SCHEDULE 14A INFORMATION
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
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (Section) 240.14a-11(c) or (Section) 14a-12
BANK OF THE OZARKS, INC.
(Name of Registrant as Specified in Its Charter)
BANK OF THE OZARKS, INC.
(Name of Person(s) Filing Proxy Statement)
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:
2) Aggregate number of securities to which transaction applies:
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):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] 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:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 20, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Bank of the Ozarks, Inc., an Arkansas Corporation (the "Company"), to be held
at Embassy Suites, 11301 Financial Center Parkway, Little Rock, Arkansas 72211,
on Tuesday, April 20, 1999 at 1:30 p.m., local time, for the following purposes:
1. To elect twelve (12) directors.
2. To consider and act upon such other business as may properly come
before the meeting and any adjournments or postponements thereof.
Only stockholders of record at the close of business on March 2, 1999 will
be entitled to vote at the 1999 Annual Meeting and any adjournments or
postponements thereof.
The Company's Proxy Statement and a form of proxy are included with this
Notice. The annual report for the year ended December 31, 1998 is also
enclosed.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ GEORGE GLEASON
--------------------------------------
George Gleason
Chairman of the Board of Directors and
Chief Executive Officer
Little Rock, Arkansas
March 12, 1999
YOUR VOTE IS IMPORTANT. PLEASE DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED
FORM OF PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES
AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE GIVING OF YOUR
PROXY DOES NOT AFFECT YOUR RIGHT TO REVOKE IT LATER OR TO VOTE YOUR SHARES IN
PERSON IF YOU ATTEND THE MEETING.
12615 CHENAL PARKWAY
P.O. Box 8811
LITTLE ROCK, ARKANSAS 72231-8811
------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
APRIL 20, 1999
------------
SOLICITATION AND REVOCATION OF PROXY
The enclosed proxy, for use only at the 1999 Annual Meeting of Stockholders
to be held at Embassy Suites, 11301 Financial Center Parkway, Little Rock,
Arkansas 72211, on Tuesday, April 20, 1999 at 1:30 p.m., local time, and any
adjournments or postponements thereof, is solicited on behalf of the Board of
Directors of Bank of the Ozarks, Inc. (the "Company"). Such solicitation is
being made primarily by mail, but may also be made in person or by telephone or
telegraph by officers, directors, and regular employees of the Company. All
expenses incurred in the solicitation will be borne by the Company.
Any stockholder executing a proxy retains the right to revoke it at any
time prior to exercise at the 1999 Annual Meeting. A proxy may be revoked at
any time before it is used, upon delivery of written notice to the Secretary of
the Company, by execution and delivery of a later proxy, or by attending the
meeting and voting in person. If not revoked, all properly executed proxies
received will be voted at the meeting in accordance with the terms of the proxy.
The Company knows of no matter to be brought before the meeting other than
that referred to in the accompanying notice of annual meeting. If, however, any
other matters properly come before the meeting, the proxy solicited hereby
confers discretionary authority to the proxies named therein to vote in their
sole discretion with respect to such matters, as well as other matters incident
to the conduct of the meeting.
This proxy material is first being mailed to stockholders on or about March
12, 1999.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has selected March 2, 1999 as the record date (the
"Record Date") for the 1999 Annual Meeting. Only those stockholders of record
as of the close of business on the Record Date are entitled to notice of and to
vote at the 1999 Annual Meeting. At the close of business on the Record Date,
there were 3,779,555 shares of common stock, $0.01 par value (the "Common
Stock") issued and outstanding. At the meeting, each stockholder will be
entitled to one vote, in person or by proxy, for each share of Common Stock
owned of record as of the close of business on the Record Date. Votes will be
tabulated by inspectors of election appointed by the Company's Board of
Directors. The stock transfer books of the Company will not be closed.
The enclosed form of proxy provides a method for stockholders to withhold
authority to vote for any one or more of the nominees for the Board of Directors
while still granting authority to the proxy to vote for the remaining nominees.
The names of all nominees are listed on the proxy card. To grant the proxy
authority to vote for all nominees, check the box marked "FOR ALL NOMINEES." To
withhold authority to vote for all nominees, check the box marked "WITHHOLD."
To withhold authority to vote for any individual nominee(s), mark the "FOR ALL
EXCEPT" box and strike a line through that nominee(s)' name. By checking the
box marked "WITHHOLD," shares will not be counted as votes cast, but will be
counted as present at the meeting for the purpose of calculating whether a
quorum exists. IF NO INSTRUCTIONS ARE INDICATED, SHARES OF COMMON STOCK WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES. Broker "non-votes" are not relevant to
the determination of a quorum or whether the proposal to elect directors has
been approved.
Provided a quorum is present, the affirmative vote of a plurality of
the shares of Common Stock represented at the meeting and entitled to vote is
required for election of each nominee to the board of directors. Stockholders
may not cumulate their votes.
2
ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors is comprised of one class of directors,
elected annually. Each director serves a term of one year or until his or her
successor is duly elected or qualified. The number of directors is currently
set at twelve, and the Board of Directors has the power to fix or change
the number of directors by resolution and without any further action of the
stockholders in accordance with the Company's bylaws. The Company's Amended and
Restated Articles of Incorporation contains a provision that allows the Board of
Directors, by resolution and without any further action by the stockholders, to
classify or stagger the board into two or three groups, as equal in number as
possible, with the terms of office of such directors contained in each group
expiring one, two or three years after their election to the Board, as
applicable. The existence of such provision could result in the nominees
described below being elected for terms greater than one year.
The following slate of nominees has been chosen by the Board of Directors
and each nominee has consented to being named in this Proxy Statement and to
serve if elected. If a Nominee should for any reason become unavailable for
election, proxies may be voted with discretionary authority by the proxy holder
for a substitute designated by the Board.
Certain information for each nominee is set forth below.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH
NOMINEE. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY A CONTRARY CHOICE IN THEIR PROXIES.
NOMINEES FOR ELECTION AS DIRECTORS
George Gleason, age 45; Chairman and Chief Executive Officer. Mr. Gleason
has served the Company or one of its bank subsidiaries as Chairman, Chief
Executive Officer and/or President since 1979. He holds a B.A. in Business and
Economics from Hendrix College and a J.D. from the University of Arkansas.
James Patridge, age 48; Vice Chairman since 1997. From 1985 to 1997, Mr.
Patridge served as Executive Vice President with NationsBank, N.A. (formerly
Boatmen's Arkansas, Inc. and Worthen Banking Corporation). Mr. Patridge holds a
B.S.B.A. from the University of Arkansas, an M.S. in Finance from Memphis State
University and a J.D. from Oklahoma City University.
Mark Ross, age 43; President. Mr. Ross has served as President since 1986
and in various capacities for one of the bank subsidiaries since 1980. He was
elected as a director of the Company in 1992. Mr. Ross holds a B.A. in Business
Administration from Hendrix College.
3
Roger Collins, age 50; Director since July 1997. Mr. Collins is Executive
Vice President, Chief Financial Officer and a director of Harp's Food Stores,
Inc., a regional grocery chain headquartered in Springdale, Arkansas with 42
stores located in Arkansas, Oklahoma and Missouri. He holds a B.A. from Rice
University and a M.B.A. from the University of Texas at Austin and is a C.P.A.
Jerry Davis, age 59; Director since December 1998. Mr. Davis is Chairman,
President and Chief Executive Officer for Affiliated Foods Southwest, Inc., a
wholesale grocery operation located in Little Rock, Arkansas.
C. E. Dougan, age 52; Director since July 1997. Mr. Dougan is co-owner of
Mooney-Dougan, Inc., which is engaged in residential real estate development,
construction and investments. Prior to 1997, Mr. Dougan served 12 years as
President and Chief Executive Officer of Mercantile Bank of Crawford County
(formerly Peoples Bank & Trust Company of Van Buren and First National Bank of
Crawford County). Mr. Dougan has also served as a director of one of the bank
subsidiaries since February 1997.
Robert East, age 51; Director since July 1997. Mr. East is Chairman and
President of Robert East Company, an investment company, Chairman and Chief
Executive Officer of East-Harding, Inc., a general contracting firm, and Partner
and Treasurer of AMO Electrical Company, a distributor of electrical supplies.
He is also a partner or owner of numerous real estate projects and other
investments. Mr. East holds a B.A. in Finance and Administration from the
University of Arkansas.
Linda Gleason, age 44; Director since 1987. From 1992 to 1996, Ms. Gleason
served as the Company's Deputy Chief Executive Officer and Assistant Secretary.
She has attended Arkansas State University and the University of Arkansas at
Little Rock.
Porter Hillard, age 67; Director since July 1997. Mr. Hillard is a retired
owner and operator of various agricultural businesses since 1957. He has owned,
operated or managed various purebred and commercial cattle operations, a turkey
hatchery, feed mills, turkey grow-out operations and other businesses. Mr.
Hillard has also served as a director of one of the bank subsidiaries since
1967. He holds a B.S. in Agriculture from the University of Arkansas.
Henry Mariani, age 60; Director since July 1997. Mr. Mariani is Chairman
and Chief Executive Officer of Nite Lite Company, a manufacturing, wholesale and
retail mail order operation which specializes in hunting equipment and supplies.
He holds a B.S. in Finance from Penn State University and is a C.P.A.
R. L. Qualls, age 65; Director since July 1997. Dr. Qualls is Vice Chairman
of Baldor Electric Company, a marketer, designer and manufacturer of electric
motors based in Fort Smith, Arkansas. From 1993 to 1998 he served as Chief
Executive Officer of Baldor. Dr. Qualls holds a B.A. and M.S. in Economics from
Mississippi State University and completed his doctoral work at Louisiana State
University.
Kennith Smith, age 67; Director since July 1997. Mr. Smith is retired and
previously served as the owner and operator of Smith Cattle Farm from 1984 until
his retirement in 1993. Prior to that time he was the co-owner of Mulberry
Lumber Company. Mr. Smith has also served as a director of one of the bank
subsidiaries since 1977.
Linda Gleason is the wife of George Gleason. Except for the foregoing, no
family relationships exist among any of the above named persons. Unless
otherwise indicated, each of the above named persons serves in the same position
with the Company's bank subsidiaries.
4
COMMITTEES
During 1998 the Board of Directors met on twelve occasions. Each of the
nominees for the Board, other than Mr. Davis who was appointed by the Board on
September 15, 1998 was elected by stockholders at last year's annual meeting.
In 1998 each Director attended at least 75% or more of the total of meetings of
the Board and committees of the Board during the period in which he or she
served. The Company presently does not have a standing nominating committee, and
the Board of Directors nominates persons for director. The Board will consider
suggestions by stockholders for names of nominees to the Board of Directors for
the 2000 Annual Meeting, provided that such suggestions are made in writing and
delivered to the Secretary of the Company on or before December 1, 1999. The
following is a brief description of the functions of the Company's committees.
Audit Committee. The Audit Committee met eleven times in 1998. The Audit
Committee makes recommendations concerning the engagement of the Company's
independent auditors, reviews the terms of their engagement, reviews the
auditors' report and all related reports and matters, coordinates appropriate
action in response thereto and reviews the adequacy of the Company's internal
controls. The Audit Committee also receives and reviews the monthly reports and
presentations of the loan review and compliance officers and the internal
auditor, provides general oversight and direction for their work, and
coordinates corrective action as appropriate. Roger Collins, as Chairman, Robert
East and Porter Hillard served on the Audit Committee during 1998 and will
continue to serve on such committee in 1999. None of these individuals was
employed during or prior to 1998 as officers or employees of the Company or its
subsidiaries.
Compensation and Personnel Committee. The Compensation and Personnel
Committee met eight times in 1998. The Compensation and Personnel Committee
considers, approves and reviews all salaries and bonuses for officers and
employees, recommends to the Board of Directors the election of officers,
reviews additions and terminations of personnel, oversees administration of the
employee benefit plans and programs, including the Company's stock option plans,
and oversees staff training and educational programs. Henry Mariani, as
Chairman, Porter Hillard, and Kennith Smith served on the Compensation and
Personnel Committee during 1998 and will continue to serve on such committee in
1999. None of these individuals was employed during or prior to 1998 as
officers or employees of the Company or its subsidiaries.
Trust Committee. The Trust Committee met eleven times in 1998. The
operation of the bank's trust department and the administration of its trust
accounts are overseen by the Trust Committee. R. L. Qualls, as Chairman, Kennith
Smith and Linda Gleason served on the Trust Committee during 1998 and will
continue to serve on such committee in 1999.
Loan Committees. The Loan Committees met thirty-one times in 1998. Loan
Committees have been established for each of the three geographic divisions of
the Company and consist of both board members and executive officers. Such Loan
Committees have responsibility for reviewing and approving all loans and
aggregate loan relationships in excess of $1,000,000 and for administering all
other aspects of the lending function within each division. The following
persons served on the Company's Loan Committees during 1998 and will continue to
serve on such committee in 1999:
5
Western Central Northern
- ------- ------- --------
C. E. Dougan, Chairman Robert East, Chairman James Patridge, Chairman
George Gleason George Gleason Danny Criner
Porter Hillard Linda Gleason George Gleason
James Patridge Henry Mariani George Landrum
R. L. Qualls James Patridge Louis Melton
Joe Willis
Bill Witty
Directors Loan Review Committee. On February 17, 1998 the Board
established the Directors Loan Review Committee to increase the Board's
oversight of the Company's lending activities. The Loan Review Committee met
nine times in 1998. The Loan Review Committee, among other things, reviews
reports of new loans, loan commitments over $100,000, loan loss activity, past
due and problem loans, asset quality and other matters as appropriate. James
Patridge, as Chairman, C. E. Dougan, Henry Mariani, Jerry Davis and George
Gleason served on this committee during 1998 and will continue to serve on this
committee in 1999.
ALCO and Investment Committee. The ALCO and Investment Committee met eight
times in 1998. Management of the asset/liability (interest rate risk) position,
liquidity and investment portfolio is overseen by the ALCO and Investment
Committee. Paul Moore, as Chairman, Mark Ross, Danny Criner, Randy Oates and Dan
Rolett served on the ALCO and Investment Committee during 1998 and together with
George Gleason will serve on this committee in 1999.
PRINCIPAL STOCKHOLDERS
As of February 15, 1999 the only stockholders known by the Company to own,
directly or indirectly, more than five percent of the Company's Common Stock,
the only class of the Company's capital stock presently outstanding, are
reflected in the following table. The table is based on information supplied by
principle shareholders and a review of information on file with the United
States Securities and Exchange Commission.
NUMBER OF SHARES OF
NAME AND ADDRESS OF COMMON STOCK BENEFICIALLY PERCENTAGE OF
TITLE OF CLASS BENEFICIAL OWNER OWNED OUTSTANDING SHARES
- -------------- ---------------- ----- ------------------
Common Stock George Gleason 1,273,602/(1)/ 33.7%
12615 Chenal Parkway
P.O. Box 8811
Little Rock, Arkansas 72231-8811
Common Stock Bank of the Ozarks, Inc. 260,300 6.9%
401(k) Retirement Savings
Plan (the "401(k) Plan")/(2)/
12615 Chenal Parkway
P.O. Box 8811
Little Rock, Arkansas 72231-8811
- -------------------
/(1)/ For information regarding form of ownership, see the footnotes to
the table regarding Security Ownership of Management.
/(2)/ The 401(k) Plan is a qualified retirement plan established for the
benefit of all of the Company's officers and employees. These shares
were previously held in the Bank of the Ozarks, Inc. Stock Ownership
Plan and Trust which was merged into the 401(k) Plan effective January
31, 1999. Paul Moore, Melvin Edwards and Brad Brewer, each an employee
6
of the Company, currently serve as the trustees of the 401(k) Plan.
Participants in the 401(k) Plan are entitled to vote shares of Common Stock
allocated to their respective accounts on all matters submitted to the
Company's stockholders for approval, and the failure by a participant to
provide instructions on the manner in which to vote his or her shares is
treated as an abstention.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of February 15, 1999
with respect to beneficial ownership of the Company's Common Stock by each
director, each executive officer of the Company named under the table captioned
"Executive Compensation and Other Information" and the directors and executive
officers of the Company as a group.
NAME SHARES OWNED/(1)/ PERCENTAGE OF CLASS
- -------------------------------------- ----------------- -------------------
George Gleason........................ 1,273,602/(2)/ 33.7%
James Patridge........................ 2,023 *
Mark Ross............................. 114,219/(3)/ 3.2%
Linda Gleason......................... 39,852/(4,5)/ 1.1%
Roger Collins......................... 3,750/(4,6)/ *
Jerry Davis........................... 6,000/(7)/ *
C.E. Dougan........................... 2,830/(4)/ *
Robert East........................... 10,900/(4,8)/ *
Porter Hillard........................ 2,000/(4)/ *
Henry Mariani......................... 21,000/(4)/ *
R. L. Qualls.......................... 2,000/(4)/ *
Kennith Smith......................... 37,315/(4,9)/ *
Jean Arehart.......................... 5,744 *
All Directors and Executive Officers
as a group (20 persons)............... 1,541,900 40.8%
________________________
* Less than one percent.
/(1)/ Includes beneficial ownership of shares with respect to which voting or
investment power may be deemed to be directly or indirectly controlled.
Accordingly, the shares in the foregoing table include shares owned
directly, shares held in such person's accounts under the 401(k) Plan,
shares underlying presently exercisable options granted pursuant to
Company's stock option plans, shares owned by certain of the individual's
family members and shares held by the individual as a trustee or other
similar capacity, unless otherwise described below.
/(2)/ The amount includes (a) 210,700 shares owned of record by a trust of
which Mr. Gleason is sole trustee and has a 25% life income interest,
(b) 28,000 shares owned of record by a charitable trust for which Mr.
Gleason is a co-trustee with Ms. Gleason, (c) 11,852 shares owned
directly by Ms. Gleason and (d) 400 shares owned by the minor children
of Mr. Gleason.
/(3)/ Includes (a) 36,300 shares owned of record by a trust for the benefit of
Mr. Ross and his children and for which Mr. Ross maintains a life
interest only and (b) 25,000 shares owned by Mr. Ross' spouse.
/(4)/ Includes exercisable options for 2,000 shares granted under the Company's
Non-Employee Director Stock Option Plan.
7
/(5)/ Includes 28,000 shares owned of record by a charitable trust for which
Ms. Gleason is a co-trustee with Mr. Gleason.
/(6)/ Includes 500 shares held by spouse.
/(7)/ Includes exercisable options for 1,000 shares granted under the Company's
Non-Employee Director Stock Option Plan.
/(8)/ Includes 600 shares held by children of Mr. East.
/(9)/ Includes 692 shares held by spouse.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table shows for the years indicated all cash and certain
other compensation paid or to be paid by the Company to the Chief Executive
Officer and its other executive officers whose aggregate salary and bonus
exceeded $100,000.
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name & Principal Securities Underlying All Other
Position Year Salary Bonus Options (#) Compensation(1)
-------- ---- ------ ----- ----------- ---------------
George Gleason(2) 1998 $278,958 $ - 18,500(3) $4,870
Chairman and Chief 1997 $372,556 $ 45,297 12,200(3) $5,899
Executive Officer 1996 $405,900 $200,000 - $4,636
James Patridge(4) 1998 $115,000 $ - 14,500(3) $2,479
Vice Chairman
Mark Ross 1998 $115,000 $ - 4,500(3) $2,309
President 1997 $ 97,847 $ 19,569 4,200(3) $3,526
1996 $ 92,782 $ 22,042 - $4,047
Jean Arehart 1998 $ 75,000 $106,493 - $1,405
Executive Vice 1997 $ 73,274 $ 55,988 3,600(3) $2,177
President - Bank of the 1996 $ 37,917 $ 2,275 - -
Ozarks, wca
- -------------------------
/(1)/ Represents employer matching contributions under the Company's 401(k)
Plan for 1998.
/(2)/ Mr. Gleason's salary and bonus is determined pursuant to a written
employment contract. For a description of this agreement, see
"--Employment Agreement with Mr. Gleason" below.
/(3)/ Represents option grants under the Company's Stock Option Plan for
employees. See "Option Grants in Last Fiscal Year."
/(4)/ Mr. Patridge commenced employment with the Company on December 31, 1997.
8
EMPLOYMENT AGREEMENT WITH MR. GLEASON
Mr. Gleason's salary and bonus is determined pursuant to a written
employment contract which became effective on July 17, 1997, was amended on
September 16, 1997, and amended again on July 21, 1998. The agreement continues
through December 31, 2000. The agreement, as amended, reduced Mr. Gleason's
annual base salary effective July 21, 1998 to $225,000, subject to an annual
cost of living adjustment and an annual bonus not to exceed 1% of the Company's
net income for each fiscal year. This agreement is in addition to any other
compensation that may be received by Mr. Gleason under employee benefit plans or
reimbursement arrangements.
OPTIONS GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the named
executive officers concerning options granted in the last fiscal year and their
potential realizable value:
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term(1)
--------------------------------------------------- ---------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted Fiscal Year(%) ($/Sh) Date 5% 10%
---- ------- -------------- ------ ---- -- ---
George Gleason 10,000 9.6% $27.75 (2) $133,035 $320,730
8,500 8.2% $21.88 9/22/03 $ 51,382 $113,432
James Patridge 10,000 9.6% $25.13 (2) $120,416 $289,422
4,500 4.3% $21.88 9/22/03 $ 27,202 $ 60,097
Mark Ross 4,500 4.3% $21.88 9/22/03 $ 27,202 $ 60,097
/(1)/ As required by the Securities Exchange Commission rules and regulations,
potential realizable values are based on the assumption that the Common
Stock price appreciates at the annual rates shown compounded annually
from the date of the grant until the end of the option term and is not
intended to forecast appreciation in stock price.
/(2)/ Mr. Gleason's options expire in the amount of 3,300, 3,300 and 3,400
shares on each of July 21, 2005, 2006 and 2007, respectively; and Mr.
Patridge's options expire in installments of 3,300, 3,300 and 3,400
shares on each of January 20, 2005, 2006 and 2007, respectively.
9
AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
The following table sets forth information with respect to the named
executives concerning exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at FY-End FY-End(1)
------------------------------- --------------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
George Gleason - - - 30,700 - $94,563
James Patridge - - - 14,500 - $ 5,063
Mark Ross - - - 8,700 - $34,463
Jean Arehart - - - 3,600 - $25,200
- --------------------
/(1)/ The dollar amounts shown represent the product of the number of shares
purchasable upon exercise of the related options times the difference of
the average of the high and low sales prices reported on December 31, 1998
($23.00) and the purchase price per share payable upon such exercise
applicable to each in-the-money option.
DIRECTOR COMPENSATION
Non-employee directors are paid a monthly retainer fee of $500 and a fee
of $500 for attending each regular and special board meeting. In addition, non-
employee directors are paid a fee of $100 for attendance at each meeting of a
committee of the Board of Directors. Additionally, under the Company's Non-
Employee Director Stock Option Plan, each non-employee director is automatically
granted, on the date a director's term of office commences, and each year
thereafter on the day following the annual meeting of stockholders as long as
such director's term as a director is continuing for the ensuing year, an option
to acquire 1,000 shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock on the date of grant. Effective April 22, 1998
the Company granted options to its eight non-employee directors to purchase
1,000 shares each of Common Stock at an exercise price of $34.13 per share. An
additional non-employee director joined the Board and was awarded an option for
1,000 shares at an exercise price of $22.31 on September 15, 1998. All options
granted to non-employee directors become exercisable upon grant. The Company's
officers are not compensated for their service as directors.
REPORT OF THE COMPENSATION AND PERSONNEL COMMITTEE ON
EXECUTIVE COMPENSATION
The Personnel and Compensation Committee (hereinafter the "Compensation
Committee") is responsible for determining compensation levels for the Company's
executive officers and for determining the policies that govern the Company's
compensation and benefit plans. This report describes the basis upon which the
Compensation Committee determined the 1998 compensation payable to the executive
officers of the Company.
10
Compensation Philosophy and Policies
The policy of the Compensation Committee is to make compensation decisions
consistent with the long-term growth and performance objectives of the Company.
In 1998 the Company's compensation program for executive officers was based
upon the following principles and policies:
. The Company is committed to providing a competitive pay program that helps
attract and retain quality executives while motivating such persons to
perform their jobs in the most effective manner. In order to achieve this
purpose, the Company's compensation policies must, among other things, (1) be
internally equitable and externally competitive, (2) reward individuals based
upon productivity and performance, (3) contain an appropriate mix of cash and
long-term or equity-based compensation, (4) be administratively efficient and
within budgetary parameters and (5) be flexible in response to changing
conditions.
. To ensure that pay is competitive, the Company has compared its pay practices
with those of other financial institutions, particularly banks and bank
holding companies in the markets served by the Company, and from time to time
modifies pay parameters based on this review.
. General cash bonus rewards for executive officers and other personnel are
initially conditioned upon attaining company-wide performance thresholds.
Assuming the Company achieves the minimum thresholds, rewards are based upon
a combination of branch and departmental performance and individual
performance and responsibility. In each case, the foregoing performance
criteria are subjectively applied and therefore are not based upon the
application of objective standards or mathematical criteria.
. The Company maintains an on-going program of evaluation of officers and
employees in which supervisors set objectives and goals for personnel
reporting to them and evaluate the performance of such personnel. Senior
management, including the Chief Executive Officer, reviews the performance of
the Company's executive officers and makes final recommendations on their
compensation levels to the Compensation Committee.
Executive Compensation Components for 1998
The Compensation Committee regularly reviews the Company's compensation
program to ensure that the components of such program will allow the Company to
achieve the objectives described above. In 1998, the Company's compensation
program consisted of the following:
Base Salary. As noted above, base salary levels are reviewed periodically
to determine whether such salaries fall within the range of comparable salaries
paid by other similarly sized and similarly situated financial institutions.
Actual salaries are based upon individual
11
performance contributions in accordance with the compensation philosophy of the
Company. During 1998, base salaries for executive officers decreased an average
of approximately 4.94% over the prior year due to a reduction in the base salary
of the Chief Executive Officer. If the Chief Executive Officer's salary is
excluded, the base salaries for executive officers employed for the full year of
1997 and 1998 as a group increased by 11.7%. The Compensation Committee believes
that the Company's executive base salaries are within the range of salaries paid
by comparable financial institutions.
Bonuses. The Company's general 1998 cash bonus program conditioned the
payment of such bonuses on the Company achieving minimum 1998 consolidated net
income of approximately $5.8 million, or approximately $1.52 per share. Despite
achieving record growth and record earnings, the Company did not reach this
benchmark and the payment of general 1998 cash bonuses was eliminated. A limited
number of special bonuses were paid in 1998 for certain personnel whose special
bonuses were tied to specific performance criteria.
Employee Stock Ownership Plan. On July 21, 1998 the Board of Directors
approved merging the Employee Stock Ownership Plan (ESOP) with the 401(k) Plan.
This merger was accomplished January 31, 1999. The Board approved the increase
of the 401(k) Plan employer contribution from two percent to three percent
effective January 1, 1999 and the elimination of the 1998 ESOP contribution.
Stock Options. The Compensation Committee believes that stock options
provide an appropriate incentive to encourage management, particularly senior
management, to maximize stockholder returns since the value of an option bears a
direct correlation to appreciation in the Company's stock price. Grants under
the Company's Employee Stock Option Plan have the effect of more closely
aligning the interests of stockholders with the interests of management, while
at the same time providing a valuable tool for attracting, rewarding, and
retaining key employees. The Compensation Committee determines whether to grant
stock options based upon the subjective analysis of a number of factors,
including the Company's performance as measured by the price of its stock, the
overall mix of equity-based or long-term compensation to cash compensation, the
number and frequency of prior option grants and the potential for an
individual's contribution and performance to positively impact the Company's
performance. Based upon the foregoing factors, the Compensation Committee
during 1998 granted options to purchase a total of 52,650 shares of the
Company's Common Stock to executive officers at exercise prices per share
ranging from $21.88 to $27.75, with a weighted average exercise price per share
of $23.94. The Compensation Committee will consider recommending the award of
stock options to existing employees or to prospective employees in the future as
circumstances warrant.
401(k) Plan and Other Benefits. The Company established the 401(k)
Retirement Savings Plan in 1997. This Plan is a qualified retirement plan with
a salary deferred feature designed to qualify under Section 401 of the Internal
Revenue Code of 1986. The 401(k) Plan permits all employees of the Company to
defer a portion of their eligible compensation on a pre-tax basis subject to
certain maximum amounts. With the January 1999 merger of the ESOP with the
401(k) Plan, the Company's matching contributions will increase in 1999 up to a
maximum of three percent of the participant's salary per year. Additionally, in
order to encourage employees to invest in the Company's stock, the Company has
amended the 401(k) Plan to include a Company Common Stock fund as one of its
investment alternatives. Total matching contributions on behalf of executive
officers in 1998 were $20,546, which represented an average of 1.92% of such
officers' covered compensation. In addition to the 401(k) Plan, executives and
other employees receive life, health, dental,
12
and long-term disability insurance coverage in amounts the Company believes to
be competitive with comparably sized financial institutions.
Chairman and Chief Executive Officer Compensation
As described in the notes to the Summary Compensation Table presented above
under the caption "Executive Compensation and Other Information", the annual
cash compensation payable to George Gleason, the Company's Chairman and Chief
Executive Officer, is determined pursuant to a written employment contract. At
the request of Mr. Gleason, the Company renegotiated this contract effective
July 16, 1998 to reduce his annual base salary by $100,000. Simultaneously with
the reduction in base salary, the Committee granted Mr. Gleason options to
purchase 10,000 shares of Common Stock. The employment agreement continues
through December 31, 2000. Mr. Gleason believed that the reduction in his cash
compensation was an appropriate action in that it would help reduce Company
overhead over the next two years and more fully align his interests with that of
the Company's stockholders by increasing the equity component of his total
compensation package.
In addition, Mr. Gleason received during 1998 (1) contributions under the
Company's 401(k) Plan which were determined on a basis consistent with all other
participating employees, and (2) additional option grants to purchase 8,500
shares at the market price on September 22, 1998. The Compensation Committee
made the September grants pursuant to the Company's Employee Stock Option Plan,
and based the grants on an evaluation of the various factors considered for all
employees that were outlined above.
The Committee has reviewed Mr. Gleason's entire compensation package in the
context of compensation packages available for executives of similar-sized
financial institutions and in light of the significant dependence of the
organization on Mr. Gleason's continued services and significant
responsibilities. Based upon this review, the Compensation Committee believes
that the level of Mr. Gleason's compensation is appropriate.
Section 162(m).
In 1993, Congress enacted the Omnibus Budget Reconciliation Act of 1993
("OBRA"), which limits the deductibility for federal income tax purposes of
annual compensation paid to certain covered executive officers (including the
Chief Executive Officer) to $1 million, subject to certain exceptions. OBRA is
not expected to have an impact or result in the loss of a deduction with respect
to compensation paid to any of the Company's executives during the last year or
in the foreseeable future. In this regard, it should be noted that all option
grants effected under the Company's Employee Stock Option Plan are intended to
qualify for an exemption from OBRA.
Personnel and Compensation Committee of the
Board of Directors
Henry Mariani, Chairman
Porter Hillard
Kennith Smith
13
CERTAIN TRANSACTIONS
Each of the Company's bank subsidiaries has had, in the ordinary course of
business, banking transactions with certain of its officers and directors and
with certain officers and directors of the Company. All loan transactions with
officers and directors of the Company, its bank subsidiaries, and their related
and affiliated parties, have been in the ordinary course of business, on
substantially the same terms, including interest rates and collateral as those
prevailing for comparable transactions with other loan customers of the Company,
and have not included more than the normal risk of collectibility associated
with the Company's other banking transactions or other unfavorable features.
The Company has entered into contracts with East-Harding, Inc., of which
Robert East is co-owner, Chairman and Chief Executive Officer, for the
construction of the Company's facilities in Little Rock, Fort Smith and
Harrison, Arkansas. In 1998 the Company paid East-Harding, Inc. approximately
$7,424,000 pursuant to these contracts.
COMPANY PERFORMANCE
The graph below shows a comparison for the period commencing July 17, 1997
(the date of commencement of the Company's initial public offering) through
December 31, 1998 of the cumulative total stockholder returns (assuming
reinvestment of dividends), for the Common Stock, the S&P SmallCap Index, and
the Nasdaq Financial Index, assuming a $100 investment on July 17, 1997.
CUMULATIVE RETURN COMPARSION
[A GRAPH DEPICTING THE DATA BELOW APPEARS HERE]
- -----------------------------------------------------------------------------
7/17/97 12/31/97 12/31/98
- -----------------------------------------------------------------------------
OZRK (Bank of the Ozarks, Inc.) $ 100 $ 139 $
- -----------------------------------------------------------------------------
SML (S&P Smallcap Index) $ 100 $ 108 $
- -----------------------------------------------------------------------------
NDF (NASDAQ Financial Index) $ 100 $ 124 $
- -----------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the Securities Exchange Act of 1934, the Company's executive officers
and directors are required to file reports of ownership and subsequent changes
of ownership with the Securities and Exchange Commission. Specific due dates
have been established for these reports, and the Company is required to disclose
in this proxy statement any failure to file by these dates during the preceding
year. Based solely upon information provided to the Company by individual
directors and executive officers, the Company believes that all filing
requirements applicable to directors and executive officers have been complied
with, except as follows: (a) Aubrey Avants filed a Form 3, due July 10, 1998, on
August 6, 1998 in connection with him becoming an executive officer of the
Company and (b) Jean Arehart filed a Form 4, due on January 11, 1999, on January
12, 1999 in connection with her sale of certain shares of common stock in
December 1998.
14
AUDITORS TO BE PRESENT
A representative of Ernst & Young LLP, the Company's independent auditors,
is expected to attend the 1999 Annual Meeting and will be afforded the
opportunity to make a statement. The representative will also be available to
respond to appropriate questions.
STATEMENT REGARDING CHANGE IN AUDITORS
On July 21, 1998 the Board of Directors of the Company ratified the
approval by the Audit Committee of the Board to engage Ernst & Young LLP as the
independent auditors for the Company. Ernst & Young replaced the Company's
previous auditors, Moore Stephens Frost who was dismissed by the Company as of
July 21, 1998.
During the two fiscal years ended December 31, 1997 and the subsequent
interim period through July 21, 1998, (i) there were no disagreements with Moore
Stephens Frost on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements if
not resolved to its satisfaction would have caused it to make reference in
connection with its report to the subject matter of the disagreement and (ii)
Moore Stephens Frost did not advise the Company of any reportable events as
defined in paragraph (A) through (D) of Regulation S-K Item 304 (a) (1) (v). The
Accountant's report of Moore Stephens Frost on the consolidated financial
statements of Bank of the Ozarks, Inc. and subsidiaries as of and for the years
ended December 31, 1997 and December 31, 1996 did not contain any adverse
opinion or disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope, or accounting principles.
During the second quarter of 1998 the Company consulted with Ernst & Young
LLP to obtain its oral advice on the availability of pooling-of-interests
treatment for a possible acquisition that was never consummated. The Company had
also obtained the oral advice of Moore Stephens Frost on this issue, and the
oral advice of both Moore Stephens Frost and Ernst & Young LLP were consistent
regarding the availability of pooling-of-interests treatment for such
transaction.
STOCKHOLDER PROPOSALS
Any stockholder proposal to be presented at the 2000 Annual Meeting should
be directed to the Secretary of the Company, and must be received by the Company
on or before November 12, 1999 in order to be eligible for inclusion in the
Company's proxy statement and form of proxy. Any such proposal must comply with
the requirements of Rule 14a-8 of the Securities Exchange Act of 1934 (or any
successor rule).
Additionally, the Company's bylaws contain an advance notice provision
which provides that a matter may not be brought before the Company's annual
meeting by a stockholder unless the proposal (the "Proposal") is delivered in
writing to the Secretary of the Company no later than 30 days prior to the
Company's fiscal year end. Accordingly, if any stockholder of the Company
desires to submit a Proposal for consideration to be brought before the
Company's 2000 Annual Meeting, the stockholder must deliver written notice of
the Proposal to the Secretary of the Company no later than December 1, 1999.
15
ADDITIONAL INFORMATION AVAILABLE
Upon written request, the Company will furnish, without charge, a copy of
the Company's Annual Report on Form 10-K for the year ended December 31, 1998,
as filed with the United States Securities and Exchange Commission, including
the related financial statements. The written request should be sent to the
Secretary of the Company, Bank of the Ozarks, Inc., 12615 Chenal Parkway, P.O.
Box 8811, Little Rock, Arkansas 72231-8811.
OTHER MATTERS
The Company does not presently know of any business other than that
described above to be presented to the stockholders for action at the meeting.
Should other business come before the meeting, votes may be cast pursuant to
proxies in respect to any such business in the best judgment of the persons
acting under the proxies.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO SIGN, DATE AND
RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/s/ GEORGE GLEASON
--------------------------------------
George Gleason
Chairman of the Board of Directors and
Chief Executive Officer
March 12, 1999
16
BANK OF THE OZARKS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS APRIL 20, 1999
The undersigned stockholder(s) of Bank of the Ozarks, Inc. (the "Company")
hereby appoint George Gleason and Mark Ross, and each or either of them, the
true and lawful agents and attorneys-in-fact for the undersigned, with power of
substitution, to attend the meeting and to vote the stock owned by or
registered in the name of the undersigned, as instructed below, at the 1999
Annual Meeting of Stockholders to be held at Embassy Suites, 11301 Financial
Center Parkway, Little Rock, Arkansas 72211, on Tuesday, April 20, 1999 at 1:30
p.m., local time, and at any adjournments thereof, for the transaction of the
following business:
[X]PLEASE MARK VOTES
AS IN THE EXAMPLE
1. TO ELECT TWELVE DIRECTORS: George Gleason, James Patridge, Mark Ross,
Linda Gleason, Roger Collins, Jerry Davis, C.E. Dougan, Robert East, Porter
Hillard, Henry Mariani, R.L. Qualls, Kennith Smith
[_] FOR ALL NOMINEES [_] WITHHOLD[_] FOR ALL EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
mark the "FOR ALL EXCEPT" box and strike a line through the name(s) of such
nominee(s) in the list above.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued On Other Side)
The Proxy when properly executed will be voted in the manner directed herein
by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1.
Please sign exactly as name(s) appears below. If stock is in the name of two
or more persons, each should sign. Persons signing as attorney, executor,
administrator, trustee, guardian or other fiduciary, please give full title as
such. If a corporation, signature should be by president or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
Please mark any name or address changes below.
1999
-----------------------------------
SIGNATURE DATE
1999
-----------------------------------
SIGNATURE DATE