UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
<Table>
[ ] 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-12
</Table>
United Bancorporation of Alabama, Inc.
- --------------------------------------------------------------------------------
(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 the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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UNITED BANCORPORATION OF ALABAMA, INC.
200 EAST NASHVILLE AVENUE
ATMORE, ALABAMA
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 1, 2002
NOTICE IS HEREBY GIVEN, that pursuant to call of its Board of
Directors, the Annual Meeting of Stockholders (the "Meeting") of United
Bancorporation of Alabama, Inc. (the "Corporation"), Atmore, Alabama, will be
held at the corporate offices of United Bank, 200 East Nashville Avenue, Atmore,
Alabama, on Wednesday, May 1, 2002, at 3:00 p.m., local time, for the purpose of
considering and voting upon the following matters:
1. Election of two persons as directors, each of whom is
nominated to serve until the 2005 Annual Meeting of
Stockholders and until his successor is elected and qualified.
2. Transaction of such business as may come properly before the
Meeting or any adjournments thereof.
You are cordially invited to attend the Meeting, and we hope you will
attend.
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE SIGN AND RETURN THE ENCLOSED PROXY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING.
Stockholders of record on March 29, 2002 are entitled to receive notice
of and to vote at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
H. Leon Esneul
Chairman of the Board
ATMORE, ALABAMA
APRIL 12, 2002
UNITED BANCORPORATION OF ALABAMA, INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 1, 2002
INTRODUCTION
This Proxy Statement is furnished to the stockholders of United
Bancorporation of Alabama, Inc. (the "Corporation") in connection with the
solicitation of proxies by the Corporation's Board of Directors for use at the
Annual Meeting of Stockholders of the Corporation to be held on May 1, 2002, at
3:00 p.m., local time, and at any adjournments thereof (the "Meeting").
The matters to be considered at the Meeting include: (1) the election
of two directors, each of whom is nominated to serve until the 2005 Annual
Meeting of Stockholders, each to serve until his successor is elected and
qualified; and (2) the transaction of such other business as may come properly
before the Meeting.
The Corporation's executive offices are located at 200 East Nashville
Avenue, Atmore, Alabama 36502. This Proxy Statement is dated April 12, 2002,
and, together with a copy of the Corporation's 2001 Annual Report, is being
mailed to stockholders of the Corporation on or about April 12, 2002.
VOTING SECURITIES
As of March 29, 2002, the Corporation's only outstanding voting
security was its Class A Stock, of which 1,098,352 shares (excluding treasury
shares) were issued, outstanding, and entitled to vote. Those shares were held
by approximately 625 stockholders of record. Stockholders of record on March 29,
2002, are entitled to receive notice of and to vote at the Meeting.
Notwithstanding that date, the Corporation's stock transfer books will
not be closed, and stock may be transferred after the record date, although only
stockholders of record as of the record date may vote at the Meeting.
The directors, nominees for election as directors, and executive
officers of the Corporation as a group number eight persons and, as of March 29,
2002, beneficially owned 150,800 shares of Class A Stock, 13.73% of the total
shares of such stock outstanding. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT."
VOTES REQUIRED
The representation in person or by proxy of at least a majority of the
outstanding Class A Stock entitled to vote at the Meeting is necessary to
constitute a quorum for the transaction of business. Votes withheld from any
nominee, abstentions and broker "non-votes" are counted as
1
present or represented for purposes of determining the presence or absence of a
quorum for the Meeting. A "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a broker or other proposal because the nominee
does not have discretionary voting power with respect to the proposal and has
not received instructions from the beneficial owner.
The election of directors requires an affirmative vote of a plurality
of the shares present in person or represented by proxy at the Meeting. The
nominees receiving the highest number of affirmative votes of such shares will
be elected as directors. Accordingly, abstentions and broker non-votes will have
no effect on the outcome of the vote for directors. Although the Corporation is
not presently aware of any other matter to be acted upon at the Meeting, any
other matters that may be considered and acted upon by the stockholders at the
Meeting would require approval by the affirmative vote of at least a majority of
the shares entitled to vote and represented at the Meeting either in person or
by proxy. Abstentions would be treated as votes cast with respect to any such
matter and therefore will have the same effect as a vote against such matters.
Broker non-votes will not be counted as votes cast with respect to such matter
and therefore would have no effect on the outcome of the votes.
PROXIES
If the enclosed Proxy is executed and returned, it may be revoked at
any time before it has been exercised; if it is not revoked, the shares
represented thereby will be voted by the persons designated in such Proxy in
accordance with the instructions therein. IN THE ABSENCE OF INSTRUCTIONS, THE
PROXY WILL BE VOTED FOR ELECTION OF EACH OF THE DIRECTOR NOMINEES DESCRIBED IN
THIS PROXY STATEMENT, AND WITH DISCRETIONARY AUTHORITY ON ALL OTHER MATTERS THAT
MAY COME PROPERLY BEFORE THE MEETING.
ELECTION OF DIRECTORS
The following table sets forth the name of each nominee and each
director of the Corporation continuing in office after the Meeting, a
description of his position and offices, if any, with the Corporation and its
subsidiaries, a brief description of his principal occupation during at least
the last five years, and certain other information, including his age. Each such
director and each nominee is a director of United Bank (the "Bank").
<Table>
<Caption>
DIRECTOR DATE TERM AS PRINCIPAL OCCUPATION
NAME AND AGE SINCE DIRECTOR EXPIRES DURING PAST FIVE YEARS
- ------------ -------- ---------------- ----------------------
Dale M. Ash (42) 2002* May 2005* Controller of Pepsi-Cola
Bottling Company of Atmore
and of South Alabama Vending
Company.
L. Walter Crim (56) 1997 May 2003 Owner, Central Farm Supply.
H. Leon Esneul (66) 1993 May 2003 Chairman of the Board of the
Corporation; pecan grower;
managing partner of the Doris Company
Limited Partnership.
</Table>
2
<Table>
William C. Grissett (53) 1998 May 2004 Owner, Escambia Lawn &
Rental Center, Inc.; Vice
President, Tiger-Sunbelt
Industries, Inc. 1998-1999; President,
Sunbelt Chemicals, Inc., 1983-1998.
Robert R. Jones, III (50) 1992 May 2002* President of the Corporation
since May, 1993; President
and Chief Executive Officer
of United Bank since July,
1992.
William J. Justice (62) 1991 May 2003 Vice Chairman of the Board
of the Corporation; Vice Chairman of
the Board of United Bank; Pharmacist,
President and Chief Executive Officer,
Greenlawn Pharmacy.
David D. Swift (51) 1995 May 2004 Secretary of the Board of the
Corporation; Chairman of the
Board of United Bank; Vice
President, Swift Lumber, Inc.;
President, Swift Supply, Inc.;
Partner, Palustris Products, Ltd.
</Table>
* nominee for election for a term expiring at the 2005 Annual
Meeting of Stockholders
The Bank is a wholly-owned subsidiary of the Corporation. None of the
other entities listed under the column "Principal Occupation During Past Five
Years" above is affiliated with the Corporation.
Each director of the Corporation continuing in office after the Meeting
attended at least 75% of the meetings of the Corporation's Board of Directors
and its committees held during 2001 while he served as a director. The
Corporation's Board of Directors held seven meetings in 2001.
The Corporation's Board of Directors does not have standing audit,
nominating, or compensation committees, or committees performing similar
functions. However, the Corporation's Bylaws do authorize the Board of Directors
to designate such committees. In addition, the Board of Directors of the Bank
has established audit and compensation committees. In connection with the
adoption of the United Bancorporation of Alabama, Inc. 1998 Stock Option Plan
(the "Stock Option
3
Plan"), the Board designated four of its directors who were
not employees of the Corporation or the Bank to serve on the Stock Option
Committee of the Board, which committee acts as the Administrator of the Stock
Option Plan and as Administrator of the 1999 Employee Stock Purchase Plan of
United Bancorporation of Alabama, Inc.
It is intended that, unless "Withhold Authority" is noted, proxies in
the accompanying form will be voted at the Meeting for the election to the Board
of Directors of Dale M. Ash and Robert R. Jones, III to serve until the 2005
Annual Meeting of Stockholders and until their respective successors are elected
and qualified. Mr. Jones presently is a member of the Board of Directors. Mrs.
Ash presently is a member of the Board of Directors of United Bank, which
position she has held since 1993. If any nominee is not a candidate when the
election occurs (which is not anticipated to be the case), it is intended that
the proxies may be voted, unless authorization is withheld, for any substitute
nominee or nominees recommended by the Board of Directors. The Board of
Directors has no reason to believe that any nominee will be unable to serve as a
director if elected.
No fees are paid to directors of the Corporation for their services as
such. Since all of the Corporation's directors also serve as directors of United
Bank, they are primarily compensated for their services to United Bank. See
"Executive Compensation" below for information regarding compensation paid to
executive officers of the Corporation.
During 2001 all current directors of the Corporation also served as
directors of United Bank. Each director of United Bank received a standard fee
for such service of $3,500 ($4,700 for United Bank Board Chairman David D.
Swift); $100 for each Joint Loan Committee meeting attended; and $50 for each
additional committee meeting attended, with a maximum of $50 per day for
additional meetings. In 2001, United Bank's Board of Directors held a total of
15 meetings.
In connection with the Corporation's adoption of the Stock Option Plan
in 1998, each director of the Corporation was granted nonstatutory stock options
to purchase 2,000 shares of Class A Stock at an exercise price of $16 per share
(the number of shares and exercise price having been adjusted in accordance with
the Stock Option Plan to account for the 2-for-1 split of Class A Stock in May
1999), with two-fifths of such options being immediately exercisable and
additional one-fifth increments becoming exercisable in December of 1999 through
2001, respectively. No additional grants to directors have been made at this
time.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS
A VOTE "FOR" ELECTION OF THE NOMINEES LISTED ABOVE.
EXECUTIVE OFFICERS
The following table lists the executive officers of the Corporation and
the respective positions held by them in the Corporation. Each is a director of
the Corporation, except for Mitchell D. Staples, and information regarding their
other business experience during the past five years and certain other
information is set forth under the caption "ELECTION OF DIRECTORS" above. Mr.
Staples, age 40, has been the Controller and Cashier, and now is Senior Vice
President and Chief Financial Officer, of United Bank from October 1992 to
present.
4
<Table>
<Caption>
NAME POSITION
---- --------
Robert R. Jones, III President
H. Leon Esneul Chairman of the Board
William J. Justice Vice Chairman of the Board
David D. Swift Secretary
Mitchell D. Staples Treasurer
</Table>
The executive officers of the Corporation are elected annually at the
organizational meeting of the Board of Directors, which follows the annual
meeting of stockholders, to serve until the organizational meeting in the
subsequent year. Except as described under Agreements with Mr. Jones below,
there are no known arrangements or understandings between any executive officers
and any other person pursuant to which any of the above-named persons was
selected as an officer.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of March 29, 2002, the number of shares
of the Corporation's Class A Stock held by each person who owns of record or, to
the knowledge of the Corporation, may be deemed to own beneficially, more than
5% of the outstanding shares of such Stock.
<Table>
<Caption>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------- -------------------- --------
Kent D. Sherrill 55,714(1) 5.07%
7861 Arthur Brown Road
Walnut Hill, FL 32568
</Table>
- ----------
(1) Includes 800 shares owned by his wife; 6,504 shares owned jointly by his
wife and their children; 35,178 shares owned by other family members over which
Mr. Sherrill has voting and dispositive power; and 2,800 shares managed by a
trust for himself and other family members over which Mr. Sherrill has voting
and dispositive power. The foregoing is based on information provided to the
Corporation by Mr. Sherrill.
The table below sets forth, as of March 29, 2002, the number of shares
of Class A Stock beneficially owned by each director and nominee and by all
executive officers and directors as a group.
5
<Table>
<Caption>
PERCENTAGE
AMOUNT AND NATURE OF OF OUTSTANDING
NAME BENEFICIAL OWNERSHIP CLASS A STOCK
---- -------------------- --------------
Dale M. Ash 6,572(1) *
L. Walter Crim 5,258(2) *
H. Leon Esneul 51,228(3) 4.66%
William C. Grissett 19,490(4) 1.77%
Robert R. Jones, III 35,938(5) 3.27%
William J. Justice 13,749(6) 1.25%
David D. Swift 18,417(7) 1.68%
All executive officers 150,800(1)(2)(3)(4) 13.73%
and directors as a (5)(6)(7)
group (8 persons)
</Table>
- ----------
* less than 1%
(1) Includes 1,176 shares owned jointly with her children.
(2) Includes 936 shares owned jointly with his children and 800 shares which may
be acquired within 60 days upon exercise of options.
(3) Includes 49,228 shares owned by The Doris Company Limited Partnership and
400 shares which may be acquired within 60 days upon exercise of options.
(4) Includes 6,490 shares owned jointly with his wife and 12,600 shares owned by
United Bank in his Individual Retirement Account.
(5) Includes 4,318 shares owned jointly with his wife; 140 shares owned jointly
with his son; 1,658 shares owned by United Bank in his Individual Retirement
Account; 1,122 shares owned by United Bank in an Individual Retirement Account
for his wife; 140 shares owned jointly by his wife and his daughter; and 28,560
shares which may be acquired within 60 days upon exercise of options.
(6) Includes 7,200 shares owned jointly with his wife; 2,196 shares owned by his
wife, as to which shares Mr. Justice disclaims beneficial ownership; 221 shares
owned by Mr. Justice for his granddaughter, as to which shares Mr. Justice
disclaims beneficial ownership.
(7) Includes 3,417 shares owned by his wife, as to which shares Mr. Swift
disclaims beneficial ownership, and 800 shares which may be acquired within 60
days upon exercise of options.
6
EXECUTIVE COMPENSATION
Officers of the Corporation, and directors who also serve as directors
or officers of United Bank, are remunerated by United Bank. The following
Summary Compensation Table sets forth certain information concerning
compensation to Robert R. Jones, III, the only executive officer of the
Corporation who received total annual salary and bonus for 2001 exceeding
$100,000.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
----------------- ------------
ALL
SECURITIES OTHER
SALARY BONUS UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#) SATION($)
- --------------------------- ---- ------ ----- ----------- ---------
Robert R. Jones, III 2001 149,000 44,715 4,080 77,804(1)
President of the Corporation 2000 145,000 43,031 4,080 45,900(1)
President of the Bank 1999 142,500 58,781 4,080 45,638(1)
</Table>
(1) Includes $25,212 paid on a life insurance contract owned by Mr. Jones and
related tax benefits pursuant to the 1993 Agreement described below in each of
2000 and 1999, and $27,082 paid for such purposes pursuant to the 2001 Agreement
described below in 2001; $561, $456 and $456 premium reimbursed by United Bank
on a long-term disability insurance policy for Mr. Jones in each of 2001, 2000
and 1999, respectively; $738, $722 and $1,000 contributed by United Bank for the
account of Mr. Jones pursuant to United Bank's 401(k) Employee Incentive Savings
Plan (the "401(k) Plan") in 2001, 2000 and 1999, respectively; $5,850, $5,550
and $5,550 in fees for attendance at meetings of United Bank's Board of
Directors in 2001, 2000 and 1999, respectively; $36,840 accrued in 2001 to
provide for certain post-employment benefits pursuant to the 2001 Agreement
described below; and $6,733, $6,322 and $5,782 in profit-sharing payments made
in 2001, 2000 and 1999 for services in 2000, 1999 and 1998.
Agreements with Mr. Jones. The Bank and Mr. Jones entered into an Executive
Compensation Agreement as of May 28, 1993 (the "1993 Agreement") which provides
for certain deferred compensation benefits, amounts of which paid for 1999 and
2000 are described under "All Other Compensation" in the Summary Compensation
Table above. The 1993 Agreement was replaced in 2001 by the Supplemental
Compensation and Amendment Agreement discussed below (the "2001 Agreement").
Following discussions in the latter part of 1997, the Bank entered into an
Employee Agreement with Mr. Jones dated as of January 1, 1998 (the "Agreement").
Pursuant to the Agreement, Mr. Jones has agreed to provide full-time
professional services to the Bank in the capacity of President and CEO of the
Bank, to the exclusion of other businesses or activities. The Agreement was for
an initial term from January 1, 1998 through December 31, 2001, and unless
terminated will automatically renew on January 1 of each year for a three-year
term. The Agreement provides for a specified annual salary, together with
performance-based cash incentive compensation ("Bonus") determined by the Board
of the Bank at the time of its annual review of Mr. Jones' performance. The
Bonus under the Agreement is calculated as a percentage of Mr. Jones' salary,
ranging from zero to 45%, based on attainment of certain net income levels by
the Bank. Salary and Bonus paid to Mr. Jones for 2001 are
7
reflected in the Summary Compensation Table above. The Agreement specifies that
Bonus awards are intended to eventually be governed by an Executive Incentive
Compensation Plan applicable to certain officers of the Bank generally, as well
as to the President and CEO of the Bank. The Agreement also provides for Mr.
Jones to receive long-term incentives at the discretion of the Board; benefits
provided to employees of the Bank generally; reimbursement of reasonable and
customary business expenses incurred by him in connection with the performance
of his duties; payment or reimbursement of certain fees for professional and
other organizations in the Bank's market area; an automobile allowance; and
vacation time. As amended by the 2001 Agreement, the Agreement also provides for
supplemental compensation to be paid by the Bank to Mr. Jones upon retirement
and in certain other circumstances as set forth in the 2001 Agreement.
The Agreement also provides generally that, in the event of Mr. Jones'
death, the Bank will pay to his estate one quarter of his then-current annual
salary plus a prorata portion of the Bonus otherwise payable to him; that, in
the event of his disability, the Bank will pay his salary and a prorata portion
of Bonus until the earlier of twelve months after the date of disability or such
time as disability benefits commence under a Bank-provided disability insurance
policy; and that the Bank will pay Mr. Jones an amount equal to monthly salary,
benefits and prorata Bonus for twelve months after termination of his employment
if such termination is not for cause or a result of material change in Mr.
Jones' duties and responsibilities.
Under the Agreement, Mr. Jones has agreed that, during the term of his
employment and for two years thereafter, he will not engage in any business
similar of that of the Bank or any of its affiliates or solicit any employee of
the Bank or any of its affiliates to leave their employment with the Bank (the
"Noncompetition Agreements"). The Agreement also provides generally that, if a
change of control of the Bank occurs and within 36 months thereafter his
employment by the Bank is terminated, the Bank will pay him a severance payment
equal to two times the greater of the total cash compensation paid to him for
the fiscal year most recently completed before the termination or his annual
salary at the time of termination, and that, in such event, the Noncompetition
Agreements would no longer apply.
In a Supplemental Agreement with Mr. Jones dated as of March 9, 1999
(the "Supplemental Agreement"), the Corporation and the Bank have also agreed
that, subject to his continued employment by the Bank at such times, in each
year beginning in 1999 and ending in 2002, the Corporation will grant an
incentive stock option ("ISO") covering 4,080 shares of stock (the number of
shares having been adjusted to account for the 2-for-1 split of Class A Stock in
May, 1999) to Mr. Jones, exercisable at the then-current fair market value of
Class A Stock, with each such ISO being exercisable in five equal installments,
the first of which will be vested on the date of the grant. The Supplemental
Agreement specifies that the incentive stock options provided for thereunder
will be granted immediately in the event of a Change of Control as defined in
the Employee Agreement. The grant of options pursuant to the Supplemental
Agreement in 2001 is reflected under "OPTION GRANTS IN LAST FISCAL YEAR" below.
The 2001 Agreement, which became effective as of January 1, 2001,
provides for annual payments on a life insurance contract ("Insurance Payments")
in lieu of comparable payments previously required under the 1993 Agreement. In
addition to the benefits under the Agreement and in lieu of post-employment
payments previously specified in the 1993 Agreement, the 2001
8
Agreement provides for a normal retirement benefit of $102,000 per year to be
paid to Mr. Jones for 20 years if he remains employed by the Bank until normal
retirement age; lump sum payment to his beneficiary in the event of his earlier
death; and proration of the annual payment amount if his employment by the Bank
is terminated before normal retirement age for reasons other than his death,
total and permanent disability, cause, or his voluntary termination without
required notice, with the prorated annual payment amount increasing by 5% annual
increments from 50% of the normal retirement benefit in 2001 to 100% in 2011 and
thereafter. The 2001 Agreement also provides that if Mr. Jones' employment by
the Bank is terminated within 180 days after a change of control of the
Corporation, as defined in the Agreement, he will receive a lump sum payment
equal to (a) the discounted present value of the normal retirement benefit, plus
(b) the discounted present value of the Insurance Payments for the lesser of ten
years or the number of years until he would reach the age of 65.
BOARD REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of the Corporation has not appointed a separate
committee for determination of executive compensation generally. The Stock
Option Administration Committee of the Corporation's Board of Directors has been
appointed as administrator of the Stock Option Plan and the Employee Stock
Purchase Plan.
Each non-director executive officer of the Corporation is also an
officer of the Bank, and receives compensation for services to the Bank.
Executive compensation decisions made by the Bank are reviewed by the entire
Board, with the exception of determinations made with respect to Mr. Jones, in
which he does not participate.
The Board of Directors of the Bank makes compensation determinations
with respect to the employees of the Bank, including those who are executive
officers of the Corporation, based on the recommendations of the Compensation
Committee of the Bank's Board of Directors (the "Compensation Committee"). For
executives other than the Chief Executive Officer, the Compensation Committee
acts on compensation recommendations made by the Chief Executive Officer, with
the objective of providing compensation competitive with that provided by
comparable financial institutions.
At present, compensation for executive officers other than the Chief
Executive Officer consists of annual base salary and annual cash bonuses
determined by the Compensation Committee, primarily on the recommendation of the
Chief Executive Officer. Base salary is determined at hiring and is reviewed
annually for increases based upon performance evaluations made by the Chief
Executive Officer. Annual cash bonuses are generally awarded as a percentage of
base salary. The bonus is based on the individual's compensation, salary grade
and individual performance and the performance of the Bank.
The compensation of the Chief Executive Officer, Mr. Jones, is
determined by the Compensation Committee in accordance with the provision of Mr.
Jones' employment agreement. See Agreements with Mr. Jones above. Mr. Jones'
compensation consists of a specified annual salary, performance-based annual
cash incentive compensation, long-term incentives in the form of stock options,
and other benefits. The Committee based its determination of Mr. Jones'
9
compensation package as reflected in the Agreement on the advice and
recommendation of a compensation consultant specializing in the banking
industry, with the intent of providing a compensation package designed to retain
Mr. Jones' services and motivate him to perform to the best of his abilities.
The increase in Mr. Jones' 2001 base salary reflects the Board's determination
of the salary level necessary to meet this objective. The Bonus paid to Mr.
Jones in 2001, approximately 30% of his 2001 salary, was based on attainment of
predetermined net income levels by the Bank. Under the Agreement, depending on
the level of net income of the Bank, the bonus could have ranged from zero to
45%. As described above, long-term incentives in the form of incentive stock
options granted to Mr. Jones in 2001 were granted in accordance with the
Agreement as supplemented in 1999.
This report is submitted by L. Walter Crim, H. Leon Esneul, William C.
Grissett, Robert R. Jones, III, William J. Justice, Bobby W. Sawyer, and David
D. Swift, being all of the members of the Board of Directors during the 2001
fiscal year.
OPTIONS GRANTS IN LAST FISCAL YEAR
The following table and notes provide information on option grants made in 2001
under the Stock Option Plan to Mr. Jones, the only executive officer named in
the Summary Compensation Table above.
<Table>
<Caption>
Individual Grants Grant Date Value(1)
----------------------------- -------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Exercise or Grant Date
Options in Fiscal Base Price Expiration Present
Name Granted Year(2) Per Share Date Value
- ---- ---------- ---------- ----------- ---------- ----------
Robert R. Jones, III 4,080(2) 100% $32.50 12/22/2010 $21,585
</Table>
(1) The Corporation has used the Black-Scholes Option Valuation model adjusted
for dividends to determine grant date present value of the options. The
Corporation does not advocate or necessarily agree that the Black-Scholes model
properly reflects the value of an option. The assumptions used in calculating
the option value are as follows: a risk-free interest rate of 3.52%, the rate
applicable to a two-year treasury security at the time of the award; a dividend
yield of 2.16%, the yield at the time the option award was made; volatility of
12%, calculated using daily stock returns for the twelve month period preceding
the option award; a stock price at date of grant of $32.50; and a ten-year stock
option term. No adjustments were made for forfeitures or vesting restrictions on
exercise.
(2) Options were granted with an exercise price equal to market value on the
date of the grant and are exercisable in an initial 20% increment at the date of
grant and in cumulative 20% increments at the end of each of the four years
following the date of grant, subject to the condition that no option may be
exercised later than ten years after the date of the grant.
10
The following table and notes provide information on the value at
December 31, 2001 of unexercised options held by Mr. Jones, the only executive
officer named in the Summary Compensation Table above.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR(1)
AND 2001 FISCAL YEAR-END OPTION VALUES
<Table>
<Caption>
Number of Securities
Underlying Unexercised Value of Unexercised in-the
Name and Position Options at 12/31/01 Money Options at 12/31/01($)(2)
- ----------------- ------------------------------ -----------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Robert R. Jones, III 28,560 8,610 $320,508.48 $13,072.32
</Table>
(1) No options were exercised by Mr. Jones during the 2001 fiscal year.
(2) The ultimate realization of value on the exercise of such options is
dependent upon the market price of Common Stock at the time of
exercise. Calculations are based on the $30.00 price of the last sale
of Class A Stock reported to the Corporation during the fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER INFORMATION
The SEC requires certain information to be provided under the foregoing
caption. As reported above, the Board of Directors has no compensation
committee. Each member of the Board of Directors is a member of the board of
directors of the Bank, and three directors of the Corporation during fiscal year
2001, Messrs. Grissett, Justice and Sawyer, are members of the Compensation
Committee of the board of directors of the Bank. The Board of Directors of the
Corporation includes Messrs. Jones, Esneul, Justice and Swift, each of whom may
be deemed to be an executive officer of the Corporation. None of Messrs. Esneul,
Justice and Swift receives compensation from the Corporation for services as an
officer of the Corporation, and Mr. Jones does not participate in the Board's
deliberations with respect to his compensation.
REPORTS UNDER SECTION 16 OF THE SECURITIES AND EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act")
requires the Corporation's executive officers and directors, and any persons who
own more than 10% of the Class A Stock, to file reports of ownership and changes
in ownership with the Security and Exchange Commission ("SEC"). The Corporation
believes that except as follows, all requirements under Section 16(a) of the
Exchange Act applicable to directors and executive officers of the Corporation
were complied with by such persons during the last fiscal year: Mr. Esneul filed
late a report on Form 5 reporting two estate-related transactions which resulted
in no change in his reported beneficial ownership; and Mr. Jones filed late a
report on Form 5 reporting one option grant transaction. In making this
disclosure, the Corporation has relied on written representations by or on
behalf of its directors and executive officers and copies of reports filed.
11
AUDIT COMMITTEE REPORT
The SEC requires the Corporation to make a report of various matters if
there is an audit committee of its Board of Directors. Because substantially all
of the operations of the Corporation are conducted by the Bank, the Board of
Directors of the Corporation has not established a separate audit committee, nor
has it adopted a written charter for such a committee or made any determination
as to independence of committee members. The Board of Directors of the Bank has
established an audit committee (the "Bank Audit Committee"), and in their
capacities as directors of the Bank, Messrs. Crim and Grissett, each of whom is
a non-employee member of the Board of Directors of the Bank, serve as two of the
seven members of the Bank Audit Committee. The Board of Directors of the
Corporation is informed that the Bank Audit Committee has reviewed and discussed
the audited financial statements of the Corporation with management; that the
Bank Audit Committee has discussed with the independent auditor of the
Corporation, KPMG LLP ("KPMG"), the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU Section 380), and that the
Bank Audit Committee has received the written disclosures and the letter from
KPMG required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has discussed with KPMG their
independence. However, because the Board of Directors of the Corporation has no
audit committee, no such committee undertook the review and discussion described
in the preceding sentence, and there was no such committee to make a
recommendation to the Board of Directors of the Corporation as to whether the
audited financial statements should be included in the Corporation's Annual
Report on Form 10-K for the last fiscal year for filing with the SEC.
Listed below are the names of each of the members of the Corporation's
Board of Directors for the 2001 fiscal year, in accordance with Regulation S-K
Item 306(b).
L. Walter Crim H. Leon Esneul William C. Grissett
Robert R. Jones, III William J. Justice Bobby W. Sawyer
David D. Swift
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some Corporation and United Bank directors, officers, and principal
stockholders, and their associates and immediate families were customers of, or
had transactions with, subsidiaries of the Corporation in the ordinary course of
business during 2001. In addition, some Corporation and United Bank directors
are directors, officers, trustees, or principal security holders of corporations
or other organizations that were customers of, or had transactions with, the
Corporation or its subsidiaries in the ordinary course of business during 2001.
All outstanding loans and other transactions with the Corporation's, and its
subsidiary's, directors, officers, and principal stockholders, and their
associates and immediate families, 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
when made did not involve more than the normal risk of collectibility or present
other unfavorable features. In addition to banking and financial transactions,
the Corporation and its subsidiaries may have had additional transactions
12
with, or may have used products or services of, various organizations of which
directors of the Corporation or its subsidiaries are directors, officers, or
principal stockholders. Except as described below, such transactions were on
terms comparable to those which would have been recorded with unaffiliated
parties, and the amounts involved in such noncredit transactions have in no case
been material in relation to the business of the Corporation and its
subsidiaries or to such other organizations.
COMPARATIVE PERFORMANCE GRAPH
The Securities and Exchange Commission ("SEC") requires the Corporation
to include in this Proxy Statement a graph which compares the yearly percentage
change in cumulative total shareholder return on the Class A Stock with (i) the
performance of a broad equity market indicator, and (ii) the performance of a
published industry index or peer group. Set forth below is a graph comparing the
yearly percentage change in the cumulative total stockholder return on the Class
A Stock against the cumulative total return of the S&P 500 Index and the Nasdaq
Bank Index for the five-year period from December 31, 1996 to December 31, 2001.
The Nasdaq Bank Index is a broad-based capitalization-weighted index of domestic
and foreign common stocks of banks that are traded on the Nasdaq National Market
System (Nasdaq/NMS) as well as the SmallCap Market. The Class A Stock is not
traded on a recognized market, and the price for the Class A Stock on the dates
represented in the graph are based on the most recent sales prices reported to
the Corporation on or prior to each such date.
<Table>
<Caption>
Period Ending
---------------------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
United Bancorporation 100.00 185.00 236.90 300.60 360.19 333.99
Of Alabama, Inc.
S&P 500 100.00 124.89 147.93 164.24 152.80 132.88
Nasdaq Bank Index 100.00 151.54 142.98 138.88 153.65 169.05
</Table>
[GRAPH]
13
AUDITORS
KPMG LLP or its predecessor, Peat Marwick Main & Co. (collectively,
"KPMG"), independent certified public accountants, was selected as the
Corporation's auditor on September 26, 1984, and has served as such since then.
A representative of KPMG is expected to be present at the Meeting and will have
the opportunity to make a statement if he so desires. The KPMG representative
also is expected to be available to respond to appropriate questions.
AUDIT FEES
KPMG billed the Corporation aggregate fees totaling $67,000 for
professional services rendered for the audit of the Corporation's annual
financial statements for 2001 and the reviews of the financial statements
included in the Corporation's forms 10-Q for 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
KPMG did not perform any financial information systems design or implementation
services for the Corporation in 2001.
ALL OTHER FEES
The aggregate fees for all services rendered by KPMG to the Corporation for
2001, other than those described in the two immediately preceding paragraphs,
totaled $23,600.
The Board of Directors has considered whether the provision by KPMG of the
services covered by the fees other than the audit fees is compatible with
maintaining KPMG's independence and believes that it is compatible.
OTHER BUSINESS
Management currently knows of no other business to be brought before
the Meeting. If other business is brought properly before the Meeting, the
accompanying Proxy will be voted in the discretion of the persons designated in
such Proxy, unless the "Authority Withheld" box has been checked.
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne
by the Corporation. In addition to the use of the mails, proxies may be
solicited by directors, officers, or other employees of the Corporation or its
subsidiaries personally, by telephone, or by telefacsimile. The Corporation does
not expect to pay any compensation for the solicitation of proxies, but will
reimburse brokers, custodians, or other persons holding stock in their names or
in the names of nominees, for their reasonable expenses in sending proxy
materials to principals and obtaining their instructions.
14
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate
for stockholder action consistent with regulations of the SEC. In order to be
included in the Corporation's proxy statement and form of proxy relating to its
2003 Annual Meeting pursuant to Rule 14a-8 promulgated by the SEC ("Rule
14a-8"), proposals from stockholders to be presented at the 2003 Annual Meeting
must be received by the Secretary of the Corporation no later than December 9,
2002. The date after which notice of a shareholder proposal submitted outside of
the processes of Rule 14a-8 will be considered untimely is February 10, 2003. If
notice of such a shareholder proposal is received by the Corporation after
February 10, 2003, then the Corporation's proxy for the 2003 Annual Meeting may
confer discretionary authority to vote on such matter without discussion of such
matter in the proxy statement for the 2003 Annual Meeting.
ANNUAL REPORT ON FORM 10-K
The Corporation will furnish to any shareholder upon written request,
without charge, a copy of the Corporation's Annual Report on Form 10-K,
including the financial statements and schedules thereto, required to be filed
with the SEC. Requests for the above information should be directed to:
Stockholder Relations Department, United Bancorporation of Alabama, Inc., P. O.
Box 8, Atmore, Alabama 36504.
15
UNITED BANCORPORATION OF ALABAMA, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of United Bancorporation of Alabama, Inc.
(the "Corporation"), Atmore, Alabama, hereby constitutes and appoints L. Walter
Crim, H. Leon Esneul, William C. Grissett, Robert R. Jones, III, William J.
Justice, and David D. Swift and any of them, with full power of substitution,
proxies to vote the number of shares of Corporation common stock that the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
at the corporate offices of United Bank, 200 East Nashville Avenue, Atmore,
Alabama, on May 1, 2002, at 3:00 p.m., local time, or at any adjournments
thereof (the "Meeting"), upon the proposal described in the Proxy Statement and
Notice of Annual Meeting of Stockholders, both dated April 12, 2002, receipt of
which is hereby acknowledged, in the manner specified below.
Proposal. Election as director to serve until the 2005 Annual Meeting of
Stockholders and until his or her successor is elected and qualified:
Dale M. Ash and Robert R. Jones, III
[ ] FOR all nominees listed (except as indicated below).
To withhold authority for any individual nominee, write that
nominee's name in the space provided__________________________
[ ] VOTE WITHHELD from all nominees.
In their sole discretion, the proxies are authorized to vote upon such other
business as may come properly before the Meeting or any adjournment thereof.
[ ] AUTHORIZED [ ] AUTHORITY WITHHELD
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ELECTION OF THE ABOVE-NAMED NOMINEES AS DIRECTORS AND
WITH DISCRETIONARY AUTHORITY ON ALL OTHER MATTERS THAT MAY COME PROPERLY BEFORE
THE MEETING.
Please sign exactly as your name appears on your stock certificate and
date. Where shares are held jointly, each stockholder should sign. When signing
as executor, administrator, trustee, or guardian, please give full title as
such. If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: , 2002
--------------- ------------------------------------
Month Day Signature of Stockholder
------------------------------------
Signature of Other Stockholder
(If held jointly)
THIS PROXY IS SOLICITED ON BEHALF OF THE CORPORATION'S BOARD OF DIRECTORS AND
MAY BE REVOKED BY THE STOCKHOLDER(S) PRIOR TO ITS EXERCISE.