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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Capital Directions, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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CAPITAL DIRECTIONS, INC.
322 South Jefferson Street, Mason, Michigan 48854 517-676-0500
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March 29, 1999
Dear Shareholder:
Capital Directions, Inc. invites you to attend the 1999 Annual Meeting of
Shareholders beginning at 5:30 p.m. with desserts and the business meeting
commencing at 6:00 p.m. on Thursday, April 22, at the Ingham County Community
Building, 700 East Ash Street, Mason, Michigan.
Please read the accompanying Notice of Annual Meeting and Proxy Statement for
information pertaining to the matters to be considered and acted upon at the
Annual Meeting.
We appreciate your continued interest in Capital Directions, Inc. and look
forward to seeing you at the Annual Meeting. Whether or not you are present, it
is important that your shares are represented. Accordingly, please sign, date,
and mail the enclosed Proxy promptly.
Sincerely,
George A. Sullivan
Chairman of the Board
Timothy P. Gaylord
President and
Chief Executive Officer
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CAPITAL DIRECTIONS, INC.
322 South Jefferson Street, Mason, Michigan 48854 517-676-0500
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1999
The Annual Meeting of Shareholders of Capital Directions, Inc. will begin at
6:00 p.m. on Thursday, April 22, 1999 at the Ingham County Community Building,
700 East Ash Street, Mason, Michigan, for the following purposes:
(1) To elect a board of six directors, each to hold office for a
term of one year and until a successor has been elected and
qualified; and
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on March 1, 1999 will be
entitled to notice of and to vote at the Annual Meeting, or any adjournment
thereof.
All Shareholders are invited to attend the Annual Meeting. Please be sure to
mark, date, sign, and return the enclosed proxy card, whether or not you plan to
attend the meeting, so your shares will be voted. Any Shareholder present at the
meeting, may vote personally on all matters brought forward. In that event, his
or her Proxy will not be used.
BY ORDER OF THE BOARD OF DIRECTORS
Douglas W. Dancer
Secretary
March 29, 1999
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CAPITAL DIRECTIONS, INC.
322 South Jefferson Street, Mason, Michigan 48854 517-676-0500
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, APRIL 22, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies, beginning April 1, 1999, by the Board of Directors of Capital
Directions, Inc. (the "Company"), to be voted at the Annual Meeting of
Shareholders of the Company, to be held at the Ingham County Community Building,
700 East Ash Street, Mason, Michigan, on April 22, 1999 at 6:00 p.m. (the
"Annual Meeting").
If the form of Proxy accompanying this Proxy Statement is properly executed and
returned to the Company, the shares represented by the Proxy will be voted at
the Annual Meeting of Shareholders in accordance with the directions given in
such Proxy. If no choice is specified, the shares represented by the Proxy will
be voted for the election of directors listed as nominees in the Proxy and in
accordance with the best judgement of the Proxy holder with respect to any other
matter to come before the Shareholders at the Annual Meeting. A Proxy may be
revoked prior to its exercise by delivering a written notice of revocation to
the Secretary of the Company, executing a subsequent Proxy, or attending the
meeting and voting in person. Attendance at the Annual Meeting does not,
however, automatically serve to revoke the Proxy. This proxy statement is first
being mailed to shareholders on March 29, 1999.
VOTING SECURITIES AND RECORD DATE
As of March 1, 1999, the record date for the Annual Meeting, the Company had
issued and outstanding 595,623 shares of Common Stock, par value $5.00 per share
("Common Stock"), each outstanding share entitles the record holder thereof one
vote upon each matter to be voted upon at the meeting, or any adjournment. The
transaction of business at the Annual Meeting requires the presence of a quorum,
which will be established by the presence or representation at the Annual
Meeting of a majority of the outstanding shares of Common Stock entitled to
vote. Directors are elected by a plurality of the votes cast at the Annual
Meeting. Thus, the six nominees for election as directors who receive the
greatest number of votes cast will be elected directors (see "(1) ELECTION OF
DIRECTORS"). Therefore, broker non-votes on shares as to which authority is
withheld with respect to the election of directors will be counted for quorum
purposes, but since they are not votes cast, will have no effect on the election
of directors.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of March 1, 1999, as to
the Common Stock beneficially owned by each person known by the Company to be
the beneficial owner of more than five percent (5%) of the Common Stock:
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
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Common Stock, June M. Oesterle Trust 53,440(1) 8.97%
$5 par value Lyle M. Oesterle Trust
1975 Okemos Rd.
Mason, MI 48854
Common Stock, Colin J. Fingerle Trust 37,143 6.24%
$5 par value 2505 Londonderry Rd.
Ann Arbor, MI 48104
(1)Total of shares owned by both the June M. Oesterle Trust of which June
M. Oesterle is the sole Trustee and the Lyle M. Oesterle Trust of which Lyle M.
Oesterle, spouse of June M. Oesterle, is sole Trustee.
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(1) ELECTION OF DIRECTORS
Six directors are proposed to be elected at the Annual Meeting to serve until
the next Annual Meeting and/or until their successors are elected. The Bylaws of
the Company permit the Board of Directors to establish the size of the Board
from six to nine members. The present Board has fixed six as the size of the
Board to be elected. The Proxies cannot be voted for a greater number of persons
than the number of nominees named.
In the event that any nominee is unable to serve, which is not now contemplated,
the Proxy holders, to the extent they have been granted authority to vote in the
election of directors, may or may not vote for a substitute nominee. The
nominees for directors are the persons named below, all of whom are presently
serving as directors of the Company. These persons, according to the information
supplied by them, owned beneficially, directly or indirectly, the number of
shares of Common Stock of the Company set forth opposite their respective names.
All information is presented as of March 1, 1999.
DIRECTORS
Principal Occupation For Amount and Nature
Last Five Years Director of Beneficial Percent
Name Age Or More Since (1) Ownership (2) of Class
---- --- ------- --------- ------------- --------
Gerald W. Ambrose 49 County Controller for the 1990 800 (3)
County of Ingham; Vice
Chairman of the Board,
Mason State Bank and the
Company
Douglas W. Dancer 58 Realtor, CB Richard Ellis Martin; 1986 16,586 2.78
Former President, Dancer's Inc.
Department Stores; Secretary
of the Board, Mason State
Bank and the Company
Timothy P. Gaylord 44 President & Chief Executive 1995 6,435 1.08
Officer of Mason State Bank
and the Company
Paula Johnson 52 Realtor, Vision Real Estate and 1996 200 (3)
Developer, PAL, LLC i.e.: Vision
Village Condominiums
Marvin B. Oesterle 47 Partner, Golden Acres Farms 1981 5,080 (3)
and Oesterle Brothers
Seed Corn
George A. Sullivan 66 Attorney; Chairman of the 1975 2,120 (3)
Board, Mason State Bank and
the Company
6 directors as a group 31,221 5.24
(1) Includes service as a director of the Company's wholly-owned subsidiary,
Mason State Bank (the "Bank"). The Company was organized in 1988 to act,
inter alia, as a holding company for Mason State Bank, and the Bank's
directors became directors of the Company.
(2) Includes shares owned by or jointly with spouse, or minor child, or other
relative residing in same household, or as trustee.
(3) Less than one percent.
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COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a number of standing committees, including Audit and
Personnel.
The members of the Audit Committee include: Marvin B. Oesterle, Chairman; Gerald
W. Ambrose; and George A. Sullivan, ex-officio. The Audit Committee, which met
three times during 1998, appoints, subject to approval by the Board of
Directors, the Bank's independent auditors and approves the program of
continuous internal audit and the scope of audit procedures. The committee also
reviews the accounting principles and the control procedures and practices
adopted by management, the services performed by the independent auditors, and
approves the fees paid to the independent auditors.
The members of the Personnel Committee include: Gerald W. Ambrose, Chairman;
Douglas W. Dancer; Timothy P. Gaylord; Paula Johnson; and George A. Sullivan,
ex-officio. This committee met eight times in 1998. The Bank's Personnel
Committee approves the officers' salary budget for the year and recommends
changes in official salaries and other benefits to the Bank's Board of
Directors.
In 1998 there were a total of twelve regularly scheduled meetings of the Board
of Directors of the Company. Of the nominees for re-election as directors of the
Company, no director attended less than seventy-five percent of the aggregate of
the total number of meetings of the Board of Directors of the Company held in
1998 and the total number of meetings held by all standing committees of the
Board on which they served.
Each director of the Company is entitled to receive an annual retainer of
$6,752. In lieu of payment of director fees, certain directors have elected to
participate in a deferred compensation plan adopted in 1986. The plan was closed
to new participants May 18, 1996. All of the directors, except Gerald W.
Ambrose, Paula Johnson, and Timothy P. Gaylord, have elected to participate in
the plan which provides for retirement and death benefits to be paid to the
participating directors or their beneficiaries over fifteen years. Deferred
director fees are used to purchase life insurance policies of which the Bank is
the owner and beneficiary. These life insurance policies are structured to fully
fund the Bank's obligation under the terms of the plan.
EXECUTIVE OFFICERS
First Elected as
an Officer of
Name (age) Position with the Company the Company
- ---------- ------------------------- -----------
George A. Sullivan (66) Chairman 1988
Gerald W. Ambrose (49) Vice Chairman 1994
Douglas W. Dancer (58) Secretary 1990
Lois A. Toth (48) Treasurer 1998
Timothy P. Gaylord (44) President & CEO 1995
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation paid by the Company and its
subsidiaries during the fiscal year ended December 31, 1998 to the Company's
Chief Executive Officer. There were no executive officers, other than the CEO,
whose combined salary and bonus exceeded $100,000.
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SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
Name and All Other
Principal Position Year Salary ($) (1) Bonus ($) Options (#) (2) Compensation ($) (3)
- ------------------ ---- -------------- --------- --------------- --------------------
Timothy P. Gaylord 1998 $108,169 $13,200 2,000 $7,750
President and CEO 1997 $97,950 $12,609 2,000 $6,256
1996 $91,240 $11,700 2,000 $7,256
(1) Includes director's fees of $6,752 for 1998; $6,492 for 1997;
and $6,240 for 1996.
(2) The amounts shown represent the number of shares covered by
stock options granted under the Capital Directions, Inc.
Incentive Stock Option Plan as more fully described in the
Option Grants in Last Fiscal Year table set forth below.
(3) "All Other Compensation" is comprised of the following items:
A contribution by the Bank of $7,750 to the Bank's 401(k) Plan
for 1998 and $6,256 for 1997. The Bank is accustomed to
awarding a longevity bonus to all employees based on their
salary and length of service at five-year increments. Mr.
Gaylord received an award of $425 for five years of service
and a contribution by the Bank of $6,831 to the Bank's 401(k)
Plan for 1996.
The following table presents information about stock options granted to the
named executive officer during 1998 under the Capital Directions, Inc. Incentive
Stock Option Plan (the "Stock Option Plan").
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Exercise Price Appreciation
Underlying Granted to or Base for Option Term (2)
Options Employees Price Expiration
Name Granted (#) (1) in Fiscal Year ($/Sh) Date 5% ($) 10% ($)
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Timothy P. Gaylord 2,000 45.5 32.00 2/19/08 40,249 102,000
(1) The amounts shown are shares of the Company's Common Stock
covered by options granted under the Stock Option Plan. The
vesting of Stock Options does not start until two years from
the date of grant, February 19, 1998. The options vest over 3
years, with one-third of the covered shares becoming part of
the exercisable portion each of the three years.
(2) The potential realizable value is reported net of the option
exercise price, but before income taxes associated with
exercise. These amounts represent assumed annual compounded
rates of appreciation of five percent and ten percent from the
date of grant to the end of the option. Actual gains, if any,
on stock option exercises are dependent on the future
performance of the Company's Common Stock, overall stock
market conditions, and the optionees' continued employment
through the vesting period. The amounts reflected in this
table may not necessarily be achieved.
The following table presents the number of shares covered by, and the value of,
unexercised options held by the named executive officer at December 31, 1998. No
options were exercised by the named executive officer during 1998.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at FY-End (#) (1) Options at FY-End ($) (2)
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------------- -------------------------
Timothy P. Gaylord 1,601/5,799 26,116.75/43,523.25
(1) On March 18, 1999, the Company's Board of Directors, with the
consent of each grantee, voted to rescind all outstanding
SARs, which had been previously granted under the Company's
Incentive Stock Option Plan.
(2) The value shown is based upon the market bid price at December
31, 1998 of $31.25 net of the option exercise price.
EMPLOYMENT AGREEMENT
The Company has entered into an agreement with Mr. Gaylord relating to his
employment by the Company and the Bank. This agreement is summarized below. This
summary is not intended to be complete and is qualified in its entirety by
reference to the agreement.
The agreement among Mr. Gaylord, the Company, and the Bank (the "Agreement")
provides that Mr. Gaylord will be employed by the Company and the Bank as their
President and Chief Executive Officer. The Agreement was automatically renewed
in 1998 for a one-year period ending September 30, 1999 and is subject to
automatic renewals of one-year periods unless terminated in accordance with the
Agreement. The Agreement provided an annual salary rate for 1995 of $85,000,
subject to adjustment by the Board of Directors in subsequent years during the
term of the Agreement. During 1998 Mr. Gaylord's salary was $101,417. Mr.
Gaylord is also entitled to customary employee benefits and perquisites. The
Agreement provides that in the event of a change in control of the Company or
the Bank, if Mr. Gaylord's employment is involuntarily terminated, or if Mr.
Gaylord's status and compensation are reduced without cause within one year of
the change in control, Mr. Gaylord shall be entitled to payment of an amount
equal to his annual salary. The Agreement provides that the Company and the Bank
may terminate Mr. Gaylord's employment at any time for cause without further
obligation to compensate Mr. Gaylord. The Agreement broadly defines cause to
generally include, among other things, misfeasance, malfeasance, and nonfeasance
of Mr. Gaylord's duties and breach of the Agreement. The Agreement further
provides that Mr. Gaylord shall not, for a period of one year after Mr.
Gaylord's last day of employment, provide financial services or otherwise
compete with the business of the Company and the Bank in the City of Mason,
Michigan and a three mile radius surrounding it. Further, Mr. Gaylord shall not
during that one year period, solicit customers of the Bank and its affiliates or
solicit for hire any then current Bank or Company employees or contact them for
the purpose of inducing them to leave the Bank or Company. The Agreement also
requires Mr. Gaylord to maintain the confidentiality of certain information and
trade secrets of the Company and the Bank following the termination of his
employment.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
Directors and officers of the Company and their associates were customers of,
and had transactions with, subsidiaries of the Company in the ordinary course of
business during 1998. All loans and commitments included in such transactions
were made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features.
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TRANSACTION OF OTHER BUSINESS
The Board of Directors of the Company does not intend to bring any other matters
before the Annual Meeting. At the date of this Proxy Statement, the Board is not
aware of any matter other than the election of directors to be presented for
action by others or that any nominee named herein for election to the Board of
Directors will be unavailable. If any of the nominees listed above is not
available for election as a director, or if any other matters come before the
meeting or any adjournment thereof, it is intended that the shares represented
by Proxies given to the Board of Directors' designees will be voted with respect
thereto in accordance with the best judgement of the Proxies after consultation
with the Board of Directors. In addition, Rule 14a-4 of Regulation 14A under the
Securities Exchange Act of 1934 permits discretionary voting on any matter
presented at an annual meeting of shareholders, if the Company did not have
notice of the matter at least 45 days before the date on which the Company first
mailed its proxy materials for the prior year's annual meeting. The shares
represented by Proxies given to the Board of Directors' designees will be voted
in accordance with the best judgement of the proxies after consultation with the
Board of Directors on any matter coming within the scope of Rule 14a-4.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
For the year 1998, Crowe, Chizek and Company LLP was engaged by the Board of
Directors to perform an audit of the Company's financial statements and has been
so engaged for the year 1999. A representative of Crowe Chizek will be present
at the meeting to make a statement if he or she desires and to respond to
appropriate questions. The Company periodically reviews bids from qualified
accounting firms.
ADDITIONAL INFORMATION
The cost of soliciting Proxies will be borne by the Company. In addition to
solicitation by mail, officers and regular employees of the Company and its
subsidiaries may solicit Proxies by telephone, telegraph, or in person. The
Company has retained the services of The Independent Election Corporation of
America to deliver Proxy materials to brokers, nominees, fiduciaries, and other
custodians for distribution to their beneficial owners, as well as the
solicitation of Proxies from these institutions. The cost of the solicitation is
expected to amount to approximately $2,500, plus reasonable out-of-pocket
expenses.
2000 ANNUAL MEETING
Any shareholder who intends to present a proposal at the 2000 Annual Meeting of
Shareholders must submit the proposal in writing to the Company on or before
November 19, 1999 in order for the proposal to be eligible for inclusion in the
Company's proxy statement and form of proxy for that meeting.
SHAREHOLDERS ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS.
Douglas W. Dancer
Secretary
March 29, 1999
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CAPITAL DIRECTIONS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gerald W. Ambrose and Marvin B. Oesterle,
jointly and severally, proxies, with full power of substitution, to vote all the
shares of capital stock of Capital Directions, Inc. which the undersigned may be
entitled to vote, at the Annual Meeting of Shareholders to be held at the
Ingham County Community Building, 700 East Ash Street, at 6:00 p.m. on
April 22, 1999, or any adjournment thereof.
The proxies named on the reverse hereof as directed to vote as specified on the
reverse hereof or, if no specification is made, FOR all nominees named on the
reverse side and to vote IN ACCORDANCE WITH THEIR DISCRETION on such other
matters that may properly come before the meeting. The Board of Directors
recommends a vote FOR all Agenda items.
(TO BE SIGNED ON REVERSE SIDE.)
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1. ELECTION OF DIRECTORS 2. TRANSACT SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE
NOMINEES: THE MEETING OR ANY
ADJOURNMENT THEREOF.
FOR WITHHELD
FOR WITHHELD ABSTAIN
Gerald W. Ambrose Paula Johnson
Douglas W. Dancer Marvin B. Oesterle [ ] [ ] [ ] [ ] [ ]
Timothy P. Gaylord George A. Sullivan -------------------- ---------------------------------
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
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/ /
/ NOTE: Please sign exactly as name appears hereon. Joint owners /
/ should each sign. When signing as attorney, executor, administrator,/
/ trustee or guardian, please give full title as such. /
/ /
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/ SIGNATURE DATE /
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/ SIGNATURE DATE /
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