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. )
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[_] Preliminary Proxy Statement
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COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
City Holding Company
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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[LOGO]
April 30, 2001
To Our Shareholders:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of shareholders of City Holding Company to be held at the
Charleston Marriott Town Center located at 200 Lee Street, Charleston, West
Virginia 25301, on June 13, 2001, at 1:30 p.m. We look forward to personally
greeting those of you who are able to attend the meeting.
The notice of meeting and proxy statement accompanying this letter
describes the specific business to be acted upon.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the shareholders.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend in person, you are requested to vote, sign, date, and
promptly return the enclosed proxy in the postage-paid envelope provided.
City Holding Company thanks you for your consideration and continued
support.
Sincerely,
/s/ Philip L. McLaughlin,
Philip L. McLaughlin,
Chairman of the Board
CITY HOLDING COMPANY
25 Gatewater Road
Post Office Box 7520
Charleston, West Virginia 25356-0520
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 13, 2001
Notice is hereby given that the Annual Meeting of shareholders of City
Holding Company will be held at the Charleston Marriott Town Center located at
200 Lee Street, Charleston, West Virginia 25301, on June 13, 2001, at 1:30 p.m.
(local time) for the following purposes:
1. To elect seven Class Two (II) directors to serve for a term of three
years and to elect three Class One (I) directors to serve for a term
of two years. The names of the nominees are set forth in the
accompanying proxy statement.
2. To ratify the Board of Directors' appointment of Ernst & Young LLP as
independent auditors of City Holding Company for 2001.
3. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on April 25, 2001, are the
only shareholders entitled to notice of and to vote at the annual shareholders
meeting.
By Order of the Board of Directors,
/s/ Victoria A. Evans
Victoria A. Evans
Secretary
April 30, 2001
IMPORTANT NOTICE
Whether you expect to attend the meeting or not, please vote, sign, date, and
return the enclosed proxy in the enclosed self-addressed, postage-paid envelope
as promptly as possible. If you attend the meeting, you may vote your shares in
person, even though you have previously signed and returned your proxy.
CITY HOLDING COMPANY
25 Gatewater Road
Post Office Box 7520
Charleston, West Virginia 25356-0520
PROXY STATEMENT
Information Concerning the Solicitation
This statement is furnished in connection with the solicitation of proxies
to be used at the Annual Meeting of shareholders of City Holding Company (the
"Company") to be held on June 13, 2001.
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of the Company. The cost of preparing, assembling, and
mailing the proxy material and of reimbursing brokers, nominees, and fiduciaries
for the out-of-pocket and clerical expenses of transmitting copies of the proxy
material to the beneficial owners of shares held of record by such persons will
be borne by the Company. The Company does not currently intend to solicit
proxies otherwise than by use of the mail, but certain officers and regular
employees of the Company or its subsidiaries, without additional compensation,
may use their best efforts, by telephone or otherwise, to obtain proxies. The
proxy materials are being mailed, on or about May 9, 2001, to shareholders of
record at the close of business on April 25, 2001.
A shareholder signing and returning a proxy on the enclosed form has the
power to revoke it at any time before the shares subject to it are voted by
notifying, in writing, Victoria A. Evans, City Holding Company, P.O. Box 7520,
Charleston, West Virginia 25356-0520, by the execution of a proxy with a later
date, or by voting in person at the Annual Meeting the shares represented by the
proxy. If a shareholder specifies how the proxy is to be voted with respect to
any of the proposals for which a choice is provided, the proxy will be voted in
accordance with such specifications. If a shareholder fails to specify with
respect to such proposals, the proxy will be voted FOR proposals One and Two.
Shareholders' Proposals for 2002 Annual Meeting
Shareholders' proposals intended to be presented at the 2002 Annual Meeting
must be delivered to the Secretary at the principal executive offices of the
Company not less than 120 calendar days prior to the first anniversary of the
2001 Annual Meeting. If the date of the 2002 Annual Meeting is changed by more
than 30 days from the anniversary date of the 2001 Annual Meeting, notice by the
shareholder must be received not later than 120 calendar days prior to the 2002
Annual Meeting or 10 calendar days following the date on which public
announcement of the date of the 2002 Annual Meeting is first made. To be so
included, all such submissions must comply with the requirements of Rule 14a-8
of the Securities Exchange Act of 1934. The Board of Directors directs the close
attention of interested shareholders to that Rule. In addition, if the Company
does not receive notice of a shareholder proposal at least 45 days before the
Company first mails its proxy statement for the 2002 Annual Meeting, the persons
named as proxies in the Company's proxy card for the 2002 Annual Meeting will
have discretionary authority to vote on such proposal at the 2002 Annual
Meeting.
Outstanding Voting Securities
Only shareholders of record at the close of business on April 25, 2001 are
entitled to vote at the Annual Meeting. On that day, there were issued and
outstanding 16,887,934 shares of common stock (after deducting an aggregate of
4,979 shares held in treasury). Each share has one vote. The affirmative vote of
a majority of the shares represented and entitled to vote at the Annual Meeting
is required to ratify the appointment of Ernst & Young LLP. Directors are
elected by a plurality of the votes cast. In all elections of directors, each
shareholder shall have the right to cast one vote for each share of stock owned
by him for as many persons as there are directors to be elected, or upon proper
notice to the Company, he may cumulate such votes and give one candidate as many
votes as the number of directors to be elected multiplied by the number of his
shares of stock or he may distribute them on the same principle among as many
candidates and in such manner as he shall desire. If one shareholder has given
notice that he intends to cumulate votes, all shareholders may do so. The
Proxies may cumulate their votes at their discretion.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of the Company's Common Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. Abstentions will be counted as shares present for purposes of
determining the presence of a quorum. As a consequence, abstentions will be
counted as votes against the proposal. Because director nominees must receive a
plurality of the votes cast at the meeting, a vote withheld will not affect the
outcome of the election.
1
STOCK OWNERSHIP OF DIRECTORS, NOMINEES FOR DIRECTOR AND
NAMED EXECUTIVE OFFICERS
The Company's only authorized voting equity security is its Common Stock,
par value $2.50 per share (the "Common Stock"). As discussed on the preceding
pages, the Company's Common Stock has one vote per share on all matters except
the election of Directors.
The table below presents certain information as of the Record Date
regarding beneficial ownership of shares of Common Stock by Directors, nominees
for Director, named executive officers, and all Directors and executive officers
as a group. The Company knows of no person that owns more than 5% of the
outstanding Common Stock.
Common Shares Aggregate
Sole Voting and Subject to a Percentage
Name of Beneficial Owner Investment Power Other (1) Right to Acquire (2) Owned
- ------------------------------------------------------------------------------------------------------------------------
Directors:
Samuel M. Bowling 85,076 6,001 - *
Hugh R. Clonch 19,378 91,985 - *
Robert D. Fisher 10,316 - - *
Jay C. Goldman 11,332 - - *
David W. Hambrick 32,444 3,009 832 *
David E. Haden 62,214 3,199 - *
Frank S. Harkins, Jr. 32,799 10,000 2,777 *
Carlin K. Harmon (3) 43,719 - - *
Tracy W. Hylton II (4) 13,299 - - *
C. Dallas Kayser (4) 33,949 472 - *
Philip L. McLaughlin 32,291 1,852 17,331 *
E. M. Payne III (4) 4,895 54,230 - *
Robert T. Rogers 21,588 2,721 - *
Mark H. Schaul (5) 22,388 1,808 - *
James E. Songer II 5,223 10,251 - *
Albert M. Tieche, Jr. 28,892 - - *
Nominees:
Oshel B. Craigo 9,740 728 -
William H. File, III 12,476 499 - *
Gerald R. Francis 1,000 - - *
Robert E. Grist 28,427 - - *
James L. Rossi 8,550 - - *
Sharon H. Rowe 47,488 8 - *
Mary H. Williams 7,101 56,740 - *
Named Executive Officers:
Matthew B. Call (6) 10,363 5,949 19,533 *
Total 584,948 249,452 40,473 5.18%
_______________________________
* Less than 1%.
(1) Includes shares (a) owned by or with certain relatives; (b) held in various
fiduciary capacities; (c) held by certain corporations; (d) held in trust
by the Company's 401(k) and Profit Sharing Plan; or (e) held in trust by
the Company's Employee Stock Ownership Plan (ESOP).
(2) Includes options to acquire shares of the Company's common stock that are
exercisable within 60 days.
(3) Mr. Harmon will not stand for re-election to the Company's Board of
Directors.
(4) Messrs. Hylton, Kayser, and Payne are nominees for re-election to the Board
of Directors.
(5) Mr. Schaul will retire from the Board of Directors at the 2001 Annual
Meeting.
(6) Mr. Call resigned as an executive officer in April 2001.
2
ELECTION OF DIRECTORS (Proposal 1)
Mr. Thomas E. Lilly resigned from the Board of Directors effective March
31, 2001. Mr. Mark H. Schaul will retire from the Board of Directors at the time
of the 2001 Annual Meeting. Mr. Carlin K. Harmon will not stand for re-election
to the Company's Board of Directors.
There are seven nominees for election as Class Two (II) directors to serve
for terms of three years expiring on the date of the Annual Meeting in 2004.
Messrs. Tracy W. Hylton, II, C. Dallas Kayser, and E. M. Payne, III currently
serve as directors of the Company and will stand for re-election as Class II
directors. The Board of Directors has approved Gerald R. Francis, Oshel B.
Craigo, Sharon H. Rowe, and William H. File, III to stand for election as Class
II nominees at the 2001 Annual Meeting with the remaining Class II
Directors/nominees.
There are three nominees for election as Class One (I) directors to serve
for terms of two years expiring on the date of the Annual Meeting in 2003. The
Board of Directors has approved Robert E. Grist, James L. Rossi, and Mary H.
Williams to stand for election as Class I nominees at the 2001 Annual Meeting.
Each director elected will continue in office until a successor has been
elected. It is intended that the persons named in the accompanying proxy will
vote to elect the seven Class II and three Class I nominees as directors, unless
authority to so vote is withheld. If any nominee is unable to serve, which the
Board of Directors has no reason to expect, the persons named in the
accompanying proxy intend to vote for the balance of those named and, if they
deem it advisable, for a substitute nominee. The names of the nominees for
directors of the Company and the names of directors of the Company whose terms
of office will continue after the Annual Meeting are listed in the following
table.
Name Age Business Experience
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Class II Nominees (Terms Expire in 2004):
Tracy W. Hylton, II 52 Director - Horizon Bancorp, Inc., Beckley, WV until 1998;
Director since 1999 President Eller, Inc., Beckley, WV (Surface Mining); President
- Gracie, Inc., Mabscott, WV (Land Leasing); President -
Lightning, Inc., Skelton, WV (Land Leasing); Vice President -
Nell Jean Enterprises, Inc., Beckley, WV (Retail); President -
Nell Jean Industries, Inc., Mabscott, WV (Mine Supply);
President - New Land Leasing Company, Inc., Skelton, WV;
President - Patience, Inc., Skelton, WV (Surface Mining);
Secretary and Treasurer - Patton, Inc.; Member - T & M, LLC,
Beckley, WV; Executive Vice President - WRM, Inc.; Member -
Harper Hotel LLC, Beckley, WV (Management Company).
C. Dallas Kayser 49 C. Dallas Kayser, LC, Pt. Pleasant, WV (Law Firm); Owner - Twin
Director since 1995 Rivers Realty, Pt. Pleasant, WV (Real Estate); Part Owner -
Deerfield Development, Pt. Pleasant, WV (Real Estate); Part
Owner - Twin K, Inc.; Director and Trustee - Pleasant Valley
Hospital, Inc., Pt. Pleasant, WV (Health Care); Trustee -
United Methodist Foundation of WV, Inc. (Non-profit).
E. M. Payne, III 65 Director - Horizon Bancorp, Inc., Beckley, WV until 1998;
Director since 1999 Partner - File, Payne, Scherer & File, Beckley, WV (Law Firm).
Gerald R. Francis 57 Interim President and Chief Executive Officer - City Holding
Company and City National Bank, Charleston, WV since April
2001; President - People's Bank and Trust Company,
Indianapolis, IN 1996-1999
3
Oshel B. Craigo 63 Owner - Better Foods, Inc. (Restaurants); Owner - Craigo Real
Estate, Inc.; Owner - Mt. State Properties, Inc.; Owner -
Gino's Distributing Co., Inc. (Restaurants); Owner - TB Holding
Inc.; Owner - TBW Franchising; Director - City National Bank,
Charleston, WV
Sharon H. Rowe 49 Director - City National Bank, Charleston, WV; Director -
Horizon Bancorp, Inc., Beckley, WV until 1998; Director -
Greenbrier Valley National Bank until 1999; Director of
Advertising and Public Relations, The Greebrier Resort since
1991; Vice President, Communications - The Greenbrier Resort
Management Company since 1998; West Virginia Tourism
Commission; Director - West Virginia Hospitality and Travel
Association; President - Greenbrier County Convention and
Visitors Bureau; Director - The Education Alliance; Advisor -
West Virginia School of Osteopathic Medicine
William H. File, III 53 Partner - File, Payne, Scherer & File, Beckley, WV (Law Firm)
since 1987; Director - City National Bank, Charleston, WV since
1999; Director - Horizon Bancorp, Beckley, WV until 1998;
Director - Bank of Raleigh until 1998; Director - West Virginia
Educational Broadcasting Authority since 1995; Trustee - The
College of West Virginia
Class I Nominees (Terms Expire in 2003):
Robert E. Grist 43 President - Grist Lumber, Inc., Smoot, WV since 1985; Director
- City National Bank, Charleston, WV since 1999; Greenbrier
Valley Economic Development Corporation until 2001
James. L. Rossi 46 James Rossi, CPA, Pt. Pleasant, WV (Public Accounting);
President Kellen Corporation, Pt. Pleasant, WV; Tudors
Restaurants Franchise Owner/Operator, Pt. Pleasant, WV and
Gallipolis, OH; Director - City National Bank, Charleston, WV
since 1999; Director - Peoples Bank of Pt. Pleasant, Pt.
Pleasant, WV until 1998; Director/Treasurer - Mason County
Development Authority since 1984; Member - Mason County
Development Loan Fund since 1990; Director - Mason County Area
Chamber of Commerce since 2001
Mary H. Williams 39 Pharmaceutical Sales Specialist - AstraZeneca since September
2000; Treasurer - Hooten Equipment since June 1994; Treasurer -
Virginia Street Corporation (real estate) since 1994; Director
- City National Bank, Charleston, WV since 1998; Director -
Capital State Bank, Charleston, WV from 1996-1998
Class III Directors (Terms Expire in 2002):
Samuel M. Bowling 64 Vice Chairman of the Board - City Holding Company, Charleston,
Director since 1983 WV; Chairman of the Board - City Holding Company until 1998;
President and Owner - Dougherty Co., Inc., Charleston, WV
(Mechanical Contractor); Owner - S. M. Bowling, Inc.,
Charleston, WV; Owner - Bowling Enterprises, Inc., Charleston,
WV.
David E. Haden 62 President - CityInsurance Professionals, a division of City
Director since 1998 National Bank, Charleston, WV.
4
R. T. Rogers 67 Director - Horizon Bancorp, Inc., Beckley, WV from 1985 - 1998;
Director since 1999 President and Chief Executive Officer - R. T. Rogers Oil Co.,
Hinton, WV (Oil and Fuel Distributor); Director - National Bank
of Summers of Hinton, Hinton, WV until 1999.
Jay C. Goldman 58 Mayor - City of Charleston, Charleston, WV; President - Goldman
Director since 1988 and Associates, Charleston, WV (Real Estate).
Robert D. Fisher 48 Partner - Adams, Fisher & Evans, Ripley, WV (Law Firm).
Director since 1994
Philip L. McLaughlin 61 Chairman of the Board - City Holding Company, Charleston, WV;
Director since 1999 Regional President (Allegheny Region) - City National Bank,
Charleston, WV; President, Chief Operating Officer and Director
- Horizon Bancorp, Inc., Beckley, WV until 1998; President,
Chief Executive Officer and Director - Greenbrier Valley
National Bank, Lewisburg, WV until 1999; Director - First
National Bank in Marlinton, Marlinton, WV until 1999; Director
- Bank of Raleigh, Beckley, WV until 1999; Director - The
Twentieth Street Bank, Inc., Huntington, WV until 1999.
Hugh R. Clonch 61 President - Clonch Industries, Dixie, WV (Timber).
Director since 1995
Class I Directors (Terms Expire in 2003):
David W. Hambrick 59 Director - Horizon Bancorp, Beckley, WV from 1993 - 1998;
Director since 1999 Executive Vice President - Greenbrier Valley National Bank,
Lewisburg, WV until 1999; Director - First National Bank in
Marlinton, Marlinton, WV until 1999; Executive Vice President -
Horizon Bancorp, Inc., Beckley, WV until 1998; Chief Financial
Officer - Horizon Bancorp, Inc., Beckley, WV until 1996.
Frank S. Harkins, Jr. 62 Chairman of the Board and Chief Executive Officer - Horizon
Director since 1999 Bancorp, Inc., Beckley, WV until 1998; Director - National Bank
of Summers of Hinton, Hinton, WV until 1999; Director -
Greenbrier Valley National Bank, Lewisburg, WV until 1999;
Director, President, and Chief Executive Officer --Bank of
Raleigh, Beckley, WV until 1999; Director - The Twentieth
Street Bank, Inc., Huntington, WV until 1999.
Albert M. Tieche, Jr. 48 Director - Horizon Bancorp, Inc., Beckley, WV from 1992 - 1998;
Director since 1999 Administrator and Treasurer - Beckley Hospital, Inc., Beckley,
WV until 1997; President - BHI, Inc. (surviving corporation of
Beckley Hospital Inc.), Beckley, WV; Director - Bank of
Raleigh, Beckley, WV until 1999.
James E. Songer, II 45 President - Songer Insurance Agency; Owner - Homeseekers LLC;
Director since 2000 Director - Bank of Raleigh until 1999.
5
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
Committees of the Board of Directors and Meeting Attendance
The full Board of Directors met 14 times during the fiscal year ended
December 31, 2000. The Executive Committee, which consists of Samuel M. Bowling,
Hugh R. Clonch, C. Dallas Kayser, Philip L. McLaughlin and Edward M. Payne, III,
met three times during the fiscal year ended December 31, 2000. Additionally,
the Board has Audit, Compliance, Legal, Strategic Planning and Trust Committees.
No director attended fewer than 75% of the meetings of the Company's Board of
Directors, or its Committees, held during fiscal year 2000.
During 2000, the Audit Committee included Mark Schaul (Chairman), Robert D.
Fisher, Thomas E. Lilly and Albert M. Tieche, Jr., none of whom is employed by
the Company. The Committee met 11 times during 2000. Members of the Audit
Committee are "independent," as that term is defined in the listing standards of
The Nasdaq Stock Market Inc. The Audit Committee recommends the engagement of
the independent auditors, considers the scope of the audit, reviews the
activities and recommendations made by the Company's internal auditors, and
considers comments made by the independent auditors with respect to the
Company's internal control structure.
During 2000, the Compensation Committee included Jay C. Goldman (Chairman),
Samuel M. Bowling and Robert T. Rogers, none of whom is employed by the Company.
The Compensation Committee's function is to make recommendations to the Board
with respect to the compensation of executive officers and certain other
officers who participate in the Company's Stock Incentive Plan. The Committee
met once during the year 2000. Following the committee meeting, it was
determined that all matters relating to compensation would be referred to the
Executive Committee of the Board for review and consideration.
In July 2000, the Board formed a special committee, the CEO Search
Committee. This special committee was formed for the purpose of recruiting and
selecting a candidate to replace the Company's former President and CEO, who
resigned in June 2000. Committee members included, C. Dallas Kayser (Chairman),
Samuel M. Bowling, Hugh R. Clonch, Jay C. Goldman, Tracy W. Hylton, II, Philip
L. McLaughlin and Edward M. Payne, III. The committee met five times during the
fiscal year ended December 31, 2000.
The full Board of Directors functions as a Nominating Committee. Pursuant
to the Company's Amended and Restated Bylaws, the Board will consider nominees
recommended by shareholders if such recommendations are submitted to the
Secretary at the principal executive offices of the Company not less than 120
calendar days prior to the first anniversary of the previous year's annual
meeting. If no annual meeting was held in the previous year or the date of the
annual meeting was changed by more than 30 days from the anniversary date of the
previous year's annual meeting, notice by the shareholder must be so received
not later than 120 calendar days prior to such annual meeting or 10 calendar
days following the date on which public announcement of the date of the meeting
is first made. Nominations of persons for election to the Board of Directors may
be made only (A) by the Board of Directors or the Chief Executive Officer, or
(B) by any shareholder entitled to vote at the meeting who complies with the
requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and
rules and regulations promulgated thereunder and the procedures set forth in the
Company's Amended and Restated Bylaws.
Compensation of Directors
Through June 2000, the Company's Directors who were members of the
Executive Committee were paid a fee of $3,500 per quarter, regardless of
attendance. Directors who were not members of the Executive Committee were paid
a fee of $1,500 per quarter, regardless of attendance. The Audit Committee and
Compensation Committee members were paid a fee of $500 for each committee
meeting attended. In July 2000, the fee structure for Board and Committee
meetings was modified. Following the amendment to the fee structure, all Company
Directors are paid a fee of $500 for each Board meeting attended and $250 for
each Committee meeting attended. Directors who are also officers of the Company
and its subsidiaries receive no compensation for attendance at Board or
Committee meetings.
6
Report of the Audit Committee
The Audit Committee of the Board of Directors (the "Audit Committee") is
composed of four independent directors and operates under a written charter
adopted by the Board of Directors, a copy of which is attached to this Proxy
Statement as Appendix A. The Audit Committee recommends to the Board of
Directors, subject to shareholder ratification, the selection of the Company's
independent accountants. Management is responsible for the Company's internal
controls and the financial reporting process. The independent accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and for issuing a report thereon. The Audit Committee's responsibility is to
monitor and oversee these processes. In this context, the Audit Committee has
met and held discussions with management and Ernst & Young LLP ("Ernst &
Young"), the Company's independent accountants.
Management represented to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and Ernst &
Young.
The Audit Committee has discussed with Ernst & Young the matters required
to be discussed by Statement on Auditing Standards No. 61 (Codification of
Statements on Accounting Standards).
The Audit Committee has also received the written disclosures and the
letter from Ernst & Young relating to the independence of that firm as required
by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), and has discussed with Ernst & Young that firm's independence
from the Company. The Audit Committee has also considered whether the provision
of services by Ernst & Young covering financial information systems design and
implementation and other services is compatible with maintaining Ernst & Young's
independence.
Based upon the Audit Committee's discussions with management and Ernst &
Young and the Audit Committee's review of the representation of management and
the report of Ernst & Young to the Audit Committee, the Audit Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000 filed with the Securities and Exchange Commission.
Respectfully submitted,
Mark H. Schaul, Chairman
Robert D. Fisher
Thomas E. Lilly
Albert M. Tieche, Jr.
March 28, 2001
7
EXECUTIVE OFFICERS OF CITY HOLDING COMPANY
At December 31, 2000, the executive officers of the Company were as follows:
Name Age Business Experience
- -------------------------------------------------------------------------------------------------------
Philip L. McLaughlin 61 Executive Vice President - City Holding Company
and Regional President - City National Bank
Robert A. Henson (1) 40 Acting Chief Executive Officer and Chief Financial
Officer - City Holding Company; Chief Financial
Officer - City Holding Company since 1990
Matthew B. Call (2) 43 Executive Vice President - City Holding Company
since 1998; Senior Vice President - City Holding
Company from 1994 - 1998
(1) Robert A. Henson resigned as an executive officer of the Company effective
March 31, 2001.
(2) Matthew B. Call resigned as an executive officer of the Company effective
April 30, 2001.
8
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation for the Company's
Chief Executive Officer and its other most highly paid executive officers, as
well as the total compensation paid to each individual during the Company's last
three fiscal years:
Summary Compensation Table
--------------------------
(2) Securities
Name and (1) All Other Underlying
Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#)
- --------------------------------------------------------------------------------------------------------------------------------
Steven J. Day (3) 2000 $265,390 $ - $ 7,817 -
Former President, Chief 1999 240,000 - 25,043 15,000
Executive Officer and Director 1998 209,773 - 18,789 25,900
Philip L. McLaughlin 2000 180,000 - 12,744 -
Executive Vice President and 1999 180,000 - 17,082 15,000
Chairman of the Board 1998 175,534 23,182 1,600 2,777
Robert A. Henson (4) 2000 150,000 75,000 16,103 -
Acting Chief Executive Officer 1999 150,000 - 24,084 15,000
and Chief Financial Officer 1998 105,375 - 17,006 15,461
Matthew B. Call (5) 2000 150,000 55,000 13,577 -
Executive Vice President 1999 150,000 - 24,965 15,000
1998 92,880 - 16,263 15,339
(1) Includes bonus awards under the Company's Incentive Plan.
(2) Includes the imputed value of life insurance benefits, automobile
allowances and Company matching and profit-sharing contributions under the
Company's Profit-Sharing and 401(k) Plan, which was implemented January 1,
1991, and the Company's ESOP, which was implemented January 1, 1996.
(3) Mr. Day resigned as a director and executive officer of the Company
effective June 14, 2000.
(4) Mr. Henson resigned as an executive officer of the Company effective March
31, 2001.
(5) Mr. Call resigned as an executive officer of the Company effective April
30, 2001.
9
Summary of Stock Option Activity
No stock options were granted or exercised during 2000. The following table
presents the value of unexercised options held by the named executives at
December 31, 2000:
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year- at Fiscal Year-End
Shares Acquired Value End (#) Exercisable (E)/ ($) Exercisable (E)/
Name on Exercise (#) Realized ($) Unexercisable (U) Unexercisable (U)
- --------------------------------------------------------------------------------------------------------
Philip L. McLaughlin - - 17,331 (E) -
10,222 (U)
Robert A. Henson - - 21,323 (E) -
16,475 (U) -
Matthew B. Call - - 19,533 (E) -
16,014 (U) -
Executive Committee Report on Executive Compensation
To the Board of Directors of City Holding Company:
Beginning in 2000, the Executive Committee's responsibilities expanded to
include overseeing the compensation of the executive officers of the Company.
The Executive Committee therefore submits the following report of its
deliberations with respect to compensation of the Company executives, including
the Company's former Chief Executive Officer, Mr. Day, for 2000:
City Holding executives are generally compensated under the Company's
Incentive Plan (the "Incentive Plan") adopted in 1992. The Incentive Plan is
designed to link executive compensation to the performance of the Company and to
provide levels of compensation adequate to attract and to retain quality
management. Compensation under the Incentive Plan includes base salaries with
provisions for annual increases and bonuses, including stock options, based on
individual and corporate performance. Bonuses are paid one-half in cash and one-
half in Common Stock, while stock options are awarded at the Committee's
discretion. Maximum salary increases (as a percentage of the percentage increase
in the Consumer Price Index) and bonuses, including stock options, (as a
percentage of salary) are calculated under the Incentive Plan based upon
performance as measured by annual return on average assets and return on average
equity. The Committee believes that these ratios best measure performance that
is likely to translate into increased shareholder value. The Incentive Plan may
be amended or rescinded at any time.
Base Salaries. Base salaries for Mr. Day, Mr. McLaughlin, Mr. Henson and
Mr. Call were determined in accordance with the minimum salary provisions of
their respective employment agreements. Base salaries for all other executives
were not increased in 2000.
Annual Bonuses. The Executive Committee approved cash bonuses to Messrs.
Henson and Call of $75,000 and $55,000, respectively, for 2000.
Stock Options. Executive officers of the Company were awarded no stock
options during 2000.
Respectfully submitted,
Samuel L. Bowling
Hugh R. Clonch
C. Dallas Kayser
Philip L. McLaughlin
Edward M. Payne, III
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OTHER EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
Employment and Consulting Agreements
The Company has entered into employment agreements with Philip L.
McLaughlin, Robert A. Henson and Matthew B. Call (individually, the "named
executive"). The agreements specify terms of employment, including compensation.
The contracts were entered into on December 31, 1998 and terminate on the day
next preceding the fifth (for Mr. McLaughlin) and third (for Messrs. Henson and
Call) anniversary of the date of the contracts, except that on each monthly
anniversary date, the agreements are automatically extended for an additional
month. The agreements provide that if the named executive voluntarily terminates
his employment at any time after December 31, 2000, the named executive will be
entitled to receive annually 60% of his Termination Compensation, as defined,
until the earlier of (i) five years from the date on which the named executive
voluntarily terminates employment or (ii) the date on which the named executive
reaches age 65. In the event the named executive's employment is terminated by
the Company other than for "just cause", the named executive will receive the
highest amount of annual cash compensation received during any of the preceding
five calendar years in each year until the end of the term of the agreement. In
the event of a change of control of the Company, the named executive may
voluntarily terminate employment with the Company up until twenty-four months
after the change of control and be entitled to receive in lump sum (i) any
compensation due but not yet paid through the date of termination and (ii) an
amount equal to Termination Compensation multiplied by a factor of 2.99.
The Company has also entered into an employment and consulting agreement
with Frank S. Harkins, Jr., a director. The agreement was entered into on
December 31, 1998 and specified a term of employment until June 1, 1999, with a
consulting arrangement comprising business development and retention activities
commencing on that date and continuing for five years thereafter. The agreement
specifies the terms of the employment and consulting arrangement, including
annual compensation of $200,000. In the event Mr. Harkins' employment or
consulting arrangement is terminated by the Company other than for "just cause",
Mr. Harkins will continue to receive the annual cash compensation in each year
until the end of the term of the agreement.
Mr. Day resigned as a director and executive officer of the Company
effective June 14, 2000. With the Board of Directors' concurrence, Mr. Day's
resignation was characterized as a "termination without Just Cause" under the
terms of his employment agreement. Mr. Day will receive approximately $294,000
annually for a period of five years from the date of his resignation.
Additionally, the Company will continue to provide health insurance coverage for
Mr. Day and his family for five years, and Mr. Day retained ownership of certain
Company assets dedicated to his personal use.
Mr. Henson resigned as an executive officer of the Company effective March
31, 2001. In accordance with Mr. Henson's employment contract, Mr. Henson will
receive approximately $135,000 annually for a period of five years from the date
of his resignation. Additionally, the Company will continue to provide health
insurance coverage for Mr. Henson and Mr. Henson retained ownership of certain
Company assets dedicated to his personal use.
Mr. Call resigned as an executive officer of the Company effective April
30, 2001. Mr. Call and the Company have entered into a severance agreement which
modified the payment schedule set forth in Mr. Call's employment contact as
follows: In May 2001, Mr. Call will receive a lump sum distribution of
approximately $211,000; beginning on May 30, 2001 through May 15, 2003, Mr. Call
will receive approximately $127,000 annually; beginning on May 30, 2003 through
May 15, 2005, Mr. Call will receive approximately $63,000 annually.
Additionally, the Company will continue to provide health insurance coverage for
Mr. Call and Mr. Call received a $15,000 credit toward the purchase of his
Company vehicle and retained ownership of certain other Company assets dedicated
to his personal use.
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Stock Incentive Plan
Shares Subject to Option; Administration
The Company's Executive Committee administers the Stock Incentive Plan. The
Committee may delegate its authority to administer the Stock Incentive Plan to
an officer of the Company. Under the Stock Incentive Plan a total of 1,300,000
shares of Common Stock may be issued upon the exercise of options, stock
appreciation rights and stock awards. This limitation can be adjusted, as the
Executive Committee determines is appropriate, in the event of a change in the
number of outstanding shares of Common Stock by reason of a stock dividend,
stock split, combination, reclassification, recapitalization or other similar
events.
Eligibility
Key employees of the Company and its related entities and individuals who
provide services to the Company and its related entities are eligible to
participate in the Stock Incentive Plan.
Plan Benefits
The Committee may, from time to time, grant stock options, stock
appreciation rights ("SARs"), or stock awards to Stock Incentive Plan
participants. Options granted under the Stock Incentive Plan may be incentive
stock options ("ISOs") or nonqualified stock options. The Committee will fix the
option price at the time the option is granted, but in the case of an ISO, the
price cannot be less than the shares' fair market value on the date of grant.
The option price may be paid in cash, or, with the Committee's consent, with
shares of Common Stock, a combination of cash and Common Stock, or in
installments.
SARs entitle the participant to receive the excess of the fair market value
of a share of Common Stock on the date of exercise over the initial value of the
SAR. The initial value of the SAR is the fair market value of a share of Common
Stock on the date of grant.
SARs may be granted in relation to option grants ("Corresponding SARs") or
independently of option grants. The difference between these two types of SARs
is that to exercise a Corresponding SAR, the participant must surrender
unexercised that portion of the stock option to which the Corresponding SAR
relates.
Participants may also be awarded shares of Common Stock pursuant to a stock
award. The Committee may prescribe that a participant's right in a stock award
shall be nontransferable or forfeitable or both unless certain conditions are
satisfied. These conditions may include, for example, a requirement that the
participant continue employment with the Company for a specified period or that
the Company or the participant achieves stated objectives.
The Stock Incentive Plan provides that outstanding options and SARs will
become exercisable and outstanding stock awards will be earned in full and
nonforfeitable upon a change in control.
Duration of Stock Incentive Plan
No option, SAR or stock award may be granted under the Stock Incentive Plan
after March 8, 2003.
Termination, Suspension, or Amendment of Stock Incentive Plan
The Company's Board of Directors may, without further action by
shareholders, terminate or suspend the Stock Incentive Plan in whole or in part.
The Board of Directors may also amend the Stock Incentive Plan except that no
amendment that increases the number of shares of Common Stock that may be issued
under the Stock Incentive Plan or changes the class of individuals who may be
selected to participate in the Plan will become effective until it is approved
by shareholders.
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Employee Benefit Plans
Under the Company's Profit Sharing & 401(k) Plan (the "Plan"), a deferred
compensation plan under the Internal Revenue code, eligible participants,
including Messrs. McLaughlin, Henson, and Call, may contribute from 1% to 15% of
pre-tax earnings to their Plan accounts. Contributions may be invested in any of
six investment options as selected by the participant, including Company Common
Stock. The Company matches, in its Common Stock, 50% of the first 6% of earnings
contributed by each participant. Although the profit sharing features of this
Plan remain intact, future profit sharing contributions, if any, are expected to
be made to the Employee Stock Ownership Plan.
City Holding Company's Employees Stock Ownership Plan ("ESOP"), covers all
eligible employees, including Messrs. McLaughlin, Henson, and Call, who have
completed one year of service and have attained the age of 21. The ESOP plan was
created January 1, 1996, and includes both a Money Purchase and a Stock Bonus
feature. Annually, the Company will contribute to the Money Purchase account an
amount equal to 9% of eligible compensation. In June 2000, the Company suspended
contributions to the Money Purchase account. The Stock Bonus account
contributions are discretionary and are determined annually by the Company's
Board of Directors. Contributions to all executive officers of the Company
aggregated $18,000, and included contributions of $6,750, $5,625, and $5,625,
respectively, to Messrs. McLaughlin, Henson, and Call.
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STOCK PERFORMANCE
The following graph sets forth the cumulative total shareholder return
(assuming reinvestment of dividends) to City Holding Company's shareholders
during the five-year period ended December 31, 2000, as well as an overall stock
market index (The Nasdaq Stock Market Index) and the Company's Peer Group. The
Peer Group consists of publicly-traded financial institutions over $1 billion
but less than $5 billion in assets headquartered in Ohio, Pennsylvania,
Virginia, Kentucky, and Maryland.
[GRAPH]
CERTAIN TRANSACTIONS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
During 2000, the Company and its subsidiaries had, and expect to have in
the future, banking transactions with officers and directors of the Company,
their immediate families and entities in which they are principal owners (more
than 10% interest). The transactions are in the ordinary course of business and
on substantially the same terms, including interest rates and security, as those
prevailing at the same time for comparable transactions with others and do not
involve more than the normal risk of collectibility or present other unfavorable
factors.
The Company has entered into employment agreements and an employment and
consulting agreement with certain of its named executive officers and directors.
See Employment and Consulting Agreements above under the section titled Other
Executive Compensation Plans and Arrangements.
SECTION 16(a) BENEFICAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers and directors are required under the
Securities and Exchange Act of 1934 (the "Exchange Act") to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Copies of these reports must also be furnished to City Holding. Based solely
upon the review of copies of such reports furnished to the Company through the
date hereof, or written
14
representations that no reports were required, the Company believes that during
2000, all filing requirements applicable to its officers and directors were met.
APPOINTMENT OF INDEPENDENT AUDITORS (Proposal 2)
Subject to ratification by the Company's shareholders, the Company's Board
of Directors has appointed Ernst & Young LLP as independent auditors to audit
the consolidated financial statements of the Company for the year ending
December 31, 2001.
Representatives of Ernst & Young are expected to be present at the Annual
Meeting and will have an opportunity to make a statement if they so desire and
will be available to respond to appropriate questions.
Audit Fees
The Audit Committee has reviewed and approved the following aggregate fees
billed to the Company during the fiscal year ended December 31, 2000 by the
Company's principal accounting firm, Ernst & Young, LLP:
Audit Fees...................................................................... $289,000
Financial Information Systems Design and Implementation Fees.................... none
All Other Fees (including fees for audit-related services of $678,000).......... $758,000
Recommendation
The affirmative vote of a majority of the shares represented and entitled
to vote at the annual meeting is required to ratify the appointment of Ernst &
Young LLP. The Board of Directors unanimously recommends the shareholders vote
"FOR" such ratification.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not
informed of any matters, other than those stated above, that may be brought
before the meeting. However, if any other matters are brought before the
meeting, the persons named in the enclosed form of proxy or their substitutes
will vote with respect to such matters in accordance with their best judgment.
By Order of the Board of Directors,
/s/ Victoria A. Evans
Victoria A. Evans
Secretary
April 30, 2001
15
Appendix A
AUDIT COMMITTEE CHARTER
Adopted June 12, 2000
ORGANIZATION
This Charter governs operations of the City Holding Company (CHCO) Audit
Committee. The Committee will review and reassess this charter annually and
obtain approval of the CHCO Board of Directors for its initial adoption and
any subsequent revisions. The Committee appointed by the Board will meet
regulatory requirements for independence and financial literacy with at least
one Committee member possessing required accounting or related financial
management expertise.
The CHCO Audit Committee will meet on a monthly basis in a joint meeting with
the City National Bank Audit Committee. These joint Audit Committee meetings
will focus on reporting from CHCO's risk control functions, which include
internal audit, compliance management, internal loan review, and quality
control. Reports from independent auditors will be made as required by
regulation and as outlined in this charter.
STATEMENT OF POLICY
The Audit Committee will provide assistance to the Board in fulfilling its
oversight responsibilities to shareholders, the investment community, and
others. This oversight relates to CHCO's financial statements and the
financial reporting process, the systems for internal accounting and financial
controls, the internal audit function, the annual independent audit of CHCO's
financial statements, and the legal compliance and ethics programs as
established as established by management and the Board. In so doing, it is the
responsibility of the Committee to maintain open communication between the
Committee, independent auditors, internal auditors, and CHCO executive
management. To meet its responsibilities, the Committee is authorized to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel and the power to retain outside counsel or
other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Audit Committee is to oversee the CHCO
financial reporting process on behalf of the Board and report the results of
their activities to the Board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible
for auditing those financial statements. The Committee should take appropriate
actions
1
to establish an environment conducive to quality financial reporting, sound
business practices, and ethical behavior.
The Committee will implement the following recurring processes to carry out
its oversight responsibilities. These processes are to serve as a guide to
which should be revised or supplemented as needed.
1. The Committee will have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the Board and the Audit Committee, as representatives of
CHCO shareholders.
2. The committee shall have the ultimate authority and responsibility to
evaluate and, where appropriate, replace the independent auditors.
3. The Committee will discuss with the auditors their independence from
management and the Company and the matters included in written disclosures
required by the Independence Standards Board.
4. On an annual basis, the Committee will review and recommend to the CHCO
Board the selection of the Company's independent auditors, subject to
shareholder approval.
5. Through discussions with the internal auditors and the independent
auditors, the Committee will assess audit schedules and scopes, and the
adequacy of staffing and compensation. On an ongoing basis, the Committee
will meet with the internal and independent auditors, without management
present, to discuss the results of their examinations.
6. The Committee will meet with the internal and independent auditors and CHCO
executive management to discuss the adequacy and effectiveness of the
accounting and financial controls, including systems to manage and monitor
business risk, and legal and ethical compliance programs.
7. The Committee will review all interim financial statements with CHCO
executive management and the independent auditors prior to filing the
Company's Quarterly Report on Form 10-Q. The Committee will also discuss
the results of the quarterly review and any other matters required to be
communicated to the Committee by the independent auditors under generally
accepted auditing standards.
8. The Committee will review annual financial statements with the independent
auditors and CHCO executive management prior to filing the Company's Annual
Report on Form 10-K. Issues to be addressed in this review include the
quality of accounting principles, the reasonableness of significant
judgements, and the clarity of the disclosures in the financial statements.
The Committee will also discuss the results of the annual audit and any
other matters where communication to the committee is required under
generally accepted auditing standards.
2
CITY HOLDING COMPANY
Post Office Box 7520
Charleston, West Virginia 25356-0520
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - JUNE 13, 2001
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CITY HOLDING
COMPANY)
The undersigned shareholder of City Holding Company hereby appoints John W.
Alderman, III and Victoria A. Evans and each of them, with full power of
substitution, as proxies and hereby authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of City Holding Company held of
record by the undersigned on April 25, 2001 at the 2001 Annual Meeting of
Shareholders to be held on June 13, 2001 or any adjournment or adjournments
thereof. The undersigned shareholder authorizes the proxies to cumulate their
votes at their discretion.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
(1) PROPOSAL TO ELECT SEVEN CLASS II DIRECTORS TO SERVE FOR TERMS OF THREE
YEARS AND THREE CLASS I DIRECTORS TO SERVE FOR TERMS OF TWO YEARS.
FOR [_] (except as marked WITHHOLD AUTHORITY [_]
to the contrary below)
CLASS II NOMINEES:
Tracy W. Hylton, II Oshel B. Craigo
C. Dallas Kayser Sharon H. Rowe
Edward M. Payne, III William H. File, III
Gerald R. Francis
CLASS I NOMINEES:
Robert E. Grist Mary H. Williams
James L. Rossi
To withhold authority to vote for any individual nominee, strike a line
through the nominee's name above.
(2) PROPOSAL TO RATIFY THE BOARD OF DIRECTORS' APPOINTMENT OF ERNST & YOUNG,
LLP AS THE INDEPENDENT AUDITORS FOR CITY HOLDING COMPANY FOR 2001
FOR [_] AGAINST [_] ABSTAIN [_]
(3) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting of Shareholders or
any adjournment or adjournments thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR Proposals 1 and 2. You may revoke this proxy at any time prior to the
---
time it is voted at the Annual Meeting.
Dated _______________, 2001
__________________________________
Signature
__________________________________
Signature, if held jointly
Please date and sign exactly as
name appears hereon. If shares are
held jointly, each shareholder
should sign. Agents, executors,
administrators, guardians,
trustees, etc. should use full
title, and, if more than one, all
should sign. If the shareholder is
a corporation, please sign full
corporate name by the president or
another authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Please mark, sign, date and return
the proxy promptly using the
enclosed envelope.