SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting materials pursuant to Rule 14a-11(c) or Rule 14a-12.
DCB FINANCIAL CORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of security to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
April 14, 2004
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of DCB
Financial Corp at 4:00 p.m. on Thursday, May 20, 2004. The meeting will be held
at the Corporate Center, 110 Riverbend Ave., Lewis Center, Ohio.
Along with the other members of the Board of Directors and management, I look
forward to greeting those shareholders who are able to attend in person.
The year 2003 was a positive one for the Bank as we saw our Directors and
management team come together to resolve many challenges and to put objectives
and plans in place to set the course for your Company's future. I am excited
about sharing with you some of our successes and challenges at the Annual
Meeting.
In addition to the election of four directors, the Board is requesting
shareholder approval of a Long-Term Stock Incentive Plan. This stock incentive
plan for employees and directors is designed to attract and retain individuals
of outstanding ability and to encourage employees and directors to acquire a
proprietary interest in the Company.
Thank you again for your continued loyalty and support.
On behalf of the Board of Directors,
/s/ Jeffrey T. Benton
---------------------
Jeffrey T. Benton
President and Chief Executive Officer
DCB FINANCIAL CORP
110 Riverbend Avenue
Lewis Center, Ohio 43035
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
MAY 20, 2004
TO THE SHAREHOLDERS OF DCB FINANCIAL CORP:
You are hereby notified that the annual meeting of the shareholders of DCB
Financial Corp (the "Company") will be held on May 20, 2004, at 4:00 P.M. at the
Delaware County Bank & Trust Company Corporate Center (110 Riverbend Avenue),
Lewis Center, Ohio, for the purpose of considering and acting upon the
following:
1. ELECTION OF DIRECTORS - To elect Class II directors to hold office until the
expiration of their terms (3 years) expiring at the Annual Meeting in 2007,
or until their successors shall be duly elected and qualified.
2. ADOPTION OF 2004 LONG-TERM STOCK INCENTIVE PLAN - in the form attached hereto
as Appendix D.
3. OTHER BUSINESS - To transact any other business which may properly come
before the meeting or any adjournment of the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF ITS NOMINEES NOTED IN THE
PROXY STATEMENT, AND "FOR" APPROVAL OF PROPOSAL 2.
The Board of Directors has fixed March 31, 2004, as the record date for the
determination of shareholders entitled to notice of and to vote at the annual
meeting. As of the record date there were 3,934,760 shares of the Company's no
par value common stock outstanding. The stock transfer books of the Company will
not be closed prior to the meeting.
A copy of the Company's Annual Report, which includes the Company's audited
Balance Sheets as of December 31, 2003, and 2002, the related audited Statements
of Income, Statements of Changes in Shareholders' Equity, and Statements of Cash
Flows for each of the three years ended December 31, 2003, is enclosed.
By the order of the Board of Directors
/s/ Jeffrey T. Benton
---------------------
April 14, 2004 Jeffrey T. Benton
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. YOU
STILL HAVE THE RIGHT TO REVOKE THE PROXY AND VOTE IN PERSON AT THE MEETING IF
YOU SO CHOOSE. IF YOU HAVE ANY QUESTIONS PLEASE CONTACT DONALD R. BLACKBURN,
SECRETARY OF DCB FINANCIAL CORP (740/657-7930).
2.
DCB FINANCIAL CORP
110 Riverbend Avenue
Lewis Center, Ohio 43035
(740) 657-7000
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement and the accompanying form of proxy are furnished in
connection with the solicitation, by the Board of Directors of DCB Financial
Corp, 110 Riverbend Avenue, Lewis Center, Ohio 43035, (740) 657-7000, of proxies
to be voted at the annual meeting of the shareholders of DCB Financial Corp to
be held on May 20, 2004, at 4:00 P.M. at the Delaware County Bank & Trust
Company Corporate Center (110 Riverbend Avenue), Lewis Center, Ohio, in
accordance with the foregoing notice.
DCB Financial Corp is a financial services holding company. DCB Financial Corp
is at times hereinafter referred to as the "Company."
The solicitation of proxies on the enclosed form is made on behalf of the Board
of Directors of the Company and will be conducted primarily through the mail.
Please mail your completed proxy in the envelope included with these proxy
materials. In addition to the use of the mail, members of the Board of Directors
and certain officers and employees of the Company or its subsidiaries may
solicit the return of proxies by telephone, facsimile, other electronic media or
through personal contact. Proxies may not be returned through the Internet. The
Directors, officers and employees that participate in such solicitation will not
receive additional compensation for such efforts, but will be reimbursed for
out-of-pocket expenses.
The proxy materials are first being mailed to shareholders on or about April 14,
2004.
Any shareholder executing a proxy has the right to revoke it by the execution of
a subsequently dated proxy, by written notice delivered to the Secretary of the
Company prior to the exercise of the proxy or in person by voting at the
meeting. The shares will be voted in accordance with the direction of the
shareholder as specified on the proxy. In the absence of instruction, the proxy
will be voted "FOR" the election of the management director nominees listed in
this Proxy Statement, and "FOR" Proposal 2, described in this proxy statement,
and in the discretion of the proxy committee for any other business that
properly comes before the meeting.
VOTING SECURITIES AND PROCEDURES
Only shareholders of record at the close of business on March 31, 2004, will be
eligible to vote at the Annual Meeting or any adjournment thereof. As of March
31, 2004, the Company had outstanding 3,934,760 shares of no par value common
stock. Shareholders are entitled to one vote for each share of common stock
owned as of the record date. Shareholders do not have cumulative voting rights
with respect to the election of directors.
The presence in person or by proxy of a majority of the outstanding shares of
common stock of the Company entitled to vote at the meeting will constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business at the meeting.
The four nominees for director who receive the largest number of votes cast
"For" will be elected as directors. Shares represented at the annual meeting in
person or by proxy but withheld or otherwise not cast for the election of
directors, including abstentions and broker non-votes, will have no impact on
the outcome of the election for directors.
Many of the Company's shareholders hold their shares in "street name"--in the
name of a brokerage firm. If you hold your shares in "street name," please note
that only your brokerage firm can sign a proxy on your behalf. In regard to
Proposal 2, broker non-votes will not be counted as shares voted in favor of or
against the proposal. Because Proposal 2, regarding the adoption of a long-term
stock incentive plan, requires approval by a majority of the outstanding shares,
abstentions in regard
3.
to this proposal will effectively represent a vote against the proposal. The
Board of Directors urges you to contact the person responsible for your account
today, and instruct them to execute a proxy on your behalf for the annual
meeting.
All Directors and Executive Officers of the Company as a group (comprised of 18
individuals), beneficially held 270,305 shares of the Company's common stock as
of March 31, 2004, representing 6.87% of the outstanding common stock of the
Company.
PROPOSAL 1 - ELECTION OF DIRECTORS AND INFORMATION WITH RESPECT TO
DIRECTORS AND OFFICERS
At the annual meeting four (4) Directors will be elected to a three-year term
expiring at the annual meeting in 2007.
The Code of Regulations for the Company provides that the Directors shall be
divided into three Classes, as nearly equal in number as possible. The number of
Directors and year of term expiration for each Class is as follows:
Class I 3 Directors Term Expiration 2006
Class II 4 Directors Term Expiration 2007
Class III 4 Directors Term Expiration 2005
The Board has nominated the following individuals for election as Class II
Directors for terms expiring at the Annual Meeting in 2007. Information
regarding these nominees is set forth as follows. Unless otherwise indicated,
each person has held his or her principal occupation for more than five years.
PRINCIPAL OCCUPATION
NAME AGE DIRECTOR SINCE (1) DURING PAST FIVE YEARS
- ------------------ --- ------------------ ----------------------------------------------
Merrill L. Kaufman 69 1988 President, Peoples Store, Inc., a retailer
Terry M. Kramer 57 1992 Vice-Chairman of the Company and The Delaware
County Bank & Trust Company; President, Kramer
Exploration, a geologist
Edward Powers 58 1984 President, R.B. Powers and Co., a specialty items
manufacturer
Donald J. Wolf 60 2003(2) President, Wolf, Rogers, Dickey, & Co., Certified
Public Accountants
(1) Includes time served as a director of The Delaware County Bank & Trust
Company prior to the organization of the Company in 1997.
(2) Mr. Wolf was appointed to the Board of Directors of the Company by the
Members of the Board in a meeting held on November 17, 2003.
While it is contemplated that all nominees will stand for election, and the
nominees have confirmed this with the Company, if one or more of the nominees at
the time of the annual meeting should be unavailable or unable to serve as a
candidate for election as a director of the Company, the proxies reserve full
discretion to vote the common shares represented by the proxies for the election
of the remaining nominees and any substitute nominee(s) designated by the Board
of Directors. The Board of Directors knows of no reason why any of the
above-mentioned persons will be unavailable or unable to serve if elected to the
Board. Under Ohio law and the Company's Code of Regulations, the four nominees
receiving the greatest number of votes will be elected as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL OF THE ABOVE
NOMINEES.
4.
The following table sets forth certain information with respect to the Class I
and III Directors of DCB Financial Corp:
DIRECTOR
NAME (CLASS) AGE SINCE(1) PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- ---------------------------- --- --------- -----------------------------------------------------------
Jeffrey T. Benton (I) 51 2003(2) Currently, President and CEO of the Company and its
wholly owned subsidiary, The Delaware County Bank & Trust
Company; formerly Executive Vice President, Community
First Bank, Celina, Ohio; Consultant to the banking industry;
Senior Vice President, Bank One, N.A.
Jerome J. Harmeyer (III) 64 1990 President, Fisher Cast Steel, Liberty Castings, foundries
Vicki J. Lewis (III) 49 1997 Vice President of Strategic Development , Grady Memorial
Hospital
G. William Parker (I) 69 1976 Chairman of the Company and The Delaware County Bank &
Trust Company; Retired Surgeon
William R. Oberfield (III) 49 1993 President, Oberfield's Concrete Products
Gary M. Skinner (I) 59 1996 President, Hardscrabble Farms
Adam Stevenson (III) 63 2001 Retired Plant Manager, PPG Industries
(1) Includes time served as a director of The Delaware County Bank & Trust
Company prior to the organization of the Company in 1997.
(2) Mr. Benton became President and CEO of the Company under an employment
agreement dated December 18, 2002, which is discussed below. Mr. Benton was
appointed to the Board of Directors of the Company on February 18, 2003.
There are no family relationships among any of the directors, nominees for
election as directors and executive officers of the Company, other than Jay
Wolf, Assistant Vice President and Marketing Director, who is the nephew of
Donald J. Wolf, a director nominee.
The following table sets forth certain information with respect to the
executive officers of DCB Financial Corp:
OFFICER POSITION AND OFFICES HELD WITH COMPANY
NAME AGE SINCE(1) & PRINCIPAL OCCUPATION HELD PAST FIVE YEARS
- ------------------------ --- ------- ------------------------------------------------------------
Jeffrey T. Benton 51 2002 President and Chief Executive Officer
Formerly Executive Vice President, Community First Bank,
Celina, Ohio; Consultant to the banking industry; Senior Vice
President, Bank One, N.A.
Barbara S. Walters 48 2003 Senior Vice President, Retail Banking: Area President,
National City Bank
Thomas R. Whitney 55 1996 Senior Vice President and Senior Trust Officer
Jerry S. Whittington 58 2001 Senior Vice President Lending, prior to his appointment
as SVP, he was a Vice President of Lending for The Bank;
before joining The Bank, he was a Vice President of Lending
for Huntington National Bank, Columbus, Ohio
Donald R. Blackburn 60 1988 Vice President, Customer Relations and Shareholder
Relations
Brian E. Stanfill 45 1998 Vice President, Operations
John A. Ustaszewski 38 2001 Vice President and Chief Financial Officer; Vice
President and Risk Manager, Corporate One prior to 2001
Jay D. Wolf 33 1993 Assistant Vice President and Marketing Director
(1) Includes time served as an officer of The Delaware County Bank & Trust
Company
5.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth the number and percentage of shares of common stock
owned by the Directors and Executive Officers of the Company. Each of the
persons named in the following table possesses sole voting and investment power,
except as otherwise shown in the footnotes to the following table. As of the
date of this Proxy Statement, management is not aware of any person who
beneficially owns five percent or more of the Company's common stock.
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP
NAME MARCH 31, 2004 PERCENTAGE
- ----------------------------------------------------- ----------------------- -----------
Jeffrey T. Benton, Director & CEO 4,795(1) *
William R. Oberfield, Director 20,152(2) *
G. William Parker, Chairman of the Board of Directors 24,928 *
Gary M. Skinner, Director 21,044(3) *
Merrill L. Kaufman, Director 21,570(4) *
Terry M. Kramer, Director 51,190(5) 1.30%
Edward Powers, Director 21,840 *
Jerome J. Harmeyer, Director 52,833(6) 1.33%
Vicki J. Lewis, Director 16,249(7) *
Adam Stevenson, Director 2,532 *
Donald J. Wolf, Director 3,833(8) *
Thomas R. Whitney, Executive Officer 11,876(9) *
All directors, nominees and executive officers
as a group (18 in number) 270,305 6.87%
*Ownership is less than 1%
(1) Includes beneficial ownership of 540 shares owned by his son .
(2) Includes beneficial ownership of 5,394 shares owned by spouse and
spouse's IRA.
(3) Includes beneficial ownership of 9,236 shares owned jointly with spouse
and 667 shares owned by spouse.
(4) Includes beneficial ownership of 7,596 shares owned jointly with
spouse.
(5) Includes beneficial ownership of 23,420 shares owned by his spouse.
(6) Includes 1,144 shares owned jointly with spouse and 43,639 shares owned
by spouse and spouse's IRA.
(7) Includes beneficial ownership of 15,700 shares owned by spouse.
(8) Includes 500 shares owned by spouse
(9) Includes beneficial ownership of 606 shares which are subject to shared
voting and investment power with his spouse.
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board and
through its committees. The Board of Directors of the Company has appointed and
maintains an Audit Committee, Compensation Committee and Nominating and
Governance Committee.
The Audit Committee reviews with the Company's independent auditors, the audit
plan, the scope and results of their audit engagement and the accompanying
management letter, if any; reviews the scope and results of the Company's
internal auditing procedures; consults with the independent auditors and
management with regard to the Company's accounting methods and the adequacy of
its internal accounting controls; approves professional services provided by the
independent auditors; reviews the independence of the independent auditors; and
reviews the range of the independent auditors' audit and nonaudit fees. The
Audit Committee also has been charged with the enforcement of the Code of
Business Conduct and Ethics adopted by the Company's Board of Directors, as
discussed below. The Audit Committee is comprised of Ms. Lewis and Messrs. Wolf,
Kaufman, Skinner, and Powers. The Audit Committee met six (6) times during 2003.
The Board of Directors has determined that Donald J. Wolf, one of the members of
the Audit Committee, is a "financial expert" as defined under the regulations
promulgated under the Sarbanes-Oxley Act discussed below. Mr. Wolf and all of
the other members of the Audit Committee have been determined by the Board of
Directors to be "independent" under the listing standards adopted by the NASDAQ
Stock Market.
6.
The Compensation Committee functions as the compensation committee of the Board
of Directors and is responsible for overseeing the administration of the
Company's employee benefit plans; reviewing the compensation of officers;
reviewing the criteria that forms the basis for management's officer and
employee compensation recommendations and reviewing management's recommendations
in this regard. The Salary Committee is comprised of Ms. Lewis and Messrs.
Kramer, Stevenson and Parker. The Compensation Committee met six (6) times
during 2003.
The Company's Nominating and Governance Committee is responsible for making
recommendations to the Board of nominees to fill vacancies created by expiring
terms of Directors and, from time to time, making appointments to fill vacancies
created prior to the expiration of a Director's term. The Nominating Committee
will consider nominees recommended by shareholders. The procedure for nominating
an individual as a director is set forth below under the heading "Nominations
for Members of the Board of Directors." The Committee met one (1) time in 2003.
The Nominating Committee is comprised of Messrs. Kaufman and Powers. The
committee also is responsible for overseeing the Company's corporate governance
policies and procedures, as detailed below.
The Board of Directors of the Company meets monthly for its regular meetings and
upon call for special meetings. During 2003, the Board of Directors of the
Company met fifteen (15) times. All Directors of the Company attended at least
75 percent of the Board and Committee Meetings that they were scheduled to
attend during 2003.
Directors are paid a monthly retainer of $250 for serving on the Board, except
for the Chairman of the Board who receives a retainer of $500 per month. In
addition, the Directors receive $250 per board meeting attended and $150 for
each committee meeting attended. Committee Chairs receive $200 for each
Committee Meeting attended.
CORPORATE GOVERNANCE
The Company recently reviewed its corporate governance policies as a matter of
good business practices and in light of the passage of the Sarbanes-Oxley Act of
2002 ("Sarbanes Oxley") and regulations promulgated by the Securities and
Exchange Commission ("SEC") and listing standards adopted by NASDAQ. While the
corporate governance requirements set forth in the NASDAQ listing standards are
not applicable to the Company because it is not listed on NASDAQ, the Company
decided to implement most of those corporate governance policies to encourage
appropriate conduct among the members of its Board of Directors, officers and
employees and to assure that the Company operates in an efficient and ethical
manner.
In this regard, the Board of Directors and the Board of Directors of the Company
met on March 17, 2004 to consider a number of policies, charters and guidelines.
After discussion, the Board of Directors adopted Corporate Governance Guidelines
for the Company. In addition, the Company adopted charters for the Audit
Committee (attached hereto as Appendix A), the Compensation Committee (attached
hereto as Appendix B) and the newly created Nominating and Governance Committee
(attached hereto as Appendix C). The charters for these three committees are
designed to help the committees function more efficiently and with greater
independence from the Board of Directors, which was one of the primary goals in
the adoption of Sarbanes-Oxley. The members of each of these three committees
are currently, and under the terms of their respective charters, will continue
to be "independent" pursuant to standards adopted by NASDAQ. Further, the Board
of Directors has determined that under the NASDAQ "independence" standards, a
majority of the members of the Board of Directors is currently independent.
Finally, the Board of Directors adopted a revised Code of Business Conduct and
Ethics (the "Code") at the meeting. The Company had initially adopted a Code of
Business Conduct and Ethics at a meeting of the Board of Directors held on March
18, 2003. The new Code is substantially the same as the prior code. While
Sarbanes-Oxley mandates the adoption of a code of ethics for the most senior
executive officers of all public companies, the Code adopted by the Company's
Board of Directors is broader in the activities covered and applies to all
officers, directors and employees of the Company and the Bank. The
administration of the Code has been delegated to the Audit Committee of the
Board of Directors, a Committee comprised entirely of "independent directors."
The Code addresses topics such as compliance with laws and regulations, honest
and ethical conduct, conflicts of interest, confidentiality and protection of
Company assets, fair dealing and accurate and timely periodic reports, and also
provides for enforcement mechanisms. The Board and management of the Company
intend to continue to monitor not only the developing legal requirements in this
area, but also the best practices of comparable companies, to assure that the
Company maintains sound corporate governance practices in the future.
7.
A copy of the Company's Code appears on the Company's website
(www.dcbfinancialcorp.com). In addition, a copy of the Code is available to any
shareholder free of charge upon request. Shareholders desiring a copy of the
Code should address written requests to Donald R. Blackburn, Secretary of the
Company at the Company's offices, 110 Riverbend Avenue, Lewis Center, Ohio
43035.
NOMINATIONS FOR MEMBERS OF THE BOARD OF DIRECTORS
As noted above under "Corporate Governance", the Company has established a
Nominating and Governance Committee. The charter for the committee is attached
hereto as Appendix C. The Board of Directors intends to appoint only
"independent" directors (as defined by NASDAQ) to the committee. The Nominating
and Governance Committee does not yet have a specific policy regarding the
consideration of nominations for directors by shareholders other than the
procedures set forth in the Company's Code of Regulations described below under
the heading "Shareholder Proposals and Director Nominations." The committee
intends to develop such a policy in the near future. While not actively seeking
nominations, the Nominating and Governance Committee will consider nominations
from shareholders. Proposed nominations should be addressed to Chairman of the
Nominating and Governance Committee of Company and should be sent to the
Company's executive offices.
Further, if any shareholder desires to send communication to the Board of
Directors, such communication should be addressed to the Chair of the Nominating
and Governance Committee. The Committee still is in the process of developing
guidelines for consideration of proposals presented to the Committee for
consideration by the Board of Directors.
While the Company has no specific policy requiring attendance at the annual
meeting of shareholders by board members, such attendance is expected. At the
2003 annual meeting, 9 of the 11 directors attended.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides certain summary information concerning compensation
paid or accrued by the Company and/or its subsidiaries, to or on behalf of the
Company's Chief Executive Officer and two of its other executive officers who
earned more than $100,000 in salary and bonus for the fiscal year ended December
31, 2003. No other executive officer earned more than $100,000 in salary and
bonus for the fiscal year ended December 31, 2003.
SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION
LONG TERM COMPENSATION
ANNUAL COMPENSATION OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARDS COMPENSATION(2)
- ------------------------------------ ---- -------- ---------- ------------ ------------ ---------------
Jeffrey T. Benton, President and CEO 2003 $148,269 $70,000(1) -0- $10,010(3) -0-
David G. Bernon(4) 2003 $107,000 $ 4,114(5) -0- -0- $30,887
Senior Vice President, 2002 $107,040 $ 7,295 -0- -0- $39,759
Lending and Branch Division 2001 $101,879 $15,967 -0- -0- $33,418
Thomas R. Whitney 2003 $104,834 $11,038(5) -0- -0- $21,431
Senior Vice President and 2002 $104,834 $ 7,148 -0- -0- $26,369
Senior Trust Officer 2001 $ 98,898 $15,500 -0- -0- $20,571
(1) This amount represents a cash bonus payable to Mr. Benton for his
performance in 2003. One half of such amount was paid in February 2004 and the
remaining one-half will be paid in August 2004.
(2) The amounts shown in this column for the most recent fiscal year were
derived from the following figures: (1) contributions by the Company to the
Company 401(k) plan on behalf of the named executive: Mr. Bernon, $2,140; and
Mr. Whitney, $3,145; and (2) Supplemental Executive Retirement Plan accrual; Mr.
Bernon, $28,747; and Mr. Whitney, $18,286.
(3) Represents a grant of 455 common shares of the Company valued at $22.00 as
of the date of grant of the restricted shares, February 26, 2004.
(4) Mr. Bernon retired from the Company and the Bank effective January 31, 2004.
(5) In addition to a cash bonus paid, the amount noted includes $136 (8 shares
at $17.00 per share) in stock granted to Messrs. Bernon and Whitney. A similar
grant was made to all persons that were employees on December 31, 2002.
8.
EMPLOYMENT CONTRACT
The Company has a employment contract currently in place with Jeffrey T. Benton,
President and CEO of the Company and its subsidiary, The Delaware County Bank
and Trust Company (the "Bank").
The Company entered into an employment agreement with Mr. Benton on December 18,
2002. The contract provides that Mr. Benton will be the President and Chief
Executive Officer of the Company and The Delaware County Bank and Trust Company
from that date through December 31, 2004. The contract provides for automatic
renewal for successive one-year periods thereafter if Mr. Benton is employed as
of the end of the calendar year. The Company agreed to appoint Mr. Benton to the
Board of Directors of the Company and the Bank, which action has been taken. Mr.
Benton's base salary under the contract is $150,000. Mr. Benton has the
opportunity to earn a performance-based bonus if he meets the criteria
established on an annual basis by the Board of Directors. One half of any such
bonus will be paid in cash within 30 days of the date of determination of the
bonus. The remaining one half of the bonus amount is to be paid in options on
shares of common stock of the Company based upon the price of the stock on the
date of the bonus, with such options vesting over between three to five years.
Mr. Benton's contract provides other typical perquisites including participation
in Company employee benefit plans, reimbursement of moving expenses, club
membership and vacations with pay. In the event of termination, the agreement
provides for payment of 12 months of base salary, unless Mr. Benton is
terminated for "Just Cause" (as defined in the agreement). Mr. Benton is
permitted to terminate the contract and receive his base pay for 12 months in
the event of a change of control, if he resigns within 12 months of such action.
The contract provides for protection of the Company's confidential information
and includes a covenant not to compete during the contract and for two years
thereafter. Finally, the contract provides for arbitration of disputes arising
under the contract.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective January 1, 1998, the Company's wholly-owned subsidiary, The Delaware
County Bank and Trust Company, adopted an unfunded, non-qualified supplemental
executive retirement plan (the "Supplemental Retirement Plan"), due to
limitations imposed by federal law on the amount of retirement income that may
be paid through the Company's 401(k) Plan. Under the Supplemental Retirement
Plan, only executive officers named in the Supplemental Retirement Plan or
otherwise designated for participation in the Supplemental Retirement Plan by
the Board of Directors are eligible to participate. As of the date of this proxy
statement, Messrs. Bernon, Whitney and one other former executive officer have
participated in the Supplemental Retirement Plan.
Each participant in the Supplemental Retirement Plan is entitled to receive
under the Supplemental Retirement Plan at age 62 or upon later retirement, an
amount equal to 70% of the participant's total compensation from January 1, 1998
to age 62, less the participant's 401(k) plan benefits and social security
benefits. Amounts to be paid under the Supplemental Retirement Plan will be paid
monthly over an eighteen-year period. Each participant's compensation for
purposes of determining benefits under the Supplemental Retirement Plan will be
his or her 1998 base salary, increased by 4.5% for each subsequent year of
employment. The rate of annual appreciation on each participant's 401(k) plan
assets, for purposes of determining the amount to subtract in determining
Supplemental Retirement Plan benefits, is assumed to be 8%, and each
participant's annual contribution to his or her 401(k) plan account is assumed
to be 6% of eligible compensation. Because the final benefit to be paid a
participant under the Supplemental Retirement Plan at retirement will vary based
on the level of the Company's contributions to the 401(k) plan, with greater
Company contributions to the 401(k) plan resulting in lesser Supplemental
Retirement Plan benefits, it is not possible to precisely determine an executive
officer's Supplemental Retirement Plan benefit at retirement. The Company has
provided its best estimate of such amount in the Summary Compensation Table set
forth above.
Prorated benefits will be paid in accordance with the terms of the Supplemental
Retirement Plan in the event of the death or disability of a participant or the
acquisition or other change in control of the Company and subsequent termination
of employment of the participant or other diminishment of a participant's
compensation or responsibilities following a change in control of the Company.
In such an event the proration will be based upon the ratio of the number of
years of the participant's employment from January 1, 1998, to the date of the
triggering event to the number of whole years from January 1, 1998, to the date
the participant reaches age 62. Supplemental Retirement Plan benefits accrued
during 2003 for Messrs. Bernon and Whitney were $28,747 and $18,286,
respectively.
9.
REPORT OF THE COMPENSATION COMMITTEE
Under rules established by the Securities and Exchange Commission (the "SEC"),
the Company is required to provide certain data and information in regard to the
compensation and benefits provided to the Company's President and Chief
Executive Officer and, if applicable, the four other most highly compensated
Executive Officers, whose compensation exceeded $100,000 during the Company's
fiscal year. The disclosure includes the use of tables and a report explaining
the rationale and considerations that led to fundamental executive compensation
decisions affecting such officers. The Compensation Committee of the Company has
the responsibility of determining the compensation policy and practices with
respect to all Executive Officers. At the direction of the Board of Directors,
the Compensation Committee of the Company has prepared the following report for
inclusion in the Proxy Statement.
Compensation Policy. The report reflects the Company's compensation philosophy
as endorsed by the Compensation Committee. The Committee makes the
recommendation regarding the level of compensation for all Executive Officers
including Mr. Benton as the President and CEO. Mr. Benton has input into the
compensation levels for all Executive Officers, except himself.
The executive compensation program of the Company has been designed to:
- Support a pay-for-performance policy that rewards Executive
Officers for corporate performance.
- Motivate Executive Officers to achieve strategic business
goals.
- Provide competitive compensation opportunities critical to the
Company's long-term success.
The Compensation Committee approved compensation increases for all Executive
Officers of the Company during 2003. Executive Officer salary increase
determinations are based upon an evaluation of each executive's performance
against goals set in the prior year.
The Bank maintains a cash bonus plan (the "Bonus Plan") which allocates a
portion of the Bank's pre-tax income for the purpose of employee cash bonuses on
an annual basis. The Bonus Plan is administered by the Compensation Committee.
The award of a bonus to any employee under the terms of the Bonus Plan is
discretionary and is approved by the Board of Directors upon the recommendation
of the Compensation Committee.
The Compensation Committee has determined that a significant portion of
executive compensation should be payable in an annual bonus which shall be based
principally upon the financial performance of the Company and that of the
individual in attaining his or her established goals.
To further the philosophy of tying the financial rewards of the Company's
executive officers to the financial success of the Company, the Compensation
Committee approved and recommended to the Board of Directors the DCB Financial
Corp 2004 Long-Term Stock Incentive Plan described in Proposal 2 below. The
Compensation Committee believes that such a plan will allow the Company to hire
and retain high quality management and board members. For further information
about the plan, please review the description of the plan set forth below.
This Report of Compensation is submitted by the Compensation Committee Members:
Terry M. Kramer, G. William Parker, Vicki J. Lewis and Adam Stevenson.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2003, some of the Directors who served on the Compensation
Committee, and the companies with which they are associated, were customers of
and have had banking transactions with the Bank in the ordinary course of the
Bank's business in the past and up to the present time. All loans and
commitments for loans included in such transactions were made on substantially
the same terms including interest rates and collateral as were prevailing at the
time for comparable transactions with other persons. In the opinion of the Board
of Directors of the Bank, these loans and commitments for loans do not involve
more than a normal risk of collectibility or present other unfavorable features.
The Company and/or the Bank have
10.
had, and expect to have in the future, banking transactions in the ordinary
course of its business with such directors, and their associates, on
substantially the same terms, including interest rates and collateral on loans,
as those prevailing at the same time for comparable transactions with others. It
is intended that such transactions will not involve more than the normal risk of
collectibility or present other unfavorable features.
PERFORMANCE GRAPH - FIVE YEAR SHAREHOLDER RETURN COMPARISON
We have set forth below a line-graph presentation comparing cumulative five-year
shareholder returns for the Company, the Russell 2000 Index and the Nasdaq Bank
Index. The chart below compares the value of $100 invested on December 31, 1998,
in the stock of DCB Financial Corp., the Russell 2000 Index and the Nasdaq Bank
Index.
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
DCBF $100.00 $ 84.78 $ 66.37 $ 84.93 $119.43 $136.36
Russell 2000 Index $100.00 $121.26 $117.59 $120.52 $ 95.84 $141.12
Nasdaq Bank Composite $100.00 $ 94.28 $110.50 $124.31 $132.98 $176.32
Comparision Of Five Year Cumulative Total Return Among
DCB Financial Corp. Russell 2000 Index & Nasdaq Bank Composite
For Fiscal Year Ending December 31
[PERFORMANCE GRAPH]
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no existing or proposed material transactions between the Company and
any of the Company's executive officers, directors, nominees for director or the
immediate family or associates of any of the foregoing persons.
Some of the directors of the Company, as well as the companies with which such
directors are associated, are customers of, and have had banking transactions
with the Bank in the ordinary course of the Bank's business and the Bank expects
to have such ordinary banking transactions with such persons in the future. In
the opinion of management of the Company and the Bank, all loans and commitments
to lend included in such transactions were made in compliance with applicable
laws on substantially the same terms, including interest rates and collateral,
as those prevailing for comparable transactions with other persons of similar
creditworthiness and did not involve more than a normal risk of collectibility
or present other unfavorable features.
The Bank expects to have in the future banking transactions in the ordinary
course of its business with directors, officers and principal shareholders, and
their associates on substantially the same terms, including interest rates and
collateral on loans, as those prevailing at the same time for comparable
transactions with others and which do not involve more than the normal risk of
collectibility or present other unfavorable features.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, Directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms furnished to the Company or
written representations that no such forms were required, the Company believes
that, except as noted below, during 2003 all Section 16(a) filing requirements
applicable to its officers and Directors were complied with. The Company has no
shareholders who are ten percent beneficial owners.
11.
INFORMATION CONCERNING INDEPENDENT ACCOUNTANTS
On March 13, 2003 the Audit Committee of the Board of Directors of the
Company, upon authority delegated to it by the Company's Board of Directors,
dismissed its former auditors Crowe Chizek and Company LLP and engaged the firm
of Grant Thornton, LLP ("Grant Thornton") as its new independent public
accountant, effective for the fiscal year beginning January 1, 2003. Grant
Thornton was engaged to provide independent audit services for the Company and
its subsidiaries and to provide certain non-audit services including advice on
accounting, tax and reporting matters.
DCB Financial Corp's independent accountants billed the aggregate fees
shown below for audit services, audit related services, tax services and other
services rendered to DCB Financial Corp and its subsidiaries for the years 2002
and 2003. Audit fees include fees billed in connection with the audit of the
Company's annual financial statements, as well as fees billed for the review of
the unaudited financial statements contained in the Company's periodic reports
on Form 10-Q, as filed with the Securities and Exchange Commission. Fees under
"All Other Fees" for 2002 include fees incurred in connection with assisting the
Company to fulfill its reporting obligations under FDICIA (The Federal Deposit
Insurance Company Improvement Act) required now that the Company's total assets
exceeded $500 Million, and $38,775 in permitted outsourced internal audit
outsourcing fees. Fees included under "all Other Fees" for 2003 include $19,000
in permitted internal audit outsourcing fees.
CROWE CHIZEK AND CROWE CHIZEK AND
COMPANY, LLP-2002 COMPANY, LLP-2003 GRANT THORNTON-2003
----------------- ----------------- -------------------
AUDIT FEES $ 73,454 $ 2,250 $70,300
AUDIT RELATED FEES -0- -0- -0-
TAX FEES $ 10,187 $ 5,688 -0-
ALL OTHER FEES $ 71,185 $29,905 -0-
TOTAL $153,826 $37,843 $70,300
PROPOSAL 2 - APPROVAL OF THE DCB FINANCIAL CORP. 2004 LONG-TERM STOCK
INCENTIVE PLAN
The Board of Directors of the Company has adopted the DCB Financial
Corp 2004 Long-Term Stock Incentive Plan (the "Plan") upon the recommendation of
the Company's Compensation Committee and recommends that shareholders approve
the Plan at the Annual Meeting. The Company has no prior stock incentive plans
in place. The Board believes the Plan is an integral part of its compensation
programs and strategies. It believes the Plan provides the Company the
flexibility to implement competitive compensation programs and will be an
effective tool for recruiting, motivating, and retaining the quality of
employees and directors key to the achievement of the Company's success.
The Plan permits the grant of incentive awards in the form of options,
restricted stock, performance shares, and unrestricted stock to employees of the
Company or a subsidiary of the Company, specifically The Delaware County Bank &
Trust Company (a "Subsidiary"), and to officers and Directors of the Company or
a Subsidiary whether or not employed by the Company. Shareholder approval of the
Plan will also permit the granting of performance-based awards discussed below
to qualify for deductibility under Section 162(m) of the Internal Revenue Code
(the "Code").
The Board believes that approval of the Plan will substantially further
the interest of shareholders and that the Plan contains a number of provisions
that are consistent with sound corporate governance practices, including:
- Prohibition on stock option repricings. The Plan prohibits the
cancellation of any outstanding option for the purpose of
reissuing an option at a lower option price.
- No discount stock options. The Plan prohibits the grant of an
option with an exercise price less than the fair market value
of a share of common stock of the Company ("Common Share") on
the date of grant.
- Administration. The Plan provides that it will be administered
by either the full Board of Directors, or if the Board so
determines, a committee comprised of independent, non-employee
directors. The Board of Directors has determined that the Plan
will be administered by the Company's Compensation Committee,
a committee comprised entirely of independent directors.
12.
- No option reloads. The Plan does not permit option reloads,
that is, the automatic grant of a replacement option upon the
exercise of an option.
- No Annual "Evergreen" Provision. The Plan provides for
specific number of shares available for awards and limits the
maximum award in one year to a participant.
A summary of the principal provisions of the Plan appears below. The
summary is qualified in it entirely by reference to the complete text of the
Plan that is attached to this proxy statement as Appendix D.
SUMMARY OF THE PLAN
Administration: The Plan provides that it will be administered by a
committee that is comprised of three Directors who are non-employee directors
within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as
amended, and who qualify as outside directors under Section 162(m) of the Code
(the "Committee"). The Board of Directors may assume the duties and
responsibilities of the Committee and function as the Committee under the Plan.
The Board of Directors has determined that the Plan will be administered by the
Company's Compensation Committee, a committee comprised entirely of independent
directors. The Committee selects participants from among eligible persons and,
subject to the terms of the Plan, determines the type, size and time of grant of
stock incentive awards, determines the terms and conditions of awards and makes
all other determinations necessary or advisable for the administration of the
plan. Each award under the Plan will be evidenced by a written award agreement
approved by the Committee (the "Award Agreement").
Eligibility: The Committee may make awards to any person who is an
employee, officer, or director of the Company or a Subsidiary. As of March 15,
2004, there were 11 directors, 37 officers and approximately 153 employees,
other than officers, who would be eligible for awards under the Plan. The
Committee selects from eligible persons the persons who actually participate in
the plan.
Shares Available for Awards: No more than 300,000 Common Shares may be issued
under the Plan. The shares that may be issued may be authorized but unissued
shares or treasury shares. If there is a stock split, stock dividend or other
relevant change affecting the Common Shares, the Committee will make appropriate
adjustments in the maximum number of shares issuable under the Plan and subject
to outstanding incentive awards. Shares that were subject to an incentive award
under the plan but were not issued for any reason and are no longer subject to
award or were issued and reacquired by the Company because of a participant's
failure to comply with the terms of an award are again available for award under
the Plan.
Types of Awards and Annual Award Limits: Stock incentives that may be
issued under the Plan consist of stock options, restricted and unrestricted
stock awards, performance share awards or any combination of the foregoing. The
Plan contains annual limits on certain types of awards to individual
participants. In any calendar year, no participant may be granted stock options
covering more than 20,000 shares, restricted stock awards covering more than
5,000 shares, or performance share awards covering more than 5,000 shares.
Stock Options: A stock option provides for the purchase Common Shares
in the future at an exercise price per share that may not be less than 100% of
the fair market value of a share on the date the option is granted. Stock
options may be either nonqualified options or incentive stock options, which
meet the requirements of Section 422 of the Code. The term of an option may not
exceed ten years. Unless the Committee determines otherwise, options become
exercisable with respect to 20% of the shares subject to the option on the
first, second, third, fourth and fifth anniversary date of the date of grant of
the option. An option may only be exercised while the optionee is employed by
the Company or a Subsidiary or within 30 days after cessation of the optionee's
employment if the reason for cessation of employment is other than disability,
retirement, death or termination for gross misconduct. In the case of disability
or normal retirement, an option may be exercised to the extent it was
exercisable on the date the optionee ceased to be employed by the Company for
the lesser of three years after termination of employment or the remaining term
of the option (such three-year period is reduced to a one-year period in the
case of early retirement or death). In the case of termination for gross
misconduct, the option may not be exercised after termination of employment. In
the event of a change of control of the Company (as defined in the Plan), any
option which is not then exercisable, automatically becomes exercisable. The
option price is payable either in cash, by delivery to the company of shares of
the Company already owned by the optionee, or by any combination of such methods
of payment. Under the Plan, an optionee may use shares received upon the
exercise of a portion of an option to pay the exercise price for additional
portions of the option. The Plan also permits the use of shares issuable upon
exercise of an option to pay applicable withholding taxes due upon the exercise
of a nonqualified stock option. The Committee may, however, adopt guidelines
limiting or restricting the use of shares as a method of payment of the option
price and withholding taxes.
13.
Restricted Stock Awards: A restricted stock award is an award of Common
Shares that may not be sold, transferred, pledged, or otherwise transferred
until a restricted period established by the Committee at the time of grant is
satisfied. The Award Agreement sets forth a restricted period during which the
grantee must remain in the employ of the Company. Unless the Committee
determines otherwise, 20% of the shares subject to the restricted share award
vest on the first, second, third, fourth and fifth anniversary date of the date
of grant of the restricted stock award. If the grantee's employment terminates
during the restricted period, the grant terminates and the grantee must return
the shares to the Company. However, the Committee may provide complete or
partial exceptions to this requirement as it deems equitable. The grantee of
restricted shares is entitled to vote the shares and receives dividends during
the restricted period.
Performance Awards. The Committee may grant performance awards under
which payment is made, in the Committee's discretion, in shares, in cash, or a
combination of shares and cash if the performance of the Company or Subsidiary
or division of the Company selected by the Committee meets certain goals
established by the Committee during an award period. The Committee determines
the goals, the length of an award period, the maximum payment value of an award,
and the minimum performance required before a payment is made. Except for
performance awards intended as "performance-based compensation" under Section
162(m) of the Code, the Committee may revise the goals and the computation of
payment at any time to account for unforeseen events which occur during an award
period and which have a substantial effect on the performance of the Company,
Subsidiary or division. In order to receive payment, a grantee must remain in
the employ of the Company until the completion of the award period, except that
the Committee may provide complete or partial exceptions to that requirement as
it deems equitable.
Stock Awards. The Committee may grant eligible persons awards of
Common Shares for past services in lieu of bonus or other cash compensation, or
for any other valid purpose determined by the Committee. Stock awards are free
of any restrictions on transfer and upon issuance of the shares, the holder has
all of the rights of a shareholder.
Plan Amendments: The Board of Directors may amend or modify the Plan at any
time, except that it may not amend the plan without shareholder approval so as
to: (i) increase the maximum number of shares that may be issued under the plan;
(ii) expand the types of awards available under the Plan; (iii) permit the
granting of options with exercise prices less than 100% of the fair market value
of a Common Share on the date of grant; (iv) materially modify the requirements
as to eligibility for participation in the plan; (v) materially extend the term
of the plan; or (vi) delete or modify the limitation on the repricing of
options. No amendment of the Plan may, without the consent of a participant,
adversely affect any award held by him under the Plan.
Term of the Plan: Unless earlier terminated by the Board, the Plan would
terminate on the day immediately preceding the tenth anniversary date of its
approval by shareholders of the Company. Termination of the plan does not affect
any outstanding awards granted prior to the termination of the plan.
PERFORMANCE-BASED COMPENSATION
Under Section 162(m) of the Code, the Company may not deduct
compensation of more than $1,000,000 that is paid to an individual who, on the
last day of the taxable year, is either the Company's chief executive officer or
is among one of the four most highly-compensated officers for that taxable year
as reported in the Company's proxy statement (referred to as "covered
employees"). The limitation on deductions does not apply to certain types of
compensation, including "performance-based compensation" if approved by
shareholders. Under the Plan, options will qualify as performance-based
compensation and restricted stock awards and performance share awards may also
qualify if the Committee so designates these awards (herein called "Section
162(m) Awards") as performance-based compensation and administers the plan with
respect to these designated awards in compliance with Section 162(m) of the
Code.
The Plan contains various performance measures that the Committee
may use to determine whether and to what extent any covered employee has earned
a Section 162(m) Award. The performance criteria upon which the payment or
vesting may be based are limited to the following performance measures, either
alone or in any combination, on either a consolidated or business unit or
divisional level, and which shall include or exclude discontinued operations and
acquisition expenses, as the Committee may determine: level of sales, earnings
per share, income before income taxes and cumulative effect of accounting
changes, income before cumulative effect of accounting changes, net income,
return on assets, return on equity, return on capital employed, total
stockholder return, market valuation, cash flow and completion of acquisitions.
The foregoing criteria shall have any reasonable definitions that the Committee
may specify, which may include or exclude any or all of the following items, as
the Committee may specify: extraordinary, unusual or non-recurring items;
effects of accounting changes; effects of currency fluctuations; effects of
financing activities (e.g., effect on earnings per share of issuing convertible
debt securities); expenses for
14.
restructuring or productivity initiatives; non-operating items; and effects of
divestitures. The Committee may make downward adjustments in the amounts payable
under an award, but it may not increase the award amounts or waive the
achievement of a performance goal.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal United States Federal
income tax consequences of awards under the Plan and is based on Federal income
tax laws currently in effect.
Limitation on Corporate Deductions for Certain Executives'
Compensation: Under the Plan, the Committee is authorized to grant awards that
qualify as performance-based compensation under Section 162(m) of the Code, as
well as awards that do not. As a result, the Company may not be entitled to any
deduction mentioned below if the individual in question is a covered employee
within the meaning of the Code, the amount in question does not qualify as
performance-based compensation, and the amount in question, when added to the
covered employee's other taxable compensation that is not performance-based in
the same taxable year, exceeds $1 million.
Stock Options: There are no Federal income tax consequences either to
the optionee or the Company upon the grant of an incentive stock option or a
nonqualified option. If shares are purchased under an incentive stock option
(i.e., an incentive option is exercised) during employment or within three
months thereafter, the optionee will not recognize any income and the Company
will not be entitled to a deduction in respect of the option exercise. However,
the excess of the fair market value of the shares on the date of such exercise
over the purchase price of the shares under the option will be includible in the
optionee's alternative minimum taxable income. Generally, if the optionee
disposes of shares purchased under an incentive stock option within two years of
the date of grant or one year of the date of exercise of the incentive stock
option, the optionee will recognize ordinary income, and the Company will be
entitled to a deduction, equal to the excess of the fair market value of the
shares on the date of exercise (or, if less, the amount realized by the optionee
on the disposition of the shares) over the purchase price of such shares. Any
gain after the date on which the optionee purchased the shares will be treated
as capital gain to the optionee and will not be deductible by the Company. If
the shares are disposed of after the two-year and one-year periods mentioned
above, the Company will not be entitled to any deduction, and the entire gain or
loss realized by the optionee will be treated as capital gain or loss. When
shares are purchased under a nonqualified option, the excess of the fair market
value of the shares on the date of purchase over the purchase price of such
shares under the option will generally be taxable to the optionee as ordinary
income and deductible by the Company. The disposition of shares purchased under
a nonqualified option will generally result in a capital gain or loss for the
optionee, but will have no tax consequences for the Company.
Stock Awards: An employee who receives cash or shares of Common Shares pursuant
to a stock award will generally recognize ordinary income equal to the sum of
the cash and the fair market value of the shares received, and the Company will
generally be entitled to a corresponding deduction from its income. However, an
employee who pursuant to a stock award receives Common Shares that is restricted
as to transferability and subject to a substantial risk of forfeiture, will not
recognize taxable income at the time the stock is issued unless the employee
makes a special election in accordance with applicable Treasury regulations to
be taxed (at ordinary income rates) on the fair market value of the shares at
that time (with fair market value determined for this purpose without regard to
any restrictions other than restrictions, if any, which by their terms will
never lapse), in which case the Company would be entitled to a deduction at the
same time equal to the amount of income realized by the employee but would not
be entitled to deduct any dividends thereafter paid on the shares. Absent such
an election, an employee who has been awarded such restricted stock will not
recognize taxable income until the shares become transferable or cease to be
subject to a substantial risk of forfeiture, at which time the recipient will
recognize ordinary income and the Company will be entitled to a corresponding
deduction equal to the excess of the fair market value of the shares at that
time over the amount (if any) paid by the recipient for the shares. Dividends
paid to the recipient on the restricted shares prior to that time will be
ordinary compensation income to the recipient and deductible by the Company.
NEW PLAN BENEFITS
Since benefits under the Plan will depend on the action of the Committee and the
fair market value of the Company's Common Shares at various future dates, it is
not possible to determine the benefits that will be received by directors,
executive officers and other employees if the Plan is approved by shareholders.
On March 31, 2004, the closing price of the Company's Common Shares was $23.85
per share.
15.
VOTE REQUIRED FOR APPROVAL
Approval of the Plan requires the affirmative vote of a majority of the votes
cast at the Annual Meeting.
THE BOARD OF DIRECTORS APPROVES AND RECOMMENDS TO THE SHAREHOLDERS THE ADOPTION
OF PROPOSAL 2.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
If any shareholder of the Company wishes to submit a proposal to be included in
next year's Proxy Statement and acted upon at the annual meeting of the Company
to be held in 2004, the proposal must be received by the Secretary of the
Company at the principal executive offices of the Company, 110 Riverbend Avenue,
Lewis Center, Ohio 43035, prior to the close of business on December 11, 2004.
On any other proposal raised by a shareholder for next year's annual meeting,
the Company intends that proxies received by it will be voted in the interest of
the Company in accordance with the judgement of the Board of Directors, unless
notice of the proposal is received by the Company not later than February 24,
2005.
The Company's Code of Regulations establishes advance notice procedures as to
the nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors. In order to make a director nomination at
a shareholder meeting, it is necessary that you notify the Company in writing
not less than 90 days in advance of the meeting. In addition, the notice must
meet all other requirements contained in our Code of Regulations. Further, the
Company's Code of Regulations establishes advance notice procedures for any
shareholder proposal to be considered at a shareholder meeting, whether or not
the shareholder wants to include the proposal in the Company's proxy materials
for the meeting. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Company not less
than 60 days prior to the meeting. A shareholder's notice to the Secretary
regarding a proposal to be considered at a shareholder meeting must also meet
all other requirements contained in our Code of Regulations concerning
shareholder proposals. Any shareholder that wants to nominate any person as a
director of the Company or have the shareholders consider any proposal at the
annual shareholders' meeting, should obtain a copy of our Code of Regulations
and follow the procedures described therein. A copy of the Code of Regulations
may be obtained by sending written request addressed to Donald R. Blackburn, the
Secretary of the Company, at the principal executive offices of the Company.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters that may
come before the meeting. However, the enclosed Proxy will confer discretionary
authority with respect to matters which are not known to the Board of Directors
at the time of printing and which may properly come before the meeting. A COPY
OF THE COMPANY'S 2003 REPORT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
ON FORM 10-K, AS AMENDED, WILL BE AVAILABLE WITHOUT CHARGE TO SHAREHOLDERS ON
REQUEST. Address all requests, in writing, for this document to Donald R.
Blackburn, Vice President & Secretary, DCB Financial Corp., 110 Riverbend
Avenue, Lewis Center, Ohio 43035.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
Only one Proxy Statement and/or Annual Report is/are being delivered to multiple
security holders sharing an address unless the Company has received contrary
instructions from one or more of the security holders. The Company will deliver
promptly, upon written or oral request, a separate copy of the Proxy Statement
and/or Annual Report to a security holder at a shared address to which a single
copy of the documents was delivered. To request separate delivery of these
materials now or in the future, a security holder may submit a written request
to Donald R. Blackburn, Vice President & Secretary, DCB Financial Corp., 110
Riverbend Avenue, Lewis Center, Ohio 43035, (740) 657-7930. Additionally, any
security holders presently sharing an address who are receiving multiple copies
of the Proxy Statement and/or Annual Report and would like to receive a single
copy of such materials may do so by directing their request to the Company in
the manner provided above.
By Order of the Board of Directors of DCB Financial Corp
/s/ Jeffrey T. Benton
---------------------
Jeffrey T. Benton
President and Chief Executive Officer
16.
APPENDIX A
AUDIT COMMITTEE CHARTER
A-1
DCB FINANCIAL CORP - AUDIT COMMITTEE CHARTER
STATEMENT OF POLICY
The purpose of the audit committee is to oversee the Corporation's accounting
and financial reporting processes and the audits of the Corporation's financial
statements. The audit committee shall provide assistance to the board of
directors in fulfilling its oversight responsibilities by reviewing the
financial reports and related financial information provided by the Corporation
to governmental agencies or the general public, the Corporation's system of
internal controls and the effectiveness of its control structure, the
Corporation's compliance with designated laws and regulations, and the
Corporation's accounting, internal and external auditing and financial reporting
processes. In discharging its responsibilities, the audit committee shall:
- Serve as an independent and objective party to oversee the
Corporation's accounting and financial reporting processes, internal
control system, and the audits of the Corporation's financial
statements.
- Review and evaluate the audit procedures and results of the
Corporation's independent auditor and internal audit function.
- Approve, engage and terminate the independent auditor.
- Review and evaluate the independent auditor's qualifications,
performance and independence.
- Review, evaluate and approve any non-audit services the independent
auditor may perform for the Corporation and disclose such approved
non-audit services in periodic reports to shareholders.
- Maintain free and open means of communication between the board of
directors, the independent auditor, the internal auditor, and the
management of the Corporation.
- Maintain free and open means of communication between employees and the
audit committee for the processing of complaints received by the
Corporation regarding questionable accounting or auditing matters,
including suspicions of fraudulent activity.
- At least annually, review and if necessary or appropriate, update this
charter for consideration by the board of directors and perform an
evaluation of the audit committee performance and function.
ORGANIZATION
The members of the audit committee shall be appointed by the board of directors
and may be removed by the board of directors. The audit committee may consult or
retain its own independent legal, accounting or other advisors and shall
determine the degree of independence from the Corporation required of those
advisors. The audit committee shall meet at least four times per year and will
report directly to the full board any issues that arise with respect to the
quality and integrity of the Corporation's general financial performance and
reporting and regulatory compliance. The audit committee may also meet
periodically by itself to discuss matters it determines require private audit
committee or board of directors' attention. Further, the audit committee shall
meet separately with management, with the internal auditor and with the
independent auditor. There will be at least three members of the audit
committee. A majority of the members of the audit committee shall be a quorum to
transact business.
RESOURCES AND AUTHORITY OF THE AUDIT COMMITTEE
The audit committee shall have the funding, resources and authority to discharge
its duties and responsibilities without seeking the approval of the board of
directors or management of the Corporation, including (1) the authority, funding
and resources to compensate the independent auditor engaged by the audit
committee for the purpose of preparing or issuing the audit report and
performing other audit, review and attest services for the Corporation, (2) the
authority, funding and resources to select, retain, terminate and approve the
fees and other terms of engagement of, special or independent counsel,
accountants and other advisors as deemed appropriate by the audit committee, and
(3) the authority to pay all its ordinary administrative expenses incurred in
carrying out its duties and responsibilities.
QUALIFICATIONS
The audit committee shall be composed entirely of independent directors,
determined by the board of directors under the DCB Financial Corp Corporate
Governance Guidelines. The members of the audit committee, as determined by the
board of directors, shall also meet the independence and financial expertise
requirements of The Nasdaq Stock Market for audit committee members. At least
one member of the audit committee will have past employment experience in
finance or accounting, requisite professional certification in accounting, or
other comparable experience or background which results in the member's
financial sophistication.
A-2
INDEPENDENT AUDITORS
The independent auditor shall be engaged by and accountable to the audit
committee. The independent auditor will report directly to the audit committee.
The audit committee shall have the sole authority to engage, compensate,
evaluate and terminate the independent auditor, to review with the independent
auditor the nature and scope of any disclosed relationships or professional
services including all audit engagement fees and terms, and to take appropriate
action to ensure the continuing independence of the auditor. The audit committee
shall pre-approve, or adopt appropriate procedures to pre-approve, all audit and
non-audit services to be provided by the independent auditor. The audit
committee shall also set clear policies and standards relating to the
Corporation's hiring of employees or former employees of the independent auditor
to ensure continued independence throughout the engagement of the independent
auditor.
The audit committee shall, on an annual basis, obtain from the independent
auditor a written disclosure delineating all of its relationships and
professional services as required by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees. The audit committee shall
engage in a dialogue with the independent auditor with respect to any disclosed
relationships or services that may impact the objectivity and independence of
the independent auditor and be responsible for taking appropriate action to
oversee the independence of the independent auditor. Additionally, the audit
committee will obtain and review a report of the independent auditor describing
its internal quality-control procedures, material issues raised by the most
recent internal quality-control review of the independent auditor or an inquiry
or investigation by a governmental authority involving one or more audits
carried out by the independent auditor in the preceding five years and any steps
or procedures taken to deal with any such issues. After reviewing the
independent auditor's report, the audit committee shall evaluate the auditor's
qualifications, performance and independence. The audit committee shall consider
the opinions of management and the internal auditor in making such evaluation.
As required by law, the audit committee shall confirm the regular rotation of
the lead and concurring audit partner, and consider whether there should be a
regular rotation of the auditor itself.
The independent auditor shall ascertain that the audit committee is made aware
of and timely report to the audit committee all necessary accounting policies
and practices to be used, all alternative treatments of financial information
within generally accepted accounting principles that have been discussed with
management and the risks of using such alternative treatments, and inform the
audit committee of other material written communications between the independent
auditor and management.
The audit committee will have complete oversight of the work done by the
independent auditor for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Corporation, including
resolution of any disagreement between management and the independent auditor
regarding financial reporting.
INTERNAL AUDIT
The internal auditor of the Corporation shall directly report to the chairman of
the audit committee, with administrative oversight provided by an appropriate
executive officer of the Corporation. The audit committee will oversee the
internal audit function and determine that the internal auditor is establishing,
maintaining and executing appropriate audit programs, policies and procedures
that govern the examination and audit of the ledgers, records, procedures and
operations of the Corporation and its affiliates.
COMPLAINT PROCEDURES
The audit committee will establish procedures for the receipt, retention and
treatment of complaints received by the Corporation regarding accounting,
internal accounting controls or auditing matters, and for the confidential,
anonymous submission by employees of the Corporation and its subsidiaries
regarding questionable accounting or auditing matters. ("Whistle Blower"
procedures).
FINANCIAL REPORTING OVERSIGHT
In discharging its responsibilities to oversee governmental and public reporting
of financial information, the audit committee shall:
- - Review and discuss the annual audited financial statements, footnotes and
related disclosures included in the Corporation's annual report to
shareholders and its annual report on Form 10-K with financial management,
the independent auditor, and the internal auditor prior to the release and
filing of such documents. Review with the independent auditor the results
of its annual examination of the financial statements, including their
report thereon, and determine its satisfaction with the disclosures and
content of the financial statements. This review shall cover discussion of
all items required by generally accepted auditing standards regarding
required communications with audit committees. Ascertain that the results
of any internal audit activity or regulatory reports were appropriately
considered in preparing the financial statements.
A-3
- - Review and discuss the quarterly financial results and information with
financial management, the independent auditor, and the internal auditor to
determine that the independent auditor does not take exception to the
disclosure and content of the financial statements on Form 10-Q, to
determine that the results of any internal audit activity or regulatory
reports were appropriately considered in preparing the financial
statements, and to discuss any other matters required to be communicated to
the audit committee by the independent auditor.
- - Review and discuss the types of presentation and information to be included
in earnings press releases, and any additional financial information and
earnings guidance that is provided.
- - Inquire of management, the internal auditor, and the independent auditor
about significant risks or exposures and discuss guidelines and policies to
govern the steps management has taken to minimize such risk to the
Corporation.
- - Review and discuss the form and content of the certification documents for
the quarterly reports on Form 10-Q and the annual report on Form 10-K with
the internal auditor, the independent auditor, the chief financial officer
and the chief executive officer.
- - Review the basis for the disclosures made in the annual report to
stockholders under the heading Management's Report on Internal Controls
regarding the control environment of the Corporation and the annual filing
required under the Federal Deposit Insurance Corporation Improvement Act of
1991.
- - Prepare, review and approve the annual proxy statement disclosure regarding
the activities and report of the audit committee for the year.
A-4
APPENDIX B
COMPENSATION COMMITTEE CHARTER
B-1
DCB FINANCIAL CORP
COMPENSATION COMMITTEE CHARTER
STATEMENT OF POLICY
The Compensation Committee shall provide assistance to the board of directors in
fulfilling the board of directors' responsibilities relating to management
organization, performance, compensation and succession, and establishing
compensation for members of the board of directors.
ORGANIZATION
The members of the Compensation Committee shall be appointed by the board of
directors and may be removed by the board of directors. The Compensation
Committee shall meet on the call of its chairman. The Compensation Committee has
the authority to retain and terminate advisors, including compensation
consultants, accountants and legal counsel, to assist in discharging its duties
including the authority to approve such advisors' fees and retention terms.
There will be at least three members of the Compensation Committee. A majority
of the members of the Compensation Committee shall be a quorum to transact
business.
QUALIFICATIONS
The Compensation Committee shall be composed of independent directors,
determined by the board of directors under the DCB Financial Corp Corporate
Governance Guidelines. The members of the Compensation Committee shall be
outside directors within the meaning of Section 162 (m) of the Internal Revenue
Code. Each member of the Compensation Committee shall also be a "Non-Employee
Director" as the term is defined by Rule 16b-3 of the Securities and Exchange
Commission.
POWERS, DUTIES AND RESPONSIBILITIES
In discharging its responsibilities for management organization, performance,
compensation, and succession, the Compensation Committee shall:
- Consider and authorize the compensation philosophy for DCB
Financial Corp's personnel.
- Review and evaluate chief executive officer and approve senior
management performance, in light of goals and objectives set by
the Compensation Committee that include DCB Financial Corp's
performance and return to shareholders.
- Set the chief executive officer's and approve senior management's
compensation based upon performance. The chief executive officer
will not be present during the Compensation Committee's
deliberations about or voting on the chief executive officer's
compensation.
- Annually review and approve perquisites for the chief executive
officer and senior management.
- Consider and make recommendations to the board of directors on
matters relating to organization and succession of senior
management.
- Evaluate and establish director compensation.
- Consider and approve the report of the Compensation Committee for
inclusion in DCB Financial Corp's proxy statement for its annual
shareholders' meeting.
- Make recommendations to the board of directors with respect to
incentive compensation plans, deferred compensation plans,
executive retirement plans, and equity-based plans.
- Review and approve incentive, deferred compensation, and
equity-based plans.
- Annually review and if necessary or appropriate, update this
charter for consideration by the board of directors.
- Annually evaluate the performance and function of the Compensation
Committee.
- Manage investment alternatives and oversee administration of 401
K.
- Report the matters considered and actions taken by the
Compensation Committee to the board of directors.
B-2
APPENDIX C
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
C-1
DCB FINANCIAL CORP
NOMINATING AND GOVERNANCE COMMITTEE CHARTER
STATEMENT OF POLICY
The Nominating and Governance Committee shall provide assistance to the board of
directors in fulfilling the board of directors' responsibilities for director
nominations and appointments, and board of directors and corporate governance.
ORGANIZATION
The members of the Nominating and Governance Committee shall be appointed by the
board of directors and may be removed by the board of directors. The Nominating
and Governance Committee shall meet on the call of its chairman. The Nominating
and Governance Committee has the sole authority to retain and terminate any
consulting or search firm to be used to identify director candidates, including
the sole authority to approve the firm's fees and other retention terms. There
will be at least three members of the Nominating and Governance Committee. A
majority of the members of the Nominating and Governance Committee shall be a
quorum to transact business.
QUALIFICATIONS
The Nominating and Governance Committee shall be composed entirely of
independent directors, determined by the board of directors under the DCB
Financial Corp Corporate Governance Guidelines.
POWERS, DUTIES, AND RESPONSIBILITIES
In discharging its responsibilities to review, authorize and approve director
nominations, director compensation and corporate governance, the Nominating and
Governance Committee shall:
- actively seek individuals qualified to become members of the board of
directors;
- from time to time recommend individuals for appointment as directors
by the board of directors;
- set the number of directors that shall constitute the whole board of
directors;
- recommend to the whole board of directors nominees for director for
nomination by the board of directors for approval by shareholders at
an annual meeting of shareholders or special meeting of shareholders;
- recommend to the board of directors the establishment, charter and
membership of the various committees of the board of directors;
- recommend to the board of directors corporate governance guidelines
for DCB Financial Corp;
- consider and advise the board of directors on other matters relating
to the affairs or governance of the board of directors;
- annually review and if necessary or appropriate, update this charter
for consideration by the board of directors;
- annually evaluate the performance and function of the Nominating and
Governance Committee; and
- report the matters considered and actions taken by the Nominating and
Governance Committee to the board of directors.
C-2
APPENDIX D
DCB FINANCIAL CORP.
2004 LONG-TERM STOCK INCENTIVE PLAN
D-1
DCB FINANCIAL CORP
2004 LONG -TERM STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of this 2004 Long-Term Stock Incentive Plan (the "Plan") is to
promote the long-term success of DCB Financial Corp (the "Company") by providing
financial incentives to employees and directors of the Company and its
subsidiaries who are in positions to make contributions toward such success. The
Plan is designed to attract individuals of outstanding ability to employment
with the Company and its subsidiaries and to encourage employees and directors
to acquire a proprietary interest in the Company through stock ownership, to
continue employment or service with the Company and its subsidiaries, and to
render superior performance during such employment or service.
SECTION 2. DEFINITIONS
(a) "Board" means the Board of Directors of the Company.
(b) "Change of Control" means and shall be deemed to have occurred on
(i) the date upon which the Company is provided a copy of a Schedule 13D, filed
pursuant to Section 13(d) of the Securities Exchange Act of 1934 indicating that
a group or person, as defined in Rule 13d-3 under said Act, has become the
beneficial owner of 20% or more of the outstanding Voting Shares or the date
upon which the Company first learns that a person or group has become the
beneficial owner of 20% or more of the outstanding Voting Shares if a Schedule
13D is not filed; (ii) the date of a change in the composition of the Board such
that individuals who were members of the Board on the date two years prior to
such change (or who were subsequently elected to fill a vacancy in the Board, or
were subsequently nominated for election by the Company's shareholders, by the
affirmative vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such two year period) no longer
constitute a majority of the Board; (iii) the date the shareholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
Voting Shares of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into Voting
Shares of the surviving entity) at least 80% of the total voting power
represented by the Voting Shares of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or (iv) the date
shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the committee referred to in Section 4.
(e) "Company" means DCB Financial Corp, an Ohio corporation, and when
used with reference to employment of a Participant, Company includes any
Subsidiary of the Company.
(f) "Employee" means an employee of the Company or a Subsidiary who in
the opinion of the Committee can contribute significantly to the growth and
successful operations of the Company or a Subsidiary. For the purposes of the
Plan other than the grant of Incentive Stock Options, a director or officer of
the Company or a Subsidiary shall be deemed an employee regardless of whether or
not such director or officer is on the payroll of, or is otherwise paid for
services by, the Company or a Subsidiary.
(g) "Fair Market Value" means the average of the high and low prices of
a Share on the date when the value of a Share is to be determined, as reported
on OTC Bulletin Board, or, if no sale of Shares is reported on such date, then
the next preceding date on which a sale occurred; or if the Shares are no longer
traded on the OTC Bulletin Board, the determination of such value shall be made
by the Committee in accordance with applicable provisions of the Code and
related regulations promulgated under the Code.
(h) "Gross Misconduct" means engaging in any act or acts involving
conduct which violates Company policy or is illegal and which results, directly
or indirectly, in personal gain to the individual involved at the expense of the
Company or a Subsidiary.
(i) "Incentive Award" means an Option, Restricted Share Award,
Performance Award, or Share Award granted under the Plan.
(j) "Incentive Stock Option" means an Option that is an Incentive Stock
Option, as defined in Section 422 of the Code.
(k) "Nonqualified Stock Option" means an Option that is not an
Incentive Stock Option.
(l) "Option" means a right to purchase Shares at a specified price;
"Optionee" means the holder of an Option.
(m) "Participant" means an Employee selected to receive an Incentive
Award.
D-2
(n) "Performance Award" means a right to receive Restricted Shares,
Shares, cash, or a combination thereof, contingent upon the attainment of
performance objectives determined in the discretion of the Committee as more
fully set forth at Section 8 hereof.
(o) "Plan" means the 2004 Stock Incentive Plan as herein set forth as
the same shall be amended from time to time.
(p) "Restricted Share Award" means a right to receive Shares that is
nontransferable and subject to substantial risk of forfeiture until specific
conditions are met; "Restricted Shares" means Shares, which are the subject of a
Restricted Share Award; and "Restricted Period" shall have the meaning ascribed
to it at Section 7(a).
(q) "Share Award" means an award of Shares that the Committee in its
discretion determines to grant to one or more Employees under the Plan that is
neither a Performance Award or an award of Restricted Shares.
(r) "Shares" means the Common Shares, no par value, of the Company.
(s) "Subsidiary" means any company more than 50% of the voting stock of
which is owned or controlled, directly or indirectly, by the Company.
(t) "Voting Shares" means any securities of the Company, which vote
generally in the election of directors of the Company.
SECTION 3. SHARES SUBJECT TO THE PLAN
(a) Maximum Number. The maximum number of Shares that may be subject to
Incentive Awards granted pursuant to the Plan shall be Three Hundred Thousand
(300,000), subject to adjustment in accordance with Section 3(c). The Shares
that may be issued pursuant to Incentive Awards may be authorized and unissued
Shares or Shares held in the Company's treasury. In the event of a lapse,
expiration, termination, or cancellation of any Incentive Award granted under
the Plan without the issuance of Shares or the payment of cash, or if Shares are
issued under a Restricted Share Award and are reacquired by the Company as a
result of rights reserved upon the issuance thereof, the Shares subject to or
reserved for such Incentive Award shall no longer be charged against the 300,000
Share maximum and may again be used for new Incentive Awards.
(b) Maximum Number - Per Employee. The maximum Incentive Awards that
may be granted to each Employee in each fiscal year of the Company is as
follows:
(i) With respect to Options, no more than Twenty Thousand
(20,000) Shares may be subject to options granted in the year;
(ii) With respect to Restricted Shares (not issued in
connection with Performance Awards), no more than Five Thousand (5,000) such
Shares may be awarded in the year; and
(iii) With respect to Performance Awards, no more than Five
Thousand (5,000) Shares may be awarded in the year the award is made regardless
of the year the award is earned or paid).
(c) Adjustment. The Board may make or provide for such adjustments in
the numbers of Shares covered by outstanding Options or Performance Shares
granted hereunder, in the option exercise prices per share applicable to such
Options, and in the kind of shares covered thereby, as the Board, in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants or Optionees that
otherwise would result from (a) any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company, or (b) any merger, consolidation, spin-off, split-off, spin-out,
split-up, reorganization, partial or complete liquidation or other distribution
of assets, issuance of rights or warrants to purchase securities, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing. Moreover, in the event of any such transaction or event, the Board,
in its discretion, may provide in substitution for any or all outstanding awards
under the Plan such alternative consideration as it, in good faith, may
determine to be equitable in the circumstances and may require in connection
therewith the surrender of all awards to be replaced. The Board may also make or
provide for such adjustments in the numbers of shares specified in Section 3(a)
and Section 3(b) as the Board in its sole discretion, exercised in good faith,
may determine is appropriate to reflect any transaction or event described in
this Section 3(c).
SECTION 4. ADMINISTRATION
(a) Committee. The Plan shall be administered by a Committee of the
Board, comprised of three or more directors, who shall from time to time be
appointed by, and serve at the pleasure of, the Board. Each director serving on
the Committee shall be a "non-employee director" within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934 and an "outside
director" within the meaning of Code Section 162(m). The Board shall also have
the authority to exercise the powers and duties of the Committee; and until the
Board determines otherwise by formal resolution, all powers of the Committee
under the Plan shall be exercised by the Board.
D-3
(b) Authority. The Committee shall have and exercise all the power and
authority granted to it under the Plan. Subject to the provisions of the Plan,
the Committee shall have authority in its sole discretion from time to time (i)
to designate from Employees the persons to whom Incentive Awards are granted;
(ii) to prescribe such limitations, restrictions and conditions upon any such
awards as the Committee shall deem appropriate, including establishing and
administering Performance Goals, as defined in Section 8(a), and certifying
whether the Performance Goals have been attained; (iii) to interpret the Plan
and to adopt, amend and rescind rules and regulations relating to the Plan; and
(iv) to make all other determinations and take all other actions necessary or
advisable for the implementation and administration of the Plan.
(c) Committee Actions. A majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at a meeting at which
a quorum is present, or acts reduced to or approved in writing by all members of
the Committee, shall be acts of the Committee. All such actions shall be final,
conclusive, and binding. No member of the Committee shall be liable for any
action taken or decision made in good faith relating to the Plan or any
Incentive Award thereunder.
(d) Interpretation and Construction. Any provision of this Plan to the
contrary notwithstanding, (i) certain designated Incentive Awards under this
Plan are intended to qualify as performance-based compensation within the
meaning of Code Section 162(m)(4)(C) and (ii) any provision of the Plan that
would prevent a designated Incentive Award from so qualifying shall be
administered, interpreted and construed to carry out such intention and any
provision that cannot be so administered, interpreted and construed shall to
that extent be disregarded.
SECTION 5. ELIGIBILITY AND INCENTIVE AWARDS
(a) Eligible Employees. The Committee may grant Incentive Awards to
officers and other Employees.
(b) Incentive Awards. Incentive Awards may be granted in any one or
more combinations of (i) Incentive Stock Options, (ii) Nonqualified Stock
Options, (iii) Restricted Share Awards, (iv) Share Awards and (v) Performance
Awards. All Incentive Awards shall be subject to such other terms and conditions
as may be established by the Committee. Determinations by the Committee under
the Plan, including without limitation, designation of Participants, the form,
amount and timing of Incentive Awards, the terms and provisions of Incentive
Awards, and the written agreements evidencing Incentive Awards, need not be
uniform and may be made selectively among employees who receive, or are eligible
to receive, Incentive Awards hereunder, whether or not such employees are
similarly situated.
(c) Employment. The Plan and the Incentive Awards granted hereunder
shall not confer upon any Employee the right to continued employment with the
Company or affect in any way the right of the Company to terminate the
employment of an Employee at any time and for any reason.
SECTION 6. OPTIONS
The Committee may grant Incentive Stock Options and Nonqualified Stock Options
and such Options shall be subject to the following terms and conditions and such
other terms and conditions as the Committee may prescribe:
(a) Option Price. The option price per Share with respect to each
Option shall be determined by the Committee but shall not be less than the Fair
Market Value of a Share on the date the Option is granted.
(b) Period of Option. The Committee shall fix the period of each Option
but in no case may an option be exercised more than ten years after the date of
its grant.
(c) Exercise of Option. Unless the Committee determines otherwise, an
Option shall become exercisable with respect to 20% of the Shares subject to the
option on the first, second, third, fourth and fifth annual anniversary date of
the date of grant of the Option, subject to the provisions of Section 6(d)
relating to continuous employment. Any Shares not purchased during a specified
period may be purchased thereafter at any time prior to the expiration of the
Option unless the Committee determines otherwise. The Committee may at any time
remove or alter any restriction on exercise of an Option that was imposed by the
Committee.
(d) Termination of Employment. No Option may be exercised under the Plan unless
the Optionee has been continuously employed by the Company from the date of
grant of the Option to the date of exercise except that an Option may, subject
to the ten year limitation at Section 6(b), be exercised (i) within 30 days
after the Optionee ceases to be employed by the Company if the cause of
cessation of employment was other than retirement, disability, death or
termination of employment by the Company for Gross Misconduct; (ii) within one
year of cessation of employment in the case of early retirement or death except
that the Committee may, in its discretion, in the case of early retirement,
extend the period of exercise to a date not more than three years after
cessation of employment; and (iii) within three years of cessation of employment
in the case of normal retirement or disability. After termination of employment
Options may be exercised only to the extent they could have been exercised on
the date of the Optionee's termination of employment. The Committee shall
determine whether authorized leave of absence or absence for military or
governmental service shall constitute a termination of employment.
D-4
(e) Limits on Incentive Stock Options. Except as may be permitted by
the Code, the Fair Market Value of Shares (determined at the time of grant of
Options) as to which Incentive Stock Options held by an Optionee first become
exercisable in any calendar year shall not exceed $100,000. In addition, no
Incentive Stock Option shall be granted to an Employee who possesses, directly
or indirectly (within the meaning of Code Section 424(d)), at the time of grant
more than 10% of the combined voting power of all classes of stock of the
Company unless the option price is at least 110% of the Fair Market Value of the
Shares subject to the Option on the date such Option is granted and such
Incentive Stock Option is not exercisable after the expiration of five years
from the date of grant.
(f) Notice of Exercise and Payment. An Option granted under the Plan
may be exercised by the Optionee giving written notice of exercise to the
Committee. The Option price for the Shares purchased shall be paid in full at
the time such notice is given. An Option shall be deemed exercised on the date
the Committee receives written notice of exercise, together with full payment
for the Shares purchased. The Option price shall be paid to the Company either
in cash, by delivery to the Company of Shares already-owned by the Optionee or
any combination of cash and such Shares. The Committee may, however, at any time
and in its discretion, adopt guidelines limiting or restricting the use of
already-owned Shares to pay all or any portion of the Option price. In the event
already-owned Shares are used to pay all or a portion of the Option price, the
amount credited to payment of the Option price shall be the Fair Market Value of
the already-owned Shares on the date the Option is exercised.
(g) Fractional Shares. No fractional shares shall be issued pursuant to
the exercise of an Option, nor shall any cash payment be made in lieu of
fractional shares.
(h) Repricing of Options. Without approval of shareholders of the
Company, the option exercise price per share of any previously granted option
will not, whether through amendment, cancellation, replacement grants or any
other means, be lowered, except for adjustments pursuant to Section 3(c).
SECTION 7. RESTRICTED SHARE AWARDS
The Committee may issue Shares to an Employee which Shares shall be subject to
the following terms and conditions and such other terms and conditions as the
Committee may prescribe in connection with the grant of a Restricted Share
Award:
(a) General. With respect to each grant of Restricted Shares, the
Committee, in its sole discretion, shall determine the period or periods during
which the restrictions set forth at Subsection 7(b) shall apply to the
Restricted Shares (the "Restricted Period"); and unless the Committee determines
otherwise at the time of grant, 20% of the Shares included in the grant shall
have a Restricted Period of one year, 20% a Restricted Period of two years, 20%
a Restricted Period of three years, 20% a Restricted Period of four years, and
20% a Restricted Period of five years.
(b) Restrictions. At the time of grant of Restricted Shares to an
Employee, a certificate or certificates representing the number of Shares
granted and included in each Restricted Period shall be registered in his name
but shall be held by the Company for the account of the Employee. The Employee
shall have the entire beneficial ownership interest in, and all rights and
privileges of a shareholder as to, such Restricted Shares, including the right
to receive dividends and the right to vote such Restricted Shares, subject to
the following restrictions: (i) subject to Section 7(c), the Employee shall not
be entitled to delivery of any Share certificate until the expiration of the
Restricted Period with respect to that particular certificate; (ii) Restricted
Shares may not be sold, transferred, assigned, pledged, or otherwise encumbered
or disposed of during the Restricted Period applicable to the particular shares;
and (iii) Restricted Shares shall be forfeited and all rights of the Employee to
such Restricted Shares shall terminate without further obligation on the part of
the Company unless the Employee remains in the continuous employment of the
Company for the entire Restricted Period in relation to which such Restricted
Shares were granted, except as provided by Section 7(c). Any Shares received
with respect to Restricted Shares as a result of a recapitalization adjustment
pursuant to Section 3(b) shall be subject to the same restrictions as such
Restricted Shares.
(c) Termination of Employment.
(i) Retirement. If an Employee ceases to be employed by the Company
prior to the end of a Restricted Period by reason of normal retirement under a
retirement plan of the Company or the Employee otherwise retires with the
consent of the Company, the number of Restricted Shares granted to such Employee
for such Restricted Period shall be reduced in proportion to the Restricted
Period (determined on a quarterly basis) remaining after the Employee ceases to
be an Employee and all restrictions on such reduced number of Shares shall
lapse. A certificate for such Shares shall be delivered to the Employee in
accordance with the provisions of Section 7(d) hereof. The Committee may, if it
deems appropriate, direct that the Employee receive a greater number of Shares
free of all restrictions but not exceeding the number of Restricted Shares then
subject to the restrictions of Section 7(b).
(ii) Death. If an Employee ceases to be employed by the Company
prior to the end of a Restricted Period by reason of death, the Restricted
Shares granted to such Employee shall immediately vest in his beneficiary or
estate and all restrictions applicable to such Shares shall lapse. A certificate
for such Shares shall be delivered to the Employee's beneficiary or estate in
accordance with the provisions of Subsection 7(d).
D-5
(iii) All Other Terminations. If an Employee ceases to be an
Employee prior to the end of a Restricted Period for any reason other than
retirement or death, the Employee shall immediately forfeit all Restricted
Shares then subject to the restrictions of Section 7(b) in accordance with the
provisions thereof, except that the Committee may, if it finds that the
circumstances in the particular case so warrant, allow an Employee whose
employment has so terminated to retain any or all of the Restricted Shares then
subject to the restrictions of Section 7(b) and all restrictions applicable to
such retained shares shall lapse. A certificate for such retained shares shall
be delivered to the Employee in accordance with the provisions of Section 7(d).
(d) Payment of Restricted Shares. At the end of the Restricted Period
or at such earlier time as provided for in Subsection 7(c), all restrictions
applicable to the Restricted Shares shall lapse and a Share certificate for a
number of Shares equal to the number of Restricted Shares, free of all
restrictions, shall be delivered to the Employee or his beneficiary or estate,
as the case may be. The Company shall not be required to deliver any fractional
Share but will pay, in lieu thereof, the Fair Market Value (measured as of the
date the restrictions lapse) of such fractional Share to the Employee or his
beneficiary or estate, as the case may be.
SECTION 8. PERFORMANCE AWARDS
The Committee may grant to Employees Performance Awards that shall be subject to
the following terms and conditions and such other terms and conditions as the
Committee may prescribe in connection with the grant of a Performance Award:
(a) Award Period and Performance Goals. The Committee shall determine
and include in a Performance Award the period of time during which a Performance
Award may be earned ("Award Period"). The Committee shall also establish
performance objectives ("Performance Goals") to be met by the Company,
Subsidiary or division during the Award Period as a condition to payment of the
Performance Award. The Performance Goals may include minimum and optimum
objectives or a single set of objectives.
With respect to Performance Awards that are intended to qualify as "performance
based" within the meaning of Code Section 162(m)(4)(C), the Committee shall (i)
select the Employees for such Incentive Awards, (ii)establish in writing the
applicable performance goals no later than 90 days after the commencement of the
period of service to which the performance goals relates (or such earlier or
later date as may be the applicable deadline for compensation payable hereunder
to qualify as "performance based" within the meaning of Code Section
162(m)(4)(C)), and (iii)designate the Performance Awards that are to qualify as
"performance based" within the meaning of Code Section 162(m)(4)(C).
The Committee shall establish in writing the Performance Goals for each Award
Period, which may be based on any of the following performance criteria, either
alone or in any combination, on either a consolidated or business unit or
divisional level, and which shall include or exclude discontinued operations and
acquisition expenses, as the Committee may determine: level of sales, earnings
per share, income before income taxes and cumulative effect of accounting
changes, income before cumulative effect of accounting changes, net income,
return on assets, return on equity, return on capital employed, total
stockholder return, market valuation, cash flow and completion of acquisitions.
The foregoing criteria shall have any reasonable definitions that the Committee
may specify, which may include or exclude any or all of the following items, as
the Committee may specify: extraordinary, unusual or non-recurring items;
effects of accounting changes; effects of currency fluctuations; effects of
financing activities (e.g., effect on earnings per share of issuing convertible
debt securities); expenses for restructuring or productivity initiatives;
non-operating items; and effects of divestitures. Any such performance criterion
or combination of such criteria may apply to the participant's award opportunity
in its entirety or to any designated portion or portions of the award
opportunity, as the Committee may specify.
(b) No Discretion. With respect to Performance Awards that are intended
to qualify as "performance based" within the meaning of Code Section
162(m)(4)(C), the Committee has no discretion to increase the amount of the
award due upon attainment of the applicable performance goals. No provision of
this Plan shall preclude the Committee from exercising negative discretion with
respect to any award (i.e., to reduce or eliminate the award payable) within the
meaning of Treasury Regulation Section 1.162-27(e)(2)(iii)(A).
(c) Performance Award Earned. The Performance Awards may be expressed
in terms of Shares and referred to as "Performance Shares" or "Performance
Units," as the Committee may specify. With respect to each Performance Award,
the Committee shall fix the number of allocable Performance Shares or
Performance Units. The level of Performance Goals attained will determine the
percentage of Performance Shares or Performance Units earned for an Award
Period. After completion of the Award Period, the Committee shall certify in
writing the extent to which the Performance Goals and other material terms
applicable to such award are attained. Unless and until the Committee so
certifies, the Performance Award shall not be paid.
(d) Performance Award Payment. The Committee, in its discretion, may
elect to make payment of the Performance Awards in Restricted Shares, Shares,
cash or any combination of the foregoing.
D-6
(e) Requirement of Employment. A grantee of a Performance Award must
remain in the employment of the Company until the completion of the Award Period
in order to be entitled to payment under the Performance Award; provided that
the Committee may, in its sole discretion, provide for a partial or full payment
of the Performance Award that would have been payable if the grantee had
continued employment for the entire Award Period, which shall be paid at the
same time as would have been paid if no termination of employment occurred, but
only if and to the extent the exercise of such discretion does not prevent any
designated Incentive Award from qualifying as "performance based" within the
meaning of Code Section 162(m)(4)(C).
(f) Dividends. The Committee may, in its discretion, at the time of the
granting of a Performance Award, provide that any dividends declared on Shares
during the Award Period, and which would have been paid with respect to
Performance Shares had they been owned by a grantee, be (i) paid to the grantee,
or (ii) accumulated for the benefit of the grantee and used to increase the
number of Performance Shares of the grantee.
SECTION 9. NON-ASSIGNABILITY OF INCENTIVE AWARDS
(a) Except as provided in Section 9(b) with respect to Nonqualified
Stock Options, no Incentive Award granted under the Plan shall be assigned,
transferred, pledged, or otherwise encumbered by an Employee, otherwise than by
will, by designation of a beneficiary after death, or by the laws of descent and
distribution, or be made subject to execution, attachment or similar process.
Except as provided in Section 9(b) with respect to Nonqualified Stock Options,
each Incentive Award shall be exercisable during the Employee's lifetime only by
the Employee or, if permissible under applicable law, by the Employee's guardian
or legal representative.
(b) No Nonqualified Stock Option nor any right thereunder may be
assigned or transferred by the optionee except by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order (as defined
in the Code or the Employee Retirement Income Security Act of 1974), provided,
however, the Committee may by written action permit any holder of a Nonqualified
Stock Option, either before or after the time of grant, to transfer a
Nonqualified Stock Option during his lifetime to one or more members of his
family, to one or more trusts for the benefit of one or more members of his
family, or to a partnership or partnerships of members of his family, provided
that no consideration is paid for the transfer and that such transfer would not
result in the loss of any exemption under Rule 16b-3 for any option granted
under any plan of the Company. The transferee of a Nonqualified Stock Option
shall be subject to all restrictions, terms and conditions applicable to the
Nonqualified Stock Option prior to its transfer. The Committee may impose on any
transferable Nonqualified Stock Option and on the shares to be issued upon the
exercise of a Nonqualified Stock Option such limitations and conditions as the
Committee deems appropriate.
SECTION 10. CHANGE OF CONTROL
(a) General. In order to maintain all of the Employee's rights in the
event of a Change of Control of the Company, the Committee, in its sole
discretion, may, as to any Incentive Award, either at the time that an Incentive
Award is made or any time thereafter, take any one or more of the following
actions:
(i) provide for the acceleration of any time periods relating to
the exercise or realization of any such award, so that such award may be
exercised or realized in full on or before a date fixed by the Committee, or
(ii) provide for the purchase of any such award by the Company,
upon an Employee's request, for an amount of cash equal to the amount that could
have been attained upon the exercise of such award or realization of such
Employee's rights had such award been currently exercisable or payable.
(b) Options. All outstanding Options that are not yet exercisable shall
become immediately exercisable in full in the event of a Change of Control of
the Company.
SECTION 11. TAXES
(a) Withholding for Taxes. The Company shall be entitled, if necessary
or desirable, to withhold the amount of any tax attributable to any amounts
payable under any Incentive Award and the Company may defer making payment of
any Incentive Award if any such tax, charge, or assessment may be pending until
indemnified to its satisfaction.
(b) Use of Shares for Tax Withholding Payments. With the approval of
the Committee, Shares may be used in lieu of cash to pay all or any part of the
mandatory federal, state or local withholding tax payments to be made by the
Employee in connection with an Incentive Award, as follows:
(i) Nonqualified Stock Options. (a) The holder of a Nonqualified
Stock Option may elect to have the Company retain from the Shares to be issued
upon exercise of such an option Shares having a Fair Market Value equal to the
withholding tax to be paid; or (b) the holder of a Nonqualified Stock Option may
deliver to the Company already-owned Shares having a Fair Market Value equal to
the withholding tax to be paid and in such case.
D-7
(ii) Restricted Share Awards. If withholding taxes are required to
be paid at the time Restricted Shares are delivered to an Employee or at the
expiration of the Restricted Period, then the Employee may pay such taxes by
delivering to the Company Shares having a Fair Market Value equal to the amount
of the withholding tax being paid by use of Shares.
(iii) Performance Shares. If withholding taxes are required to be
paid at the time Shares are delivered to an Employee as a Performance Award,
then the Employee may pay such taxes by delivering to the Company Shares having
a Fair Market Value equal to the amount of the withholding tax being paid by use
of Shares.
SECTION 12. COMPLIANCE WITH LAWS AND EXCHANGE REQUIREMENTS
No Option shall be granted and no Shares shall be issued in connection with any
Incentive Award unless the grant of the Option and the issuance and delivery of
Shares or cash pursuant to the Incentive Award shall comply with all relevant
provisions of state and federal law, including, without limitation, the
Securities Act of 1933, the Securities Exchange Act of 1934, the rules and
regulations promulgated thereunder, and the requirements of any market system or
stock exchange upon which the Shares may then be listed.
SECTION 13. AMENDMENT AND TERMINATION OF PLAN
(a) Amendment. The Board may from time to time amend the Plan, or any
provision thereof, in such respects as the Board may deem advisable except that
it may not amend the Plan without shareholder approval so as to:
(i) increase the maximum number of Shares that may be issued under
the Plan except in accordance with Section 3(c);
(ii) expand the types of awards available under the Plan;
(iii) permit the granting of Options with exercise prices lower
than those specified in Section 6 or materially modify the method for
determining the Option exercise price;
(iv) materially modify the requirements as to eligibility for
participation in the Plan;
(v) materially extend the term of the Plan;
(vi) delete or modify the limitation on the repricing of Options at
Section 6(h); or
(vii) prevent future grant of Incentive Awards to qualify as
"performance based" within the meaning of Code Section 162(m)(4)(C).
(b) Termination. The Board may at any time terminate the Plan.
(c) Effect of Amendment or Termination. Any amendment or the
termination of the Plan shall not adversely affect any Incentive Award
previously granted nor disqualify an Incentive Award from being treated as
"performance based" within the meaning of Code Section 162(m)(4)(C). Incentive
Awards outstanding at the time that the Plan is amended or terminated shall
remain in full force and effect as if the Plan had not been amended or
terminated.
SECTION 14. NOTICES
Each notice relating to the Plan shall be in writing and delivered in person or
by certified or registered mail to the proper address. Each notice to the
Committee shall be addressed as follows: DCB Financial Corp, 110 Riverbend
Avenue, Lewis Center, Ohio 43035, Attention: Compensation Committee. Each notice
to a Participant shall be addressed to the Participant at the address of the
Participant maintained by the Company on its books and records. Anyone to whom a
notice may be given under this Plan may designate a new address by written
notice to the other party to that effect.
SECTION 15. BENEFITS OF PLAN
This Plan shall inure to the benefit of and be binding upon each successor of
the Company. All rights and obligations imposed upon a Participant and all
rights granted to the Company under this Plan shall be binding upon the
Participant's heirs, legal representatives and successors.
SECTION 16. PRONOUNS AND PLURALS
All pronouns shall be deemed to refer to the masculine, feminine, singular or
plural, as the identity of the person or persons may require.
SECTION 17. SHAREHOLDER APPROVAL AND TERM OF PLAN
(a) The Plan was approved by the Board of Directors of the Company on
March 17, 2004 and shall only become effective upon its approval by shareholders
at the annual meeting of the shareholders of the Company held in 2004.
(b) Unless sooner terminated under Section 13, the Plan shall be in
effect from the date of its approval by shareholders of the Company in
accordance with Section 17(a) and shall continue in effect until the tenth
anniversary of the date its approval by shareholders.
D-8
PROXY FOR ANNUAL MEETING OF
DCB FINANCIAL CORP
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned shareholder of
DCB Financial Corp, Lewis Center, Ohio, do hereby nominate, constitute, and
appoint Vicki J. Lewis, Gary M. Skinner and Adam Stevenson, or any one of them
(with full power of substitution for me and in my name, place and stead) to vote
all the common stock of said Company, standing in my name on its books on March
31, 2004, at the Annual Meeting of its shareholders to be held on May 20, 2004,
at 4:00 P.M. (local time) at the Delaware County Bank & Trust Company Corporate
Center (110 Riverbend Avenue), Lewis Center, Ohio, or any postponements or
adjournments thereof with all the powers the undersigned would possess if
personally present as follows. This proxy revokes all prior proxies given by the
undersigned.
1. To elect four (4) members of Class II (term to expire 2007) to the
Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES.
Nominees: Merrill L. Kaufman Terry M. Kramer Edward Powers Donald J. Wolf
For All Nominees [ ] Withhold Authority to Vote For all Nominees [ ]
(To Withhold Authority for an individual nominee, check the "For All
Nominees" box and draw a line through the name of such nominee)
2. To approve the DCB Financial Corp 2004 Long-Term Stock Incentive Plan
in the form attached to the Proxy Statement as Appendix D.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL 2.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
THIS PROXY IS SOLICITED BY MANAGEMENT AND CONFERS AUTHORITY TO VOTE "FOR" THE
NOMINEES NOTED ABOVE, AND "FOR" PROPOSAL 2 ABOVE UNLESS OTHERWISE MARKED. IF ANY
OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT. ALL SHARES REPRESENTED BY
PROPERLY EXECUTED PROXIES WILL BE VOTED AS DIRECTED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE DIRECTORS NOMINATED BY THE
BOARD OF DIRECTORS AND "FOR" PROPOSAL 2. This proxy may be revoked prior to its
exercise by either written notice or personally at the meeting or by a
subsequently dated proxy.
___________________________________ __________________________________
(STOCKHOLDER SIGNATURE) (DATE)
___________________________________ __________________________________
(STOCKHOLDER SIGNATURE) (DATE)
INSERT LABEL
(WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, PLEASE
GIVE FULL TITLE. IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. ALL JOINT OWNERS
SHOULD SIGN.)