FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street, Columbia, Tennessee 38402-1148
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on the 16th day of April, 1996
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 in the Banking Room of the Main Office of First Farmers and
Merchants National Bank of Columbia, 816 South Garden Street,
Columbia, Tennessee 38402-1148, on the 16th day of April, 1996
at 3:00 o'clock P.M., local time, for the following purposes:
1. Fixing number of Directors: Fixing the number of Directors
to be elected at sixteen (16).
2. Election of Directors: Election of sixteen (16) persons
listed in the Proxy Statement dated March 20, 1996, accompanying
the notice of said meeting.
3. 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 1,
1996, 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
O'Neill D. Moore
Secretary
March 20, 1996
FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street
Columbia, Tennessee 38402-1148
PROXY
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 Robin
Courtney, K. C. Dodson, 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
16, 1996, at 3:00 p.m., local time at the office of the First
Farmers and Merchants National Bank of Columbia at 816 South
Garden Street, Columbia, Tennessee 38402-1148, or any
adjournment thereof, with all the powers the undersigned would
possess if personally present, as follows:
1. Fixing the number of Directors to be elected at sixteen (16).
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. 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 H. Terry Cook, Jr. Waymon L. Hickman
T. Randy Stevens James L. Bailey, Jr. W. J. Davis, Jr.
Sam. D. Kennedy Dan C. Wheeler Flavius A.Barker
Thomas Napier Gordon Tillman Knox David I. Wise
Harlan D. Bowsher Edwin W. Halliday Joe E. Lancaster
W. Donald Wright
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE LISTED
ABOVE, LINE THROUGH OR STRIKE OUT THE NOMINEE'S NAME.
3. At their discretion, Robin Courtney and/or K. C. Dodson
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 PROPOSALS 1 AND 2.
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 __________, 1996
_____________________________________________
_____________________________________________
(Signature of Stockholder)
No. of Shares ______________ PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY.
FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street
Columbia, Tennessee 38402-1148
BALLOT
1. Fixing the number of Directors to be elected at sixteen (16).
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. 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 H. Terry Cook, Jr. Waymon L. Hickman
T. Randy Stevens James L. Bailey, Jr. W. J. Davis, Jr.
Sam. D. Kennedy Dan C. Wheeler Flavius A. Barker
Thomas Napier Gordon Tillman Knox David I. Wise
Harlan D. Bowsher Edwin W. Halliday Joe E. Lancaster
W. Donald Wright
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE LISTED
ABOVE, LINE THROUGH OR STRIKE OUT THE NOMINEE'S NAME.
Dated the _________ day of ____________, 1996
______________________________________
______________________________________
(Signature of Stockholder)
No. of Shares ____________
PLEASE MARK, SIGN, DATE AND RETURN THIS BALLOT PROMPTLY.
FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street
Columbia, Tennessee 38402-1148
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on The 16th day of April, 1996
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 Fourteenth Annual Meeting of
Stockholders to be held on the 16th day of April, 1996, 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
20th day of March, 1996.
PURPOSES OF THE MEETING
The Annual Stockholders' Meeting will be held for the purposes
of (i) fixing the number of directors; (ii) electing directors;
and (iii) transacting whatever business may properly be brought
before the meeting or any adjournment thereof.
QUORUM AND VOTING
At the closing of business on March 1, 1996, the Corporation
had issued and outstanding 1,400,000 shares of its common stock.
Only holders of record of Common Stock of the Corporation at
the close of business on March 1, 1996, (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 1, 1996, no individual or corporation owned
beneficially, directly or indirectly, more than 5% of the
Corporation's voting securities. As of March 1, 1996, the First
Farmers and Merchants National Bank of Columbia (the "Bank"),
the Corporation's subsidiary held, of record in a fiduciary
capacity as trustee, executor, agent or otherwise, 121,135
shares or approximately 8.653% 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 1, 1996, 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) 1,400,000 shares
252,746 18.05%
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 elected and
qualified.
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 below to serve until the next Annual Meeting or until
their successors are duly elected and qualified. Fifteen of the
nominees are presently serving as Directors. Mr. Virgil H.
Moore, Jr., who is a present member of the Board, has attained
mandatory retirement age. The new proposed Director is Flavius
A. Barker, President and Chief Executive Officer of the
Tennessee Farm Bureau Federation. He is a native of Sequatchie
County, Tennessee and received his early education from the
Sequatchie County High School. He has been very active in
farming, now operating a 900 acre farm in partnership with his
sons. Mr. Barker has been active in banking and the financial
service industry for many years, having served 30 years as
Director of the Chattanooga Production Credit Association, later
known as the Production Credit Association Board. In 1973, he
was one of six individuals from Sequatchie County who served as
the organizing group for the Citizens Bank which has now grown
into a four county organization.
Being active in many civic and professional organizations, he
has served as the Director of the local Tennessee Farmers
Cooperative and the Soil Conservation Service. He was a
representative from Tennessee to the National Council of
Agricultural Extension Services. His most recent appointment
was by Governor Don Sundquist to serve on the Governor's Council
of Agriculture and Forestry. Being active in the State Farm
Bureau Organization, he was first elected to the Board in 1970
and was elected as Vice President in 1986.
Mr. Barker and his wife, Naomi, have four children and seven
grandchildren. He is an active member of the United Methodist
Church where he serves on the Board of Trustees.
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 below. 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 three pages:
Position & Position & Director Business Experience Shares of Corporation
Office Held Office Held of Bank During Last Beneficially Owned Percent
Name Age With Corporation With Bank Since Five (5)Years as of 3/01/96/1 of Class
Kenneth A. Abercrombie 54 Director Director 1988 President, Loretto Casket 1,200/2 .086%
Co., Inc.
James L. Bailey, Jr. 53 Director Director 1973 Pharmacist 4,146 .296%
Flavius A. Barker 64 President, Tennessee Farm 209/3 .015%
Bureau Federation
Harlan D. Bowsher 67 Director Director 1974 Plant Manager, 9,786/4 .699%
General Electric (retired)
H. Terry Cook, Jr. 55 Director Director 1980 President, Cook Properties,
Inc. 10,853/5 .755%
W. J. Davis, Jr. 49 Director Director 1982 Chairman and CEO, 44,400/6 3.171%
Davis Group, Inc.
Thomas Napier Gordon 44 Director Director 1986 Attorney and Managing 29,201/7 2.086%
Partner, Gordon Brothers
Properties
Edwin W. Halliday 63 Director Director 1974 Farmer 4,224/8 .306%
Waymon L. Hickman 61 Director, Director, 1967 Chairman & Chief 35,500/9 2.536%
President Chairman & Executive Officer
& CEO CEO of Bank
Sam D. Kennedy 69 Director Director 1966 President, Kennedy
Newspapers 7,824/10 .559%
Co., Inc.,
Tillman Knox 67 Director Director 1966 President, Hall & Knox 14,000/11 1.000%
Mining Company, Inc.
Joe E. Lancaster 66 Director Director 1968 Chief Executive Officer, 35,000/12 2.500%
Tennessee Farmers
Insurance Companies
(Retired)
T. Randy Stevens 44 Director & Director, 1991 President & Chief 18,400/13 1.314%
Exec. Vice Pres. President/ Operating Officer
& CAO & C0O of Bank
Dan C. Wheeler 53 Director Director 1993 Commissioner TN Department 2,767/14 .198%
of Agriculture
David I. Wise 64 Director & Director, 1967 Senior Exec.VP/Security/ 22,000/15 1.571%
Vice President Sr. Exec. VP Loan Rev. Officer of Bank
W. Donald Wright 56 Director Director 1992 Partner H & S Pharmacies 508 .036%
240,018 17.144%
Footnotes
1/ Unless otherwise indicated, all shares are owned of record.
2/ 400 shares are registered to Kenneth and Carol Abercrombie
(Mr. Abercrombie's wife).
3/ 209 shares are registered to Flavius A. Barker or Naomi
Barker (Mr. Barker's wife).
4/ 6,570 shares are registered to Barbara J. Bowsher, Mr.
Bowsher's wife
5/ 853 shares are registered to Griffitha G. Cook, Mr. Cook's
wife.
6/ 6,300 shares are registered to Wayne Pressnell Testamentary
Trust number one.
800 shares are registered to Estate of W. J. Davis, Sr.
6,300 shares are registered to Winfred J. Davis & Starling
Pressnell Davis, Co-Trustees.
8,268 shares are registered to W. J. Davis, Jr., Trustee, the
Davis Group
4,212 shares are registered to Starling Pressnell Davis.
320 shares are registered to Mrs. W. J. Davis.
7/ 2,530 shares are registered to Thomas Napier Gordon, Jr.,
minor son of Mr. Gordon.
2,530 shares are registered to Edward Bradshaw Gordon, minor
son of Mr. Gordon.
200 shares are registered to Teri Hasenour Gordon, wife of Mr.
Gordon.
8/ 3,640 shares are registered to Polly Ann Halliday, Mr.
Halliday's wife.
9/ 19,022 shares are registered to Waymon L. Hickman and Carey
B. Hickman (Mr. Hickman's wife), joint tenants.
10/ 200 shares are registered to Elizabeth Ridley Finney
Kennedy, Mr. Kennedy's wife.
490 shares are registered to Elizabeth R. F. Kennedy, Cust.
Mary Susan Berry Kennedy, II (Tenn UGMA)
490 shares are registered to Elizabeth R. F. Kennedy, Cust. Sam
Delk Kennedy, III (Tenn UGMA)
270 shares are registered to Elizabeth R. F. Kennedy, Cust.
William Blackstone (Tenn UGMA)
270 shares are registered to Sam Delk Kennedy, Sr., Cust.
William Emory Blackstone, Jr. (Tenn UGMA)
400 shares are registered to Kennedy Newspapers Co., Inc.
11/ 6,292 shares are registered to Hall and Knox Mining Company.
12/ 20,000 shares are registered to Betty L. Lancaster, Mr.
Lancaster's wife.
13/ 200 shares are registered to T. Randy Stevens, custodian for
Branson James Stevens.
200 shares are registered to T. Randy Stevens, custodian for
Rebecca Lynn Stevens.
6,000 shares are registered to Leesa M. Stevens (Mr. Stevens'
wife).
14/ 2,328 shares are registered to Dan C. Wheeler and Carolyn
Wheeler (wife of Mr. Wheeler).
15/ 1,000 shares are registered to Mary Neil P. Wise (wife of
Mr. Wise)
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 1995.
The Board of Directors of the Bank has designated nine (9)
standing committees. They are as follows:
Audit Committee (4 members)
Compensation Committee (7 members)
Deferred Profit Sharing Benefit Committee (5 members)
Executive Committee (7 members)
Trust Audit Committee (4 members)
Trust Committee (5 members)
Risk Management Committee (7 members)
Business Development Committee (8 members)
Compliance/CRA Committee (6 members)
Audit Committee
Functions: The Committee recommends the certified public
accounting firm to be employed by the Corporation and the Bank
for audit purposes and recommends the areas of responsibility of
the CPA firm. The Committee also meets with the CPA firm to
receive the auditors' evaluation of the conditions of the
Corporation and the Bank, and brings those reports to the
Board of Directors for their consideration. The Committee also meets
with internal auditors for periodic review of the audit program
of the Corporation and the Bank.
Number of 1995 meetings: 4
Membership: The Committee membership is made up of four (4)
directors who are not officers of the Bank. They are Harlan D.
Bowsher, Chairman, James L. Bailey, Jr., Edwin W. Halliday and
Dan C. Wheeler.
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 10, 11 and 12.
Number of 1995 meetings: 2
Membership: The membership of the Committee is made up of two
(2) directors who are officers of the Corporation and of the
Bank and five (5) directors who are not officers of the
Corporation or the Bank. They are Tillman Knox, Chairman,
Kenneth A. Abercrombie, Harlan D. Bowsher, H. Terry Cook, Jr.,
W. J. Davis, Jr., Waymon L. Hickman, and Virgil H. Moore, Jr.
Deferred Profit Sharing Benefit Committee
Functions: The Committee determines the eligibility of
employees to participate in the Profit Sharing Plan; it also
supervises records pertaining to continuity of service, acts on
applications for retirement benefits, applications for leaves of
absence and request for distribution of participants' accounts.
The Committee is also responsible for preparing annual reports,
financial statements, disclosing benefits to participants, and
reporting to the IRS and the Department of Labor.
Number of 1995 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,
one (1) director who is not an officer of the Corporation or the
Bank, two advisory directors who are not directors 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, Thomas Napier Gordon, Robert E. Boruff
(Advisory), Charlotte E. Battles (Advisory) and Amy Slagle.
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 1995 meetings: 47
Membership: The membership of the Committee is made up of
three (3) 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. They are Virgil H. Moore, Jr.,
Chairman, Harlan D. Bowsher, H. Terry Cook, Jr., Waymon L.
Hickman, Tillman Knox, Joe E. Lancaster, and David I. Wise.
Trust Audit Committee
Functions: The Committee recommends the certified public
accounting firm to be employed by the Bank for auditing the
Trust Department. The Committee recommends the areas of
responsibility of the CPA firm and meets with the firm to
receive the auditors evaluation of the condition of the Trust
Department and brings those reports to the Board of Directors
for its consideration. The Committee meets with the internal
auditor for periodic review of audit program.
Number of 1995 meetings: 1
Membership: The membership of the Committee is made up of four
(4) directors who are not officers of the Corporation or the
Bank. They are Harlan D. Bowsher, Chairman, James L. Bailey,
Jr., Edwin W. Halliday, and Dan C. Wheeler.
Trust Committee
Functions: The Committee supervises the Trust Department. Its
duties include establishing and reviewing the investment
strategy of the Trust Department, its major equity commitments
and collective funds performances, and reviewing the earnings
and operations of the Trust Department.
Number of 1995 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, Virgil H.
Moore, Jr., Vice Chairman, Thomas Napier Gordon, Sam D. Kennedy,
and Joe E. Lancaster.
Risk Management Committee
Functions: The purpose of the Committee is to study areas of
risk within the bank with emphasis on insurance coverages and
bonding requirements.
Number of 1995 meetings: 0
Membership: The membership of the Committee is made up of
three (3) directors who are officers of the Corporation and the
Bank, three (3) directors who are not officers of the
Corporation or the Bank and one (1) Advisory Director of the
Bank. They are David I. Wise, Chairman, W. J. Davis, Jr.,
Waymon L. Hickman, Sam D. Kennedy, Joe E. Lancaster, Virgil H.
Moore, Jr., and Clarence A. Powell, (Advisory). O'Neill D.
Moore 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 1995 meetings: 1
Membership: The membership of the Committee is made up of
three (3) directors who are officers of the Corporation and the
Bank, three (3) directors who are not officers of the
Corporation or the Bank, and two (2) advisory directors of the
bank. They are W. J. Davis, Jr., Chairman, H. Terry Cook, Jr.,
Waymon L. Hickman, Virgil H. Moore, Jr., Joseph W. Remke, III
(Advisory), Hulet M. Chaney (Advisory), T. Randy Stevens, and
Don Wright. Nancy Bohannon serves as Committee Coordinator.
Compliance/CRA Committee
Functions: The purpose of the Committee is to oversee and
advise bank management and the Board of Directors in all areas
dealing with Compliance and Community Reinvestment Act.
Number of 1995 meetings: 3
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 of the Bank, one (1) officer of
the Corporation and the Bank, and one (1) officer of the Bank.
They are T. Randy Stevens, Chairman, Bernard Childress
(Advisory), H. Terry Cook, Jr., Connie A. Mayberry, O'Neill D.
Moore and W. Donald Wright.
Director Attendance
During fiscal year 1995, there were four (4) meetings of the
Board of Directors of the Corporation and twelve (12) 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.
COMPENSATION OF DIRECTORS AND OFFICERS
During the fiscal year 1995, each director and officer of the
Corporation received an annual retainer of $1,500.00 and was
paid a fee of $300.00 for each Board meeting attended up to four
meetings. Each Active and Honorary Bank Director received
$325.00 for each Bank Board of Directors' meeting attended.
Each Bank Advisory Director received $200.00 for each Bank Board
of Directors' meeting attended. Each member of the Bank's
Executive Committee received a $6,000.00 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
1995, the Corporation and the Bank paid total cash directors'
fees of $81,610.00, and directors' fees were deferred in the
amount of $128,425.00.
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 $250,000,000.00 to $500,000,000.00. The
national survey also includes data on adjoining states.
The Compensation Committee approved cash compensation
opportunities for executive officers in 1995 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 "REAP"
The second component in the executive compensation program is
the bonus plan referred to as the Reserve for Employee Action
Payments, "REAP". An earnings per share after taxes goal is
established for the Bank on an annual basis. If that goal is
achieved, eligible employees receive an end of the year payment
at the rate of 5% of the employees base salary for the entire
year. If the goal is not reached, the REAP account is reduced
in proportion to the shortage in the net earnings. There is no
ceiling or maximum amount that may be placed in the REAP
account; therefore, employees share proportionally in the amount
that the net earnings exceed the predetermined annual goal.
During fiscal year 1995, the bank exceeded its goal and paid to
264 eligible employees $324,264.23 (equivalent of 7.01% of base
salaries for eligible employees). Executive officers received
REAP payments as follows: Waymon L. Hickman - $11,777.00, T.
Randy Stevens - $6,057.00, O'Neill D. Moore - $6,372.00, and
David I. Wise - $5,451.00 (see Summary Compensation Table on
page 13).
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
$6,115,706.00 for fiscal year 1995, representing a 9.97%
increase above the previous year. Stock value increased from
$45.00 per share at December 31, 1994 to $54.00 per share at
December 31, 1995 representing a $9.00 per share increase. The
increase represents an 20.00% annualized gain, plus a $0.88 per
share cash dividend declared in 1995. Based upon these and
other factors the 1995 cash compensation of Mr. Hickman was
$185,312.00. Mr. Hickman had a base salary of $168,000.00 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 (REAP) in the amount of $11,777.00, that was due
to the corporation's excellent financial results in 1995.
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.
Tillman Knox, Chairman
Kenneth A. Abercrombie
Harlan D. Bowsher
H. Terry Cook, Jr.
W. J. Davis, Jr.
Waymon L. Hickman
Virgil H. Moore, Jr.
REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth the aggregate remuneration
accrued or paid by the Bank or the Corporation during the fiscal
years ending December 31, 1995, 1994, and 1993, to the highest
compensated officers or directors whose aggregate remuneration
exceeds $100,000.00.
SUMMARY COMPENSATION TABLE
FIRST FARMERS & MERCHANTS NATIONAL BANK
Other Annual All Other
Salary/1 Bonus/2 Compensations/3 Compensations/4
Waymon L. Hickman 1995 170,700 14,612 22,500 38,140
President & Chief Executive 1994 172,281 12,579 22,500 33,983
Officer & Director of Bank; 1993 146,500 11,936 21,600 30,726
President & Director of Corporation
T. Randy Stevens 1995 86,400 6,057 12,960 8,827
Director of Bank and Corporation, 1994 79,200 5,544 11,880 7,546
Vice President of Corporation, 1993 72,000 5,278 10,800 6,333
President and Chief Operating
Officer of Bank
O'Neill D. Moore 1995 93,600 6,372 13,635 33,557
Secretary of Bank and Corporation 1994 88,900 6,048 12,960 30,377
Senior Exec. Vice President of Bank 1993 84,100 5,981 12,240 27,497
David I. Wise 1995 77,760 5,451 11,664 49,619
Director of Bank and Corporation 1994 78,000 5,717 11,700 44,640
Senior Exec. Vice President of Bank 1993 78,150 7,706 11,385 39,745
and Vice President of Corporation
/1 Salaries, cash bank and corporation committee fees.
/2 Bonus includes REAP and auto expense.
/3 Other annual compensation is the bank's contribution to the
Deferred Profit Sharing Plan. Any other annual benefits
provided by the Bank does not discriminate in favor of Officers
and Directors and is available generally to all salaried
employees.
/4 Deferred Salary Continuation Plan, Deferred Corporation and
Bank Committee Fees.
Shareholder Return
Set forth below is a graph comparing the yearly change in the
cumulative total shareholder return on the Company 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 five years commencing December 31, 1990 and ending
December 31, 1995.
The graph displaying the contents of the table below will be
mailed to our stockholders.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
FF&M $ 100 $ 114.81 $ 127.77 $ 140.73 $ 166.65 $ 199.98
Regional Banks 100 178.89 227.81 241.52 228.59 359.93
S&P 500 100 130.47 140.41 154.56 156.60 215.45
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Knox, Abercrombie, Bowsher, Cook, Davis, Hickman, and
Moore served as members of the Compensation Committee throughout
1995. During 1995, 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. Knox, Bowsher, and Davis, and members of the immediate
families of such directors and executive officers. Messrs.
Knox, Bowsher, and Davis, their affiliates, families, and
companies in which they hold ten percent or more ownership had
outstanding loan balances of $1,983,005 at December 31, 1995.
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.
Messrs. Hickman, Lancaster, and Moore are stockholders and Board
of Director members of Volunteer Trust Company which
periodically borrows money from the Bank with terms comparable
to other bank customers under similar circumstances.
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 tax. This 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 1995 was $633,45.05. At December 31, 1995,
the total ending value of Mr. Waymon L. Hickman's account in the
Profit Sharing Plan was $1,116,754.89, Mr. O'Neill D. Moore's
account was $45,976.69, Mr. David I. Wise's account was
$743,707.09, and T. Randy Stevens account was $340,490.84.
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%
CERTIFIED PUBLIC ACCOUNTING FIRM
Upon the recommendation of the Audit Committee of the Bank, the
firm of Kraft Bros., Esstman, Patton & Harrell 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 and its predecessors has served as principal
accountants for more than 36 years. A representative of the
firm will be present at the stockholders meeting, will have the
opportunity to make a statement if he/she so desires and will be
available at that time to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the management of the
Corporation and the Bank knows of no other business that will be
presented at this meeting.
ITEMS OF BUSINESS FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
Any proposals by stockholders to be included in the Proxy
Statement and Proxy Form 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 29, 1996.
ANNUAL REPORTS
The annual report of the Corporation to stockholders for the
calendar year 1995 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
O'Neill D. Moore
Secretary
March 20, 1996