Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SouthBanc Shares, Inc.
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(Name of Registrant as Specified in Its Charter)
SouthBanc Shares, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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[_] 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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December 17, 1999
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
SouthBanc Shares, Inc. The meeting will be held at the main office of Perpetual
Bank, A Federal Savings Bank at 907 N. Main Street, Anderson, South Carolina on
Thursday, January 20, 2000 at 10:00 a.m., local time.
The notice of annual meeting and proxy statement appearing on the following
pages describe the formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Company. Directors and
officers of the Company, as well as a representative of Elliot, Davis & Company
LLP, the Company's independent auditors, will be present to respond to
appropriate questions of stockholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete and
mail the enclosed proxy card. If you attend the meeting, you may vote in person
even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Robert W. Orr
Robert W. Orr
President and Chief Executive Officer
SouthBanc Shares, Inc.
907 N. Main Street
Anderson, South Carolina 29621
(864) 225-0241
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On January 20, 2000
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NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of SouthBanc
Shares, Inc. (the "Company") will be held at the main office of Perpetual Bank,
A Federal Savings Bank at 907 N. Main Street, Anderson, South Carolina, on
Thursday, January 20, 2000, at 10:00 a.m., local time, for the following
purposes:
1. To elect two directors to serve for a term of three years;
2. To ratify the appointment of Elliot, Davis & Company LLP as
independent auditors for the Company for the fiscal year ending
September 30, 2000; and
3. To transact any other business that may properly come before the
meeting.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Stockholders of record at the close of business on December 1, 1999 are
entitled to receive notice of the meeting and to vote at the meeting and any
adjournment or postponement of the meeting.
Please complete and sign the enclosed form of proxy, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The proxy
will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sylvia B. Reed
Sylvia B. Reed
Corporate Secretary
Anderson, South Carolina
December 17, 1999
IMPORTANT: The prompt return of proxies will save the expense of further
requests for proxies in order to ensure a quorum. A self-addressed envelope is
enclosed for your convenience. No postage is required if mailed in the United
States.
PROXY STATEMENT
OF
SOUTHBANC SHARES, INC.
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ANNUAL MEETING OF STOCKHOLDERS
January 20, 2000
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of SouthBanc Shares, Inc. ("SouthBanc
Shares" or the "Company") to be used at the annual meeting of stockholders of
the Company. The Company is the holding company for Perpetual Bank, A Federal
Savings Bank ("Perpetual Bank"). The annual meeting will be held at Perpetual
Bank's main office at 907 N. Main Street, Anderson, South Carolina on Thursday,
January 20, 2000, at 10:00 a.m., local time. This proxy statement and the
enclosed proxy card are being first mailed to stockholders on or about December
17, 1999.
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VOTING AND PROXY PROCEDURE
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Who Can Vote at the Meeting
You are entitled to vote your SouthBanc Shares common stock if the
records of the Company show that you held your shares as of the close of
business on December 1, 1999. As of the close of business on that date, a total
of 2,950,288 shares of SouthBanc Shares common stock were outstanding. Each
share of common stock has one vote. As provided in the Company's Certificate of
Incorporation, record holders of the Company's common stock who beneficially
own, either directly or indirectly, in excess of 10% of the Company's
outstanding shares are not entitled to any vote in respect of the shares held in
excess of the 10% limit.
Attending the Meeting
If you are a beneficial owner of SouthBanc Shares common stock held by
a broker, bank or other nominee (i.e., in "street name"), you will need proof of
ownership to be admitted to the meeting. A recent brokerage statement or letter
from a bank or broker are examples of proof of ownership. If you want to vote
your shares of SouthBanc Shares common stock held in street name in person at
the meeting, you will have to get a written proxy in your name from the broker,
bank or other nominee who holds your shares.
Vote Required
The annual meeting will be held if a majority of the outstanding shares
of common stock entitled to vote is represented at the meeting, constituting a
quorum. If you return valid proxy instructions or attend the meeting in person,
your shares will be counted for purposes of determining whether there is a
quorum, even if you abstain from voting. Broker non-votes also will be counted
for purposes for determining the existence of a quorum. A broker non-vote occurs
when a broker, bank or other nominee holding shares for a beneficial owner does
not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received voting
instructions from the beneficial owner.
In voting on the election of directors, you may vote in favor of both
nominees, withhold votes as to both nominees, or withhold votes as to either
nominee. There is no cumulative voting for the election of directors. Directors
must be elected by a plurality of the votes cast at the annual meeting. This
means that the nominees receiving the greatest number of votes will be elected.
Votes that are withheld and broker non-votes will have no effect on the outcome
of the election. In voting on the ratification of the appointment of Elliot,
Davis & Company LLP as independent auditors, you may vote in favor of the
proposal, vote against the proposal or abstain from voting. This matter will be
decided by the affirmative vote of a majority of the votes cast at the annual
meeting. Abstentions, however, will have the same effect as a negative vote,
while broker non-votes will have no effect on the voting.
Voting by Proxy
This proxy statement is being sent to you by the Board of Directors of
SouthBanc Shares for the purpose of requesting that you allow your shares of
SouthBanc Shares common stock to be represented at the annual meeting by the
persons named in the enclosed proxy card. All shares of SouthBanc Shares common
stock represented at the meeting by properly executed, dated proxies will be
voted according to the instructions indicated on the proxy card. If you sign,
date and return a proxy card without giving voting instructions, your shares
will be voted as recommended by the Company's Board of Directors. The Board of
Directors recommends a vote "FOR" each of the nominees for director and "FOR"
ratification of Elliot, Davis & Company LLP as independent auditors.
If any matters not described in this proxy statement are properly
presented at the annual meeting, the persons named in the proxy card will use
their own judgment to determine how to vote your shares. This includes a motion
to adjourn or postpone the annual meeting in order to solicit additional
proxies. If the annual meeting is postponed or adjourned, your SouthBanc Shares
common stock may also be voted by the persons named in the proxy card on the new
meeting date, unless you have revoked your proxy. The Company does not know of
any other matters to be presented at the annual meeting.
You may revoke your proxy at any time before the vote is taken at the
annual meeting. To revoke your proxy you must either advise the Secretary of the
Company in writing before your SouthBanc Shares common stock has been voted at
the annual meeting, deliver a later dated proxy, or attend the annual meeting
and vote your shares in person. Attendance at the annual meeting will not in
itself constitute revocation of your proxy.
If your SouthBanc Shares common stock is held in street name, you will
receive instructions from your broker, bank or other nominee that you must
follow in order to have your shares voted. Your broker or bank may allow you to
deliver your voting instructions via the telephone or the Internet. Please see
the instruction form provided by your broker, bank or other nominee that
accompanies this proxy statement.
Participants in Perpetual Bank's ESOP or 401(k) Plan
If you participate in the Perpetual Bank Employee Stock Ownership Plan
or if you hold shares through Perpetual Bank's 401(k) Plan, the proxy card
represents a voting instruction to the trustees. Each participant in the ESOP
and the 401(k) Plan may direct the trustees as to the manner in which shares of
SouthBanc Shares common stock allocated to the participant's plan account are to
be voted. Unallocated shares of common stock held by the ESOP and allocated
shares for which no voting instructions are received will be voted by the ESOP
trustees in the same proportion as shares for which the trustees have received
voting instructions, subject to the exercise of their fiduciary duties.
2
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STOCK OWNERSHIP
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Management knows of no persons who were the beneficial owners of more
than 5% of the Company's outstanding common stock as of December 1, 1999. A
person may be considered to beneficially own any shares of common stock over
which he or she has, directly or indirectly, sole or shared voting or investing
power.
The following table provides information about the shares of common
stock of SouthBanc Shares that may be considered to be beneficially owned by
each director or nominee for director of the Company, by those officers of the
Company named in the Summary Compensation Table, and by all directors and
executive officers of the Company as a group as of December 1, 1999. Unless
otherwise indicated, each of the named individuals has sole voting power and
sole investment power with respect to the number of shares shown.
Number of Shares
That May be
Number of Acquired Within Percent of
Shares Owned 60 Days by Common Stock
Name (excluding options) Exercising Options Outstanding(1)
- ---------------------------------------- ------------------ ------------------ --------------
Harold A. Pickens, Jr. 50,292 13,527 2.15%
Martha S. Clamp 22,834 16,033 1.31
Jim Gray Watson 9,113 16,033 *
Richard C. Ballenger 9,776 14,778 *
F. Stevon Kay 51,251 14,778 2.23
Robert W. Orr 65,972 69,152 4.48
Cordes G. Seabrook, Jr.(2) 32,064 14,782 1.58
Jack F. McIntosh(2) 16,205 16,033 1.09
Thomas C. Hall 58,725 69,152 4.24
Barry C. Visioli 53,835 69,152 4.07
All Directors and Executive
Officers as a group (11 persons) 376,849 317,268 21.24
__________________________________
*Less than 1% of the shares outstanding
(1) Based on 2,950,288 shares of Company common stock outstanding and entitled
to vote as of December 1, 1999, plus the number of shares that may be
acquired within 60 days by each individual (or group of individuals) by
exercising options.
(2) Messrs. Seabrook and McIntosh will retire from the Board of Directors
effective as of the date of the annual meeting.
3
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PROPOSAL 1 -- ELECTION OF DIRECTORS
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The Company's Board of Directors currently consists of eight members.
Seven directors are independent and one is a member of management. The Board is
divided into three classes with three-year staggered terms, with approximately
one-third of the directors elected each year. Two directors will be elected at
the annual meeting to serve for a three-year term, or until their respective
successors have been elected and qualified. The nominees for election this year
are Richard C. Ballenger and Jim Gray Watson, each of whom is currently a member
of the Board of Directors of the Company. Cordes G. Seabrook, Jr. and Jack F.
McIntosh each reached age 72 during this last fiscal year. As required by the
Company's Bylaws, each will retire from the Board effective the date of the
annual meeting. The Board has adopted a resolution, to be effective the date of
the annual meeting, to reduce the size of the Board to six members.
It is intended that the proxies solicited by the Board of Directors
will be voted for the election of the nominees named above. If any nominee is
unable to serve, the persons named in the proxy card would vote your shares to
approve the election of any substitute proposed by the Board of Directors.
Alternatively, the Board of Directors may adopt a resolution to reduce the size
of the Board. At this time, the Board of Directors knows of no reason why any
nominee might be unable to serve.
The Board of Directors recommends a vote "FOR" the election of both of
the nominees.
Information regarding the nominees and the directors continuing in
office is provided below. Unless otherwise stated, each individual has held his
or her current occupation for the last five years. The age indicated in each
nominee's biography is as of September 30, 1999. There are no family
relationships among the directors or executive officers except as otherwise
stated. The indicated period for service as a director includes service as a
director of Perpetual Bank.
Nominees for Election of Directors
The nominees standing for election are:
Richard C. Ballenger is the President of City Glass Company and D&B
Glass Company, Inc., both located in Anderson, South Carolina. Age 51. Director
since 1996.
Jim Gray Watson, retired, is a former President and Chief Executive
Officer of Perpetual Bank. He is a brother of Wade A. Watson, Jr., a Director
Emeritus of Perpetual Bank. Age 71. Director since 1976.
Directors Continuing in Office
The following directors have terms ending in 2001:
Robert W. "Lujack" Orr has been affiliated with Perpetual Bank since
1974. He became President of Perpetual Bank in 1991. Age 52. Director since
1989.
F. Stevon Kay is the President of Hill Electric Company, Inc.,
Anderson, South Carolina. Age 48. Director since 1996.
4
The following directors have terms ending in 2002:
Harold A. "Drew" Pickens, Jr. is the retired owner of Harold A. Pickens
and Sons, Inc., a commercial construction contractor. He serves as Chairman of
the Boards of Directors of the Company and Perpetual Bank. Age 66. Director
since 1977.
Martha C. Clamp is a certified public accountant. Age 57. Director
since 1988.
Meetings and Committees of the Board of Directors
The business of the Company and Perpetual Bank is conducted through
meetings and activities of their Boards of Directors and their committees.
During the fiscal year ended September 30, 1999, the Board of Directors of the
Company held 12 meetings and the Board of Directors of Perpetual Bank held 12
meetings. No director attended fewer than 75% of the total meetings of the
Boards of Directors and committees on which such director served.
The Company's Board of Directors has established Executive (consisting
of Directors Pickens and Clamp), Audit (consisting of Directors Clamp, Kay, Orr,
Pickens and Seabrook), Compensation (consisting of Directors Seabrook and
Pickens) and Nominating (consisting of the entire Board) Committees, among
others. During fiscal 1999, the Executive Committee met once, the Audit
Committee met five times and the Compensation and Nominating Committees each met
once.
Directors' Compensation
Directors' Fees. Non-officer directors of Perpetual Bank (including
Directors Emeritus) receive annual compensation of $10,800, payable $900
monthly, and $100 for each committee meeting attended. Director compensation is
deducted by $100 for each meeting absence. No fees are paid for attending
special meetings of the Board. The Chairman of the Board receives compensation
of $1,500 per year. Perpetual Bank paid a total of approximately $130,000 in
directors' and committee fees for the fiscal year ended September 30, 1999. No
separate fees are paid for service on the Company's Board of Directors.
Perpetual Bank, A Federal Savings Bank 1997 Stock Option Plan (assumed
by SouthBanc Shares, Inc.) Under the Perpetual Bank, A Federal Savings Bank 1997
Stock Option Plan, which was adopted by Perpetual Bank's stockholders on April
1, 1997, each non-employee director received non-qualified stock options to
purchase 6,256 shares of common stock at an exercise price of $8.86 per share,
the fair market value of the common stock on April 7, 1997, the date the options
were granted. The option will vest equally over a five-year period commencing on
the first anniversary of the date of grant. SouthBanc Shares assumed the plan in
connection with the conversion of Perpetual Bank's form of mutual holding
company to stock form on April 14, 1998. At that time, the options for Perpetual
Bank's common stock were converted into options for the Company's common stock
and adjustments were made to the exercise price and the number of shares subject
to options.
SouthBanc Shares, Inc. 1998 Stock Option Plan. Under the SouthBanc
Shares, Inc. 1998 Stock Option Plan, which was adopted by the Company's
stockholders on January 27, 1999, each non-employee director received
non-qualified stock options to purchase 9,777 shares of common stock at an
exercise price of $20.31 per share, the fair market value of the common stock on
April 19, 1999, the date the options were granted. The options will vest equally
over a five-year period commencing on the first anniversary of the
5
date of grant. If there is a change in control of the Company (as defined in the
plan), each outstanding stock option grant will become fully vested and
immediately exercisable. All options granted under the plan expire ten years
following the date of grant.
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EXECUTIVE COMPENSATION
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Summary Compensation Table
The following information is furnished for Messrs. Orr, Hall and
Visioli. No other executive officer of SouthBanc Shares or Perpetual Bank
received salary and bonus of $100,000 or more during the fiscal year ended
September 30, 1999.
Long-Term Compensation
----------------------------
Annual Compensation Awards
--------------------------------- ----------------------------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Principal Compensation Awards Options/ Compensation
Positions Year Salary($) Bonus($) ($)(1) ($)(2) (#)(3) ($)(4)
- ------------------------- ------ --------- -------- ------------ ---------- ---------- ------------
Robert W. Orr, 1999 $101,764 $115,799 $-- $463,332 39,923 $11,323
President and 1998 98,800 -- -- -- -- 15,337
Chief Executive Officer 1997 95,000 64,813 -- 330,525 16,685 36,541
Thomas C. Hall, 1999 85,696 97,515 -- 463,332 39,923 10,120
Senior Vice 1998 83,200 -- -- -- -- 13,855
President 1997 80,000 54,580 -- 330,525 16,685 31,772
Barry C. Visioli 1999 74,984 85,325 -- 463,332 39,923 9,224
Senior Vice 1998 72,800 -- -- -- -- 12,736
President 1997 70,000 47,757 -- 330,525 16,685 27,970
____________________
(1) Does not include certain additional benefits, the aggregate amounts of
which do not exceed the lesser of $50,000 or 10% of salary and bonus
for the named executive officers.
(2) For fiscal year 1999, represents the value of shares awarded under the
SouthBanc Shares, Inc. 1998 Management Development and Recognition Plan
that will vest in equal installment over a five-year period beginning
on April 19, 2000. Dividends are paid on such awards if and when
dividends are declared and paid by SouthBanc Shares. At September 30,
1999, the value of the unvested awards was $501,886 for each of Mr.
Orr, Mr. Hall and Mr. Visioli (22,813 shares at $22.00 per share).
(3) For fiscal year 1999, represents stock options granted pursuant to the
SouthBanc Shares, Inc. 1998 Stock Option Plan.
(4) For fiscal year 1999, represents 401(k) Plan employer contributions of
$4,592, $3,848 and $3,385 for Messrs. Orr, Hall, Visioli, respectively,
and ESOP contributions of $6,731, $6,272 and $5,839 for Messrs. Orr,
Hall and Visioli, respectively.
6
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following information is presented for Messrs. Orr, Hall and
Visioli for the fiscal year ended September 30, 1999.
Number of Value of Unexercised
Securities Underlying In-the-Money Options at
Unexercised Options Fiscal Year End ($)(1)
------------------------------ --------------------------
Shares Value
Acquired on Realized
Name Exercise(#) ($)(2) Exercisable Unexercisable Exercisable Unexercisable
- ----------- ----------- ---------- ----------- -------------- ----------- -------------
Robert W. Orr -- $ -- 31,654 37,498 $ 164,044 $ 264,270
Thomas C. Hall 6,559 111,454 31,654 37,498 164,044 264,270
Barry C. Visioli 6,559 109,815 31,654 37,498 164,044 264,270
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(1) Value of unexercised in-the-money options equals the market value of
shares covered by in-the-money options on September 30, 1999 ($22.00 per
share) less the exercise prices of the options. Options are in-the-money
if the market value of the shares covered by the options is greater than
the option exercise price.
(2) Value of shares acquired on exercise equals the market value of the shares
on the exercise date less the option exercise price.
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Options(1)
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Number of % of Total
Securities Options Exercise or
Underlying Granted to Base Price
Options Granted Employees in Per Expiration
Name (2)(3)(4) Fiscal Year(5) Share Date(6) 5% 10%
- ---------------------------- --------------- -------------- ----------- -------------- ---------- ----------
Robert W. Orr 39,923 25.00% $ 20.31 April 19, 2009 $ 510,827 $1,289,229
Thomas C. Hall 39,923 25.00 20.31 April 19, 2009 510,827 1,289,229
Barry C. Visioli 39,923 25.00 20.31 April 19, 2009 510,827 1,289,229
_________________________
(1) The amounts represent certain assumed rates of appreciation. Actual gains,
if any, on stock option exercises and common stock holdings depend on the
future performance of the SouthBanc Shares common stock. There can be no
assurance that the amounts reflected in this table will be realized.
(2) Options granted pursuant to the SouthBanc Shares, Inc. 1998 Stock Option
Plan are exercisable as follows: 50% on the date of grant and 50% on
January 1, 2000.
(3) The purchase price may be made in whole or in part in cash or common stock
of SouthBanc Shares.
(4) All options are intended to be Incentive Stock Options to the extent
permissible under Section 422 of the Internal Revenue Code.
(5) Includes options granted to officers, directors and employees.
(6) The option term is ten years.
7
Employment Agreements
The Company and Perpetual Bank (collectively, the "Employers") have
entered into three-year employment agreements with Messrs. Orr, Hall and
Visioli. Under the agreements, the current base salaries for Messrs. Orr, Hall
and Visioli are $101,764, $85,696 and $74,984, respectively, which will be paid
by Perpetual Bank and may be increased at the discretion of the Board of
Directors or an authorized committee of the Board of Directors of Perpetual
Bank. Messrs. Orr's, Hall's and Visioli's salaries may not be decreased during
the term of the agreements without their prior written consent. On the
anniversary of the commencement date of the agreements, the term of the
agreements may be extended by the Board of Directors for an additional year
unless a termination notice is given by Messrs. Orr, Hall and Visioli. The
agreements are terminable by the Employers with or without cause, by Messrs.
Orr, Hall and Visioli in specific circumstances set forth in the agreements
which constitute constructive termination or in certain circumstances specified
by federal regulations. If the employment of Messrs. Orr, Hall and Visioli is
terminated without cause or upon a constructive termination, the Employers would
be required to honor the terms of the agreements through the expiration of the
then current term, including payment of current cash compensation and
continuation of employee benefits.
The agreements also provide for severance payments to each executive if
employment is terminated following a change in control of Perpetual Bank or the
Company. These payments, which will be made promptly after any change in
control, will be equal to three times the average annual compensation paid to
Messrs. Orr, Hall and Visioli during the five years immediately preceding the
change in control. In addition, each executive is entitled to continuation of
other employee benefits for a 36-month period following a change in control.
Under the agreements, a "change in control" is deemed to occur if, at anytime
during the term of the agreement, a person other than the Company purchases
shares of common stock pursuant to a tender or exchange offer for such shares,
any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities, the membership of the Board of Directors
changes as the result of a contested election, or stockholders of the Company
approve a merger, consolidation, sale or disposition of all or substantially all
of the Company's assets, or a plan of partial or complete liquidation has
occurred. Cash and benefits paid to Messrs. Orr, Hall and Visioli under the
agreements, together with payments under other benefit plans, following a change
in control of Perpetual Bank or the Company may constitute an "excess parachute
payment" under Section 280G of the Internal Revenue Code, resulting in the
imposition of a 20% excise tax on the recipient and the denial of the deduction
for such excess amounts to the Company and Perpetual Bank. The agreements
include a provision whereby the Company and Perpetual Bank indemnifies Messrs.
Orr, Hall and Visioli on an after-tax basis for any "excess parachute payment"
excise taxes.
Supplemental Executive Retirement Agreements
Perpetual Bank entered into supplemental executive retirement
agreements in April 1998 with Messrs. Orr, Hall and Visioli. Pursuant to the
agreements, upon retirement on or after reaching age 65, Messrs. Orr, Hall and
Visioli would receive monthly benefits of $7,575, $3,433 and $2,808,
respectively, paid monthly for 239 months following retirement. Upon termination
following a change in control of Perpetual Bank, Messrs. Orr, Hall and Visioli
would receive monthly benefits of $7,575, $3,433 and $2,808, respectively, paid
monthly for 239 months commencing with the month after he reaches age 65. Upon
termination of service for disability or retirement before age 65, Messrs. Orr,
Hall and Visioli would receive a reduced amount pursuant to a schedule set forth
in the agreements paid monthly for 239 months following termination. The reduced
payments would reflect Perpetual Bank's accrued liability under the agreements
8
as of the date of termination. The agreements provide a death benefit if Messrs.
Orr, Hall and Visioli die while in active service of Perpetual Bank equal to the
amount that would be paid to Messrs. Orr, Hall and Visioli upon serving until
age 65. If Messrs. Orr, Hall and Visioli die after benefit payments commence but
before receiving all payments, Perpetual Bank will pay the remaining benefits at
the same time and in the same amounts they would have been paid had Messrs. Orr,
Hall and Visioli survived. Perpetual Bank purchased life insurance on Messrs.
Orr, Hall and Visioli whereby Perpetual Bank is the beneficiary in order to
offset the expected payments to Messrs. Orr, Hall and Visioli. Perpetual Bank
accrued aggregate expense related to these agreements of approximately $110,000.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Report of the Compensation
Committee of the Company and Performance Graph shall not be incorporated by
reference into any such filings.
Report of the Compensation Committee of the Company
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information about the
compensation and benefits provided to the Company's Chief Executive Officer and
its other executive officers. The disclosure requirements for the Chief
Executive Officer and other executive officers include the use of tables and a
report explaining the rationale and consideration that led to the fundamental
executive compensation decisions affecting those individuals.
The Compensation Committee of the Company ("Committee") administer all
policies that govern executive compensation for the Company and Perpetual Bank.
The Committee evaluates the performance and determines the compensation of each
named executive officer and two other senior officers of the Company and
Perpetual Bank.
The Committee believes that compensation policy should reflect both
executives' management skills as well as Company performance and shareholder
returns. To this end, the following goals underlie the Committee's policies:
1. To attract and retain key executives who possess the
management skills and experience vital to the
long-term success of the Company and Perpetual Bank.
2. To provide compensation that is competitive and
consistent with executive compensation levels found
in the financial and banking industries.
3. To motivate executives to enhance long-term shareholder
value by building their ownership in the Company.
4. To make the compensation program an integral part of
the Company's long-term planning and management process.
The Committee's uses whatever means it considers necessary to obtain
adequate and current information upon which to base its recommendations to the
Board of Directors. For fiscal 1999, the Committee reviewed the results of
various compensation surveys and assessed the performance of the Chief Executive
Officer and other executive officers of Perpetual Bank.
9
In preparing its analysis with respect to comparative compensation
data, the Committee considers characteristics of peer institutions such as asset
size, off-balance sheet assets, earnings, type of business operations, corporate
structure and geographic location. When analyzing comparative data for
individual executive officers at peer institutions, the Committee considers the
scope and similarity of officer positions, experience and the complexity of
individual officer responsibilities.
In making its compensation recommendations, the Committee also
considers the performance of executive officers. The Chief Executive Officer
evaluates the performance of all other executive officers and reports to the
Committee. The Committee evaluates the performance of the Chief Executive
Officer. The Committee then reports to the Board of Directors regarding the
performance of the Chief Executive Officer and other executive officers. The
Committee also recommends to the Board of Directors the compensation of each of
the executive officers, including the Chief Executive Officer. Upon review of
the Committee's recommendations, the Board of Directors sets all executive
compensation. The Chief Executive Officer, a member of the Board of Directors,
abstains from voting on matters related to his compensation.
Compensation Committee Considerations for Fiscal 1999. Compensation for
executive officers is generally composed of salary, bonus, participation in
various employee benefit plans, such as the ESOP and the 401(k) plan, certain
fringe benefits provided to employees and directors fees, if applicable. The
benefits provided under the ESOP and the 401(k) plan are determined based on the
executive's compensation and/or years of service with Perpetual Bank.
A bonus pool has been established for Messrs. Orr, Hall and Visioli
based on the earnings of the Company. The bonus is also measured by the
Company's loan delinquency ratios and growth in deposits and loans, earnings per
share and other financial measurements. The Committee recommends the proposed
bonuses to the full Board for its approval. The annual review and bonuses are
generally made on September 30 of each year. For 1999 Messrs. Orr, Hall and
Visioli received bonuses of $115,799, $97,515, and $85,325. For 1998, each
individual received no bonus because of the loss reserve established for a
limited partnership investment in mortgage servicing rights held by Perpetual
Bank, which reduced pre-tax earnings to $1.8 million. The threshold for the
bonus plan is $2.5 million pre-tax earnings.
The Company, with stockholder approval, adopted the SouthBanc Shares,
Inc. 1998 Management Recognition and Development Plan and the SouthBanc Shares,
Inc. 1998 Stock Option Plan under which executive officers may receive grants of
restricted stock and awards of stock options. The Company believes that stock
ownership by its executives is a significant factor in aligning the interests of
the executives with those of stockholders. Stock options and restricted stock
awards under these plans were allocated based upon regulatory practices and
policies, the practices of other recently converted financial institutions and
the executive officers' level of responsibility and contributions to the
Company.
Compensation of the Chief Executive Officer. For the fiscal year ended
September 30, 1999, Robert W. Orr received a base salary of $101,764 and a cash
bonus of $115,799. In addition, he received other compensation of $11,323 as set
forth in the Summary Compensation Table presented earlier. For the reasons
discussed above, Mr. Orr did not receive a bonus in fiscal 1998. The Board of
Directors believes that Mr. Orr's compensation is appropriate based on Perpetual
Bank's compensation policy, consideration of salaries for similar positions in
the financial industry and Perpetual Bank's performance during the fiscal year.
10
Mr. Orr does not serve on the Compensation Committee and did not
participate in the Board of Director's review and adoption of the Compensation
Committee's recommendation concerning his compensation.
Compensation Committee of the Company consisting of:
Harold A. Pickens, Jr.
Cordes G. Seabrook, Jr.
Compensation Committee Interlocks and Insider Participation
No executive officer of the Company or Perpetual Bank has served as a
member of the compensation committee of another entity, one of whose executive
officers served on either the Compensation Committee of the Company or the
Personnel Committee of Perpetual Bank. No executive officer of the Company or
Perpetual Bank has served as a director of another entity, one of whose
executive officers served on either the Compensation Committee of the Company or
the Personnel Committee of Perpetual Bank. No executive officer of the Company
or Perpetual Bank has served as a member of the compensation committee of
another entity, one of whose executive officers served as a director of the
Company or Perpetual Bank.
11
- --------------------------------------------------------------------------------
PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph compares the cumulative total shareholder return
on the Company's common stock with the cumulative total return on the Nasdaq
Index (U.S. Companies) and with the SNL $250 - $500 Million Asset Thrift Index.
Before the Company's common stock began trading on The Nasdaq National Market on
April 16, 1998, Perpetual Bank's common stock traded on the Nasdaq SmallCap
Market. The base amount for the graph is $21.25 per share, which was the closing
price of Perpetual Bank's common stock on October 1, 1996, the first day of
trading for Perpetual Bank's common stock. The graph assumes that the value of
the investment in Perpetual Bank's common stock and in each index was $100 at
October 1, 1996, and that all dividends were reinvested. Stock price performance
shown is not necessarily indicative of future price performance.
[GRAPH APPEARS HERE]
Period Ended
--------------------------------------------------------------------------------
10/01/96 3/31/97 9/30/97 3/31/98 9/30/98 3/31/99 9/30/99
-------- ------- ------- ------- ------- ------- -------
SouthBanc Shares, Inc........................... $ 100.00 $129.39 $305.61 $363.36 $278.91 $321.91 $370.61
The Nasdaq Index (U.S. Companies)............... 100.00 99.73 137.96 151.21 140.30 203.67 227.83
SNL $250 - $500 Million Asset Thrift Index ..... 100.00 120.52 162.80 195.58 155.10 166.59 192.96
12
________________________________________________________________________________
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
________________________________________________________________________________
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10% of
any registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Executive officers, directors and greater than 10% stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of its executive
officers and directors has complied with applicable reporting requirements for
transactions in SouthBanc Shares common stock during the fiscal year ended
September 30, 1999.
________________________________________________________________________________
TRANSACTIONS WITH MANAGEMENT
________________________________________________________________________________
Federal regulations require that all loans or extensions of credit to
executive officers and directors of insured financial institutions must be made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons,
except for loans made under programs generally available to all employees, and
must not involve more than the normal risk of repayment or present other
unfavorable features. Perpetual Bank, therefore, is prohibited from making any
new loans or extensions of credit to executive officers and directors at
different rates or terms than those offered to the general public, except for
loans made pursuant to programs generally available to all employees, and has
adopted a policy to this effect. In addition, loans made to a director or
executive officer in an amount that, when aggregated with the amount of all
other loans to such person and his or her related interests, are in excess of
the greater of $25,000 or 5% of the institution's capital and surplus (up to a
maximum of $500,000) must be approved in advance by a majority of the
disinterested members of the Board of Directors. The aggregate amount of loans
by Perpetual Bank to its executive officers and directors and their associates
was approximately $1.2 million at September 30, 1999.
________________________________________________________________________________
PROPOSAL 2 -- RATIFICATION OF INDEPENDENT AUDITORS
________________________________________________________________________________
The Board of Directors has appointed Elliot, Davis & Company LLP to be
its independent auditors for the 2000 fiscal year, subject to the ratification
by stockholders. A representative of Elliot, Davis & Company LLP is expected to
be present at the annual meeting to respond to appropriate questions from
stockholders and will have the opportunity to make a statement should he or she
desire to do so.
If the ratification of the appointment of the independent auditors is
not approved by a majority of the votes cast by stockholders at the annual
meeting, other independent auditors will be considered by the Board of
Directors. The Board of Directors recommends that stockholders vote "FOR" the
ratification of the appointment of independent auditors.
13
________________________________________________________________________________
MISCELLANEOUS
________________________________________________________________________________
The Company will pay the cost of this proxy solicitation. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of SouthBanc Shares common stock. In addition to soliciting
proxies by mail, directors, officers and regular employees of the Company may
solicit proxies personally or by telephone without receiving additional
compensation. The Company has not retained any firm to assist in soliciting
proxies.
The Company's Annual Report to Stockholders has been mailed to
stockholders as of the close of business on December 1, 1999. Any stockholder
who has not received a copy of the Annual Report may obtain a copy by writing to
the Secretary of the Company. The Annual Report is not to be treated as part of
the proxy solicitation material or as having been incorporated in this proxy
statement by reference.
A copy of the Company's Form 10-K for the fiscal year ended September
30, 1999, as filed with the Securities and Exchange Commission, will be
furnished without charge to stockholders as of the close of business on December
1, 1999 upon written request to Sylvia B. Reed, Corporate Secretary, SouthBanc
Shares, Inc., 907 N. Main Street, Anderson, South Carolina 29621.
________________________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________________________
Proposals that stockholders seek to have included in the proxy
statement for the Company's next annual meeting must be received by the Company
no later than August 19, 2000. If next year's annual meeting is held on a date
more than 30 calendar days from January 20, 2001, a stockholder proposal must be
received by a reasonable time before the proxy solicitation for such annual
meeting is made. Any stockholder proposals will be subject to the requirements
of the proxy rules adopted by the Securities and Exchange Commission.
The Company's Certificate of Incorporation provides that in order for a
stockholder to make nominations for the election of directors or proposals for
business to be brought before a meeting of stockholders, a stockholder must
deliver written notice of such nominations and/or proposals to the Secretary not
less than 30 nor more than 60 days before the date of the meeting; provided that
if less than 31 days' notice of the meeting is given to stockholders, such
notice must be delivered not later than the close of the tenth day following the
day on which notice of the meeting was mailed to stockholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sylvia B. Reed
Sylvia B. Reed
Corporate Secretary
Anderson, South Carolina
December 17, 1999
14
REVOCABLE PROXY
SOUTHBANC SHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 20, 2000
The undersigned hereby appoints the official Proxy Committee of the
Board of Directors of SouthBanc Shares, Inc. (the "Company"), consisting of the
entire Board of Directors, with full powers of substitution to act as attorneys
and proxies for the undersigned, to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote at the annual meeting of
stockholders to be held at the main office of Perpetual Bank, 907 N. Main
Street, Anderson, South Carolina, on Thursday, January 20, 2000, at 10:00 a.m.,
local time, and at any and all adjournments thereof, as indicated on the
opposite side of this revocable proxy.
VOTE VOTE
FOR WITHHELD
--- --------
1. The election as director of the nominees [ ] [ ]
listed below (except as marked to the
contrary below).
Richard C. Ballenger
Jim Gray Watson
INSTRUCTIONS: To withhold your vote
for any individual nominee, write the
nominee's name on the line below.
______________________
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of Elliot, Davis & Company LLP [ ] [ ] [ ]
as independent auditors for the fiscal
year ending September 30, 2000.
3. In their discretion, upon such other matters as may properly come before the
meeting.
The Board of Directors recommends a vote "FOR" the listed proposals.
This proxy card will also be used to provide voting instructions to the
trustees for any shares of common stock of the Company allocated to participants
under the Perpetual Bank Employee Stock Ownership Plan or the Perpetual Bank
401(k) Plan.
THIS PROXY, PROPERLY SIGNED AND DATED, WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED THIS PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF
ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THE
BOARD OF DIRECTORS IN ITS BEST JUDGMENT. PRESENTLY, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY ON THE BOARD OF DIRECTORS TO VOTE WITH RESPECT TO THE
ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote in person at the
annual meeting or at any adjournment thereof and after notification to the
Secretary of the Company at the annual meeting of the stockholder's decision to
terminate this proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the Company before the
execution of this proxy of the Notice of Annual Meeting of Stockholders, a Proxy
Statement for the Annual Meeting of Stockholders and the 1999 Annual Report to
Stockholders.
Dated:__________________
_________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
_________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, indicate your full title. If
shares are held jointly, only one registered holder need sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.