SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 2)
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
[x] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COOPERATIVE BANKSHARES, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee Required.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total Fee Paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid
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2. Form, Schedule or Registration Statement No.:
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3 Filing Party:
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4. Date Filed:
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March 26, 1997
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders of Cooperative
Bankshares, Inc. (the "Company") to be held at the Wilmington Hilton, 301 North
Water Street, Wilmington, North Carolina, on Friday, April 25, 1997 at 11:00
a.m.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. During the meeting, we will
also report on the operations of the Company. Directors and officers of the
Company as well as representatives of Coopers & Lybrand L.L.P., the Company's
independent auditors, will be present to respond to any questions the
stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND
THE ANNUAL MEETING. This will not prevent you from voting in person but will
assure that your vote is counted if you are unable to attend the meeting. Your
vote is important, regardless of the number of shares you own.
Sincerely,
Frederick Willetts, III
President and Chief
Executive Officer
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COOPERATIVE BANKSHARES, INC.
201 MARKET STREET
WILMINGTON, NORTH CAROLINA 28401
(910) 343-0181
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 25, 1997
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Cooperative Bankshares, Inc. (the "Company") will be held at the
Wilmington Hilton, 301 North Water Street, Wilmington, North Carolina, on
Friday, April 25, 1997 at 11:00 a.m.
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 for three year
terms and one director for a two year term;
2. The transaction of such other matters as may properly come before
the Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come before
the Meeting.
Any action may be taken on any of the foregoing proposals at the Meeting on
the date specified above or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Stockholders of record at the close
of business on March 3, 1997 are the stockholders entitled to vote at the
Meeting and any adjourn ments thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by 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
Daniel W. Eller
Secretary
Wilmington, North Carolina
March 26, 1997
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
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PROXY STATEMENT
OF
COOPERATIVE BANKSHARES, INC.
201 MARKET STREET
WILMINGTON, NORTH CAROLINA 28401
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1997
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cooperative Bankshares, Inc. (the
"Company"), holding company for Cooperative Bank for Savings, Inc., SSB
("Cooperative Bank") to be used at the Annual Meeting of Stockholders of the
Company (the "Meeting") which will be held at the Wilmington Hilton, 301 North
Water Street, Wilmington, North Carolina, on Friday, April 25, 1997 at 11:00
a.m. The accompanying Notice of Annual Meeting and this Proxy Statement are
being first mailed to stockholders on or about March 26, 1997.
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VOTING AND REVOCABILITY OF PROXIES
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Proxies solicited by the Board of Directors of the Company will be voted in
accordance with the directions given therein. WHERE NO INSTRUCTIONS ARE
INDICATED, PROXIES WILL BE VOTED FOR THE NOMINEES FOR DIRECTORS SET FORTH BELOW.
The Bylaws of the Company provide that in the absence of stockholder direction,
a stockholder's proxy shall be voted as determined by a majority of the Board of
Directors. The proxy confers discretionary authority on the persons named
therein to vote with respect to the election of any person as a director where
the nominee is unable to serve or for good cause will not serve, and matters
incident to the conduct of the Meeting.
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted
at the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to Daniel W. Eller, Secretary of the Company, at the address shown above,
by filing of a later dated proxy prior to a vote being taken on a particular
proposal at the Meeting, or by attending the Meeting and voting in person.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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The securities entitled to vote at the Meeting consist of the Company's
common stock, par value $1.00 per share (the "Common Stock"). Stockholders of
record as of the close of business on March 3, 1997 (the "Record Date") are
entitled to one vote for each share of Common Stock then held. As of the Record
Date, the Company had 1,491,698 shares of Common Stock issued and outstanding.
The presence, in person or by proxy, of at least a majority of the total number
of shares of Common Stock outstanding and entitled to vote will be necessary to
constitute a quorum at the Meeting.
Persons and groups owning in excess of 5% of the Common Stock are required
to file certain reports regarding such ownership pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"). The following table sets
forth, as of the Record Date, certain information as to the Common Stock
beneficially owned by persons owning in excess of 5% of the Common Stock, by
each of the executive officers named in the Summary Compensation Table on page
7, and by all executive officers and directors of the Company as a group.
Management knows of no person, except as listed below, who owned more than 5% of
the Company's outstanding shares of the Common Stock as of the Record Date.
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership (1) Outstanding
- ------------------- ------------- ------------
Frederick Willetts, III
201 Market Street
Wilmington, North Carolina 28401 139,487 (2) 9.3%
Frederick Willetts, Jr.
201 Market Street
Wilmington, North Carolina 28401 86,864 (3) 5.8%
Salem Investment Counselors, Inc.
P.O. Box 25427
Winston-Salem, N.C. 27114-5427 107,525 7.2%
All executive officers and directors
as a group (13 persons) 353,558 (4) 23.7%
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(1) Includes stock held in joint tenancy; stock owned as tenants in common;
stock owned or held by a spouse or other member of the individual's
household; stock allocated through an employee benefit plan of the Company;
stock subject to options exercisable within 60 days; and stock owned by
businesses in which the officer or director is an officer or major
stockholder, or as a custodian or trustee, or by spouses as a custodian or
trustee, over which shares such officer or director effectively exercises
sole or shared voting and/or investment power, unless otherwise indicated.
(2) Includes 35,707 shares which Mr. Willetts has the right to purchase
pursuant to the exercise of stock options under the Cooperative Bank for
Savings, Inc. 1990 Stock Option Plan (the "Option Plan") and 5,068 shares
allocated to Mr. Willetts' account under the Cooperative Bank for Savings,
Inc., SSB Employee Stock Ownership Plan (the "ESOP"). Also includes shares
of Common Stock owned by Mr. Willetts' spouse and minor children, and
77,202 shares held by the ESOP, as to which Mr. Willetts, as a trustee,
shares voting and dispositive power. Does not include 35,155 shares held
by the Frederick Willetts, Jr. Trust, of which he is Trustee. These shares
are included in the shares beneficially owned by Mr. Frederick Willetts,
Jr., discussed in footnote (3) below.
(3) Includes 26,438 shares which Mr. Willetts, Jr. has the right to purchase
pursuant to the exercise of stock options under the Option Plan and 35,155
shares held for the benefit of Mr. Willetts, Jr. in the Frederick Willetts,
Jr. Trust.
(4) Includes 138,401 shares which officers and directors as a group have the
right to purchase pursuant to the exercise of stock options under the
Option Plan, and 82,270 shares held by the ESOP as to which certain
officers and directors, as trustees, share voting and dispositive power.
Shares held by the ESOP have been counted only once in the computation of
ownership by all officers and directors as a group.
2
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors is currently composed of nine members.
Pursuant to the Company's Articles of Incorporation, the Board of Directors is
divided into three classes which shall be as nearly equal in number as possible.
The terms of only one class of directors expires at each annual meeting. The
Company's Articles of Incorporation generally provide that directors are to be
elected for terms of three years and until their successors are elected and
qualified.
Three directors will be elected at the Meeting to serve for a three-year
period, and until their respective successors have been elected and qualified.
The Board of Directors has nominated to serve as directors Frederick Willetts,
III, F. Peter Fensel, Jr. and William H. Wagoner for three year terms. Each of
these nominees is currently a member of the Board. The Board has also nominated
R. Allen Rippy to serve as a director for a two year term. Mr. Rippy was
appointed by the Board in February 1997 to fill the vacancy created by the
retirement of former Director Charles H. Boney. It is intended that the persons
named in the proxies solicited by the Board will vote for the election of the
named nominees. If any nominee is unable to serve, the shares represented by
all valid proxies which have not been revoked will be voted for the election of
such substitute as the Board of Directors may recom mend. At this time, the
Board knows of no reason why any nominee might be unavailable to serve.
Under the Company's Bylaws, directors shall be elected by a majority of
those votes cast by stockholders at the Meeting. Votes which are not cast at
the Meeting, either because of abstentions or broker non-votes, are not
considered in determining the number of votes which have been cast for or
against the election of a nominee.
The following table sets forth the names of the Board of Directors'
nominees for election as directors and of those directors who will continue to
serve as such after the Meeting. Also set forth is certain other information
with respect to each person's age, the year he first became a director of
Cooperative Bank, the expiration of his term as a director, and the number and
percentage of shares of the Common Stock beneficially owned. With the exception
of Mr. Rippy, all of the individuals were initially appointed as directors of
the Company in connection with the Company's incorporation in April 1994.
Shares of
Year First Common Stock
Age at Elected as Current Beneficially
December 31, Director of Term Owned at Percent
Name 1996 Cooperative Bank to Expire March 3, 1997 (1) of Class
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BOARD NOMINEES FOR TERM TO EXPIRE IN 2000
Frederick Willetts, III 47 1976 1997 139,487 (2) 9.3%
F. Peter Fensel, Jr. 47 1990 1997 7,124 (3) 0.4%
William H. Wagoner 69 1968 1997 4,273 (3) 0.2%
BOARD NOMINEE FOR TERM TO EXPIRE IN 1999
R. Allen Rippy 45 1997 1997 4,712 (3) 0.3%
DIRECTORS CONTINUING IN OFFICE
Frederick Willetts, Jr. 71 1952 1998 86,864 (4) 5.8%
James D. Hundley, M.D. 55 1990 1998 14,957 (3) 1.0%
O. Richard Wright, Jr. 52 1992 1998 25,141 (3) 1.6%
Paul G. Burton 61 1992 1999 4,740 (3) 0.3%
H. Thompson King, III 54 1990 1999 7,059 (3) 0.4%
(Footnotes on following page)
3
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(1) Includes stock held in joint tenancy; stock owned as tenants in common;
stock owned or held by a spouse or other member of the individual's
household; stock allocated through an employee benefit plan of the Company;
stock subject to options exercisable within 60 days; and stock owned by
businesses in which the director is an officer or major stockholder, or as
a custodian or trustee, or by spouses as a custodian or trustee, over which
shares the director effectively exercises sole or shared voting and/or
investment power, unless otherwise indicated.
(2) Includes 35,707 shares which Mr. Willetts has the right to purchase
pursuant to the exercise of stock options under the Option Plan and 5,068
shares allocated to Mr. Willetts' account under the ESOP. Also includes
77,202 shares held by the ESOP, as to which Mr. Willetts, as a trustee,
shares voting and dispositive power. Also includes shares of Common Stock
owned by Mr. Willetts' spouse and minor children. Does not include 35,155
shares held by the Frederick Willetts, Jr. Trust, of which he is trustee.
These shares are included in the shares beneficially owned by Mr. Frederick
Willetts, Jr., discussed in footnote (4) below.
(3) Includes 3,712, 2,868, 3,712, 3,712, 3,712, 3,712 and 3,712 shares which
Messrs. Fensel, Wagoner, Rippy, Hundley, Wright, Burton and King have the
right to purchase pursuant to the exercise of stock options under the
Option Plan.
(4) Includes 26,438 shares which Mr. Willetts, Jr. has the right to purchase
pursuant to the exercise of stock options under the Option Plan and 35,155
shares held for the benefit of Mr. Willetts, Jr. in the Frederick Willetts,
Jr. Trust.
The principal occupation of each director of the Company for the last five
years is set forth below.
FREDERICK WILLETTS, III has been employed by the Bank since 1972 and has
served as the chief executive officer and president since June 1, 1991. Prior
to that date, he served as chief operating officer and executive vice president
of the Bank. Mr. Willetts, III currently serves on the board of directors and
executive committee of America's Community Bankers and the Thrift Institutions
Advisory Council to the Federal Reserve Board. He has served as president of
the Southeastern Conference of the U.S. Savings and Loan League, president of
the Greater Wilmington Chamber of Commerce, president of the Foundation of the
Episcopal Diocese of East Carolina and vice chairman of the Foundation of the
University of North Carolina at Wilmington. Mr. Willetts, III was the recipient
of the New Hanover County Distinguished Service Award in 1987, the "Five
Outstanding Young North Carolinians" award in 1988, the Glen Troop Award for
outstanding public service to the thrift industry in 1990 and the Wilmington
Good Citizenship Award in 1994. Mr. Willetts, III is the son of Frederick
Willetts, Jr.
F. PETER FENSEL, JR. is President of F. P. Fensel Supply Company in
Wilmington, North Carolina. He has served as president of the North Carolina
Azalea Festival, was a member of the board of directors of the Greater
Wilmington Chamber of Commerce, Wilmington Industrial Development Board, Brigade
Boys Club, Plantation Village, Foundation of the University of North Carolina at
Wilmington and Historic Wilmington Foundation. He is a past member of the Cape
Fear Area United Way.
WILLIAM H. WAGONER was the Chancellor of the University of North Carolina
at Wilmington from 1969 to 1990. Dr. Wagoner was past chairman of the board of
directors of the Area Health Education Center and is trustee emeritus of the
board of trustees of Cape Fear Memorial Hospital. He was named Chancellor
Emeritus by the University of North Carolina Board of Governors at his
retirement.
R. ALLEN RIPPY is vice president of Rippy Cadillac Oldsmobile, Inc. He
joined the family business in 1973 after graduating from the University of North
Carolina at Chapel Hill. Allen is a native of Wilmington. He has served on the
Board of the North Carolina Automobile Dealers Association for six years, has
served on the Wilmington YMCA Board of Directors, and was a board member of Cape
Fear Academy. He has been very active with many charitable organizations in the
Wilmington area through his business' "Caring and Sharing" Program which he
founded. He has for many years been extremely active with the youth programs of
his church.
FREDERICK WILLETTS, JR. is chairman of the board of directors of the
Company and Cooperative Bank and currently serves as executive vice president of
Cooperative Bank. Mr. Willetts has been employed by Cooperative Bank since 1946
and served as president and chief executive officer from 1963 until June 1,
1991. Mr. Willetts has served as chairman of the North Carolina Savings and
Loan League, as a member of the board of directors and executive committee for
the United States Savings and Loan league, as past president of the Southeastern
Conference of the U.S. Savings and Loan League, as past president of the Greater
Wilmington Chamber of Commerce and past president of the North Carolina Azalea
Festival at Wilmington. Mr. Willetts, Jr., is the father of Frederick Willetts,
III.
4
JAMES D. HUNDLEY, M.D. is a partner in the Wilmington Orthopaedic Group,
P.A. of Wilmington, North Carolina. He is past president of the North Carolina
Orthopaedic Association, the New Hanover-Pender Medical Society, the University
of North Carolina Orthopaedic Alumni Association, and the Cape Fear Academy
Board of Trustees, past Chief of Staff of the New Hanover Regional Medical
Center, and past chairman of the New Hanover Public Library Advisory Board. He
is a member and past president of the Wilmington Rotary Club. He is the
director of the Rotary/Orthopaedic Crippled Children's Clinic, Athletic Team
Physician for the University of North Carolina at Wilmington, and a member of
the National Board for Certification of Orthopaedic Physicians' Assistants. He
is vice president of the UNC Medical Alumni Association. He is a Clinical
Assistant Professor in the Department of Orthopaedics at UNC Hospitals in Chapel
Hill and a member of the search committee for a new chairman of that department.
He has recently been named an adjunct professor in the Health, Physical
Education and Recreation Department of UNC Wilmington for his work with student
athletes. Dr. Hundley is listed in BEST DOCTORS IN AMERICA, THE SOUTHEAST
REGION (1996-1997).
O. RICHARD WRIGHT, JR. is the senior partner in the law firm of McGougan,
Wright, Worley & Harper, established in Tabor City, North Carolina in 1932, and
has been associated with the firm since 1971. Mr. Wright is the owner of Flat
Bay Farms and is co-owner of a residential and commercial rental property firm
known as WSIC. Mr. Wright served in the North Carolina House of Representatives
for seven terms during the years 1974 to 1988. He serves on the board of
directors of a number of civic and community organizations including the Tabor
City Committee of 100, the Southeastern Community College Foundation, the Lewis
A. Sikes Foundation, the Olive Battle Wright Scholarship Foundation, the
Columbus County Committee of 100, the North Carolina Retail Merchants
Association, the University of North Carolina General Alumni Association and the
Cape Fear Council, Boy Scouts of America. Mr. Wright has just served his term
as President of the Law Alumni Association of the University of North Carolina.
PAUL G. BURTON is president of Burton Steel Company of Wilmington, North
Carolina. He is a native of Wilmington and a graduate of North Carolina State
University. Mr. Burton is active in the National Society of Professional
Engineers and is a director of the Wilmington Industrial Development Commission.
He is past president of the North Carolina Azalea Festival. He served for three
years on the Governor's Board for Travel and Tourism, the Mayor's Task Force on
Economic Development and the North Carolina Ports Railway Commission.
H. THOMPSON KING, III was named President of Hanover Iron Works, Inc. in
1982. He joined the firm in 1973, representing a fourth generation succession
of the founders of the company. Hanover Iron Works, Inc. specializes in metal
fabrication, roofing, heating and air conditioning. Mr. King is a native of
Wilmington, North Carolina. He is a member of the Wilmington Rotary Club. He
has served as president of Carolina Roofing and Sheet Metal Contractors
Association, the New Hanover County Airport Authority and was vice president of
the Wilmington Chamber of Commerce.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Board of Directors of the Company conducts business through meetings of
the Board and of its committees. During the fiscal year ended December 31,
1996, the Board of Directors held 16 meetings. No director attended fewer than
75% of the total meetings of the Board of Directors and committee meetings on
which such Board member served during this period.
The Company's Audit Committee consists of Directors Rippy, King and Fensel.
This committee meets periodically on call by the Internal Auditor for the
purpose of reviewing the activities and findings of the Internal Audit
Department. The Audit Committee met four times during the fiscal year ended
December 31, 1996.
The Personnel Committee, composed of Directors Wagoner, Hundley, Wright and
Burton, meets periodically for the purpose of reviewing compensation of all
employees and officers and met twice during the fiscal year ended December 31,
1996 for this purpose.
5
The full Board of Directors selects nominees for election as directors.
The Company does not have a standing nominating committee.
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EXECUTIVE COMPENSATION
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BOARD PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL. The function of administering the Company's executive
compensation policies is currently performed by the Personnel Committee of the
Board of Directors of Cooperative Bank (the "Committee"), which is composed
entirely of outside directors. The Committee is responsible for developing and
making recommendations to the Board concerning compensation paid to the Chief
Executive Officer and each of the other executive officers, and for
administering all aspects of the Company's executive compensation program,
including employee benefit plans.
The Committee makes its recommendations to the Board concerning executive
compensation on the basis of its annual review and evaluation of the Company and
Cooperative Bank's corporate performance and the compensation of its executive
officers as compared with other companies similar in size and market
capitalization.
EXECUTIVE COMPENSATION PROGRAM. The Company's executive compensation
program, which was developed with the objective of attracting and retaining
highly qualified and motivated executives, and recognizing and rewarding
outstanding performance, has the following components: (i) base salaries
(subject to the terms of existing employment agreements), (ii) stock options,
and (iii) miscellaneous other fringe benefits.
Base salary increases are determined on the basis of a combination of cost
of living and individual and corporate performance. During the year ended
December 31, 1996, base salaries of executive officers were determined by a
review of peer group compensation. The compensation survey results of the
Savings and Community Bankers of America, survey results of the North Carolina
Community Bankers Association and SNL Securities Executive Compensation Review
were compared to salaries of the Company's executive officers. Peer groups were
compared to the Company by asset range and geographic region. By comparison,
salaries for the Bank's executive officers were on the low to average end of the
range for comparable peer groups.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The base salary of the Chief
Executive Officer is established by the terms of the employment agreement
entered into between Mr. Willetts and Cooperative Bank in 1991 (see "Employment
and Severance Agreements" below). The Chief Executive Officer's base salary
under the agreement was determined on the basis of the Committee's review and
evaluation of the compensation of chief executives of other thrift companies
similar in size and market capitalization to Cooperative Bank. The chief
executive officer's salary is compared to the same survey results as those of
the other executive officers. The geographic regions used for the surveys were
North Carolina financial institutions and the South Atlantic states financial
institutions. The survey asset range used by the Savings and Community Bankers
of America was $300 to $500 million and the asset range used by the North
Carolina Bankers Association was $200,000,000 - above. The asset range for the
SNL Securities Executive Compensation Review was $250,000,000 to $500,000,000
with 102 institutions reporting and 14 reporting from the Southeast region. The
number of institutions reporting data for the Savings and Community Bankers
survey in the $300 to $500 million asset group was 59 and the number reporting
for the South Atlantic region was 71. The number of institutions reporting for
the North Carolina Community Bankers Association by assets in excess of $200
million was 15.
6
SUMMARY COMPENSATION TABLE. The following table sets forth the cash and
noncash compensation for each of the last three fiscal years awarded to or
earned by the Chief Executive Officer and the Chairman/Senior Vice President.
No other executive officer received salary and bonuses in excess of $100,000
during the year ended December 31, 1996.
Long-Term Compensation
Awards
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Name and Principal Annual Compensation Securities All Other
--------------------
Position Year Salary Bonus Underlying Options Compensation
- ---------------------------- ---- ----- ----- ------------------- ------------
Frederick Willetts, III 1996 $180,000 $ -- -- $13,200 (1)
President and Chief 1995 180,000 -- -- 13,200 (1)
Executive Officer 1994 (2) 127,500 (2) 23,800 -- 9,400 (1)(2)
Frederick Willetts, Jr. 1996 95,000 -- -- 25,200 (1)
Executive Vice President 1995 120,000 -- -- 25,200 (1)
and Chairman 1994 (2) 86,250 -- 19,000 18,400 (1)(2)
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(1) Represents directors' fees.
(2) Due to the change in the Company's fiscal year in December 1993, these
figures reflect compensation/awards for the nine months ended December 31,
1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUE TABLE.
The following table sets forth information concerning the value of options held
by the Chief Executive Officer and the Chairman/Senior Vice President as of
December 31, 1996. Neither individual was awarded or exercised stock options
during fiscal year 1996.
Number of Securities Value of Unexercised
Underlying Options In-the-Money Options
at Fiscal Year-End at Fiscal Year-End
Name (All Immediately Exercisable) (All Immediately Exercisable)(1)
------ ----------------------------- --------------------------------
Frederick Willetts, III 35,707 $596,307
Frederick Willetts, Jr. 26,438 223,965
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(1) Difference between fair market value of underlying Common Stock at fiscal
year-end ($20.25 per share) and the exercise price, as adjusted.
PENSION PLAN. The following table shows the estimated annual benefits
payable under the Pension Plan (ten year certain and life) based on an
employee's years of service and compensation, as calculated under the plan.
Under the Internal Revenue Code of 1986, as amended (the "Code"), benefits under
the plan are currently limited to $120,000 per year. Alternatively, the Pension
Plan provides that payment of benefits may be made in the form of a lump sum
payment equal to the present value of such benefits.
7
Years of Service
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Remuneration 5 10 15 20 25 30 35
- ------------------ ------- ------- ------- ------- ------- -------- --------
$ 10,000 $ 3,780 $ 4,160 $ 4,540 $ 4,920 $ 5,300 $ 5,680 $ 6,060
30,000 11,580 12,980 14,340 15,720 17,100 18,480 19,060
60,000 23,280 26,160 29,040 31,920 34,800 37,680 40,560
90,000 34,980 39,360 43,740 48,120 52,500 56,880 61,260
120,000 46,680 52,560 58,440 64,320 70,200 78,080 81,960
150,000 58,380 65,760 73,140 80,520 87,900 95,280 102,660
160,000 62,280 70,160 78,040 85,920 93,800 101,680 109,560
170,000 62,280 70,160 78,040 85,920 93,800 101,680 109,560
200,000 62,280 70,160 78,040 85,920 93,800 101,680 109,560
230,000 62,280 70,160 78,040 85,920 93,800 101,680 109,560
As of December 31, 1996, Frederick Willetts, III had 24 years of service
under the Pension Plan.
In December 1996, the ESOP purchased 27,000 shares of the Common Stock from
the Pension Plan for allocation to the accounts of ESOP participants.
EMPLOYMENT AND SEVERANCE AGREEMENTS. In August 1991, Cooperative Bank
entered into an employment agreement with Frederick Willetts, III, President and
Chief Executive Officer. The employment agreement was amended in August 1994 in
order to reflect Cooperative Bank's holding company reorganization. The
employment agreement has a term of five years, and provides for a current annual
base salary of $180,000. The agreement provides for a salary review by the
Board of Directors not less often than annually with increases to be made in the
Board's sole discretion, and also provides for inclusion in any customary fringe
benefits and vacation and sick leave. The agreement is terminable upon death,
and is terminable by Cooperative Bank for "just cause" as defined in the
agreement. If Cooperative Bank terminates Mr. Willetts' employment without just
cause, he will be entitled to a continuation of his salary and other benefits
from the date of termination through the remaining term of the agreement. Mr.
Willetts will be able to terminate his agreement by providing written notice to
the Board of Directors.
The employment agreement contains a provision stating that in the event of
the involuntary termination of employment in connection with, or within one year
after, any change in control of the Company or Cooperative Bank, or in the event
of a voluntary termination of employment in connection with, or within one year
after, any change of control of the Company or Cooperative Bank which has not
been approved by the Board of Directors, Mr. Willetts will be paid a sum equal
to 2.99 times the average annual compensation he received during the five
taxable years immediately prior to the date of change in control. "Control"
generally refers to the ownership, holding or power to vote more than 25% of the
Company's or Cooperative Bank's voting stock, the control of the election of a
majority of directors or the exercise of a controlling influence over the
management or policies of the Company or Cooperative Bank by any person or
group. Mr. Willetts may also be entitled to receive the foregoing termination
payment following a change of control regardless of whether the change of
control is approved by the Board of Directors in the event he is required to
relocate more than 35 miles from Cooperative Bank's office, his duties are
materially diminished, existing employee benefit plans are not maintained, or he
is not re-elected to the Board of Directors. The aggregate payment to Mr.
Willetts, assuming the termination of employment or other triggering events
under the foregoing circumstances at December 31, 1996, would be approximately
$441,773.
The provisions of the employment agreement may have the effect of
discouraging a future takeover attempt in which stockholders of the Company
otherwise might receive a premium for their shares over then-current market
prices.
8
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DIRECTORS' COMPENSATION
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Members of the Board of Directors and committees of the Board of Directors
receive $1,100 per month. No additional fees are paid for committee membership
or meetings. The Chairman of the Board receives an additional fee of $1,000 per
month and is eligible to participate in the Company's medical insurance
reimbursement plan. The Chairman also has use of an automobile and is reimbursed
for associated expenses. Directors are also eligible to receive stock options
under the Option Plan. Each non-employee director who joins the Board of
Directors receives options to purchase 2.50% of the shares of Common Stock
reserved for issuance under the Option Plan at an exercise price equal to the
fair market value of the Common Stock on the date of grant. Accordingly,
Director R. Allen Rippy was awarded options to purchase 3,712 shares at an
exercise price of $21.00 when he joined the Board on March 1, 1997.
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COMPARATIVE STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The graph and table which follow show the cumulative total return on the
Common Stock of the Company (and its predecessor, Cooperative Bank) between
March 31, 1992 and December 31, 1996, compared with the cumulative total return
of the NASDAQ Stock Market Index for U.S. Companies and the NASDAQ Bank Stocks
Index over the same period. Cumulative total return on the stock or the index
equals the total increase in value since March 31, 1992 assuming reinvestment of
all dividends paid into the stock or the index, respectively.
COMPARISON OF 40 MONTH CUMULATIVE TOTAL SHAREHOLDER
RETURN FOR THE COMPANY AND SELECTED INDICES
[GRAPH APPEARS HERE]
3/92 3/93 3/94 12/94 12/95 12/96
- -------------------------- ---- ---- ---- ----- ----- -----
The Company 100 256 281 272 384 380
- -------------------------- ---- ---- ---- ----- ----- -----
NASDAQ Stock Market Index 100 115 124 127 179 220
- -------------------------- ---- ---- ---- ----- ----- -----
NASDAQ Bank Stocks Index 100 144 146 148 220 290
- -------------------------- ---- ---- ---- ----- ----- -----
9
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TRANSACTIONS WITH MANAGEMENT
- --------------------------------------------------------------------------------
All of the Company's loans to directors and executive officers are currently
made in the ordinary course of business on substantially the same terms as those
of comparable transactions prevailing at the time and do not involve more than
the normal risk of collectibility or contain other unfavorable features.
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BENEFICIAL OWNERSHIP REPORTS
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Pursuant to regulations promulgated under the 1934 Act, the Company's
officers, directors and persons who own more than ten percent of the outstanding
Common Stock are required to file reports detailing their ownership and changes
of ownership in such Common Stock, and to furnish the Company with copies of all
such reports. Based solely on its review of the copies of such reports received
during or with respect to the fiscal year ended December 31, 1996, the Company
believes that during the year ended December 31, 1996, all of its officers,
directors and stockholders owning in excess of ten percent of the Company's
outstanding Common Stock have complied with the reporting requirements, except
that Officers O. C. Burrell, Jr., Daniel W. Eller, Eric R. Gray, Edward E.
Maready, Frederick Willetts, III and Frederick Willetts, Jr. each inadvertently
failed to timely file one report disclosing a single transaction.
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RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
Coopers & Lybrand L.L.P. served as the Company's independent certified public
accountants for the fiscal year ended December 31, 1996. The Board of Directors
presently intends to renew the Company's arrangements with Coopers & Lybrand
L.L.P. to be its independent certified public accountant for the fiscal year
ending December 31, 1997. A representative of Coopers & Lybrand L.L.P. is
expected to be present at the Meeting to respond to appropriate questions and to
make a statement, if so desired.
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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.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by mail, Morrow & Co., a proxy soliciting firm, will
assist the Company in soliciting proxies for the meeting and will be paid a fee
of approximately $3,500, plus reimbursement for out-of-pocket expenses. Proxies
may also be solicited personally or by telephone or telegraph by directors,
officers and regular employees of the Company and the Bank, without additional
compensation therefor. The Company will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially owned by others, to send proxy materials to and obtain
proxies from such beneficial owners, and will reimburse such holders for their
reasonable expenses in doing so.
The Company's Annual Report to Stockholders for the year ended December 31,
1996, including financial statements, is being mailed to all stockholders of
record as of the close of business on March 3, 1997. Any stockholder who has
not received a copy of such Annual Report may obtain a copy by writing to the
Secretary of
10
the Company. Such Annual Report is not to be treated as a part of the proxy
solicitation material nor as having been incorporated herein by reference.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office at 201
Market Street, Wilmington, North Carolina 28401, no later than November 26,
1997. Any such proposal shall be subject to the requirements of the proxy rules
adopted under the 1934 Act.
BY ORDER OF THE BOARD OF DIRECTORS
Daniel W. Eller
Secretary
Wilmington, North Carolina
March 26, 1997
- --------------------------------------------------------------------------------
ANNUAL REPORT ON FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO THE SECRETARY, COOPERATIVE BANKSHARES, INC., 201 MARKET STREET,
WILMINGTON, NORTH CAROLINA 28401.
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11
REVOCABLE PROXY
COOPERATIVE BANKSHARES, INC.
WILMINGTON, NORTH CAROLINA
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1997
- --------------------------------------------------------------------------------
The undersigned hereby appoints Paul G. Burton, H. Thompson King, III and
James D. Hundley of Cooperative Bankshares, Inc. (the "Company") with full
powers of substitution, to act as proxies for the undersigned to vote all shares
of the Company's common stock, $1.00 par value (the "Common Stock") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders (the
"Meeting"), to be held at the Wilmington Hilton, 301 N. Water Street,
Wilmington, North Carolina, on Friday, April 25, 1997 at 11:00 a.m., and at any
and all adjournments thereof, as follows:
VOTE
FOR WITHHELD
--- --------
1. The election as directors of the
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Three Year Terms
----------------
Frederick Willetts, III
F. Peter Fensel, Jr.
William H. Wagoner
Two Year Term
-------------
R. Allen Rippy
INSTRUCTION: TO WITHHOLD YOUR VOTE
FOR ANY INDIVIDUAL NOMINEE, INSERT
THAT NOMINEE'S NAME ON THE LINE
PROVIDED BELOW.
-----------------------------------
The Board of Directors recommends a vote "FOR" nominees listed above.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY SHALL BE VOTED FOR EACH OF THE NOMINEES LISTED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY AS DETERMINED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE MEETING. THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS
THEREOF TO VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE
NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT
TO THE CONDUCT OF THE 1997 ANNUAL MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at any
adjournment thereof and after notification to the Secretary of the Company at
the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no further
force and effect.
The undersigned acknowledges receipt from the Company prior to the execution
of this proxy of the Notice of Annual Meeting, the Proxy Statement, and the
Company's Annual Report to Stockholders for the Fiscal Year Ended December 31,
1996. The undersigned hereby revokes any and all proxies heretofore given with
respect to the undersigned's shares of the Company's Common Stock.
Dated: , 1997
------------------------
- --------------------------- ------------------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- --------------------------- ------------------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which this card was
mailed. When signing as attorney, executor, administrator, trustee or guardian,
please give your full title. If shares are held jointly, each holder should
sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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