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 (S)240.14a-11(c) or (S)240.14a-12
SCOTLAND 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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(2) Aggregate number 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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(4) Proposed maximum aggregate value of transaction:
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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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Scotland Bancorp, Inc.
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505 South Main Street
Laurinburg, North Carolina 28352
(910) 276-2703
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on January 16, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of Scotland Bancorp, Inc. (the "Company") will be held on
January 16, 1997, at 4:00 p.m., Eastern Time, at the main office of the Company
at 505 South Main Street, Laurinburg, North Carolina.
The Annual Meeting is for the purpose of considering and voting upon the
following matters:
1. To elect three classes of directors: (a) three persons who will serve
as directors of the Company until the 1998 Annual Meeting of
stockholders or until their successors are duly elected and qualified,
(b) four persons who will serve as directors of the Company until the
1999 Annual Meeting of stockholders or until their successors are duly
elected and qualified, and (c) three persons who will serve as
directors of the Company until the 2000 Annual Meeting of stockholders
or until their successors are duly elected and qualified;
2. To ratify the selection of McGladrey & Pullen, LLP as the independent
auditor for the Company for the fiscal year ending September 30, 1997;
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 December 10, 1996, 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/ John B. Clark
John B. Clark
Secretary
Laurinburg, North Carolina
December 17, 1996
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.
Scotland Bancorp, Inc.
======================
PROXY STATEMENT
1997 ANNUAL MEETING OF STOCKHOLDERS
January 16, 1997
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
General
This Proxy Statement is being furnished to stockholders of Scotland
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 1997 Annual Meeting of Stockholders (the "Annual Meeting") to be
held on January 16, 1997, at 4:00 p.m., Eastern Time, at the main office of the
Company at 505 South Main Street, Laurinburg, North Carolina, and any
adjournments thereof. This Proxy Statement and the accompanying form of proxy
were first mailed to stockholders on or about December 19, 1996. The Company's
office is located at 505 South Main Street, Laurinburg, North Carolina 28352 and
its telephone number is (910) 276-2703.
Other than the matters listed on the attached Notice of 1997 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, Scotland Savings Bank, 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, against, 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 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 on which no
---
instructions are given.
The close of business on December 10, 1996 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 1,840,000 shares of Common Stock and there were approximately 486
stockholders, excluding shares held in street name. 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. 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 need only receive a plurality of the
votes cast in the election of the applicable class of directors for which he has
been nominated. As a result, those persons nominated for election in a class of
directors 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 1997 fiscal year will be approved if a plurality of the votes
cast vote in favor of the proposal.
Abstentions will be counted for purposes of determining whether a
quorum is present at the Annual Meeting. Abstentions will not be counted in
tabulating the votes cast on any proposal submitted to the stockholders. Broker
non-votes will not be counted either for determining the existence of a quorum
or for tabulating votes cast on any 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
Beneficial of
Name and Address Ownership/1/ Class/2/
- ---------------- ------------ --------
James W. Mason 179,870/3/ 9.78%
407 Prince Street
Laurinburg, NC 28352
S. T. Snowdon, Jr. 149,200/4/ 8.11%
25863 Snead's Grove Road
Laurel Hill, NC 28351
James E. Milligan 162,200/5/ 8.82%
8 Canterbury Circle
Pinehurst, NC 28374
James S. Mitchener, Jr. 173,700/6/ 9.44%
704 Morrison Lane
Laurinburg, NC 28352
- ------------------------------------
/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 1,840,000 shares of Common Stock outstanding at the
Record Date.
/3/ Mr. Mason serves as a trustee of the Scotland Savings Bank, Inc., SSB
Employee Stock Ownership Plan (the "ESOP") which holds 147,200 shares of the
Company's Common Stock. The trustees of such plan share certain voting and
investment power of such shares.
/4/ Mr. Snowdon serves as a trustee of the ESOP which holds 147,200 shares of
the Company's Common Stock. The trustees of such plan share certain voting and
investment power of such shares.
/5/ Mr. Milligan serves as a trustee of the ESOP which holds 147,200 shares of
the Company's Common Stock. The trustees of such plan share certain voting and
investment power of such shares.
/6/ Dr. Mitchener serves as a trustee of the ESOP which holds 147,200 shares of
the Company's Common Stock. The trustees of such plan share certain voting and
investment power of such shares. This number also includes 1,500 shares held by
Dr. Mitchener's spouse for which he disclaims beneficial ownership.
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 (including nominees for re-election at the Annual
Meeting), each of the members of the board of directors of the Bank, certain
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 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 W. Mason, Chairman of the Boards 179,870/4/ 9.78%
of Directors
407 Prince Street
Laurinburg, NC 28352
S. T. Snowdon, Jr., Vice Chairman of the 149,200/5/ 8.11%
Boards of Directors
25863 Snead's Grove Road
Laurel Hill, NC 28351
Clifton P. Buie 2,000 0.11%
421 West Boulevard
Laurinburg, NC 28352
E. S. Hill, Jr. 25,000 1.08%
7840 Dogwood Drive
Laurinburg, NC 28353
John W. Hudson 2,500 0.14%
801 Frederick Avenue
Laurinburg, NC 28352
James E. Milligan 162,200/6/ 8.82%
8 Canterbury Circle
Pinehurst, NC 28374
James S. Mitchener, Jr. 173,700/7/ 9.44%
704 Morrison Lane
Laurinburg, NC 28352
James T. Willis 11,000 0.60%
12540 Bagpipe Lane
Laurinburg, NC 28352
William C. Fitzgerald, III, Director, 31,189/8/ 1.97%
President and CEO of the Company and
the Bank
1303 Dunbar Drive
Laurinburg, NC 28352
4
Amount and
Nature of Percentage
Beneficial of
Name and Address Ownership Class
- ---------------- ------------ --------
John B. Clark, Director, Vice President 8,239 0.45%
and Secretary of the Company and Senior
Vice President of the Bank
1803 Sherbrooke Circle
Laurinburg, NC 28352
Directors and Executive Officers as a 303,298/9/ 16.48%
Group (10 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 1,840,000 shares of Common Stock outstanding at the
Record Date.
/4/ Mr. Mason serves as a trustee of the ESOP which holds 147,200 shares of the
Company's Common Stock. The trustees of such plan share certain voting and
investment power of such shares.
/5/ Mr. Snowdon serves as a trustee of the ESOP which holds 147,200 shares of
the Company's Common Stock. The trustees of such plan share certain voting and
investment power of such shares.
/6/ Mr. Milligan serves as a trustee of the ESOP which holds 147,200 shares of
the Company's Common Stock. The trustees of such plan share certain voting and
investment power of such shares.
/7/ Dr. Mitchener serves as a trustee of the ESOP which holds 147,200 shares of
the Company's Common Stock. The trustees of such plan share certain voting and
investment power of such shares. This number also includes 1,500 shares held by
Dr. Mitchener's spouse for which he disclaims beneficial ownership.
/8/ This number includes 1,222 shares held by Mr. Fitzgerald's spouse. Mr.
Fitzgerald disclaims beneficial ownership of such shares.
/9/ The 147,200 shares held by the ESOP for which the trustees, Messers. Mason,
Snowdon, Milligan and Dr. Mitchener, share 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.
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 September 30,
1996, all but one of its executive officers and directors and greater than ten
percent beneficial owners complied with all applicable Section 16(a) filing
requirements. Debora B. Steagall was elected to the position of Assistant
Treasurer of the Company in May 1996; however, Ms. Steagall's Initial Statement
of Beneficial Ownership on SEC Form 3 was filed on November 5, 1996.
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 ten members.
The Articles of Incorporation and Bylaws provide that in the first
election of directors, and in all elections thereafter, that so long as the
total number of directors is nine or more, the directors will be divided into
three classes, as nearly equal in number as possible, to serve, in the first
instance, for terms of one, two and three years, respectively, from the date
such class takes office or until their earlier death, resignation, retirement,
removal or disqualification or until their successors are elected and qualified.
As a result, there are three classes of directors to be elected at the Annual
Meeting -- for one, two and three year terms. Thereafter, the successors in
each class of directors are to be elected for terms of three years, or until
their earlier death, resignation, retirement, removal or disqualification or
until their successors are elected and qualified.
The Board of Directors has nominated the ten persons named below for
election as directors to serve for the terms specified, or until their earlier
death, resignation, retirement, removal or disqualification or until their
successors are elected and qualified. Any other persons nominated must be
nominated for either a one, two or three year term.
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 ten nominees listed below as directors for the terms specified, unless
authority to vote is withheld or such proxies are duly 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 Certificate of Incorporation). 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. Votes will be separately cast and
tabulated for persons nominated in each of the three classes of directors for
the terms specified. As a result, those three nominees for terms expiring at
the 1998 annual meeting who receive the largest number of votes will be elected
as directors for that term; those four nominees for terms expiring at the 1999
annual meeting who receive the largest number of votes will be elected for that
term and those three nominees for terms expiring at the 2000 annual meeting who
receive the largest number of votes will be elected for that term. Accordingly,
shares not voted for any reason respecting 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 following table sets forth as to each nominee, his name, age,
principal occupation during the last five years, the term for which he has been
nominated, 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 November 1995.
6
Age on
September
30, Principal Occupation Term Director
Name 1995 During Last Five Years Expires Since
- ----- --------- ---------------------- ------- --------
CLass I - Term Ending as of 1998 Annual Meeting
James W. Mason 80 Chairman of the Board; Attorney 1998 1953
Clifton P. Buie 38 Vice President of Manufacturing 1998 1990
for Charles Craft, Inc., a
textile company
John W. Hudson 69 Retired Plant Manager of 1998 1994
LOF Glass
Class II - Term Ending as of 1999 Annual Meeting
John B. Clark 46 Senior Vice President of the 1999 1976
Bank
James E. Milligan 72 Retired Newspaper Publisher 1999 1973
James S. Mitchener, Jr. 73 Retired Surgeon 1999 1974
James T. Willis 41 Vice President, Adams & 1999 1994
Willis, Inc.; General
Manager of Firestone Store
Class III - Term Ending as of 2000 Annual Meeting
S. T. Snowdon, Jr. 69 Vice Chairman of the Board; 2000 1959
Retired Architect
E. S. Hill, Jr. 53 General Manager of 2000 1990
Eaton Corp., a golf
supply company
William C. Fitzgerald, III 58 President and Chief Executive 2000 1992
Officer of the Bank; prior to
joining the Bank,
Mr. Fitzgerald was a managing
agent for the Resolution Trust
Corporation from 1990 to
July 1992
The Board of Directors recommends a vote FOR all of the nominees for
---
election as directors.
Board of Directors of the Bank
The Bank also has a ten member board of directors which is composed of
the same persons who are currently directors of the Company.
7
Meetings of the Board and Committees of the Board
The Company was organized in November 1995 by the board of directors of
the Bank to acquire the capital stock of the Bank issued in connection with the
Bank's conversion from mutual to stock form (the "Conversion"). The Company did
not actively engage in any business until after the consummation of the
Conversion on March 29, 1996. Consequently, the meetings of the Board of
Directors held during the fiscal year ended September 30, 1996 were held in
connection with the organization of the Company and the Conversion. Going
forward, the Board of Directors is scheduled to meet quarterly and may have
additional meetings as needed. During fiscal 1996, the Board of Directors of the
Company held six meetings. All of the existing directors of the Company,
including the nominees for election listed above, 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 September 30, 1996.
The Board of Directors of the Company has one standing committee--the
Audit Committee. The Audit Committee of the Board consists of Clifton P. Buie,
E. S. Hill, Jr., James S. Mitchener, Jr. and James T. Willis. This Committee
meets annually to obtain and review the annual audit report from the Company's
and the Bank's independent auditor and also meets on an as-needed basis. The
Audit Committee met one time during the fiscal year ended September 30, 1996.
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 other standing
committees to which certain responsibilities have been delegated--the Loan
Committee, the Audit Committee and the Executive Committee. The members of the
Company's Audit Committee also serve on the Bank's Audit Committee. 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 Executive Committee of the Bank's board of directors serves as the
compensation committee. The Executive Committee determines the compensation of
the executive officers of the Bank and the Company and the Bank's other
employees. During the fiscal year ended September 30, 1996, Messers. Mason,
Milligan, Snowdon, Fitzgerald and Dr. Mitchener served on the Bank's Executive
Committee. Mr. Fitzgerald does not participate in any deliberations of the
Executive Committee concerning his compensation as an executive officer.
Director Compensation
Board Fees. Members of the Board of Directors receive a $200 fee for
each meeting attended. 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, non-
employee members of the Bank board receive $600 per month. The Chairman
receives an additional $400 per month and the Vice Chairman receives an
additional $100 per month. In addition, non-employee Bank directors who serve
on the Loan Committee receive $325 per month, non-employee directors who serve
on the Executive Committee receive $75 for each Executive Committee meeting
attended and non-employee directors who serve on the Audit Committee receive $75
for each Audit Committee meeting attended.
Bank Deferred Compensation Agreements. Three non-employee directors of
the Bank, Messers. Snowdon and Milligan and Dr. Mitchener participate in
deferred compensation plans under which such directors, or their designated
beneficiaries, are to be paid specified amounts over a ten-year period beginning
in 1994 in return for the deferral of certain amounts of directors fees over a
seven-year period. Under the provisions of the plan, Mr. Snowdon is currently
receiving $735 per month; Mr. Milligan is receiving $647 per month and Dr.
Mitchener is receiving $500 per month. The Bank purchased life insurance
policies with the Bank named as the beneficiary to fund the benefits received
pursuant to these plans. Total expense related to the plans amounted to $12,419
for the year ended September 30, 1996 and the Bank's accrued liability for plan
obligations amounted to $118,161 at September 30, 1996.
8
Executive Officers
The following table sets forth certain information with respect to the
persons who are executive officers of either the Company or the Bank or both.
Employed By
the Bank or
Age on Positions and Occupations the Company
Name September 30, 1996 During Last Five Years Since
- ---- ------------------ ------------------------- -----------
William C. Fitzgerald, III 58 President and Chief Executive 1992
Officer of the Company and the
Bank; Prior to joining the Bank,
Mr. Fitzgerald was a managing
agent for the Resolution Trust
Corporation from 1990 to July
1992
John B. Clark 46 Senior Vice President of the 1971
Bank and Vice President and
Secretary of the Company
Management Compensation
Summary Compensation Table. The following table sets forth for the
fiscal years ended September 30, 1996 and 1995 certain information as to the
cash compensation received by William C. Fitzgerald, III, the President and
Chief Executive Officer of the Company and the Bank. There were no other
executive officers whose cash compensation exceeded $100,000 for services
rendered in all capacities.
Other Annual
Name and Compensation All Other
Principal Position Year Salary Bonus ($)/3/ Compensation
- ------------------ ---- ------ ----- ------------ ------------
William C. Fitzgerald, III
President, Chief Executive 1996 $89,575/1/ $27,686/2/ - - - $2,026/4/
Officer and Director
1995 $82,917 $18,531 - - - $1,910
- ----------------
/1/ Mr. Fitzgerald's base salary is set pursuant to an employment agreement
with the Bank dated as of March 20, 1996. This amount also includes $400 in
directors' fees for services on the Company's Board of Directors.
/2/ Includes a $12,215 discretionary bonus and a $15,471 annual bonus paid
under Mr. Fitzgerald's employment agreement with the Bank.
/3/ Under the "Other Annual Compensation" category, perquisites for the fiscal
years ended September 30, 1996 and 1995 did not exceed the lesser of
$50,000, or 10% of salary and bonus as reported for Mr. Fitzgerald.
/4/ The amount contributed to the Bank's 401(k) profit sharing plan for
Mr. Fitzgerald for the fiscal year ended September 30, 1996.
401(k) Profit Sharing Plan. The Bank maintains a contributory savings plan
for its employees, which meets the requirements of Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code"). All employees who have
completed three months of service and who are at least 21 years of age may elect
to contribute a percentage
9
of their compensation to the plan each year, subject to certain maximums imposed
by federal law. The Bank will match 50% of each participant's contribution, up
to a maximum employer contribution of 2% of the participant's compensation. For
purposes of the 401(k) profit sharing plan, compensation means a participant's
compensation received from the employer as reported on Form W-2.
Participants are fully vested in amounts they contribute to the plan.
Participants are fully vested in amounts contributed to the plan on their behalf
by the Bank as employer matching contributions and as profit sharing
contributions after four years of service as follows: 1 year, 25%; 2 years, 50%;
3 years, 75%; 4 or more years, 100%.
Benefits under the plan are payable in the event of the participant's
retirement, death, disability or termination of employment. Normal retirement
age under the plan is 65 years of age. The total amount contributed by the Bank
to the 401(k) profit sharing plan during the fiscal year ended September 30,
1996 was $7,001.
Employee Stock Ownership Plan. In connection with the Conversion, the
Bank established the ESOP for eligible employees of the Bank. Employees with
1,000 hours of employment in a plan year and 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 147,200 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.
Shares purchased by the ESOP are held in a suspense account for
allocation among participants as the 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 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 appointed prior to the
Conversion. 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.
Employment Agreement. In connection with the Conversion, the Bank
entered into an employment agreement with William C. Fitzgerald, III in order to
establish his duties and compensation and to provide for his continued
employment with the Bank. The agreement provided for an initial annual base
salary of $93,500 and for an initial 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. The agreement provides that base salary
shall be reviewed by the board of directors of the Bank not less often than
annually. In addition, the employment agreement provides for 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 such employee's
office. 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 the employee. In the event of a
change in control (as defined below) in lieu of continuing to be entitled to
receive a profitability bonus, Mr. Fitzgerald's base salary shall be adjusted to
include an amount equal to the average of the two previous years' annual
profitability bonus and such adjusted base salary shall be increased by a
minimum of 6% annually.
10
The employment agreement provides that in the event of a change in
control of the Bank or the Company, the acquiror shall be bound by the terms of
the employment agreement for a period of three years beginning on the date of
the change of control and during such time the nature of the employee's
compensation, duties or benefits may not be diminished except as set forth in
the employment agreement. For purposes of the employment agreement, a change in
control generally will occur if (i) after the effective date of the employment
agreement, 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.
Special Termination Agreement. In connection with the Conversion, the
Bank entered into a special termination agreement with John B. Clark. The
special termination agreement provides for payment to Mr. Clark only (i) in the
event of a change in control of the Company or the Bank followed by termination
of the employee's employment within 24 months by the Bank for other than
"cause," as such term is defined in the agreement, or (ii) in the event the
nature of the employee's compensation, duties or benefits are diminished within
24 months following a change in control of the Bank or the Company and the
employee terminates his employment within 12 months thereafter. In the event of
such a termination of employment, the employee is entitled to payment in an
amount equal to two times his "base amount" as defined in Section 280G(b)(3) of
the Code, payable in a lump sum or in equal monthly payments. The initial term
of the agreement is for a three-year period commencing upon the effective date
of the Conversion. 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. For purposes of the
special termination agreement, "change in control" has the same meaning as
contained in the employment agreement to be entered into with Mr. Fitzgerald.
See "--Employment Agreement".
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
McGladrey & Pullen, LLP, the Company's and the Bank's independent
auditor for the year ended September 30, 1996, has been selected as the
Company's and the Bank's independent auditor for the 1997 fiscal year. Such
selection is being submitted to the Company's stockholders for ratification. A
representative of McGladrey & Pullen, LLP 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.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
It is presently anticipated that the 1998 Annual Meeting of Stock-
holders will be held in January of 1998. 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 September 19, 1997, and meet all other applicable
requirements for inclusion therein.
11
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 30 days nor more than 50 days prior to the meeting at which such
nominations will be made; provided, however, if less than 21 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 seventh 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 September 30, 1996,
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: SCOTLAND BANCORP, INC., 505 SOUTH MAIN STREET, LAURINBURG, NORTH
CAROLINA 28352, ATTENTION: WILLIAM C. FITZGERALD, III.
By Order of the Board of Directors,
/s/ John B. Clark
John B. Clark
Secretary
Laurinburg, North Carolina
December 17, 1996
12
PLEASE MARK VOTES REVOCABLE PROXY
[X] AS IN THIS EXAMPLE SCOTLAND BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 16, 1997
4:00 P.M.
The undersigned hereby appoints the official proxy committee consisting of
all the members of the Board of Directors of Scotland 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 office of the Company, 505 South Main Street,
Laurinburg, North Carolina, on January 16, 1997 at 4:00 p.m. and at any and all
adjournments thereof, as follows:
----------------------------------------------
Please be sure to sign and Date
this Proxy in the box below.
- --------------------------------------------------------------------------------
- ---Stockholder sign above------Co-Holder (if any) sign above -------------------
WITH- FOR ALL
FOR HOLD EXCEPT
1. The approval of the election of the [_] [_] [_]
following named directors:
(a) James W. Mason, Clifton P. Buie and John W. Hudson who will serve as direc-
tors of the Company until the 1998 Annual Meeting of Stockholders or until
their successors are duly elected and qualify,
(b) John B. Clark, James E. Milligan, James S. Mitchener, Jr. and James T.
Willis who will serve as directors of the Company until the 1999 Annual
Meeting of Stockholders or until their successors are duly elected and
qualify, and
(c) Sam T. Snowdon, Jr., E.S. Hill, Jr. and William C. Fitzgerald, III who will
serve as directors of the Company until the 2000 Annual Meeting of Stock-
holders 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.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. The ratification of McGladrey & [_] [_] [_]
Pullen, LLP as the independent
auditors of the Company for the
year ending September 30, 1997.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING: [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
If no instructions are given, the proxy will be voted for the nominees for
election to the Board of Directors named in this Revocable Proxy and for the
ratification of the selection of McGladrey & Pullen, LLP as the independent au-
ditors for the Company for the 1997 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.
+ +
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[UP ARROW APPEARS HERE] [UP ARROW APPEARS HERE]
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
SCOTLAND BANCORP, INC.
- --------------------------------------------------------------------------------
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
December 17, 1996.
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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