UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Century Bancorp, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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Notes:
CENTURY BANCORP, INC.
22 Winston Street
Thomasville, North Carolina 27360
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NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 21, 2000
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders
(the "Annual Meeting") of Century Bancorp, Inc. (the "Company") will be held on
November 21, 2000, at 5:00 p.m., Eastern Time, at the main office of the Company
at 22 Winston Street, Thomasville, North Carolina.
The Annual Meeting is for the purpose of considering and voting upon
the following matters:
1. To elect five persons who will serve as directors of the
Company until the 2001 Annual Meeting of Stockholders and
until their successors are duly elected and qualified or until
their earlier death, resignation, retirement, removal or
disqualification;
2. To ratify the selection of Dixon Odom PLLC as the independent
auditor for the Company for the fiscal year ending June 30,
2001; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof. The Board of
Directors is not aware of any other business to be considered
at the Annual Meeting.
The Board of Directors has established September 29, 2000, as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments thereof. In the event there are
not sufficient shares present in person or by proxy to constitute a quorum at
the time of the Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies by the Company.
By Order of the Board of Directors
/s/ Drema A. Michael
Drema A. Michael
Secretary
Thomasville, North Carolina
October 13, 2000
A form of proxy is enclosed to enable you to vote your shares at the Annual
Meeting. You are urged, regardless of the number of shares you hold, to
complete, sign, date and return the proxy promptly. A return envelope, which
requires no postage if mailed in the United States, is enclosed for your
convenience.
CENTURY BANCORP, INC.
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
November 21, 2000
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
General
This Proxy Statement is being furnished to stockholders of Century
Bancorp, Inc. (the "Company") in connection with the solicitation by the board
of directors of the Company (the "Board of Directors" or "Board") of proxies to
be used at the 2000 Annual Meeting of Stockholders (the "Annual Meeting") to be
held on November 21, 2000, at 5:00 p.m., Eastern Time, at the main office of the
Company at 22 Winston Street, Thomasville, North Carolina, and any adjournments
thereof. This Proxy Statement and the accompanying form of proxy were first
mailed to stockholders on or about October 13, 2000. The Company's office is
located at 22 Winston Street, Thomasville, North Carolina 27360 and its
telephone number is (336) 475-4663.
Other than the matters listed on the attached Notice of 2000 Annual
Meeting of Stockholders, the Board of Directors knows of no matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares represented thereby in accordance with their best judgment on such
other business, if any, that may properly come before the Annual Meeting or any
adjournments thereof.
Revocability of Proxy
A proxy may be revoked at any time prior to its exercise by the filing
of a written notice of revocation with the Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
beneficial owner of shares of the Company's outstanding common stock (the
"Common Stock") that are not registered in your own name, you will need
appropriate documentation from the holder of record of your shares to vote
personally at the Annual Meeting.
Solicitation
The Company will pay the cost of preparing, assembling and mailing this
Proxy Statement and other proxy solicitation expenses, if any. In addition to
the use of the mail, proxies may be solicited personally or by telephone by
directors, officers and regular employees of the Company and its wholly-owned
savings bank subsidiary, Home Savings, Inc. SSB (the "Bank"), without additional
compensation therefor. Brokerage houses and nominees have been requested to
forward these proxy materials to the beneficial owners of shares held of record
by such persons and, upon request, the Company will reimburse such persons for
their reasonable out-of-pocket expenses in doing so.
Voting Securities and Vote Required for Approval
Regardless of the number of shares of Common Stock owned, it is
important that stockholders be present in person or represented by proxy at the
Annual Meeting. Stockholders are requested to vote by completing, signing,
dating and returning the enclosed proxy in the enclosed postage-paid envelope.
Any stockholder may vote for or against, or may abstain or withhold authority to
vote on any matter to come before the Annual Meeting. If the enclosed proxy is
properly completed, signed, dated and returned, and not revoked, it will be
voted in accordance with the instructions
1
therein. If a proxy is returned with no instructions given, the proxy will be
voted FOR the nominees for election to the Board of Directors named in this
Proxy Statement and FOR the other matters described in this Proxy Statement
calling for a vote of the stockholders. If instructions are given with respect
to some but not all proposals, such instructions as are given will be followed
and the proxy will be voted FOR the proposals for which no instructions are
given.
The close of business on September 29, 2000 has been fixed by the Board
of Directors as the record date ("Record Date") for the determination of those
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. As of the Record Date, the Company had outstanding
1,105,019 shares of Common Stock. Each share of Common Stock entitles its owner
to one vote on each matter calling for a vote of stockholders at the Annual
Meeting.
The presence, in person or by proxy, of the holders of at least a
majority of shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. To determine whether a
quorum is present, the Company will count all shares of Common Stock present at
the Annual Meeting, either in person or by proxy, whether or not such shares are
voted for any matter. Since many of our stockholders cannot attend the Annual
Meeting, it is necessary that a large number be represented by proxy.
Accordingly, the Board of Directors has designated proxies to represent those
stockholders who cannot be present in person and who desire to be so
represented. In the event there are not sufficient stockholders present, in
person or by proxy, to constitute a quorum or to approve or ratify any proposal
at the time of the Annual Meeting, the Annual Meeting may be adjourned in order
to permit the further solicitation of proxies.
In order to be elected, a nominee to the Board of Directors need only
receive a plurality of the votes cast in the election of directors. As a result,
those persons nominated for election who receive the largest number of votes
will be elected as directors. Accordingly, shares not voted for any reason with
respect to any one or more nominees will not be counted as votes against such
nominees. No stockholder has the right to cumulatively vote his or her shares in
the election of directors.
The proposal to ratify the appointment of the Company's independent
auditor for the year ending June 30, 2001 will be approved if the votes cast in
favor of such proposal exceed the votes cast opposing the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that any person who acquires the beneficial ownership of more than 5%
of the Common Stock of the Company notify the Securities and Exchange Commission
(the "SEC") and the Company. Following is certain information, as of the Record
Date, regarding all persons or "groups", as defined in the Exchange Act, who
held of record or who are known to the Company to own beneficially more than 5%
of the Company's Common Stock.
2
Amount and
Nature of Percentage
Name and Address Beneficial of
of Beneficial Owner Ownership/1/ Class/2/
- ------------------- ----------- ----------
Henry H. Darr 198,837/3/ 17.90%
620 Trindale Road
Trinity, NC 27370
F. Stuart Kennedy 198,837/3/,/4/ 17.90%
1100 Dover Drive
Thomasville, NC 27360
Milton T. Riley, Jr. 201,537/3/,/5/ 18.14%
605 Burke Trail
Thomasville, NC 27360
Einar Paul Robsham 58,200 5.27%
P. O. Box 5183
Cochituate, MA 01778
- ------------------------------------
/1/ Unless otherwise noted, all shares are owned directly or indirectly by the
named individuals, by their spouses and minor children, or by other
entities controlled by the named individuals.
/2/ Based upon a total of 1,105,019 shares of Common Stock outstanding at
the Record Date and the shares underlying options that have vested or
are exercisable within 60 days under the Century Bancorp, Inc. Stock
Option Plan ("Option Plan"). Assumes exercise of only those options
included with respect to designated recipients.
/3/ Includes 159,858 shares held by the Home Savings, Inc. SSB Employee Stock
Ownership Plan (the "ESOP") and 16,034 shares held by the Home Savings,
Inc. SSB Management Recognition Plan and Trust ("MRP"). Mr. Darr,
Mr. Kennedy and Mr. Riley are trustees under the ESOP and MRP and share
certain voting and investment power with respect to such shares. Also
includes 6,111 shares underlying options which are vested or are
exercisable within 60 days under the Option Plan.
/4/ This number also includes 9,000 shares owned by a family limited
partnership and 2,400 shares owned by Mr. Kennedy's wife. Mr. Kennedy
disclaims beneficial ownership of shares owned by his wife.
/5/ This number also includes 1,200 shares owned by Mr. Riley's wife. Mr. Riley
disclaims beneficial ownership of shares owned by his wife.
Set forth below is certain information, as of the Record Date,
regarding those shares of Common Stock owned beneficially by each of the members
of the Board of Directors (all of whom are nominees for re-election at the
Annual Meeting), each of the members of the board of directors of the Bank, the
executive officers of the Company and the Bank, and the directors and executive
officers of the Company and the Bank as a group. All persons listed as directors
are directors of the Company and the Bank.
3
Amount and
Nature of Percentage
Beneficial of
Name and Address Ownership/1/, /2/ Class/3/
- ---------------- --------------- ----------
James G. Hudson, Jr., President, Chief 56,493/4/ 5.0%
Executive Officer, Treasurer and Director
3 Paddock Lane
Thomasville, NC 27360
Drema A. Michael, Secretary and 27,579/5/ 2.47%
Assistant Treasurer
444 Hannersville Road
Lexington, NC 27292
John E. Todd, Vice President 26,271/6/ 2.35%
904 Grove Circle
Thomasville, NC 27360
John R. Hunnicutt, Director 18,201/7/ 1.64%
1014 Pine Needle Lane
Thomasville, NC 27360
Milton T. Riley, Jr., Director 201,537/8/,/9/ 18.14%
605 Burke Trail
Thomasville, NC 27360
F. Stuart Kennedy, Director 198,837/8/,/10/ 17.90%
1100 Dover Drive
Thomasville, NC 27360
Henry H. Darr, Director 198,837/8/ 17.90%
620 Trindale Road
Trinity, NC 27370
Directors and Executive Officers as a 350,527/11/,/12/ 29.71%
Group (7 Persons)
- --------------------------------
/1/ Voting and investment power is not shared unless otherwise indicated.
/2/ Unless otherwise noted, all shares are owned directly or indirectly by
the named individuals, their spouses and minor children, or other
entities controlled by the named individuals.
/3/ Based upon a total of 1,105,019 shares of Common Stock outstanding at
the Record Date and the shares underlying options that have vested or
are exercisable within 60 days under the Option Plan. Assumes exercise
of only those options included with respect to designated recipients.
/4/ This number includes 2,685 shares owned by Mr. Hudson's wife. Mr.
Hudson disclaims beneficial ownership of the shares owned by his wife.
This number also includes 22,911 shares subject to options which have
vested or are exercisable within 60 days under the Option Plan, 7,864
shares allocated to Mr. Hudson under the ESOP and 3,055 restricted
shares not yet vested under the MRP.
/5/ This number includes 13,749 shares subject to options which have vested
or are exercisable within 60 days under the Option Plan, 5,058 shares
allocated to Ms. Michael under the ESOP and 1,833 restricted shares not
yet vested under the MRP.
/6/ This number includes 13,749 shares subject to options which have vested
or are exercisable within 60 days under the Option Plan, 5,190 shares
allocated to Mr. Todd under the ESOP and 1,833 restricted shares not
yet vested under the MRP.
/7/ Includes 6,111 shares underlying options which are vested or are
exercisable within 60 days under the Option Plan and 611 shares not
yet vested under the MRP.
4
/8/ Includes 159,858 shares held by the ESOP and 16,034 shares held by the
MRP. Mr. Darr, Mr. Kennedy, and Mr. Riley are trustees under the ESOP
and MRP and share certain voting and investment power with respect to
such shares. Also includes 6,111 shares underlying options which are
vested or are exercisable within 60 days under the Option Plan.
/9/ This number includes 1,200 shares owned by Mr. Riley's wife. Mr. Riley
disclaims beneficial ownership of shares owned by his wife.
/10/ This number includes 9,000 shares owned by a family limited partnership.
This number also includes 2,400 shares owned by Mr. Kennedy's wife.
Mr. Kennedy disclaims beneficial ownership of shares owned by his wife.
/11/ The 159,858 shares held by the ESOP and the 16,034 shares held in the
MRP for which the trustees, Messrs. Darr, Riley and Kennedy, share
certain voting and investment power have been included only once in the
total number of shares owned beneficially by the directors and
executive officers as a group.
/12/ Includes 74,853 shares underlying options which are vested or are
exercisable within 60 days under the Option Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of the
Company's Common Stock to file reports of ownership and changes in ownership
with the SEC. Executive officers, directors and greater than ten percent
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during the fiscal year ended June 30, 2000,
all of its executive officers and directors and greater than ten percent
beneficial owners complied with all applicable Section 16(a) filing
requirements.
5
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
The Articles of Incorporation of the Company provide that the number of
directors of the Company shall not be less than five nor more than fifteen, with
the exact number within this range to be fixed from time to time by the Board of
Directors. The Board of Directors has currently fixed the size of the Board at
five members.
The Board of Directors has nominated the five persons named below for
election as directors to serve as directors of the Company until the 2001 Annual
Meeting of Stockholders and until their successors are elected and qualified, or
until their earlier death, resignation, retirement, removal or disqualification.
The persons named in the accompanying form of proxy intend to vote any
shares of Common Stock represented by valid proxies received by them to elect
the five nominees listed below as directors for the term specified above, unless
authority to vote is withheld or such proxies are revoked. Each of the nominees
for election is currently a member of the Board of Directors. In the event that
any of the nominees should become unavailable to accept nomination or election,
it is intended that the proxyholders will vote to elect in his stead such other
person as the present Board of Directors may recommend or to reduce the number
of directors to be elected at the Annual Meeting by the number of such persons
unable or unwilling to serve (subject to the requirements of the Company's
Articles of Incorporation and Bylaws). The present Board of Directors has no
reason to believe that any of the nominees named herein will be unable to serve
if elected to office. In order to be elected as a director, a nominee need only
receive a plurality of the votes cast.
The following table sets forth as to each nominee, his name, age,
principal occupation during the last five years, the year in which his existing
term of office expires, and the year he was first elected as a director of the
Bank. All of the nominees were appointed to serve as initial directors of the
Company in connection with its incorporation in July, 1996 and have been elected
to serve as directors of the Company continuously since that time. All of the
nominees have been serving as directors of the Bank since before the formation
of the Company. All of the persons listed are being nominated to serve a term of
one year and until their successors shall be elected and qualify or until their
earlier death, resignation, retirement, removal or disqualification.
Age on Existing
June 30, Principal Occupation Term Director
Name 2000 During Last Five Years Expires Since
- ---- ------ ---------------------- ------- ------
Henry H. Darr 59 President, J. L. Darr & Son, Inc. 2000 1980
James G. Hudson, Jr. 60 President, Chief Executive Officer and 2000 1972
Treasurer of the Company and the Bank
John R. Hunnicutt 64 President, McThom, Inc. and McLex, Inc., 2000 1995
licensees of McDonalds Corporation
F. Stuart Kennedy 74 Chairman of the Board, Rex Oil Company 2000 1971
Milton T. Riley, Jr. 63 President, Riley Properties, Inc.; until 1992, 2000 1992
partner with Dixon, Odom & Co., certified
public accountants
Mr. Darr and Mr. Kennedy are cousins.
The Board of Directors recommends a vote FOR all of the nominees for
election as directors.
6
Board of Directors of the Bank
The Bank also has a five member board of directors which is composed of
the same persons who are currently directors of the Company.
Meetings of the Board and Committees of the Board
During fiscal 2000, the Board of Directors of the Company held 12
meetings. All of the existing directors of the Company, all of whom are being
nominated for re-election, attended at least 75% of the aggregate number of
meetings of the Board of Directors and committees of the Board on which they
served during the year ended June 30, 2000.
The Board of Directors of the Company has a standing Audit Committee. The
Company's Audit Committee consists of Mr. Riley, Mr. Kennedy and Mr. Hunnicutt.
This Committee meets periodically to supervise examination of the assets and the
liabilities and the internal audit program of the Company and its subsidiaries
and to cause outside audits to be performed on the financial statements of the
Company. The Audit Committee met one time during the fiscal year ended June 30,
2000.
In addition, the full Board of Directors acts as a nominating committee
each year prior to the annual meeting of stockholders to nominate persons for
election to the Board of Directors.
The Bank's board of directors has appointed three standing committees to
which certain responsibilities have been delegated -- the Loan Committee, the
Audit Committee and the Executive Committee. The Bank's Audit Committee consists
of Mr. Riley, Mr. Hunnicutt and Mr. Kennedy. In addition, the Bank's board of
directors appoints other committees of its members to perform certain more
limited functions from time to time.
The Board of Directors of the Company does not have a compensation
committee. The Bank's full board of directors serves as the Company's
compensation committee and determines the compensation of the executive officers
of the Company and the Bank. The salaries of each of the executive officers is
determined based upon the executive officer's contributions to the Bank's
overall profitability, maintenance of regulatory compliance standards,
professional leadership, and management effectiveness in meeting the needs of
day to day operations. The board of directors also compares the compensation of
the Bank's executive officers with compensation paid to executives of comparable
financial institutions in North Carolina and executives of other businesses in
the Bank's market area. Mr. Hudson participates in the deliberations of the
board of directors regarding compensation of executive officers other than
himself. He does not participate in the discussion or decisions regarding his
own compensation.
Director Compensation
Board Fees. Members of the Board of Directors receive no fees or
compensation for their service as a director of the Company. However, all
members of the Company's Board of Directors are also directors of the Bank. For
their service on the Bank's board of directors, all members of the Bank's board
receive $900 per month.
In addition, all non-employee directors who serve on the Bank's board
committees receive $150 per meeting for their service. Board fees are subject to
adjustment annually.
Executive Officers
The following table sets forth certain information with respect to the
persons who are executive officers of the Company and the Bank.
7
Employed By
the Bank or
Age on Positions and Occupations the Company
Name June 30, 2000 During Last Five Years Since
- ---- ------------- ------------------------ ------
James G. Hudson, Jr. 60 President, Chief Executive Officer, and 1972
Treasurer of the Company and the Bank
John E. Todd 54 Vice President of the Company and the 1979
Bank
Drema A. Michael 47 Secretary and Assistant Treasurer of the 1974
Company and the Bank
Management Compensation
Summary Compensation Table. The following table sets forth for the
fiscal years ended June 30, 2000, 1999 and 1998 certain information as to the
cash compensation received by Mr. Hudson, the President, Chief Executive Officer
and Treasurer of the Company and the Bank. There were no other executive
officers whose salary and bonuses exceeded $100,000 for services rendered in all
capacities during the fiscal year ended June 30, 2000. Mr. Hudson has no stock
appreciation rights.
8
All Other
Annual Compensation Long Term Compensation Awards Compensation
-------------------------------------------------- ---------------------------------- -------------
Other Annual Restricted
Name and Compensation Stock Securities Underlying
Principal Position Year Salary Bonus ($)/3/ Awards Options/in Shares
- ------------------ ---- ------ ----- -------------- ------ -----------------
James G. Hudson, Jr. 2000 $122,300/1/ $ 17,730/2/ $ -0- $ -0- -0- $22,000/8/
President, Chief Executive
Officer,
Treasurer and Director
1999 $116,300/1/ $ 18,404/4/ $ -0- $ -0- -0- $22,000/8/
1998 $110,700/1/ $113,623/5/ $ -0- $272,277/6/ 10,183/7/ $22,000/8/
- -----------------------
/1/ Includes director's fees of $10,800, $10,800 and $10,200 for Mr. Hudson's
service on the Bank's Board of Directors in 2000, 1999 and 1998,
respectively.
/2/ Includes $14,407 in bonuses paid under the Bank's bonus compensation plan
and $3,323 in holiday bonuses. See "-- Bonus Compensation."
/3/ Under the "Other Annual Compensation" category, perquisites for the fiscal
years ended June 30, 2000, 1999 and 1998 did not exceed the lesser of
$50,000, or 10% of salary and bonus as reported for any named employee.
/4/ Includes $14,442 in bonuses paid under the Bank's bonus compensation plan
and $3,962 in holiday bonuses. See " "-- Bonus Compensation."
/5/ Includes $19,215 in bonuses paid under the Bank's bonus compensation plan
and $3,769 in holiday bonuses. See "-- Bonus Compensation." Also includes
the value of the shares granted to Mr. Hudson under the MRP which were
immediately vested on the date of the grant, then estimated to be $90,729.
/6/ On March 10, 1998, Mr. Hudson was awarded 4,073 shares of Common Stock
of the Company pursuant to the MRP. On such date the shares had a
market value of $89.125 per share. Subject to the provisions of the
MRP, 25% of the shares vested on the date of the grant and 25% will
vest at the end of each year thereafter. This amount represents the
then estimated value of the 75% of such shares which did not vest on
the date of the grant. On June 30, 1998, after the adjustments required
under the MRP as a result of the Company's stock dividend on April 6,
1998 of two shares for each share outstanding (the "Stock Dividend")
and $30 per share special dividend on April 6, 1998 (the "Special
Dividend"), the unvested portion of Mr. Hudson's MRP grant totaled
9,164 shares of Common Stock, which had a value of $17.00 per share on
June 30, 1998, for a total value of $155,788.
/7/ On March 10, 1998, Mr. Hudson was granted options to purchase 10,183
shares of the Common Stock of the Company pursuant to the Option Plan.
The options initially had an exercise price of $89.125 per share. In
accordance with the terms of the Option Plan, as a result of the Stock
Dividend and Special Dividend, Mr. Hudson's options were converted into
the right to purchase 30,549 shares at an exercise price of $20.45 per
share.
/8/ This represents the amount accrued under supplemental income agreements
established for the benefit of Mr. Hudson in 2000, 1999 and 1998.
9
Bonus Compensation. The Bank has approved a bonus compensation plan
pursuant to which James G. Hudson, Jr., President, Chief Executive Officer and
Treasurer, receives bonus compensation equal to 1% of the Bank's income before
taxes and John E. Todd, Vice President, and Drema A. Michael, Secretary and
Assistant Treasurer, are each entitled to receive bonuses equal to 0.5% of the
Bank's income before taxes. During the fiscal years ended June 30, 2000, 1999,
and 1998, the bonuses paid to Mr. Hudson totaled $14,407, $14,442 and $19,215,
respectively; and the bonuses paid to each of Mr. Todd and Ms. Michael totaled
$7,205, $7,222 and $9,608, respectively. In addition, employees receive annual
discretionary holiday bonuses, which during the fiscal years 2000, 1999 and 1998
totaled $13,200, $16,000 and $15,000, in the aggregate for all employees. As is
the case with the Bank's compensation arrangements in general, the Bank's bonus
compensation plan is subject to regulatory oversight and, therefore, could be
changed in the future in response to regulatory requirements or otherwise.
Supplemental Income Plans. The Bank has entered into two separate
Supplemental Income Agreements with James G. Hudson, Jr., President, Chief
Executive Officer and Treasurer. These agreements provide that Mr. Hudson will
receive certain specified monthly payments for 15 years upon reaching 65 years
of age. In the event of Mr. Hudson's death before all payments have been made,
benefits would be payable to designated beneficiaries. In addition, if Mr.
Hudson should die prior to reaching 65 years of age, certain monthly payments
would be made for a 15-year period to designated beneficiaries. In the event Mr.
Hudson terminates his employment, for reasons other than death, prior to
reaching 65 years of age, the monthly retirement benefit payment would be
reduced. The benefits payable under the Supplemental Income Agreements are
funded by the purchase of life insurance. During the fiscal year ended June 30,
2000, the Bank accrued $22,000 towards the cost of the benefits to be provided
to Mr. Hudson under the supplemental income plans.
Employment Agreement. In connection with the Bank's conversion from
mutual to stock form in 1996 (the "Conversion"), the Bank entered into an
employment agreement with James G. Hudson, Jr., President, Chief Executive
Officer and Treasurer, in order to establish his duties and compensation and to
provide for his continued employment with the Bank. The agreement now provides
for a base salary of $115,000. The agreement provides for a term of employment
of three years. Commencing on the first anniversary date and continuing on each
anniversary date thereafter, following a performance evaluation of the employee,
the agreement may be extended for an additional year so that the remaining term
shall be three years unless written notice of non-renewal is given by the board
of directors of the Bank. The agreement also provides that base salary shall be
reviewed by the board of directors not less often than annually. In the event of
a change in control (as defined below), Mr. Hudson's base salary shall be
increased by at least 6% annually and the agreement will automatically be
extended so that it will have a three year term after the change in control. In
addition, the employment agreement provides for possible profitability and
discretionary bonuses and participation in all other pension, profit-sharing or
retirement plans maintained by the Bank or by the Company for employees of the
Bank, as well as fringe benefits normally associated with Mr. Hudson's office.
It is now expected that Mr. Hudson will continue to be eligible to receive
bonuses under the existing bonus compensation plan for executive officers, as
such plan may be amended in the future. See " -- Bonus Compensation." It is also
contemplated that Mr. Hudson will receive holiday bonuses computed on the same
basis as those paid to other employees. The employment agreement provides that
it may be terminated by the Bank for cause, as defined in the agreement, and
that it may otherwise be terminated by the Bank (subject to vested rights) or by
Mr. Hudson.
The employment agreement provides that the nature of Mr. Hudson's
compensation, duties or benefits cannot be diminished following a change in
control of the Bank or the Company. For purposes of the employment agreement, a
change in control generally will occur if (i) any "person" (as such term is
defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) directly or
indirectly, acquires beneficial ownership of voting stock, or acquires
irrevocable proxies or any combination of voting stock and irrevocable proxies,
representing 25% or more of any class of voting securities of either the Company
or the Bank, or acquires in any manner control of the election of a majority of
the directors of either the Company or the Bank, (ii) either the Company or the
Bank consolidates or merges with or into another corporation, association or
entity, or is otherwise reorganized, where neither the Company nor the Bank is
the surviving corporation in such transaction, or (iii) all or substantially all
of the assets of either the Company or the Bank are sold or otherwise
transferred to, or are acquired by, any other entity or group.
10
Special Termination Agreements. In connection with the Conversion, the
Company entered into special termination agreements with John E. Todd, Vice
President of the Bank, and Drema A. Michael, Secretary and Assistant Treasurer
of the Bank. Such agreements are intended to ensure that the Bank maintains a
stable and competent management base. The continued success of the Bank depends,
to a significant degree, on the skill and competence of its officers.
The special termination agreements provide for payment to the covered
officer only in the event of a change in control of the Company or the Bank
followed by termination of the officer's employment by the Bank within 24 months
for other than "cause," as such term is defined in the agreements, or in the
event there are certain specified changes in the officer's employment
circumstances within 24 months following a change in control of the Bank or the
Company and the officer terminates his or her employment. In the event of such a
termination of employment, the officer is entitled to payment in an amount equal
to two times his or her salary and bonuses for income tax purposes for the most
recent calendar year, payable in a lump sum or in equal monthly payments. The
term of each of these agreements is for three years. At the end of each
anniversary date of the agreements, they may be extended for another year so
that the remaining term shall be three years unless written notice of
non-renewal is given by the Company's Board of Directors. For purposes of the
special termination agreements, "change in control" has the same meaning as in
the employment agreement with Mr. Hudson. See "-- Employment Agreement." If a
change in control and such a termination occurred during calendar year 2000, Mr.
Todd and Ms. Michael would be entitled to receive $138,274 and $136,212,
respectively, under their special termination agreements.
Severance Plan. In connection with the Conversion, the Bank's Board of
Directors adopted a Severance Plan for the benefit of its employees. The
Severance Plan provides that in the event there is a "change in control" (as
defined in the Severance Plan) of the Bank or the Company and (i) the Bank or
any successor of the Bank terminates the employment of any full time employee of
the Bank in connection with, or within 24 months after, the change in control,
other than for "cause" (as defined in the Severance Plan), or (ii) an employee
terminates his or her employment with the Bank or any successor following a
decrease in the level of such employee's annual base salary rate or a transfer
of such employee to a location more than 40 miles distant from the employee's
primary work station within 24 months after a change in control, the employee
shall be entitled to a severance benefit equal to the greater of (a) an amount
equal to two weeks' salary at the employee's existing salary rate multiplied
times the employee's number of complete years of service as a Bank employee or
(b) the amount of one month's salary at the employee's salary rate at the time
of termination, subject to a maximum payment equal to one half of the employee's
annual salary. Officers of the Bank who, at the time of a "change in control,"
are parties to special termination agreements, or are parties to employment
agreements having a remaining term of more than two years, are not covered by
the Severance Plan.
Employee Stock Ownership Plan. In connection with the Conversion, the
Bank established the Employee Stock Ownership Plan ("ESOP") for eligible
employees of the Bank. Employees with 1,000 hours of employment in a plan year
who have attained age 21 are eligible to participate. As part of the Conversion,
the ESOP borrowed funds from the Company and used the funds to purchase 32,586
of the shares of Common Stock issued in the Conversion. Collateral for the loan
is the Common Stock purchased by the ESOP. The loan will be repaid principally
from the Bank's discretionary contributions to the ESOP over a period of 15
years or less. Dividends, if any, paid on shares held by the ESOP may also be
used to reduce the loan. The loan has not been guaranteed by the Bank. As a
result of the Stock Dividend, the number of shares originally held in the ESOP
was increased to an aggregate of 97,758 shares. The ESOP has subsequently
purchased 62,100 shares, so that as of June 30, 2000 it held 159,858 shares of
Common Stock.
Shares purchased by the ESOP are held in a suspense account for
allocation among participants as the ESOP loan is repaid. Contributions to the
ESOP and shares released from the suspense account in an amount proportional to
the repayment of the ESOP loan are allocated among ESOP participants on the
basis of relative compensation in the year of allocation. Benefits vest in
annual increments with full vesting upon attaining five years of service (with
credit given for years of service prior to the Conversion). Prior to the
completion of five years of credited service, a participant
11
who terminates employment for reasons other than death, retirement (or early
retirement), or disability will receive only vested benefits under the ESOP.
Forfeitures are reallocated among remaining participating employees in the same
proportion as contributions. Benefits immediately vest and are payable upon
death or disability. The Bank's contributions to the ESOP are not fixed, so
benefits payable under the ESOP cannot be estimated.
The Bank has established a committee of the board of directors to
administer the ESOP. Trustees for the ESOP were also appointed. The ESOP
committee may instruct the trustees regarding investment of funds contributed to
the ESOP. Participating employees may instruct the trustees as to the voting of
all shares allocated to their respective ESOP accounts. The unallocated shares
held in the suspense account, and all allocated shares for which voting
instructions are not received, will be voted by the trustees in their discretion
subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended.
Stock Option Plan. On February 17, 1998, the Company's stockholders
approved the Century Bancorp, Inc. Stock Option Plan (the "Option Plan"). The
Stock Option Plan is administered by a committee of the Company's Board of
Directors (the "Committee"). The Company reserved 40,733 shares of Common Stock
(which, as a result of the Stock Dividend, became 122,199 shares) for issuance
upon the exercise of options which have been or may be granted under the Option
Plan. All directors, officers and employees of the Company, the Bank, and any of
the Bank's subsidiaries are eligible for participation in the Option Plan.
Options to purchase 36,661 shares of Common Stock were granted during fiscal
year 1998. As a result of the Stock Dividend, the number of shares subject to
granted options was converted to 109,983, and those options remain outstanding
at June 30, 2000. Of the 109,983 options granted, options to purchase 24,444
shares were granted to non-employee directors of the Company and the remaining
options to purchase 85,539 shares were granted to employees. Options to purchase
12,216 shares remain ungranted.
All options granted during fiscal 1998 had an initial exercise price of
$89.125 per share. However, as a result of the Stock Dividend and the Special
Dividend, in accordance with the Option Plan, the exercise price for all
outstanding options was adjusted to $20.45 per share.
The following table sets forth certain information regarding option
exercises and values of options held by Mr. Hudson. Mr. Hudson has no stock
appreciation rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Shares Acquired Value Options at Options at
Name on Exercise Realized Fiscal Year End/1/ Fiscal Year End/2/
---- ----------- -------- --------------- ---------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
James G. Hudson, Jr. -0- $ 0 22,911/1/ 7,638/1/ $0 $0
- -----------------------
/1/ Twenty-five percent (25%) of the options granted vested on March 10,
1998 and 25% vest each year thereafter. Represents the number of shares
subject to the initial grants, as adjusted pursuant to the Option Plan
to reflect the Stock Dividend.
/2/ The exercise price of the stock options, as adjusted pursuant to the
Option Plan to reflect the Stock Dividend and the Special Dividend, is
$20.45 per share. On June 30, 2000, the fair market value of the Common
Stock was $14.25 per share.
Options granted under the Option Plan to non-employee directors were
vested immediately upon their grant. Options which have been granted to
employees have a vesting schedule which provides that 25% of the options granted
vested on the date of the grant, and 25% will vest on each subsequent
anniversary date, so that the options will be
12
completely vested on the third anniversary of the date of grant. Options become
100% vested upon death, disability or retirement, if earlier. In addition,
options become vested and exercisable in the event an optionee ceases to be an
employee of the Company or the Bank for any reason after the occurrence of a
"change in control" of the Company, as defined in the Option Plan.
Although both incentive and non-qualified options have been granted
under the Option Plan, all of the stock options granted to employees are
intended to be incentive stock options. In the case of an incentive stock
option, an optionee is not deemed to have received taxable income upon the grant
or exercise of the stock option, provided the shares are not disposed of by the
optionee for at least one year after the date of exercise and two years after
the date of grant. No compensation deduction may be taken by the Company at the
time of the grant or exercise of an incentive option, assuming these holding
periods are satisfied. Option grants to non-employee directors do not qualify
for incentive stock option treatment and are "non-qualified" options. Optionees
holding non-qualified stock options are deemed to receive ordinary income upon
exercise of their stock options in an amount equal to the amount by which the
exercise price is exceeded by the fair market value of the stock. The amount of
any ordinary income deemed to be received by the optionees upon the exercise of
non-qualified stock options is a deductible expense of the Company for tax
purposes.
No cash consideration was paid for the options which have been granted
under the Option Plan. The options have an option exercise price of $20.45, the
fair market value of the Common Stock on the date of grant (March 10, 1998), as
adjusted in accordance with the Option Plan to reflect the Stock Dividend and
the Special Dividend. The exercise price may be paid in cash or by delivery of
shares of Common Stock with a market value equal to the exercise price. Upon
exercise of an option, at the request of an optionee, the Committee in its
discretion may make a cash payment to the optionee in lieu of shares of Common
Stock. Such payment, which would result in a cancellation of the option, would
be equal to the market value per share of the Common Stock minus the option
exercise price. Shares issued upon exercise of options may be purchased in the
open market or issued from authorized, unissued shares.
Options granted under the Option Plan have a term of ten years, are not
transferable, except upon death and continue to be exercisable upon retirement.
Unless sooner terminated, the Option Plan will continue in effect for a
period of ten years from the date the Option Plan was approved by the
stockholders and became effective by its terms. The Board of Directors may at
any time alter, suspend, terminate or discontinue the Option Plan, subject to
any applicable regulatory requirements and any required stockholder approval or
any stockholder approval which the Board may deem advisable for any reason, such
as for the purpose of obtaining or retaining any statutory or regulatory
benefits under tax, securities or other laws or satisfying applicable stock
exchange or quotation system listing requirements. The Board may not, without
the consent of the optionee, make any alteration which would deprive the
optionee of his or her rights with respect to any previously granted option.
Termination of the Option Plan would not affect any previously granted options.
Management Recognition Plan. On February 17, 1998, the stockholders of
the Company approved the Home Savings, Inc. Management Recognition Plan ("MRP").
A total of 16,293 shares of Common Stock were issued to the MRP. On March 10,
1998, restricted stock awards of 14,665 shares of the Common Stock were made to
15 directors, officers and employees of the Bank. As a result of the Stock
Dividend, the number of shares of restricted stock issued under the Option Plan
(14,665) was tripled to 43,995 shares, and the number of unissued shares held by
the MRP (1,628) was tripled to 4,884.
The MRP serves as a means of providing the directors, officers, and
employees with an ownership interest in the Company in a manner designed to
encourage such persons to continue their service to the Company and the Bank and
to provide performance incentives. The MRP is administered by a committee of the
Bank's Board of Directors (the "MRP Committee"). All directors, officers, and
employees of the Company and the Bank are eligible for participation in the MRP.
The MRP Committee, in its sole discretion, determines who will receive grants of
restricted stock under the MRP.
13
The shares acquired by the MRP were issued from authorized but unissued
shares of Common Stock. Shares issued under the MRP were issued at no cost to
recipients.
Restricted shares granted under the MRP vest as determined by the MRP
Committee. The shares previously granted vest at a rate of 25% on the effective
date of the award of shares under the MRP and 25% on each subsequent anniversary
date, so that the shares will be completely vested at the end of three years
after the date of award. Awards of Common Stock under the MRP immediately vest
upon the disability or death of a recipient. Shares also become immediately
vested in the event the recipient ceases to be an employee or director of the
Bank or any subsidiary of the Bank following a "change in control" of the
Company, as defined in the MRP. The awards are not forfeitable upon vesting. The
restricted shares granted pursuant to the MRP are held in trust until they
become vested and nonforfeitable. Dividends and other distributions on such
unvested shares are similarly held in trust until the shares to which they
relate become vested and nonforfeitable. Recipients of shares under the MRP vote
all shares after they become vested and nonforfeitable and have the right to
direct the trustees' voting of shares not yet vested.
The MRP may be amended by the Board of Directors of the Bank at any
time. However, no amendment may affect any award previously made under the Plan
without the consent of the recipient.
Certain Indebtedness and Transactions of Management. The Bank makes
loans to its executive officers and directors in the ordinary course of its
business. These loans are currently made on substantially the same terms,
including interest rates, collateral and repayment terms, as those then
prevailing for comparable transactions with nonaffiliated persons, and do not
involve more than the normal risk of collectibility or present any other
unfavorable features. Applicable regulations prohibit the Bank from making loans
to its executive officers and directors at terms more favorable than could be
obtained by persons not affiliated with the Bank. The Bank's policy concerning
loans to executive officers and directors currently complies with those
regulations.
Set forth below is a table describing the loans the Bank has made to
the directors and executive officers and members of their immediate families
since June 30, 1998.
Balance Outstanding at
Borrower Type of Loan Original Loan Amount June 30, 2000
- -------- ------------ -------------------- -------------
James G. Hudson, Jr. Mortgage/Construction $250,000 $ 236,083.03
John E. Todd Consumer/Auto $ 16,700 $ 11,033.23
Mortgage $275,000 $ 265,042.81
Milton T. Riley, Jr. Commercial $750,000 $ 703,534.98
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
Dixon Odom PLLC, the Company's and the Bank's independent auditor for
the year ended June 30, 2000, has been selected as the Company's and the Bank's
independent auditor for the 2001 fiscal year. Such selection is being submitted
to the Company's stockholders for ratification. A representative of Dixon Odom
PLLC is expected to attend the Annual Meeting and will be afforded an
opportunity to make a statement, if he so desires, and to respond to appropriate
questions from stockholders.
The Board of Directors recommends that the stockholders vote
FOR this proposal.
14
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
It is presently anticipated that the 2001 Annual Meeting of
Stockholders will be held in November of 2001. In order for stockholder
proposals to be included in the proxy material for that meeting, such proposals
must be received by the Secretary of the Company at the Company's principal
executive office not later than June 15, 2001, and meet all other applicable
requirements for inclusion therein.
The Company's Bylaws provide that, in order to be eligible for
consideration at an annual meeting of stockholders, all nominations of
directors, other than those made by the Company's Board of Directors, must be
made in writing and must be delivered to the Secretary of the Company not less
than 50 days nor more than 90 days prior to the meeting at which such
nominations will be made; provided, however, if less than 60 days notice of the
meeting is given to stockholders, such nominations must be delivered to the
Secretary of the Company not later than the close of business on the 10th day
following the day on which the notice of meeting was mailed.
OTHER MATTERS
Management knows of no other matters to be presented for consideration
at the Annual Meeting or any adjournments thereof. If any other matters shall
properly come before the Annual Meeting, it is intended that the proxyholders
named in the enclosed form of proxy will vote the shares represented thereby in
accordance with their judgment, pursuant to the discretionary authority granted
therein.
MISCELLANEOUS
The Annual Report of the Company for the year ended June 30, 2000 which
includes consolidated financial statements audited and reported upon by the
Company's independent auditor, is being mailed along with this Proxy Statement;
however, it is not intended that the Annual Report be deemed a part of this
Proxy Statement or a solicitation of proxies.
THE FORM 10-KSB FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
PROVIDED FREE OF CHARGE TO THE COMPANY'S STOCKHOLDERS UPON WRITTEN REQUEST
DIRECTED TO: CENTURY BANCORP, INC., POST OFFICE BOX 989, 22 WINSTON STREET,
THOMASVILLE, NORTH CAROLINA 27361-0989, ATTENTION: JAMES G. HUDSON, JR.
By Order of the Board of Directors,
/s/ Drema A. Michael
Drema A. Michael
Secretary
Thomasville, North Carolina
October 13, 2000
15
REVOCABLE PROXY
CENTURY BANCORP, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 21, 2000
5:00 p.m.
The undersigned hereby appoints the official proxy committee consisting of all
the members of the Board of Directors of Century Bancorp, Inc. (the "Company"),
each with full power of substitution, to act as attorneys and proxies for the
undersigned, and to vote all shares of Common Stock of the Company which the
undersigned is entitled to vote only at the Annual Meeting of Stockholders, to
be held at the offices of the Company, 22 Winston Street, Thomasville, North
Carolina, on November 21, 2000, at 5:00 p.m. and at any and all adjournments
thereof, as follows:
With- For all
For hold Except
1.The approval of the election of the [ ] [ ] [ ]
following named directors:
Henry H.Darr, James G.Hudson,Jr.,John R.Hunnicutt, F. Stuart Kennedy and
Milton T. Riley, Jr. who will serve as directors of the Company until the
2001 Annual Meeting of Stockholders or until their successors are duly elected
and qualify.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except"and write that nominee's name in the space provided below.
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2.The ratification of Dixon Odom PLLC
as the independent auditor of the Company For Against Abstain
for the year ending June 30, 2001. [ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
If a proxy is returned and no instructions are given, the proxy will be voted
for the nominees for election to the Board of Directors named on this Revocable
Proxy and for the ratification of Dixon Odom PLLC as the independent auditor
for the Company for the 2001 fiscal year. If instructions are given with
respect to one but not both proposals, such instructions as are given will be
followed and the proxy will be voted for the proposal on which no instructions
are given.
--------------------------
Please be sure to sign and date | Date |
this Proxy in the box below. | |
- -------------------------------------------------------------
| |
| |
| Stockholder sign above ----- Co-holder (if any) sign above |
- --------------------------------------------------------------
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Detach above card, sign, date and mail in postage paid envelope provided.
CENTURY BANCORP, INC.
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| THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. |
| The above signed acknowledges receipt from the Company, prior to the
| execution of this Proxy, of a Notice of Annual Meeting and a Proxy Statement |
| dated October 13, 2000. |
| Please sign exactly as your name appears hereon.When signing as attorney, |
| executor, administrator, trustee or guardian, please give your full title. |
| If shares are held jointly, each holder may sign, but only one signature is |
| required. |
| |
| PLEASE ACT PROMPTLY |
| SIGN, DATE AND MAIL YOUR PROXY CARD TODAY |
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