environment.
In carrying out these responsibilities, the Audit/Compliance/CRA Committee
will:
- - Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the Bank.
- - Meet with the independent auditors and financial management of the Bank to
review the scope of the proposed audit for the current year, review the
audit procedures to be utilized in order to attain the scope, review the
results of the audit once it has been performed and ascertain that
deficiencies or inadequacies noted by the external auditors or
disagreements with management have been resolved.
- - Review with the independent auditors, the internal auditor, the
compliance officer and financial management, the adequacy and
effectiveness of the accounting and financial controls of the Bank,
and elicit any recommendations for the improvement of such internal
control procedures or particular areas where new or more detailed controls
or procedures are desirable. Particular emphasis should be given to
the adequacy of such internal controls to expose transactions, or
procedures that might be deemed illegal or otherwise improper. Further,
the committee periodically should review the Bank's policy statements to
determine their adequacy.
- - Monitor the internal audit function of the Bank including their
independence and authority of their reporting obligations.
- - Approve the adequacy of the proposed audit plan as presented by the
internal auditor for the coming year and monitor the variances from
this plan when needed.
- - Review with the Internal Auditor, the findings and recommendations for
improvement in areas of the Bank which have been reviewed by the internal
audit staff. Ascertain that these weaknesses are improved to an
acceptable level.
- - Engage outside professionals to conduct auditing procedures on areas of
the Bank which do not receive adequate, internally performed coverage.
- - Review with the Compliance Officer issues involving the training of Bank
personnel and implementation of regulatory compliance requirements.
- - Submit the minutes of all meetings of the committee to, or discuss the
matters discussed at each committee meeting with, the Board of Directors.
- - Investigate any matter brought to its attention involving illegal or
improper action with the power to retain outside counsel for this purpose.
- - Review and concur in the appointment, replacement, reassignment, or
dismissal of the Internal Auditor, Compliance Officer or outside group or
individual retained for the purpose of expressing an opinion on the
adequacy of any area of the Bank's internal control structure or financial
reporting procedures.
- - Review and update the Committee's Charter annually.