UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ____________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Classic Bancshares, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] 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.:
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4) Date Filed:
[CLASSIC BANCSHARES LETTERHEAD]
July 21, 2004
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Classic Bancshares,
Inc., I cordially invite you to attend the 2004 Annual Meeting of Stockholders.
The meeting will be held at 4:00 p.m., local time, on August 26, 2004, at Park
Place (formerly the AEP Kentucky headquarters building), located at the corner
of 17th Street and Central Avenue, Ashland, Kentucky 41101.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to consider
and vote upon the election of three directors and the ratification of the
appointment of the Company's independent auditor for the fiscal year ending
March 31, 2005. Your Board of Directors unanimously recommends that you vote for
each of the nominees named in the enclosed proxy statement and for the
ratification of the appointment of the Company's independent auditor.
In addition to the annual stockholder vote on corporate business items, the
meeting will include management's report to you on Classic Bancshares, Inc.'s
fiscal 2004 financial and operating performance.
I encourage you to attend the meeting in person. Whether or not you attend
the meeting, please read the enclosed Proxy Statement and then complete, sign
and date the enclosed proxy card and return it in the postage prepaid envelope
provided. This will save Classic Bancshares, Inc. additional expense in
soliciting proxies and will ensure that your shares are represented. Please note
that you may vote in person at the meeting even if you have previously returned
the proxy.
Thank you for your attention to this important matter.
Sincerely,
David B. Barbour
President and Chief Executive Officer
CLASSIC BANCSHARES, INC.
344 Seventeenth Street
Ashland, Kentucky 41101
(606) 326-2800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on August 26, 2004
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Classic Bancshares, Inc. ("Classic" or the "Company") will be held
at Park Place (formerly the AEP Kentucky headquarters building), located at the
corner of 17th Street and Central Avenue, Ashland, Kentucky 41101, at 4:00 p.m.,
local time, on August 26, 2004.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors of the Company; and
2. The ratification of the appointment of Crowe, Chizek and Company
LLC as the Company's independent auditor for the fiscal year
ending March 31, 2005;
and such other matters as may properly come before the Meeting, or any
adjournments or postponements thereof. The Board of Directors is not aware of
any other business to come before the Meeting.
Any action may be taken on the foregoing items at the Meeting on the date
specified above, or on any date or dates to which the Meeting may be adjourned
or postponed. Stockholders of record at the close of business on July 2, 2004
are the stockholders entitled to vote at the Meeting and any adjournments or
postponements thereof. A complete list of stockholders entitled to vote at the
Meeting will be available for inspection by stockholders at the offices of the
Company during its normal business hours of 9:00 a.m. to 4:00 p.m. during the
ten days prior to the Meeting, as well as at the Meeting.
You are requested to complete, sign and date the enclosed form of proxy,
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
C. Cyrus Reynolds
Chairman of the Board
Ashland, Kentucky
July 21, 2004
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING.
A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
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PROXY STATEMENT
CLASSIC BANCSHARES, INC.
344 Seventeenth Street
Ashland, Kentucky 41101
(606) 326-2800
ANNUAL MEETING OF STOCKHOLDERS
August 26, 2004
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Classic Bancshares, Inc. ("Classic" or the
"Company"), the parent company of Classic Bank, of proxies to be used at the
Annual Meeting of Stockholders of the Company (the "Meeting") which will be held
at Park Place (formerly the AEP Kentucky headquarters building), located at the
corner of 17th Street and Central Avenue, Ashland, Kentucky 41101, on August 26,
2004, at 4:00 p.m., local time, and all adjournments and postponements of the
Meeting. This Proxy Statement is dated July 2, 2004 and is first being mailed to
stockholders on or about July 21, 2004.
At the Meeting, stockholders of the Company are being asked to consider and
vote upon (i) the election of three directors and (ii) the ratification of the
appointment of Crowe, Chizek and Company LLC as the Company's independent
auditor for the fiscal year ending March 31, 2005.
Vote Required and Proxy Information
All shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the election of the
nominees named herein and for the ratification of the appointment of Crowe,
Chizek and Company LLC as the Company's independent auditor. The Company does
not know of any matters, other than as described in the Notice of Annual
Meeting, that are to come before the Meeting. If any other matters are properly
presented at the Meeting for action, the Board of Directors, as proxy for the
stockholder, will have the discretion to vote on such matters in accordance with
their best judgment.
The proxy card provided by the Board of Directors enables a shareholder to
vote for the election of the nominees proposed by the Board of Directors or to
withhold authority to vote for one or more of the nominees. Directors will be
elected by a plurality of votes cast without regard to either (i) broker
non-votes or (ii) proxies as to which authority to vote for one or more of the
nominees is withheld.
The proxy card provided by the Board of Directors enables a shareholder to
check the appropriate box on the proxy card to (i) vote "FOR" the proposal to
ratify the appointment of Crowe, Chizek and Company LLC as the Company's
independent auditor, (ii) vote "AGAINST" such proposal, or (iii) "ABSTAIN" from
voting on such proposal. An affirmative vote of the holders of a majority of the
shares of Common Stock cast at the Meeting is required to ratify the appointment
of the independent auditor. Shares as to which the "ABSTAIN" box has been
selected on the proxy card and shares underlying broker non-votes will not be
counted as votes cast and will have no effect on the vote on the proposal.
The holders of at least one-third of the outstanding shares of the Common
Stock, present in person or represented by proxy, will constitute a quorum for
purposes of the Meeting. Proxies marked to abstain, withheld votes and broker
non-votes will be counted for purposes of determining a quorum.
If you plan to attend the annual meeting and wish to vote in person, we
will give you a ballot at the annual meeting. However, if your shares are held
in the name of your broker, bank or other nominee, you must bring appropriate
documents from the nominee indicating that you were the beneficial owner of
common stock and authorizing you to vote the shares on July 2, 2004, the record
date for voting at the annual meeting, and stating the number of shares held by
the nominee on your behalf.
If you participate in our Employee Stock Ownership Plan ("ESOP") you will
receive a voting instruction form that reflects all shares you may vote under
the plan to which the form relates. Under the terms of the ESOP, all shares held
in the ESOP are voted by the ESOP trustees, but each participant in the ESOP may
direct the trustees how to vote the shares of Company common stock allocated to
his or her ESOP account. Unallocated shares of Company common stock held by the
ESOP Trust and allocated shares for which no timely 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.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to: Secretary,
Classic Bancshares, Inc., 344 Seventeenth Street, Ashland, Kentucky 41101.
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on July 2, 2004 will be
entitled to one vote for each share of Common Stock then held. As of that date,
the Company had 1,407,183 shares of Common Stock outstanding. The following
table sets forth information regarding share ownership of those persons or
entities known by management to beneficially own more than five percent of the
Common Stock and all directors and executive officers of the Company as a group.
Shares
Beneficially Percent
Beneficial Owner Owned of Class
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Classic Bancshares, Inc. Employee Stock Ownership Plan 113,808(1) 8.09%
344 Seventeenth Street
Ashland, Kentucky 41101
National City Corp. 93,055(2) 6.61
1900 East Ninth Street
Cleveland, Ohio 44114
Tontine Financial Partners, L.P. 93,200(3) 6.62
200 Park Avenue, Suite 3900
New York, NY 10166
David B. Barbour 106,889(4) 7.24
344 Seventeenth Street
Ashland, Kentucky
Directors and executive officers of the Company as a group 519,275(5) 30.73
(12 persons)
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(1) The amount reported represents shares held by the ESOP, 52,747 of which
have been allocated to accounts of participants. First Bankers Trust
Company, N.A., Quincy, Illinois, the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been allocated
to accounts of participants. Participants in the ESOP are entitled to
instruct the trustee as to the voting of shares allocated to their
accounts under the ESOP. Unallocated shares held by the ESOP are voted by
the trustee in the same manner that the trustee is instructed to vote by a
majority of the plan participants who instruct the trustee as to the
manner of voting the shares allocated to their plan accounts.
(2) As reported by National City Corp. in a statement filed with the
Securities and Exchange Commission on February 27, 2004 on Schedule 13G/A
under the Exchange Act. National City Corp. reported shared dispositive
power over 92,455 shares.
(3) As reported by Tontine Financial Partners, L.P., Tontine Management,
L.L.C., and Jeffrey L. Gendell in a statement filed with the Securities
and Exchange Commission February 4, 2003 on Schedule 13G/A under the
Exchange Act. Tontine Financial Partners, L.P., Tontine Management, L.L.C.
and Jeffrey L. Gendell reported shared power to vote or direct the vote of
93,200 shares. Management believes that this group may have acquired
additional shares of the common stock at the time of the Company's
issuance of additional shares in connection with the acquisition of First
Fed Financial Bancorp, Inc. on June 20, 2003.
(4) The amount includes 68,708 shares subject to options, which are currently
exercisable or will become exercisable within 60 days of July 2, 2004,
awarded under the 1996 Stock Option Plan, 1998 Stock Option Plan, 2001
Stock Option Plan and the 2003 Stock Option Plan, 6,336 shares allocated
to his ESOP account and 2,866 shares held in his 401(k) plan account.
(5) Amount includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, 19,417 shares
allocated to the ESOP accounts of the group members, shares held in a
fiduciary capacity or by certain family members, with respect to which
shares the group members may be deemed to have sole or shared voting
and/or dispositive power. The amount reported above also includes 282,732
shares subject to options currently exercisable or which will become
exercisable within 60 days of July 2, 2004, awarded under the Company's
1996 Stock Option and Incentive Plan (the "1996 Stock Option Plan"), the
Company's 1998 Premium Price Stock Option Growth Plan (the "1998 Stock
Option Plan"), the Company's 2001 Premium Price Stock Option Growth Plan
(the "2001 Stock Option Plan") and the Company's 2003 Premium Price Stock
Option Growth Plan (the "2003 Stock Option Plan").
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is presently comprised of eleven members.
Directors of the Company are generally elected to serve for a three-year term or
until their respective successors have been elected and qualified. Approximately
one-third of the directors are elected annually. Each member of the Company's
Board of Directors has served on the Board since the incorporation of the
Company in September 1995, except for Directors Robert L. Bayes and Jeffrey P.
Lopez, M.D., each of whom joined the Board in November 1996, Lisah M. Frazier
who joined the Board in March 2002 and Steven C. Milleson who joined the Board
in July 2003. Mr. Barbour also serves on the Board of the Company's banking
subsidiary, Classic Bank.
The following table sets forth certain information regarding the Company's
Board of Directors, including their terms of office, and the nominees for
election as directors. It is intended that the proxies solicited on behalf of
the Board of Directors (other than proxies in which the vote is withheld as to
the nominee) will be voted at the Meeting for the election of the nominees
identified in the following table. If any nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of such
substitute or substitutes as the Board of Directors may recommend. At this time,
the Board of Directors knows of no reason why any nominee might be unable to
serve, if elected. Except as described herein, there are no arrangements or
understandings between any director or nominee and any other person pursuant to
which such director or nominee was selected.
Shares of Common
Stock Beneficially Percent
Director Term to Owned at of
Name Age(1) Position(s) Held Since (2) Expire July 2, 2004(3) Class
-------------------------------------------- ---------------------- --------------- --------
NOMINEES
C. Cyrus Reynolds 77 Chairman of the Board 1960 2005 37,391(6) 2.63%
David B. Barbour 56 President, Chief Executive 1995 2005 106,889(7) 7.24
Officer and Director
Jeffrey P. Lopez, M.D. 45 Director 1996 2005 17,765 1.25
DIRECTORS REMAINING IN OFFICE
Robert B. Keifer, Jr. 67 Director 1991 2006 29,447 2.07
David A. Lang 60 Director 1991 2006 29,738(8) 2.09
Robert L. Bayes 60 Executive Vice President 1996 2006 40,449(9) 2.82
and Director
Steven C. Milleson 51 Director 2003 2006 8,857 .63
Lisah M. Frazier 35 Chief Operating Officer, 2002 2004 54,352(4) 3.76
Chief Financial Officer
and Director
E.B. Gevedon, Jr. 70 Director 1980 2004 44,847(5) 3.15
Robert A. Moyer, Jr. 58 Director 1993 2004 32,307 2.27
John W. Clark 62 Director 1995 2004 47,829 3.36
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(1) At March 31, 2004.
(2) Includes service as a director of Classic Bank.
(3) Includes shares held directly, as well as shares held in retirement
accounts, shares allocated to the ESOP accounts of certain of the named
persons, held by certain members of the named individuals' families, or
held by trusts of which the named individual is a trustee or substantial
beneficiary, with respect to which shares the named individuals may be
deemed to have sole or shared voting and/or dispositive power. The amount
also includes 68,708, 25,025, 12,485, 40,144, 4,400 and 15,975 shares
subject to options which are currently exercisable or will become
exercisable within 60 days of July 2, 2004, awarded under the 1996 Stock
Option Plan, the 1998 Stock Option Plan, the 2001 Stock Option Plan and
the 2003 Stock Option Plan to Mr. Barbour, Mr. Bayes, Mr. Lopez, Ms.
Frazier, Mr. Milleson and each of Messrs. Gevedon, Moyer, Clark, Reynolds,
Keifer and Lang, respectively.
(4) Includes 3,651 shares allocated to Ms. Frazier's account under the ESOP.
(5) Includes 11,000 shares held by Mr. Gevedon's spouse.
(6) Includes 6,937 shares held by Mr. Reynolds' spouse.
(7) Includes 6,834 shares allocated to Mr. Barbour's account under the ESOP.
(8) Includes 225 shares held by Mr. Lang's spouse.
(9) Includes 4,242 shares held by Mr. Bayes' spouse and 2,168 shares allocated
to Mr. Bayes' account under the ESOP.
The business experience of each director of the Company for at least the
past five years is set forth below. All directors have held their positions at
least five years, except as otherwise indicated. Director Barbour also serves as
a director of Classic Bank.
C. Cyrus Reynolds. Mr. Reynolds is Chairman of the Board of the Company, a
position he has held since September 1995. Until March 2001, Mr. Reynolds also
served as Chairman of the Board of Classic Bank. Mr. Reynolds retired as
property Valuation Administrator for Boyd County, Kentucky, an elected office he
held from 1977 until retirement. From 1960 to 1981, Mr. Reynolds was the owner
of Reynolds Insurance Agency, a general lines insurance agency located in
Ashland, Kentucky. Mr. Reynolds is a member and former officer of the Ashland
Lions Club, and has served on various state commissions, including 18 years of
service as Chairman of the Boyd County Democratic Party. Mr. Reynolds has also
served as Treasurer of the Westwood Christian Church for 40 years.
David B. Barbour. Mr. Barbour is President and Chief Executive Officer of
the Company and Chairman and Chief Executive Officer of Classic Bank, positions
he has held since September 1995 and March 2001, respectively. Prior to joining
Classic Bank in March of 1995, Mr. Barbour served as Senior Vice President and
Senior Lending Officer of First American Bank, a commercial bank located in
Ashland, Kentucky with assets of $225 million. As Senior Vice President and
Senior Lending Officer, Mr. Barbour was responsible for First American Bank's
loan portfolio, including the commercial, consumer and real estate lending
divisions. Mr. Barbour had been employed by First American Bank since 1977 and
held a variety of management positions, including Senior Vice President and
Senior Lending Officer since 1989. Mr. Barbour holds the designation of
Certified Lender, Business Banking (C.L.B.B.). Mr. Barbour holds a Graduate
Banking Degree from the Graduate School of Banking at Louisiana State
University.
Jeffrey P. Lopez, M.D. Dr. Lopez is President of Ashland Radiation
Oncology, Inc. and owner of Tri-State Regional Cancer Center located in Ashland,
Kentucky. A native of Madison, Indiana, Dr. Lopez is a graduate of Indiana
University, obtained his medical degree from Indiana School of Medicine and
served his residency in Radiation Oncology at the University of Illinois. He
serves on the Board of Directors of the Boyd County chapter of the American
Cancer Society, a position he has held since 1989. He is past President of the
Boyd County Medical Society, having served two terms as President. He is a
member of the Board of Directors for the Association of Free Standing Radiation
Oncology Centers, of which he also is a two-term past-President, and is a member
of the Board of Directors of King's Daughters' Medical Center in Ashland,
Kentucky.
Robert B. Keifer, Jr. Mr. Keifer is a retired group vice-president of
Ashland Petroleum Company, an operating division of Ashland, Inc., where he was
employed from 1966 to 1992. From 1992 to 1994, Mr. Keifer served as a consultant
to Equal Opportunity Finance, a minority small business investment company. Mr.
Keifer previously served as President of the Board of Directors of Community
Hospice, Inc. and as a director of Area Education Projects.
David A. Lang. Mr. Lang is a retired executive of American Electric Power,
where he was employed from 1965 to 2000. During his tenure with American
Electric Power, Mr. Lang held a variety of positions including Executive
Assistant - Operations, Kentucky Region Director, and Manager of National
Accounts. Mr. Lang is a Registered Professional Engineer in the Commonwealth of
Kentucky. Mr. Lang is also a former director of the Chamber of Commerce of Boyd
and Greenup Counties and co-chair of the Conference Board's USA Quality Council.
Robert L. Bayes. Mr. Bayes is Executive Vice President of the Company and
Paintsville Market Area President of Classic Bank. From 1983 to 2001, Mr. Bayes
served as President of The First National Bank of Paintsville ("Paintsville
Bank"), a subsidiary of the Company that was merged into Classic Bank in March
2001. A Certified Public Accountant, Mr. Bayes holds a B.S. in Business
Administration from Berea College, attended Graduate School at the University of
Kentucky and holds a graduate banking degree from Stonier Graduate School of
Banking at Rutgers University. Mr. Bayes is a member of the American Institute
of CPA's and Kentucky Society of CPAs.
Everett B. Gevedon, Jr. Mr. Gevedon is Vice Chairman of the Board of the
Company, a position he has held since March 2001. Mr. Gevedon has served as a
real estate consultant to corporations and individuals throughout the eastern
United States for the past 28 years. Prior to serving as a real estate
consultant, he was a general real estate appraiser and involved in real estate
sales.
Robert A. Moyer, Jr. Mr. Moyer is involved in real estate development
projects in the Naples, Florida area. Mr. Moyer previously served as Chairman
and Chief Executive Officer of Alltech Technologies, LLC until late 2001. Prior
to joining Alltech in January 2000, Mr. Moyer served as Chairman and Chief
Executive Officer of RAM Technologies, Inc., an Ashland Kentucky based
multi-faceted communications and technology company which he founded in 1976.
John W. Clark. Mr. Clark has been the President and Chief Executive Officer
of John W. Clark Oil Co., a company engaged in the distribution and sale of
petroleum products, since its founding in 1970. In addition, he has been the
President of JRB, Inc., a common carrier trucking company, since 1977; Clark
Airway, an airplane leasing company, since 1990; and John W. Clark Enterprises,
a real estate development and holding company, since 1987.
Lisah M . Frazier. Ms. Frazier is Chief Operating Officer, Chief Financial
Officer, and Treasurer of the Company, positions she has held since November
2000. Ms. Frazier is also Chief Operating Officer and Chief Financial Officer o
f Classic Bank,positions she has held since November 2000. Prior to these
positions, Ms. Frazier served as Senior Vice President and Chief Financial
Officer of the Company and Classic Bank since joining the Bank in August 1995.
Ms. Frazier, a Certified Public Accountant, prior to joining Classic Bank,
served as Investment Coordinator with Trust Company of Kentucky, a subsidiary of
Community Trust Bancorp, from June 1995 to August 1995. Prior to that position,
Ms. Frazier served as Audit Specialist in the internal audit department of
Community Trust Bancorp from 1993 to 1995. Ms. Frazier served as Senior Auditor
with the regional accounting firm of Kelley, Galloway & Company from 1990 to
1993. Ms. Frazier is a member of the Kentucky Society of Certified Public
Accountants and serves on the Leadership Council for the Kentucky Society of
CPA's.
Steven C. Milleson. Mr. Milleson is a doctor of optometry and owner and
operator of the Ironton Vision Center, Inc. located in Ironton, Ohio.
Dr. Milleson has been a member and past President of the Ironton Lions Club, a
founding member and past Board member of The Tri-State Fair and Regatta, a past
Board member of the Hecla Water Association, and an original member of the Board
of the Ashland Ballet Company and its current President of the Board and
Chairman of the Production Committee. Dr. Milleson is a member of the St. Joseph
Catholic Church. Mr. Milleson was a director of First Federal Savings Bank of
Ironton and First Federal Financial Bancorp, Inc. prior to their acquisition by
the Company in June 2003.
Director Independence
Our Board of Directors has determined that all of the Company's directors
other than Chief Executive Officer and President Barbour, Chief Operating
Officer and Chief Financial Officer Frazier, and Executive Vice President Bayes
are "independent directors" as that term is defined in the listing statements of
the NASDAQ Small-Cap Market.
Board of Directors' Meetings and Committees
Meetings of the Company's Board of Directors are generally held on a
monthly basis. The Board of Directors of the Company held 12 meetings during the
fiscal year ended March 31, 2004. No incumbent director attended fewer than 75%
of the total number of meetings held by the Board of Directors and by all
committees of the Board of Directors on which he served during the fiscal year.
The Board of Directors of the Company has standing Executive, Audit,
Compensation, Strategic Planning and Acquisition and Governance/Nominating
Committees.
Compensation Committee. The Compensation Committee is comprised of
Directors Moyer, Lang, Reynolds and Clark. The Compensation Committee is
responsible for making recommendations for the compensation of the chief
executive officer and for approving the compensation of all other executive
officers. The Compensation Committee also makes awards under the Company's stock
based benefit plans. This committee met two times during fiscal 2004.
Executive Committee. The Executive Committee is comprised of Directors R
eynolds, Barbour, Keifer and Gevedon. The Executive Committee has and exercises
all of the powers of the Board of Directors when such powers are required
between meetings of the Board of Directors. The Executive Committee met one time
in fiscal 2004.
Governance/Nominating Committee. The Governance/Nominating Committee is
comprised of Directors Reynolds, Gevedon, Keifer, Moyer, Lang, Clark, Lopez and
Milleson, all of whom are considered to be independent under applicable NASDAQ
rules.
The functions of the Committee include the following:
1. Consider and recommend to the Board standards (such as independence,
experience, leadership, diversity and stock ownership) for the
selection of individuals to be considered for election or reelection
to the Board;
2. Identify individuals qualified to become members of the Board;
3. Consider recommendations by stockholders for director nominations;
4. Conduct reviews as appropriate into the background and qualifications
of director candidates;
5. Review the structure of the Board and its committees and make
recommendations with respect thereto (including size and composition);
6. Consider and make recommendations regarding Board and committee
performance; and
7. Consider and make recommendations regarding Board continuing education
guidelines.
The committee begins the nominee identification process by evaluating the
current members of the Board of Directors willing to continue in service.
Current members of the Board with skills and experience that are relevant to the
Company's business and who are willing to continue in service are first
considered for re-nomination, balancing the value of continuity of service by
existing members of the Board with that of obtaining a new perspective. Thus,
under certain circumstances, the Committee may choose not to consider an
unsolicited recommendation.
If any member of the Board does not wish to continue in service, or if the
Committee or the Board decides not to re-nominate a member for re-election, or
if the size of the Board is increased, the Committee may solicit suggestions for
director candidates from all Board members. In addition, the Committee is
authorized by its charter to engage a third party to assist in the
identification of director nominees. In evaluating director candidates, the
Governance/Nominating Committee will consider persons who at a minimum satisfy
the following criteria:
o have the highest personal and professional ethics and integrity and
whose values are compatible with the Company's;
o have had experiences and achievements that have given them the ability
to exercise and develop good business judgment;
o are willing to devote the necessary time to the work of the Board and
its committees, which includes being available for Board and committee
meetings;
o are familiar with the communities in which the Company operates and/or
is actively engaged in community activities;
o are involved in other activities or interests that do not create a
conflict with their responsibilities to the Company and its
stockholders; and
o have the capacity and desire to represent the balanced, best interests
of the stockholders of the Company as a group, and not primarily a
special interest group or constituency.
The Governance/Nominating Committee will also take into account whether a
candidate satisfies the criteria for "independence" under the Rules of the
NASDAQ, and if a nominee is considered for service on the Audit Committee, the
financial and accounting expertise of a candidate, including whether an
individual qualifies as an audit committee financial expert.
The Governance/Nominating Committee did not meet in fiscal 2004. The
Governance/Nominating Committee has adopted a charter, a copy of which is
attached hereto as Appendix A.
Procedures for the Nomination of Directors by Shareholders
Through the Governance/Nominating Committee. The Governance/Nominating
Committee has adopted procedures for the submission to the Committee of director
nominees by stockholders. If a determination is made that an additional
candidate is needed for the Board, the Governance/Nominating Committee will
consider candidates submitted by the Company's stockholders. Stockholders can
submit the names of candidates for Director by writing to the Chairman of the
Governance/Nominating Committee at Classic Bancshares, Inc., 344 Seventeenth
Street, Ashland, Kentucky 41101. To be timely, the Chairman of the
Governance/Nominating Committee must receive a submission at least one hundred
twenty (120) days prior to the date of the Company's proxy materials for the
preceding year's annual meeting. If the date of the annual meeting is advanced
more than thirty (30) days prior to or delayed by more than thirty (30) days
after the anniversary of the preceding year's annual meeting, the stockholder's
submission must be so delivered not later than the close of business on the
tenth day following the day on which public announcement of the date of such
annual meeting is first made. The submission must include the following
information:
o the name and address of the stockholder as they appear on the Company's
books, and number of shares of the Company's common stock that are
owned beneficially by such stockholder (if the stockholder is not a
holder of record, appropriate evidence of the stockholder's ownership
will be required);
o the name, address and contact information for the candidate, and the
number of shares of common stock of the Company that are owned by the
candidate (if the candidate is not a holder of record, appropriate
evidence of the stockholder's ownership should be provided);
o a statement of the candidate's business and educational experience;
o such other information regarding the candidate as would be required to
be included in the proxy statement pursuant to SEC Regulation 14A;
o a statement detailing any relationship between the candidate and the
Company;
o a statement detailing any relationship between the candidate and any
customer, supplier or competitor of the Company;
o detailed information about any relationship or understanding between
the proposing stockholder and the candidate; and
o a statement that the candidate is willing to be considered and willing
to serve as a Director if nominated and elected.
Direct Stockholders' Nominations. Under Article I Section 6 of our bylaws,
director nominations may be made by stockholders. In order to assure that they
are effective nominations for directors by stockholders must be made in writing
and delivered to the Secretary of the Company at least 70 days prior to the
meeting date provided however that in the event that less than 80 days' public
notice or public disclosure of the date of the meeting is given or made to
stockholders, notice to be timely must be so received not later than the close
of business on the tenth day following the day on which public notice of the
date of the meeting was mailed or public disclosure of the date of the meeting
is made. A stockholder's notice to the Secretary shall set forth (A) as to each
person whom such stockholder proposes to nominate for election or re-election as
a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected);
and (B) as to the stockholder giving thenotice: (i) the name and address, as
they appear on Classic Bancshare's books, of such stockholder and (ii) the class
and number ofshares of Classic Bancshare's capital stock that are beneficially
owned by such stockholder.
Stockholder Communications with the Board
A stockholder of the Company who wants to communicate with the Board or
with any individual Director can write to the Chairman of the Governance/
Nominating Committee, Classic Bancshares, Inc., 344 Seventeenth Street, Ashland,
Kentucky 41101. The letter should indicate that the author is a stockholder and
if shares are not held of record, should include appropriate evidence of stock
ownership. Depending on the subject matter, the Chairman will:
o forward the communication to the Director(s) to whom it is addressed;
o attempt to handle the inquiry directly, for example where it is a
request for information about the Company or it is a stock-related
matter; or
o not forward the communication if it is primarily commercial in nature,
relates to an improper or irrelevant topic, or is unduly hostile,
threatening, illegal or otherwise inappropriate.
Code of Ethics
The Company has adopted a code of ethics that is applicable to senior
financial officers of the Company, including the Company's principal executive
officer, principal financial officer, principal accounting officer and all
officers performing similar functions as defined in the Code of Ethics. The Code
of Ethics was filed with the U.S. Securities and Exchange Commission as an
Exhibit to the Company's Annual Report on Form 10-KSB for the year ended
March 31, 2004.
The following Audit Committee Report, Compensation Committee Report and
stock performance graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
Report of Audit Committee
The Audit Committee is composed of Directors Keifer, Reynolds, Lang, Lopez
and Gevedon. The Board of Directors has determined that each Audit Committee
member is independent within the meaning of the requirements for listing in the
Nasdaq Small-Cap Market.
Company management is primarily responsible for the Company's financial
reporting and its internal and disclosure controls. However, the Audit Committee
is responsible for the relationship between the Company and its independent
auditor. The Committee also receives reports with respect to the Company's
financial reporting, internal control over financial reporting and disclosure
controls. In addition, the Committee reviews the Company's unaudited interim
financial statements and audited year end financial statements. Finally, the
audit committee maintains a procedure for confidential employee complaints
regarding accounting matters.
The Board of Directors has recently adopted amendments to the audit
committee charter. A copy of the audit committee charter, as amended, is
attached hereto as Appendix B.
The Audit Committee met 8 times during the fiscal year ended March 31,
2004. During these and subsequent meetings:
o Management represented to the Audit Committee that the Company's
consolidated financial statements for the year ended March 31, 2004
were prepared in accordance with generally accepted accounting
principles.
o The Audit Committee reviewed and discussed such consolidated financial
statements with management and the independent auditor.
o The Audit Committee discussed with the independent auditor the matters
required to be discussed by Statement on Auditing Standards No. 61,
including the quality (not just the acceptability) of the relevant
accounting principles, the reasonableness of the significant judgments,
and the clarity of the included disclosures.
o The Audit Committee received the written disclosures and the letter
from the independent auditor required by the Independence Standards
Board Standard No. 1 (Independence Discussions With Audit Committees)
and discussed with the independent auditor its independence from the
Company and management.
o The Audit Committee discussed with the Company's independent auditor
the overall scope and plans for the 2004 audit.
o The Audit Committee met with the independent auditor (with and without
management present) to discuss the results of its examination, its
evaluation of the Company's internal controls, and the overall quality
of the Company's financial reporting.
In performing these functions, the Audit Committee acted only in an
oversight capacity. In this oversight role, the Audit Committee relied on the
work and assurances of the Company's management, which has the primary
responsibility for financial statements and reports, and on the independent
auditor which, in its report, expressed an opinion on the conformity of the
Company's financial statements to generally accepted principles. The Audit
Committee's oversight did not provide it with an independent basis to determine
whether management maintained appropriate accounting and financial accounting
standards and complied with applicable laws and regulations. Furthermore, the
Audit Committee's review and discussions with management and the independent
auditor did not assure that the Company's financial statements were audited in
accordance with generally accepted auditing standards or that the Company's
independent auditor was in fact "independent."
In reliance on the above, the Audit Committee recommended to the Board of
Directors, and the board has approved, that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-KSB for the
year ended March 31, 2004 for filing with the Securities and Exchange
Commission. The Audit Committee and the Board of Directors also have approved,
subject to stockholder ratification, the selection of the Company's independent
auditor for fiscal 2005.
Robert B. Keifer C. Cyrus Reynolds David A. Lang
Jeffrey P. Lopez, MD E.B. Gevedon, Jr.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Company's Compensation Committee has responsibility for reviewing the
compensation policies and plans for the Bank and its affiliates. The policies
and plans established are designed to enhance both short-term and long-term
operational performance of the Bank and to build stockholder value through
appreciation in the Company's common stock price.
The Committee's primary objectives are as follows:
o to develop and maintain compensation policies and plans that provide
the Bank with the means of attracting and retaining quality executives
at competitive compensation levels;
o to implement compensation policies and plans that motivate executives
to perform to the full extent of their abilities; and
o to implement compensation policies and plans that enhance stockholder
value by aligning closely the financial interests of the Company's
executives with those of its stockholders.
In determining compensation levels, plans and adjustments, the Committee
annually takes into account, among other things, the Company's financial
performance as measured by financial ratios, the financial performance of the
Company's peers and compensation reviews made by third parties of other
similarly situated financial institutions.
With respect to Mr. Barbour's base salary for the fiscal year ended March
31, 2004, the Committee took into account a comparison of salaries of chief
executive officers of other publicly traded banking companies of similar size
and business focus.
For 2004, the Committee determined, based on Mr. Barbour's exceptional
performance in leading the Company through a period of strong earnings and
franchise growth, to award him a cash bonus. The committee also awarded the
Company's other three executive officers bonuses for fiscal year 2004 based on
their strong performances during such year.
In connection with the mutual to stock conversion in 1995, the Company
established the ESOP. In addition, in 1996, the Company implemented a restricted
stock plan and a stock option plan providing for option grants at the current
market prices. Most of the awards under these plans were made in 1996. In 1998,
2001 and 2003, as the Company experienced significant growth through
acquisitions and internal expansion, the Company adopted and made awards under
additional stock option plans providing for options with exercise prices which
were above the applicable market price on the date of grant. The committee
believes that equity-based compensation provides a long-term alignment of
interests between stockholders and those executives and others on whom the
continued success of the Company most depends.
Through the compensation programs described above, a significant portion of
the Company's executive compensation is linked directly to individual and
corporate performance. The committee will continue to review all elements of
compensation to assure that the compensation objectives and plans meet the
Company's business objectives and philosophy of linking executive compensation
to stockholder interests such as corporate performance.
The Committee carefully reviewed the impact of Section 162(m) of the
Internal Revenue Code on the cost of the Company's current executive
compensation plans. Under the legislation and regulations adopted thereunder, it
is not expected that any portion of the Company's deduction for employee
remuneration will be non-deductible in fiscal 2004 or in future years by reason
of Section 162(m). The Committee intends to review the Company's executive
compensation policies on an ongoing basis, and propose appropriate
modifications, if the Committee deems them necessary, with a view toward
avoiding or minimizing any disallowance of tax deductions under Section 162(m).
The Compensation Committee, however, reserves the right to use its judgment,
where merited by the need for flexibility to respond to changing business
conditions or by an executive officer's individual performance, to authorize
compensation that may not, in a specific case, be fully deductible by the
Company under Section 162(m).
The foregoing report is furnished by the Compensation Committee of the
Board of Directors:
C. CYRUS REYNOLDS DAVID A. LANG ROBERT A. MOYER, JR. JOHN W. CLARK
Stock Performance Presentation
The following line graph compares the cumulative total stockholder
return on the Company's common stock, the total returns of the NASDAQ Bank
Index, and the NASDAQ Composite Index for the period March 31, 1999, through
March 31, 2004. The graph assumes that $100 was invested on March 31, 1999, at
the closing price and that all dividends were reinvested. On March 31, 2004, the
closing sale price for Classic Bancshares's common stock on the NASDAQ SmallCap
Market was $39.95 per share.
[TOTAL RETURN PERFORMANCE CHART]
Period Ending
----------------------------------------------------------
Index 03/31/99 03/31/00 03/31/01 03/31/02 03/31/03 03/31/04
- -----------------------------------------------------------------------------------------
Classic Bancshares, Inc. 100.00 71.29 93.59 132.07 209.85 337.47
NASDAQ Composite 100.00 186.24 75.12 75.58 55.20 82.45
SNL NASDAW Bank Index 100.00 91.12 111.46 138.79 126.72 171.47
Compensation Committee Interlocks and Insider Participation
No executive officer or the Company of the Bank serves or has served as
a member of the compensation committee of another entity, one of whose executive
officers served on the Board or Compensation Committee of the Company or the
Bank. No executive officer of the Company or the Bank serves or has served as a
director of another entity, one of whose executive officers services on the
Compensation Committee of the Company or the Bank.
Director Compensation
Fees. The monthly fees for service on the Boards of Directors of the
Company and Classic Bank are $600 and $250, respectively. Directors of Classic
Bank also receive $50 for each committee meeting attended.
Stock Options. On May 20, 2002, each non-employee director of the
Company was granted a 10 year non-tax qualified option to purchase 1,100 shares
of the Common Stock at a price of $20.2940 per share under the Company's 2001
Premium Price Stock Option Growth Plan. On the date of grant, the closing price
(stock split adjusted) of the shares of the Common Stock was $18.4491 per share.
On March 17, 2003, each non-employee director of the Company was granted a
10-year non-tax qualified option to purchase 2,750 shares of the Common Stock at
a price of $28.6803 per share under the Company's 2001 Premium Price Stock
Option Growth Plan. On the date of grant, the closing price (stock split
adjusted) of the shares of the common stock was $26.325. On September 18, 2003,
each non-employee director of the Company was granted a 10-year non-tax
qualified option to purchase 4,400 shares of the Common Stock at a price of
$31.491 under the Company's 2003 Premium Price Stock Option Growth Plan. On the
date of grant, the closing price (stock split adjusted) of the Common Stock was
$28.629 per share.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The following table sets forth information concerning the
compensation paid or accrued by Classic Bank to the named officers for services
rendered during the fiscal years ended March 31, as indicated. No other
executive officer of the Company earned cash compensation in excess of $100,000
during the fiscal year ended March 31, 2004.
==================================================================================================================================
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
---------------------------------------------------------------------
Awards Payouts
Other Annual Restricted Options/ LTIP
Fiscal Salary Bonus Compensation Stock SARs Payouts All Other
Name and Principal Position Year ($) ($) ($)(1) Award($) (#)(2) ($) Compensation ($)
- ----------------------------------------------------------------------------------------------------------------------------------
David B. Barbour, President 2004 155,000 47,500 --- --- 11,000 --- 50,748(3)
and Chief Executive Officer 2003 140,720 36,000 --- --- 11,000 --- 41,160(3)
2002 135,960 8,000 --- --- --- 40,366(3)
---
Robert L. Bayes, Executive 2004 98,700 --- --- --- 2,200 --- 11,191(4)
Vice President 2003 98,700 10,000 --- --- 2,750 --- 10,575(4)
2002 98,700 3,000 --- --- --- --- 11,682(4)
Lisah M. Frazier, Chief 2004 90,000 40,000 --- --- 8,800 --- 14,327(5)
Operating and Financial 2003 84,000 --- --- --- 6,600 --- 7,764(5)
Officer 2002 82,000 30,000 --- --- --- --- 16,267(5)
Robert S. Curtis, Executive 2004 90,000 40,000 --- --- 6,600 --- 14,327(6)
Vice President 2003 84,000 --- --- --- 4,950 --- 7,764(6)
2002 82,000 30,000 --- --- --- --- 16,989(6)
==================================================================================================================================
(1) None of the named executive officers received any additional benefits or
perquisites which, in the aggregate, exceeded 10% of both their salary and
bonus or $50,000.
(2) Adjusted to reflect 10% stock dividend paid on November 17, 2003.
(3) Includes, among other things, for 2004, 2003 and 2002, respectively, the
following amounts: country club membership fees of $3,480, $3,480 and $3,480
paid by Classic Bank on behalf of Mr. Barbour; accruals made pursuant to the
Supplemental Executive Retirement Agreement between Classic Bank and
Mr. Barbour of $19,601, $15,162 and $14,827; Classic Bank's contribution to
Mr. Barbour's account under the ESOP of 401, 416 and 509 shares of Common
Stock based upon closing prices per share of the Common Stock of $39.95,
$27.60 and $17.601 on March 31, 2004, 2003 and 2002; Classic Bank's
contribution to Mr. Barbour's 401(k) Plan account of $6,000, $5,302 and
$4,319; and life insurance premiums paid by Classic Bank on behalf of
Mr. Barbour of $5,647, $5,734 and $5,734.
(4) Includes, among other things, for 2004, 2003 and 2002, respectively, the
following amounts: Classic Bank's contributions to Mr. Bayes' 401(k) Plan
account of $2,961, $3,216 and 3,051; Classic Bank's contributions to
Mr. Bayes' account under the ESOP of 206, 265 and 300 shares of Common Stock
based upon closing prices per share of the Common Stock of $39.95, $24.60
and $17.601 on March 31, 2004, 2003 and 2002.
(5) Includes, among other things, for 2004, 2003 and 2002, respectively, the
following amounts: Classic Bank's contributions to Ms. Frazier's 401(k) Plan
account of $3,900, $2,520 and $3,342; and Classic Bank's contributions to
Ms. Frazier's account under the ESOP of 261, 190 and 321 shares of Common
Stock ased upon closing prices per share of the Common Stock of $39.95,
$27.60 and $17.601and $12.75 on March 31, 2004, 2003 and 2002.
(6) Includes, among other things, for 2004, 2003 and 2002, respectively, the
following amounts: Classic Bank's contributions to Mr. Curtis' 401(k) Plan
account of $3,900, $2,520 and $3,342; and Classic Bank's contributions to
Mr. Curtis' account under the ESOP of 261, 190 and 362 shares of Common
Stock based upon closing prices per share of the Common Stock of $39.95,
$27.60 and $17.601 on March 31, 2004, 2003 and 2002.
The following table sets forth certain information concerning grants of
stock options to the named individuals during the fiscal year ended March 31,
2004. No stock appreciation rights were granted in fiscal 2004.
--------------------------------------------------------------------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS)
--------------------------------------------------------------------------------------------------------------------------------
Potential Realized
Value at Assumed Annual
Numbver of Rate of Stock Price
securities Percent of total Appreciation for Option
underlying options/SARs granted Term
options/SARS to employees in Exercise of Base Expiration Date ---------------------
Name granted fiscal year Price 5% 10%
----------------------------------------------------------------------------------------------------------------------------------
David B. Barbour 11,000 32.3% $31.81 9/18/13 $194,150 $475,160
Lisah M. Frazier 8,800 25.8% $31.81 9/18/13 155,320 380,128
Robert S. Curtis 6,600 19.4% $31.81 9/18/13 116,490 285,096
Robert L. Bayes 2,200 6.5% $31.81 9/18/13 38,830 95,032
----------------------------------------------------------------------------------------------------------------------------------
The following table provides information as to the number and value of
the stock options held by the named individuals as of March 31, 2004. None of
these persons exercised any stock options during fiscal year ended March 31,
2004.
- --------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
----------------------------------------------------------------
Shares
Acquired Value
on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- --------------------------------------------------------------------------------------------------------------------
David B. Barbour --- $ --- 68,708 --- $1,601,687 $ ---
Lisah M. Frazier --- $ --- 40,144 198 $ 868,228 $ 5,694
Robert S. Curtis --- $ --- 36,120 --- $ 889,873 $ ---
Robert L. Bayes --- $ --- 25,025 --- $ 646,231 $ ---
- --------------------------------------------------------------------------------------------------------------------
Employment Agreements
The Company has entered into an employment agreement with Mr. Barbour
providing for an initial term of five years. The employment agreement provides
for an annual base salary in an amount not less than Mr. Barbour's then-current
salary and provides for a daily renewal of its term so that it remains five
years unless the Company gives notice of non-renewal under certain
circumstances. The agreement provides that, in the event of the involuntary
termination of Mr. Barbour, he shall receive his salary and bonus (with the
bonus and cash incentive compensation based on historical averages) and his
health insurance for the remaining term of the contract. He shall also receive a
lump sum payment equal to the present value of certain pension and other
benefits to which he would have been entitled had he remained with the Company
for the remaining term of the contract. Each of these amounts is subject to a
cut back to the extent that Mr. Barbour receives income from another source
during the term of the contract. The employment agreement also provides that a
lump sum cash payment will be made to Mr. Barbour in an amount equal to 299% of
his five-year average "base amount" of compensation if his employment is
involuntarily terminated in connection with or within 18 months after a "change
in control" of Classic Bank or the Company. Finally, the agreement provides that
Mr. Barbour shall be entitled to indemnification against any such liability that
might arise if the above payments are deemed "excess parachute payments" under
Section 280G of the Internal Revenue Code.
Classic Bank has employment agreements with Ms. Frazier and Mr. Curtis
providing for initial terms of three years. Each agreement provides for an
annual base salary in an amount not less than the subject employee's
then-current salary and provides for a daily renewal of its terms so that the
term of the agreement always remains three years unless the Company gives notice
of non-renewal under certain circumstances. The agreements also provide for
termination upon the employee's death, for cause or certain events specified
under applicable regulations. The employment agreements are terminable by the
employee upon 90 days' notice to Classic Bank.
The employment agreements with Ms. Frazier and Mr. Curtis provide for
payment to the covered employee of an amount equal to 299% of his or her
five-year average base compensation, where employment involuntarily terminates,
(or is deemed to be terminated involuntarily), in connection with a "change in
control" of Classic Bank or within twelve months thereafter. These agreements
also provide for the continued payment of the covered employee's health benefits
for the remainder of the term of the agreement in the event he or she is
involuntarily terminated in the event of a change in control.
Change in Control Severance Agreement
Classic Bank has a change in control severance agreement with Mr. Bayes.
The agreement has a one-year term which is automatically extended for an
additional one-year term on each anniversary of its effective date upon approval
by the Board of Directors. The agreement provides that if Mr. Bayes' employment
is involuntarily terminated, other than for cause, following a change in control
he will be entitled to receive (i) a lump sum cash payment equal to 200% of his
five-year average "base amount" of compensation and (ii) for a period of 12
months thereafter substantially the same life and health benefits as he is
receiving as of the date of termination.
Supplemental Executive Retirement Agreement
Classic Bank entered into a non-qualified Supplemental Executive
Retirement Agreement (the "SERP") with Mr. Barbour which provides for the
payment of a monthly supplemental retirement benefit of up to 24% of his average
monthly compensation during the three highest 12-month periods prior to
retirement. This benefit will be payable upon normal retirement at age 65 or,
under certain circumstances, after age 55 if his employment is terminated
without cause. In the event of Mr. Barbour's death, 50% of the amount payable
under the SERP will be payable to his spouse until her death. The amounts
contributed by Classic Bank pursuant to the SERP for the last three fiscal years
are included in the Summary Compensation Table under "All Other Compensation."
Certain Transactions
Classic Bank follows policies of granting loans to their respective
(and the Company's) directors, officers and employees. These loans are made in
the ordinary course of business and on the same terms and conditions as those of
comparable transactions prevailing at the time, in accordance with underwriting
guidelines and do not involve more than the normal risk of collectibility or
present other unfavorable features. Federal law requires that all loans to
directors and executive officers be made on terms and conditions comparable to
those for similar transactions with non-affiliates. Loans by Classic Bank to all
of its (and the Company's) respective directors and executive officers and the
associates of such directors and executive officers, including outstanding
balances and commitments, totaled approximately $45.9 million at March 31, 2004,
which was approximately 45.9% of the Company's stockholders' equity at that
date. At March 31, 2004, there were no loans by Classic Bank to any director or
executive officer (or any affiliate of such director or executive officer) of
the Company or of Classic Bank, made at preferential rates or terms which in the
aggregate exceeded $60,000 during the two years ended March 31, 2004.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
The Board of Directors of the Company has appointed Crowe, Chizek and
Company LLC to be the Company's independent auditor for the fiscal year ending
March 31, 2005. Representatives of Crowe, Chizek and Company LLC are expected to
attend the Meeting to respond to appropriate questions and to make a statement
if they so desire.
Effective July 14, 2003, Smith, Goolsby, Artis & Reams, P.S.C.,
resigned as the Company's independent auditor. From the Company's creation until
the date hereof (i) the reports of Smith, Goolsby, Artis & Reams, P.S.C. on the
Company's financial statements contained no adverse opinion or disclaimer of
opinion and were not modified as to uncertainty, audit scope or accounting
principles, and (ii) there have been no disagreements with Smith, Goolsby, Artis
& Reams, P.S.C. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which were not resolved
to its satisfaction which would have caused it to make reference to the subject
matter of the disagreement in its reports. Representatives of Smith, Goolsby,
Artis & Reams, P.S.C. are expected to attend the Meeting to respond to
appropriate questions and make a statement if they so desire.
Audit Fees.
The aggregate fees payable by the Company to Crowe, Chizek and Company
LLC for professional services rendered for the audit of the Company's annual
financial statements, the review of the financial statements included in the
Company's Quarterly Reports on Form 10-QSB and services that are normally
provided by Crowe, Chizek and Company LLC in connection with statutory and
regulatory filings and engagements were $57,100 for the fiscal year ended March
31, 2004. The aggregate fees billed to the Company by Smith, Goolsby, Artis &
Reams, P.S.C. for professional services rendered by Smith, Goolsby, Artis &
Reams, P.S.C. for the audit of the Company's annual financial statements, the
review of the financial statements included in the Company's Quarterly Reports
on Form 10-QSB and services that are normally provided by Smith, Goolsby, Artis
& Reams, P.S.C. in connection with statutory and regulatory filings and
engagements were $44,800 for the fiscal year ended March 31, 2003.
Audit Related Fees.
There were no fees billed to the Company by Crowe, Chizek and Company
LLC for assurance and related services rendered by Crowe, Chizek and Company LLC
that are reasonably related to the performance of the audit of and review of the
financial statements and that are not already reported in "Audit Fees" above
during the fiscal year ended March 31, 2004. Similarly, there were no fees
billed to the Company by Smith, Goolsby, Artis & Reams, P.S.C. for assurance and
related services rendered by Smith, Goolsby, Artis & Reams, P.S.C. that are
reasonably related to the performance of the audit of and review of the
financial statements and that are not already reported in "Audit Fees" above
during the fiscal year ended March 31, 2003.
Tax Fees.
The aggregate fees payable by the Company to Crowe, Chizek and Company
LLC for professional services for tax compliance, tax advice and tax planning
were $8,350.00 during the fiscal year ended March 31, 2004. The aggregate fees
billed to the Company by Smith, Goolsby, Artis & Reams, P.S.C. for professional
services rendered by Smith, Goolsby, Artis & Reams, P.S.C. for tax compliance,
tax advice and tax planning were $5,000 during the fiscal year ended March 31,
2003.
All Other Fees.
The aggregate fees billed to the Company by Crowe, Chizek and Company
LLC were for all services other than those described above were $5,895 for the
fiscal year ended March 31, 2004. These fees related to consultation on
accounting matters relating to the acquisition of First Federal Financial
Bancorp, Inc. The aggregate fees billed to the Company by Smith, Goolsby, Artis
& Reams, P.S.C. were for all services other than those described above were
$8,000 for the fiscal year ended March 31, 2003. These fees related to
agreed-upon procedures for information systems and the trust department and
consultation on accounting matters relating to the acquisition of First Federal
Financial Bancorp, Inc.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of Crowe, Chizek and
Company LLC. The Audit Committee concluded that the performance of such services
will not affect the independence of Crowe, Chizek and Company LLC in performing
its function as independent auditor of the Company.
The Audit Committee preapproves all audit and permissible non-audit
services to be provided by the Company's independent auditor.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF Crowe, Chizek and Company LLC AS THE
COMPANY'S INDEPENDENT AUDITOR FOR THE FISCAL YEAR ENDING MARCH 31, 2005.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than 10% of the Common
Stock, to file with the Securities and Exchange Commission (the "SEC") initial
reports of ownership and reports of changes in ownership of the Common Stock.
Officers, directors and greater than 10% beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended March 31, 2004, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were met.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's next
annual meeting must be received by its Secretary at the executive office of the
Company, located at 344 Seventeenth Street, Ashland, Kentucky 41101, no later
than March 23, 2005 to be eligible for inclusion in the Company's proxy
statement and form of proxy relating to the next annual meeting. Any such
proposal will be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended, and as with any stockholder
proposal (regardless of whether included in the Company's proxy materials), the
Company's certificate of incorporation and bylaws and Delaware law.
To be considered for presentation at the next annual meeting, but not
for inclusion in the Company's proxy statement and form of proxy for that
meeting, proposals must be received by the Company no later than June 17, 2005.
If, however, the date of the next annual meeting is before August 6, 2005 or
after October 25, 2005, proposals must instead be received by the Company by the
later of the 70th day before the date of the next annual meeting or the tenth
day following the day on which public disclosure (by press release, in a
publicly available filing with the SEC, through a notice mailed to stockholders,
or otherwise) of the date of the next annual meeting is first made.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement. If,
however, any other matter should properly come before the Meeting, it is
intended that the Board of Directors, as proxy for the stockholder, will act in
accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Company. 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 Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company or Classic Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
Ashland, Kentucky
July 21, 2004
APPENDIX A
Classic Bancshares, Inc.
Governance/Nominating Committee Charter
The Board of Directors has created a Charter for the Governance/Nominating
Committee as follows:
I. Purpose
The purpose of the Governance/Nominating Committee (the "Committee") of
the Board of Directors of AMB Financial Corp. shall be to assist the Board in
(i) identifying qualified individuals to become Board members, (ii) in
determining the size and composition of the Board and its committees, (iii)
developing a process to assess Board effectiveness and (iv) making
recommendations regarding developing corporate governance guidelines.
II. Structure
The Committee shall consist of a minimum of two members, as determined
by the Board of Directors (the "Board"). Members of the Committee shall be
appointed and may be removed by the Board. All members of the Committee shall be
members of the Board and satisfy the applicable Nasdaq SmallCap listing
standards for independence. The Committee shall meet at least once annually or
more frequently as circumstances require.
III. Responsibilities
The functions of the Governance/Nominating Committee include the
following:
1. Consider and recommend to the Board standards (such as
independence, experience, leadership, diversity and stock
ownership) for the selection of individuals to be considered for
election or reelection to the Board;
2. Identify individuals qualified to become members of the Board;
3. Consider recommendations by stockholders for director nominations;
4. Conduct reviews as appropriate into the background and
qualifications of director candidates;
5. Recommend candidates to the Board for nomination as directors;
6. Review the structure of the Board and its committees and make
recommendations with respect thereto (including size and
composition);
7. Consider and make recommendations regarding Board and committee
performance; and
8. Consider and make recommendations regarding Board continuing
education guidelines.
The Committee shall have the authority to delegate any of its
responsibilities to subcommittees as the Committee may deem appropriate in its
sole discretion.
IV. Funding
The Committee shall have the authority to retain director search firms
outside counsel and any other advisors as the Committee deems appropriate in its
discretion. The Committee shall have sole authority to approve related fees and
retention terms.
V. Recommendations
The Committee shall report its actions and recommendations to the
Board. The Committee shall review at least annually the adequacy of this charter
and recommend any proposed changes to the Board for approval.
APPEXDIX B
CLASSIC BANCSHARES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
AMENDED AND RESTATED CHARTER
PREAMBLE
This Audit Committee Charter (the "Charter") has been adopted by the Board of
Directors of Classic Bancshares, Inc. (the "Company"). The Audit Committee of
the Board shall review and reassess this charter annually and recommend any
proposed changes to the Board for approval.
OBJECTIVES OF COMMITTEE
o To provide assistance to the Board of Directors in fulfilling its
fiduciary responsibilities to oversee management's activities relating
to accounting, record keeping, financial reporting, internal controls,
disclosure controls and internal control over financial reporting.
o Provide a vehicle and establish a forum for the free and open
communication of views and information among the Company's directors,
independent public accounting firm, internal auditor and management.
o To review the independence of the Company's independent public
accounting firm and the objectivity of internal auditor.
o To review the adequacy and reliability of disclosures to stockholders.
o To perform the audit committee functions specified by the Securities
and Exchange Commission and the NASDAQ Small-Cap Market.
o To establish and maintain a system for confidential complaints
regarding the Company's accounting, financial reporting, internal
controls, disclosure controls, and internal control over financial
reporting.
o The committee's duties do not include planning or conducting external
or internal audits or determining that the Company's financial
statements are complete, accurate and in accordance with generally
accepted accounting principles. Nor is it the duty of the committee to
assure compliance with laws and regulations. These are the
responsibilities of management.
ROLES AND RESPONSIBILITIES
The responsibilities of the committee include the following:
Independent Auditors:
o Appoint an independent public accounting firm for the purpose of
auditing the Company's financial statements and, if and when required,
attesting to its internal controls.
o Assess the qualifications of the Company's public auditing firm and its
lead engagement partner. Oversee and evaluate the performance of such
person and firm; if necessary, remove them.
o Obtain annually from the Company's independent public auditing firm a
formal written statement describing all relationships between the firm
and the Company, consistent with Independence Standards Board Standard
Number 1. Discuss with the Company's independent public auditing firm
any relationships that may impact the objectivity and independence of
such firm and take, or recommend that the Board take, appropriate
actions with respect to the independence of such firm from the Company.
o Resolve any disagreements between management and the Company's
independent public auditing firm regarding accounting, financial
reporting, disclosure controls, internal control over financial
reporting and similar matters.
o Approve, in advance, all audit and non-audit services to be performed
for the Company by its independent public auditing firm, subject to
applicable law and regulation. Negotiate and approve all fees and
engagement terms of the Company's independent public auditing firm for
audit and non-audit services.
o Obtain assurance from the Company's independent public auditing firm
that Section 10A(b) of the Exchange Act has not been implicated.
o Review with the Company's independent public auditing firm the plan,
procedures and scope of its annual audit of the Company's financial
statements.
Financial Reporting Review:
o Review at least annually critical accounting policies, alternate
treatments within GAAP and significant assumptions and estimates with
respect to the Company's financial statements with its management and
independent public auditing firm. In connection with such review,
review the financial accounting and reporting treatments preferred by
the Company's independent auditing firm.
o Review and discuss the Company's audited financial statements with
management and the Company's independent public auditing firm including
all of the matters indicated in Statement of Auditing Standards Number
61. Based on such review, recommend to the board whether such audited
financial statements should be included in the Company's Annual Report
on Form 10-KSB and Annual Report to Stockholders for the relevant
fiscal year.
o Review material written communications between the Company's
independent public auditing firm and management including the
management letter and schedule of unadjusted differences.
o Review and discuss with management and Company's independent public
auditing firm on at least an annual basis the Company's disclosure of
off-balance sheet data and non-financial data.
o Review and discuss with management and the Company's independent public
auditing firm the appropriateness (and the reconciliation to GAAP) of
any pro forma data to be included in the Company's public financial
reports.
o Review and discuss with management and the Company's independent public
auditing firm prior to release any proposed earnings announcement or
financial press release.
o Review and discuss with management and the Company's independent public
auditing firm prior to filing the Company's Annual Reports on Form
10-KSB, Quarterly Reports on Form 10-QSB and any other SEC disclosure
filings.
o Monitor the efforts of management and the Company's independent public
auditors to cure any deficiencies noted in its financial statements or
accounting process.
Internal Controls, Disclosure Controls and Internal Control
over Financial Reporting:
o Oversee the selection, compensation and performance of the Company's
internal auditor. Assess the qualifications and independence of the
Company's internal auditor.
o Discuss with the Company's management, independent public auditing firm
and internal auditor the organization, scope, objectivity, budget and
staffing of the Company's internal audit.
o Determine that no restrictions are placed upon the scope of the
internal audit. Assess reports regarding computer systems, facilities
and backup systems.
o Review regulatory examination reports and internal audit reports and
monitor management's compliance efforts.
o Review with the Company's independent public auditing firm, internal
auditor and management, the adequacy and effectiveness of the Company's
internal controls (including internal control over financial reporting)
and disclosure controls.
o Review reports of management and the Company's independent public
auditing firm on internal and quality controls including, if and when
required by applicable law or regulations, management's report and the
independent public auditing firm's attestation on internal control over
financial reporting.
o Discuss with management on a quarterly basis its review and conclusions
regarding the Company's disclosure controls and whether there has been
any changes in the Company's internal control over financial reporting.
Other:
o Discuss the Company's legal and regulatory compliance with the
Company's Chief Compliance Officer on at least an annual basis.
o Review and, to the extent required under applicable SEC and NASDAQ
rules, approve all transactions with related parties.
o Establish procedures for (a) the receipt, retention and treatment of
any complaints received by the Company on accounting, financial
reporting, internal control, internal control over financial reporting,
or auditing matters and (b) the confidential, anonymous submission by
the Company's employees of concerns regarding questionable accounting,
financial reporting, internal controls, internal control over financial
reporting and auditing matters.
o Reassess the adequacy of this Charter at least annually.
ORGANIZATION
o The committee shall consist of a minimum of three outside directors of
the Company. All members must be (i) financially literate, (ii) able to
read and understand financial statements and (iii) able to satisfy
applicable NASDAQ and SEC requirements with respect thereto. In
addition, at least one member of the committee shall have past
employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or
background which results in such member's financial sophistication,
(including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.)
o All members of the committee must be free from any relationship with
the Company which would interfere with their independent judgement.
Other than in his or her capacity as a member of the board of
directors or any committee thereof, no audit committee member shall
accept directly or indirectly any fee or other compensation from the
Company or any subsidiary and no audit committee member may be an
affiliated person of the Company. No audit committee member or any
of his family members shall have been employed by the Company, its
independent public auditing firm or any of their affiliates or,
received any payments from the Company (except as set forth above), its
independent public accounting firm or any of their affiliates over
the last three years. All audit committee members must comply with
the independence requirements of the NASDAQ and the SEC.
o Required Meetings. The committee shall meet at least four times a year
and more frequently as circumstances require. The timing of meetings
shall be determined by the committee. However, at least once per year,
the committee shall have private meetings with each of the Company's
independent public auditing firm, management and the internal auditor.
o One member of the committee shall be appointed as chairman. The
chairman shall be responsible for leadership of the committee,
including scheduling and presiding over meetings, preparing agendas,
and making regular reports to the board. The chairman will also
maintain regular liaison with the Company's CEO, CFO, the lead partner
of its independent public auditing firm, the internal auditor and the
general counsel.
o The committee shall have the power to conduct or authorize
investigations into any matters within its scope of responsibilities.
The committee is empowered to engage independent counsel and such other
advisers as it determines necessary or appropriate to carry out its
duties. The Company shall pay all expenses of such advisers and any
other expenses that are necessary or appropriate for carrying out the
committee's duties.
REVOCABLE PROXY REVOCABLE PROXY
CLASSIC BANCSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
August 26, 2004
The undersigned hereby appoints the Board of Directors of Classic
Bancshares, Inc. (the "Company"), with full powers of substitution, to act as
attorney and proxy for the undersigned to vote all shares of capital stock of
the Company which the undersigned is entitled to vote at the Annual Meeting of
Stockholders (the "Meeting") to be held at Park Place (formerly the AEP Kentucky
headquarters building), located at the corner of 17th Street and Central Avenue,
Ashland, Kentucky 41101, on August 26, 200 at 4:00 p.m., local time, and at any
and all adjournments and postponements thereof.
I. The election as directors of all nominees listed below (except as marked
to the contrary)
[ ] FOR (except as marked to the contrary) [ ] VOTE WITHHELD
INSTRUCTION: To withhold your vote from any individual nominee, strike a
line through the name(s) of the nominee(s) in the list at right.
C. Cyrus Reynolds David B. Barbour Jeffrey P. Lopez, M.D.
II. The ratification of the appointment of Crowe, Chizek and Company LLC as
the Company's independent auditor for the fiscal year ending March 31,
2005.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In its discretion, the Board of Directors, as proxy for the
undersigned, is authorized to vote on any other business that may properly come
before the Meeting or any adjournment or postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL OF THE NOMINEES
LISTED ABOVE AND FOR THE RATIFICATION OF THE APPOINTMENT OF CROWE CHIZEK AND
COMPANY LLC. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL
BE VOTED AS DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
The Board of Directors recommends a vote "FOR" the election of each of
its nominees for director and "FOR" the ratification of the appointment of the
independent auditors.
(To be Signed on Reverse Side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This Proxy may be revoked at any time before it is voted by: (i) filing
with the Secretary of the Company at or before the Meeting a written notice of
revocation bearing a later date than this Proxy; (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Secretary
of the Company at or before the Meeting; or (iii) attending the Meeting and
voting in person (although attendance at the Meeting will not in and of itself
constitute revocation of this Proxy). If this Proxy is properly revoked as
described above, then the power of the Board of Directors to act as attorney and
proxy for the undersigned shall be deemed terminated and of no further force and
effect.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of Notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders for the fiscal year ended March 31, 2004.
Dated: _______________, 2004 -------------------------------------------
Signature of Stockholder
-------------------------------------------
Signature of Stockholder
Please sign exactly as your name(s) appear(s) above.
When signing as attorney, executor, administrator,
trustee or guardian, please give your full title.
If shares are held jointly, each holder should sign.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE
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