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:
(DCB FINANCIAL CORP LOGO)
April 15, 2006
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 18, 2006. The meeting will be held
at the Corporate Center, 110 Riverbend Avenue, Lewis Center, Ohio, 43035.
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. It is
always exciting to share good news of the past and exciting plans for the
future.
Thank you 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
DCB FINANCIAL CORP
110 Riverbend Avenue
Lewis Center, Ohio 43035
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
MAY 18, 2006
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 18, 2006, at 4:00 P.M. local
time at the Delaware County Bank and 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 I directors to hold office until the
expiration of their terms (3 years) expiring at the Annual Meeting in 2009,
or until their successors shall be duly elected and qualified.
2. 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.
The Board of Directors has fixed March 31, 2006, 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 3,814,414 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, 2005, and 2004, 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, 2005, 2004 and 2003, is
enclosed.
By order of the Board of Directors
/s/ Jeffrey T. Benton
- -------------------------------------
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 CORPORATE SECRETARY, DCB
FINANCIAL CORP AT 740.657.7900.
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 18, 2006, at 4:00 P.M. local time 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 an Ohio Corporation and financial holding company under
the Bank Holding Company Act. DCB Financial Corp is at times hereinafter
referred to as the "Company." The Company is the sole shareholder of The
Delaware County Bank and Trust Company, an Ohio-Chartered banking organization
(the "Bank" herein).
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, and 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 by the Company.
The proxy materials are first being mailed to shareholders on or about April 15,
2006.
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 director nominees listed 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, 2006, will be
eligible to attend and to vote at the Annual Meeting or any adjournment thereof.
As of March 31, 2006, the Company had outstanding 3,814,414 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 three 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. The Board of
Directors urges you to contact the person responsible for your brokerage 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 15
individuals) beneficially held 228,849 shares of the Company's common stock as
of December 31, 2005, representing 5.98% 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 three (3) Directors will be elected to a three-year term
expiring at the annual meeting in 2009.
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 3 Directors Term Expiration 2007
Class III 3 Directors Term Expiration 2008
The Board has nominated the following individuals for election as Class I
Directors for terms expiring at the Annual Meeting in 2009. Information
regarding these nominees is set forth below. Unless otherwise indicated, each
person has held his or her principal occupation for more than five years.
DIRECTOR PRINCIPAL OCCUPATION
NAME (CLASS) AGE SINCE (1) DURING THE PAST FIVE YEARS
- ------------ --- --------- --------------------------
Jeffrey T. Benton (I) 53 2003 President and CEO of the Company and
its wholly owned subsidiary, The
Delaware County Bank & Trust Company
since 2003.
Formerly, Executive Vice President,
Community First Bank, Celina, Ohio;
Consultant to the banking industry
Gary M. Skinner (I) 61 1996 President, Hardscrabble Farms
Adam Stevenson (I) 64 2001 Retired Plant Manager, PPG Industries
(1) May include time served as a director of The Delaware County Bank and Trust
Company prior to the organization of the Company in 1997.
While it is contemplated that all nominees will stand for election, and each
nominee has 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 three 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.
The following table sets forth certain information with respect to the Class II
and III Directors of DCB Financial Corp:
DIRECTOR PRINCIPAL OCCUPATION
NAME (CLASS) AGE SINCE (1) DURING THE PAST FIVE YEARS
- ------------ --- --------- --------------------------
Terry Kramer (II) (2) 59 1992 President, Kramer Exploration
Ed Powers (II) 60 1984 President, R.B. Powers and Co.
Donald J. Wolf (II) 62 2003 President, Wolf, Rogers, Dickey
and Company, CPAs
Jerome Harmeyer (III) 66 1990 President, Fisher Cast Steel,
Liberty Casting
Vicki J. Lewis (III) 51 1997 Vice President of Strategic
Development, Grady Memorial
Hospital
William R. Oberfield (III) 51 1993 President, Oberfield's Concrete
Products
(1) May include time served as a director of The Delaware County Bank and Trust
Company prior to the organization of the Company in 1997.
(2) Chairman of the Board of Directors for the Company and The Delaware County
Bank and Trust Company.
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, Vice President and Marketing Director, who is the nephew of Donald J.
Wolf, a director.
The following table sets forth certain information with respect to the executive
officers of the Delaware County Bank and Trust Company:
OFFICER POSITION AND OFFICES HELD WITH COMPANY &
NAME AGE SINCE (1) PRINCIPAL OCCUPATION HELD PAST FIVE YEARS
- ---- --- --------- -----------------------------------------
Jeffrey T. Benton 53 2003 President and Chief Executive Officer;
formerly Executive Vice President,
Community First Bank, Celina, Ohio;
Consultant to the banking industry
John A. Ustaszewski 40 2001 Senior Vice President and Chief Financial
Officer
Tom Whitney 57 1993 Senior Vice President, Senior Trust
Officer & Legal Counsel
Jerry S. Whittington 60 2001 Senior Vice President, Lending
Barbara S. Walters 50 2003 Senior Vice President, Retail Banking;
Area President, National City Bank
Brian Stanfill 47 1998 Senior Vice President, Operations & Human
Resources
Jay D. Wolf 35 1993 Vice President, Marketing and Customer
Relations
(1) Includes time served as an officer of The Delaware County Bank and Trust
Company
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 DECEMBER 31, 2005 PERCENTAGE
- ---- ----------------------- ----------
Jeffrey T. Benton, Director & CEO (Nominee) 9,149(1) *
William R. Oberfield, Director 20,838(2) *
Gary M. Skinner, Director (Nominee) 27,378(3) *
Terry M. Kramer, Chairman of the Board of Directors 51,190(4) 1.34%
Edward Powers, Director 21,840 *
Jerome J. Harmeyer, Director 52,833(5) 1.38%
Vicki J. Lewis, Director 16,270(6) *
Adam Stevenson, Director (Nominee) 2,533(7) *
Donald J. Wolf, Director 3,961(8) *
Brian Stanfill, Executive Officer 5,148(9) *
Barbara Walters, Executive Officer 1,559 *
Jerry Whittington, Executive Officer 249 *
Thomas R. Whitney, Executive Officer 12,477(10) *
All directors, nominees and executive officers as a
group (15 in number) 228,849(11) 5.98%
- ----------
* Ownership is less than 1%
(1) Includes beneficial ownership of 540 shares owned by his son and 800
restricted shares for which he has sole voting but no investment power.
(2) Includes beneficial ownership of 5,567 shares owned by spouse and spouse's
IRA.
(3) Includes beneficial ownership of 9,236 shares owned jointly with spouse and
6,539 shares owned by spouse.
(4) Includes beneficial ownership of 24,420 shares owned by his spouse.
(5) Includes 1,144 shares owned jointly with spouse and 43,639 shares owned by
spouse and spouse's IRA.
(6) Includes beneficial ownership of 15,700 shares owned by spouse.
(7) Includes 33 shares owned jointly with spouse
(8) Includes 516 shares owned by spouse
(9) Includes 97 shares owned by children
(10) Includes beneficial ownership of 606 shares, which are subject to shared
voting, and investment power with his spouse.
(11) Does not include shares of Mr. Phillip Connolly, who was added to the Board
of Directors in February 2006
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, among other committees.
AUDIT COMMITTEE
The Audit Committee selects and engages the Company's independent auditors. 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 non-audit fees. The Audit Committee also has
been charged with the enforcement of the Code of Ethics and Business Conduct
adopted by the Company's Board of Directors, as discussed below. The Board of
Directors has adopted a written charter for the Audit Committee, which may be
found on the Company's website at www.dcbfinancialcorp.com. The Audit Committee
is comprised of Ms. Lewis and Messrs. Wolf, Skinner, and Powers. The Audit
Committee met five (5) times during 2005. The Board of Directors has determined
that Donald J. Wolf, one of the members of the Audit Committee, is an "audit
committee financial expert" as defined under the regulations of the Securities
and Exchange Commission. 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.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for overseeing the administration of
the Company's employee benefit plans; establishing the compensation of the Chief
Executive Officer, approving senior management's compensation and reviewing the
compensation of all other officers; reviewing the criteria that forms the basis
for management's officer and employee compensation recommendations and reviewing
management's recommendations in this regard and evaluating and establishing
directors' compensation. The Board of Directors has adopted a written charter
for the Compensation Committee, which may be found on the Company's website at
www.dcbfinancialcorp.com. The Compensation Committee is comprised of Ms. Lewis
and Messrs. Kramer, Skinner and Stevenson. All members of the Compensation
Committee are independent under NASDAQ listing standards. The Compensation
Committee met five (5) times during 2005.
NOMINATING AND GOVERNANCE COMMITTEE
The Company's Nominating and Governance Committee is responsible for making
recommendations to the Board of nominees for election to the Board of Directors
and, from time to time, making appointments to fill vacancies created prior to
the expiration of a Director's term. The Board of Directors has adopted a
written charter for the Nominating and Governance Committee, which may be found
on the Company's website at www.dcbfinancialcorp.com. The Nominating and
Governance 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 during 2005. The Nominating and Governance Committee is
comprised of Messrs. Stevenson, Kramer 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 2005, the Board of Directors of the
Company met twelve (12) times. All Directors of the
Company attended at least 75 percent of the Board and Committee Meetings that
they were scheduled to attend during 2005.
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 $400 per board meeting attended and $150 for
each committee meeting attended. Committee Chairs receive $200 for each
Committee Meeting attended. Committee Chairs and Directors serving on the Loan,
Audit and Compensation Committees receive $250 and $200 respectively for each
meeting attended.
On June 15, 2005, the Compensation Committee of the Board of Directors awarded
each non-employee director of the Company a nonqualified option to acquire 196
common shares of the Company, under the 2004 Long-Term Incentive Compensation
Plan, at an exercise price of $25.40 per share.
CORPORATE GOVERNANCE
Although 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 elected to implement most of the corporate governance practices
required of NASDAQ listed companies to encourage appropriate conduct among its
Directors, officers and employees and to assure that the Company operates in an
ethical manner.
The Board of Directors has established Corporate Governance Guidelines for the
Company. A copy of the Company's Corporate Governance Guidelines appears on the
Company's website at www.dcbfinancialcorp.com. Although not required, a majority
of the Directors of the Company are currently independent, under the NASDAQ
listing standards.
The Board of Directors has adopted a Code of Ethics and Business Conduct which
appears on the Company's website at www.dcbfinancialcorp.com. In addition, a
copy of the Code of Ethics and Business Conduct is available to any shareholder
free of charge upon request. Shareholders desiring a copy of the Code of Ethics
and Business Conduct should address written requests to Donald R. Blackburn,
Secretary of the Company at the Company's offices, 110 Riverbend Avenue, Lewis
Center, Ohio 43035.
AUDIT COMMITTEE REPORT
The Audit Committee of DCB Financial Corp's Board of Directors is comprised of
four directors, each of whom is "independent" as that term is defined in Rule
4200(a)(14) of the listing standards of the National Association of Securities
Dealers, Inc. The Committee operates under a written charter adopted by the
Board of Directors. The Committee recommends to the Board of Directors the
selection of the Company's independent accountants.
Management is responsible for the Company's internal controls and the financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Committee's responsibility is to monitor and oversee the processes.
In this context, the Committee has met and held discussions with management and
the independent accountants. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Committee has reviewed and
discussed the consolidated financial statements with management and the
independent accountants. The Committee discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
The Company's independent accountants also provided to the Committee the letter
and written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit
Committees), and the Committee discussed with the independent accountants that
firm's independence. The Committee has considered whether the provision of
non-audit services by the independent accountants to the Company and its
subsidiaries is compatible with maintaining the independence of the independent
accountants.
Based upon the Committee's discussion with management and the independent
accountants and the Committee's review of the representations of management and
the report of the independent accountants to the Committee, the Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 2005, filed with the Securities and Exchange Commission.
Don Wolf, Chairman
Edward Powers
Vicki J. Lewis
Gary M. Skinner
NOMINATIONS FOR MEMBERS OF THE BOARD OF DIRECTORS
The Nominating and Governance Committee of the Board of Directors recommends
director candidates to the Board of Directors for nomination, in accordance with
the Company's Code of Regulations. The Committee will investigate and assess the
background and skills of potential candidates. The Nominating and Governance
Committee is empowered to engage a third party search firm to assist it in
identifying candidates, but the Committee currently believes that the existing
directors and executive management of the Company and its subsidiaries have
sufficient networks of business contacts to identify candidates. Upon
identifying a candidate for serious consideration, one or more members of the
Nominating and Governance Committee would initially interview such candidate. If
a candidate merited further consideration, the candidate would subsequently
interview with all other Nominating and Governance Committee members
(individually or as a group), meet the Company's Chief Executive Officer and
other executive officers and ultimately meet many of the other Directors. The
Nominating and Governance Committee would elicit feedback from all persons who
met the candidate and then determine whether or not to recommend the candidate
to the Board of Directors for nomination.
The Company's Corporate Governance Guidelines and Code of Ethics and Business
Conduct set forth the following criteria for Directors: independence (a majority
of the Directors must be independent); honesty and integrity; willingness to
devote sufficient time to fulfilling duties as a Director; particular
experience, skills or expertise relevant to the Company's business; depth and
breadth of business and civic experience in leadership positions; ties to the
Company's geographic markets and minimum ownership of $500 of the Company's
common shares. The Company's Corporate Governance Guidelines provide that
shareholders may propose nominees by submitting the names and qualifications of
such persons to the Chairman of the Nominating and Governance Committee.
Submissions are to be addressed to the Chairman of the Nominating and Governance
Committee at the Company's executive offices, which submissions will then be
forwarded to the Chairman. The Nominating and Governance Committee would then
evaluate the possible nominee using the criteria outlined above and would
consider such person in comparison to all other candidates. The submission must
be made no later than 90 days prior to the Annual Meeting for consideration in
regard to the next annual meeting of shareholders. The Nominating and Governance
Committee is not obligated to recommend to the Board, nor is the Board obligated
to nominate, any such individual for election.
The Nominating and Governance Committee has not hired any director search firm
in 2005 and, accordingly, has paid no fees to any such company. As indicated
above, however, the Nominating and Governance Committee may do so in the future
if appropriate.
While the Company has no specific policy requiring attendance at the annual
meeting of shareholders by Directors, such attendance is expected. At the 2005
annual meeting, 7 of the 9 directors attended.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth the annual and long-term compensation for the
Company's Chief Executive Officer and the four other highest paid executive
officers, as well as the total compensation paid to each individual during the
last three fiscal years.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES ALL
--------------------------- STOCK UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) AWARDS OPTIONS (#) COMP (3)
- --------------------------- ---- -------- --------- ---------- ----------- --------
JEFFERY T. BENTON 2005 $170,000 $176,925 $ 0 6,132 (4) $22,928
PRESIDENT AND CEO 2004 $170,000 $ 96,900 $10,010 (2) 5,978 $ 546
2003 $148,269 $ 70,000 $15,000 (5) 0 $ 0
THOMAS R. WHITNEY 2005 $118,244 $ 28,142 $ 0 1,163 $16,426
SENIOR VICE PRESIDENT 2004 $114,834 $ 38,483 $ 0 981 $15,230
SENIOR TRUST OFFICER 2003 $104,834 $ 11,038 $ 0 0 $21,841
JERRY WHITTINGTON 2005 $115,500 $ 28,090 $ 0 1,136 $12,982
SENIOR VICE PRESIDENT 2004 $104,934 $ 20,966 $ 0 940 $11,339
LENDING 2003 $ 87,975 $ 4,435 $ 0 0 $ 332
BARBARA WALTERS 2005 $100,000 $ 18,000 $ 0 984 $13,314
SENIOR VICE PRESIDENT 2004 $ 96,900 $ 12,597 $ 0 828 $10,518
RETAIL BANKING 2003 $ 61,932 $ 3,719 $ 0 0 $ 290
BRIAN STANFILL 2005 $100,837 $ 17,747 $ 0 992 $12,804
SENIOR VICE PRESIDENT 2004 $ 96,450 $ 12,310 $ 0 835 $12,818
OPERATIONS AND HR 2003 $ 90,000 $ 3,105 $ 0 0 $ 2,826
(1) Bonus amounts for Messrs. Whitney, Whittington and Stanfill, and Ms.
Walters for 2005 have been and will be paid 20% in Company common shares,
having a fair market value of $28.95 per share on February 28, 2006, the
date awarded, and 80% in cash with one-half paid on February 28, 2006 and
the other half on August 31, 2006, assuming employment by the Company at
that date, for the above named persons and Mr. Benton.
(2) Represents 455 restricted common shares of the Company, granted on February
26, 2004 at a price of $22.00 per share. The award agreement relating to
the grant of these shares provides for vesting one-third per year after 3,
4, and 5 years from the date of grant. Dividends are paid with respect to
the shares of restricted stock owned by Mr. Benton.
(3) The amounts shown in this column for the most recently completed fiscal
year were derived from the following: (1) contributions by the Company to
the executive's deferral account under the Company's Deferred Compensation
Plan: Mr. Benton, $17,000; Mr. Whitney, $11,483; Mr. Whittington, $10,493;
Ms. Walters $9,690; and Mr. Stanfill, $9,645; (2) contributions by the
Company to the Company's 401(k) plan for the benefit of the executive: Mr.
Benton, $5,100; Mr. Whitney, $3,674; Mr. Whittington, $597; Ms. Walters,
$3,072; and Mr. Stanfill, $2,795; and (3) the economic benefit of life
insurance coverage provided for the executive officers: Mr. Benton, $828;
Mr. Whitney, $1,269; Mr. Whittington, $1,892; Ms. Walters, $552; and Mr.
Stanfill, $364.
(4) In accordance with the terms of Mr. Benton's employment agreement,
approximately one-half his bonus earned for 2004 fiscal year performance
was paid in the form of a stock option grant. On February 28, 2006, Mr.
Benton was awarded an incentive stock option for 6,132 Company common
shares at an exercise price of $28.85 per share, representing approximately
one-half of Mr. Benton's bonus for 2005. This option vests with respect to
one-third of the shares covered by the option on each of the third, fourth
and fifth anniversaries of the date of the award.
(5) Represents a grant of 800 restricted common shares of the Company valued at
the closing market price of $18.75 per share for the Company's unrestricted
common shares as of December 18, 2002, the date of grant. Mr. Benton's
right to these shares vested on December 31, 2004.
OPTION GRANTS TABLE
The following table presents information about stock options granted under the
2004 Long-Term Incentive Compensation Plan during 2005 to the named executive
officers.
OPTION GRANTS IN LAST FISCAL YEAR INDIVIDUAL GRANTS
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE EXPIRATION GRANT DATE
NAME GRANTED (#) (1) FISCAL YEAR PRICE ($/SH) (3) DATE PRESENT VALUE(2)
- ---- --------------- ------------- ---------------- ------------- ----------------
Jeffrey T. Benton 5,978 22.80% $26.91 June 15, 2015 $27,977
Thomas R. Whitney 1,163 4.44% $25.40 June 15, 2015 $ 5,443
Jerry S. Whittington 1,136 4.33% $25.40 June 15, 2015 $ 5,316
Barbara S. Walters 984 3.75% $25.40 June 15, 2015 $ 4,605
Brian E. Stanfill 992 3.78% $25.40 June 15, 2015 $ 4,643
(1) Options are incentive stock options, granted under the plan, which
generally vest ratably over a 5-year period commencing June 15, 2006.
Options have an exercise price equal to the fair market value of the
underlying stock on the date of grant. The terms of the Company's 2004
Long-Term Incentive Compensation Plan provide that all options become
exercisable in full in the event of a change in control as defined in the
Long-Term Incentive Compensation Plan.
(2) The option value was calculated to be $4.68 per share using the
Black-Scholes stock option pricing model. In making this calculation, it
was assumed that the average exercise period was 6.7 years, the volatility
rate was 14%, the risk-free rate of return was 4.75%, and the dividend
yield was 2.00%.
(3) Mr. Benton's options were provided on three separate dates in 2005, ranging
from underlying share prices of $25.40 to $27.50. The exercise price shown
is the average of options granted.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table presents information about stock options, granted under the
plan, exercised during 2005 and unexercised stock options at December 31, 2005
for the five named executive officers.
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN 2005 AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT AT
ACQUIRED DECEMBER 31, 2005 (#) DECEMBER 31, 2005 ($)
OR VALUE --------------------------- ---------------------------
NAME EXERCISED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------- -------- ----------- ------------- ----------- -------------
JEFFREY T. BENTON 0 $0 0 5,978 $ 0 $9,491
THOMAS R. WHITNEY 0 $0 196 1,948 $1,000 $7,609
JERRY S. WHITTINGTON 0 $0 188 1,888 $ 959 $7,357
BARBARA S. WALTERS 0 $0 166 1,646 $ 847 $6,426
BRIAN E. STANFILL 0 $0 167 1,660 $ 852 $6,482
2004 LONG-TERM INCENTIVE COMPENSATION PLAN
In 2004, the Company and its shareholders adopted the 2004 Long-Term Incentive
Compensation Plan (the "Incentive Plan" herein). A total of 300,000 shares have
been reserved for issuance under the Incentive Plan. The Incentive Plan provides
for the award of stock options, stock or restricted stock and performance awards
consisting of stock, cash or a combination of stock and cash to any director,
officer, or employee designated by the Compensation Committee of the Board of
Directors, which administers the Incentive Plan. The Committee's authority
includes the power to (a) determine who will receive awards under the Incentive
Plan, (b) establish the terms and conditions of awards and the schedule on which
options become exercisable (or other awards vest), subject to the terms of the
Incentive Plan, (c) determine the amount and form of awards, (d) interpret the
Incentive Plan and terms of awards, and (e) adopt rules for administration of
the Incentive Plan.
Stock options awarded under the Plan have terms of up to 10 years and may be
"incentive" or nonqualified stock options, meaning stock options that do not
qualify under Section 422 of the Internal Revenue Code for the special tax
treatment available for qualified, or "incentive," stock options. Nonqualified
stock options may be granted to any eligible Plan participant, but incentive
stock options may be granted solely to employees of the Company or its
subsidiaries. The exercise price of stock options may not be less than the fair
market value of the Company's common stock on the date of grant.
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.
EMPLOYMENT CONTRACT
On March 7, 2005, the Company entered into a new employment agreement with
Jeffrey T. Benton, President and CEO of the Company and its subsidiary bank, The
Delaware County Bank and Trust Company (the "Bank") effective January 1, 2005.
The agreement provides that Mr. Benton will serve as the President and Chief
Executive Officer of the Company for a term continuing until December 31, 2007.
After the initial term, the agreement will automatically be extended for
additional one year periods unless the Company or Mr. Benton provide notice to
the other of their intent to terminate the agreement.
The agreement provides that Mr. Benton will have an annual base salary of
$170,000. The agreement provides that the Board of Directors will establish
performance goals each year for Mr. Benton, including standards by which he may
achieve an annual performance-based bonus of up to $327,500 (the "Potential
Bonus"), with the parties stated expectation and desire that Mr. Benton's
performance will result in a bonus amount (the "Bonus Amount") for each year,
which is at least 65% of the Potential Bonus.
One half of the Bonus Amount will be paid each year in a lump sum cash bonus.
The other half of the Bonus Amount will be paid each year in the form of
nonqualified stock options awarded under
Incentive Plan. The number of shares to be included in the option awarded to Mr.
Benton will be determined by dividing one-half of the Bonus Amount by the
opening price per share of Company stock on the date the bonus is awarded by the
Board of Directors (within 30 days of the completion of our audited financial
statements each year for the prior fiscal year). The per share exercise price of
the option will be the opening price of the Company stock on the date the bonus
is awarded. Each option will vest over a five-year period, with one-third
vesting after three years, two-thirds after four years and full vesting after
five years.
The agreement provides that Mr. Benton will be eligible to participate in all
the employee benefit plans, and will have the use of a country club membership.
The Company may terminate Mr. Benton's employment at any time with or without
cause. 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 agreement
and receive base pay for 12 months from the date of termination, or in the event
of a change of control, if he resigns within 12 months of such action. The
agreement provides for protection of the Company's confidential information and
includes a covenant not to compete during the agreement and for two years
thereafter. The agreement provides for arbitration of disputes arising under the
agreement.
DEFERRED COMPENSATION PLAN
In 2004 the Company established The Delaware County Bank and Trust Executive
Deferred Compensation Plan (the "Deferred Compensation Plan"), which replaced
The Delaware County Bank & Trust Company Supplemental Executive Retirement Plan.
Under the terms of the Deferred Compensation Plan, executive officers and other
senior managers selected by the Compensation Committee of the Board of Directors
may elect to defer the receipt of up to 80% of base salary and 100% of annual
bonus amounts. The Deferred Compensation Plan also provides that the Board of
Directors may contribute annually an additional amount to the participant's
deferral account, targeted at up to 10% of the participant's base salary, but
which may be more in the Board's discretion. For 2005, the Board of Directors
elected to have the Company contribute 10% of each named executive officer's
base salary to his or her deferral account established under the Deferred
Compensation Plan.
Amounts deferred by the participant vest immediately. Contributions made by the
Company to the participant's deferral account vest based on the participant's
years of service with the Company with 25% vested after 5 years of service, 50%
vested after 10 years of service, 75% vested after 15 years of service and 100%
vested after 20 years of service. All Company contributions vest for each
participant employed by the Company at age 62, regardless of the vesting
schedule. Interest is credited annually to each participant's account, computed
at the Company's one-year certificate of deposit rate in effect on January 1st
every year and paid on the balance of the participant's deferred account at the
end of the year.
Each participant is entitled to withdraw the balance of his or her account upon
reaching age 62. Upon termination of employment prior to age 62 for any reason
other than termination for "Cause" or involuntary termination following a change
in control of the Company, the participant is entitled to withdraw the vested
portion of his or her deferral account. Upon termination of employment due to
the participant's disability, the participant is entitled to withdraw the vested
portion of his or her deferral account. Upon termination of employment because
of death, the participant's beneficiary is entitled to withdraw the vested
portion of the participant's deferral account. Upon "involuntary" termination
within 12 months following a change in control of the Company, including a
reduction in base salary or material reduction in benefits, the participant may
withdraw the balance of his or her deferral account, providing that to the
extent any benefit would create an excise tax under the excess
parachute rules of Section 280G of the Internal Revenue, the benefit paid under
the Deferred Compensation Plan will be reduced so as not to be an "excess
parachute payment" as defined by Section 280G. Upon "Termination for Cause" as
defined in the Plan, the participant will not be entitled to withdraw any amount
in excess of the participant's deferrals.
Participants may elect to make withdrawals from their deferral accounts in
either a lump sum or in equal monthly installments over a period not to exceed
10 years. If a participant dies while employed by the Company, the participant's
beneficiary receives a lump sum payment of the participant's vested deferred
account within 30 days of the participant's death.
Amounts in participant deferral accounts are the unsecured obligation of the
Company. The Company may amend or terminate the Deferred Compensation Plan at
any time at the discretion of the Board of Directors. No amendment may decrease
the value of any participant's vested deferral account balance. Upon termination
of the Deferred Compensation Plan, all vested deferred account balances will be
paid in a lump sum distribution regardless of any contrary participant election.
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Board of Directors of the Company has established a Compensation Committee
comprised entirely of independent Directors as determined by the Company's
Corporate Governance Guidelines. The Compensation Committee is responsible for
developing and making recommendations to the Board with respect to the Company's
executive compensation policies. There are no interlocking relationships
involving any members of the Compensation Committee.
Pursuant to authority delegated by the Board, the Compensation Committee
determines annually the compensation to be paid to the Chief Executive Officer
and other executive officers. The Chief Executive Officer does not participate
in any discussions regarding his own compensation.
The objectives of the Company's executive compensation program are to:
- Support the achievement of desired goals of the Company.
- Provide compensation that will attract and retain superior talent and
reward performance.
- Align the executive officers' interests with those of shareholders by
placing a significant portion of pay at risk with payout dependent
upon corporate performance, both on a short-term and long-term basis.
The executive compensation program provides an overall level of compensation
opportunity that is competitive within the banking industry. Actual compensation
levels may be greater or less than average competitive levels in surveyed
companies based upon annual and long-term performance of the Company. The
Compensation Committee also uses its discretion to set executive compensation
based upon individual performance.
COMPENSATION MATTERS IN 2005
During 2005 the Compensation Committee increased the levels of base salary of
the other executive officers, but not the Chief Executive Officer. The increases
in base salary were based upon an analysis of compensation levels for management
performing similar functions at other banking companies of similar size and
operations, and also took individual performance into account.
The performance of the Company for the purpose of determining the annual bonuses
to be paid to the executive officers, including the Chief Executive Officer, was
based on earnings per share, the efficiency ratio (interest plus noninterest
income divided by noninterest expense), credit quality, the net interest margin,
and growth in assets of the Company for the year 2005.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of base
salary, annual incentive compensation, long-term incentive compensation in the
form of stock options, a deferred compensation program and various benefits.
BASE SALARY
Base salary levels for the Company's executive officers are set relative to
companies in the banking industry of similar size and complexity of operations,
as described above. In determining salaries, the Compensation Committee also
takes into account individual experience and performance, Company performance
and specific issues particular to the Company.
ANNUAL INCENTIVE COMPENSATION
The purpose of the plan is to provide direct financial incentives in the form of
an annual cash bonus to executives to achieve the Company's annual goals. For
2005, the Compensation Committee recommended and the Board of Directors selected
earnings per share, the efficiency ratio, credit quality, the net interest
margin, and growth in assets of the Company as the measurements of the Company's
performance, with a threshold goal set for each performance measure for
determining bonus opportunities for executive officers. Company performance
exceeding the threshold produces a ratable increase in the bonus amount based
upon that particular performance measure. Individual goals are also established
for each executive officer; however, each executive officer's bonus opportunity
is determined by weighting individual and company goals. The amount distributed
to each participant is based on his or her base salary and is weighted to
reflect each participant's ability to affect the performance of the Company,
with the Chief Executive Officer having the largest weighting. The Company met
its threshold goal for performance under each of the criteria chosen by the
Compensation Committee to measure Company performance in 2005.
LONG-TERM INCENTIVES
Stock options awarded under the 2004 Long-Term Incentive Compensation Plan
constitute the Company's long-term incentive plan for executive officers. The
objectives of the stock option awards are to align executive and shareholder
long-term interests by creating a strong and direct link between executive pay
and shareholder return, and to enable executives to develop and maintain a
long-term stock ownership position in the Company's common shares.
The 2004 Long-Term Incentive Compensation Plan authorizes a committee of outside
directors to award stock options and other stock compensation to key executives.
BENEFITS
DCB Financial Corp provides medical and other employee benefits to its executive
officers that are generally available to all full time employees of the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee elected to not increase Mr. Benton's annual base
salary, which remained at $170,000, effective January 1, 2005, based upon the
Compensation Committee's review of chief executive officer compensation at other
banking companies of similar size and complexity of operations. Mr. Benton's
base salary remains at $170,000 for 2006. Under Mr. Benton's employment
agreement in effect during 2005, the Compensation Committee also awarded Mr.
Benton a cash bonus of $176,925 and options to acquire 6,132 Company common
shares at an exercise price of $28.85 per share, based on the achievement of
Company performance and individual goals set for Mr. Benton for 2005.
In respect to the limits on deductibility for federal income tax purposes of
compensation paid an executive officer in excess of $1 million, the Company
intends to strive to structure components of its executive compensation to
achieve maximum deductibility, while at the same time considering the goals of
its executive compensation philosophy.
MEMBERSHIP OF THE COMPENSATION COMMITTEE
Directors serving on the Compensation Committee are named below:
Vicki J. Lewis (Chair)
Terry M. Kramer
Gary M. Skinner
Adam Stevenson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2005 the Compensation Committee members were Vicki J. Lewis, Chair, Terry M.
Kramer, Gary M. Skinner and Adam Stevenson. No executive officer of the Company
serves on any board of directors or compensation committee of any entity that
compensates any member of the Compensation Committee. The Regulations of the
Securities and Exchange Commission require the disclosure of any related party
transactions with members of the Compensation Committee. During the past year,
certain directors and officers, including members of the Compensation Committee,
and one or more of their associates may have been customers of and had business
transactions with The Delaware Bank and Trust Company. All loans included in
such transactions were made in the ordinary course of business and on
substantially the same terms, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with other persons, and
did not involve more than normal risk of collectibility or present other
unfavorable features. It is expected that similar transactions will occur in the
future. Mr. Benton, Chief Executive Officer of the Company, does not participate
in any discussions or decisions regarding his own compensation.
PERFORMANCE GRAPH - FIVE YEAR SHAREHOLDER RETURN COMPARISON
Set forth below is a line-graph presentation comparing cumulative five-year
shareholder returns for the Company, the S&P 500, the Russell 2000 Index and the
NASDAQ Bank Index. The chart below compares the value of $100 invested on
December 31, 2000, in the stock of DCB Financial Corp, the S&P 500 Index, the
Russell 2000 Index and the NASDAQ Bank Index.
2000 2001 2002 2003 2004 2005
---- ---- ---- ---- ---- ----
DCBF $100 $128 $180 $205 $301 $306
S&P 500 Index $100 $ 88 $ 69 $ 88 $ 98 $103
Russell 2000 Index $100 $102 $ 82 $120 $142 $148
NASDAQ Bank Composite $100 $113 $120 $160 $181 $173
COMPARISON OF FIVE YEAR TOTAL RETURN* AMONG
DCB FINANCIAL CORP, S&P 500 INDEX, RUSSELL 2000 INDEX & NASDAQ BANK COMPOSITE
FOR FISCAL YEAR ENDING DECEMBER 31
(PERFORMANCE GRAPH)
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and more than ten percent shareholders
("Insiders") to file with the Securities and Exchange Commission and the Company
reports of their ownership of the Company's securities. Based upon written
representations and copies of reports furnished to the Company by Insiders, all
Section 16 reporting requirements applicable to Insiders during 2005 were
satisfied on a timely basis.
SELECTION OF AUDITORS
The Audit Committee of the Board of Directors of the Company has engaged the
services of Grant Thornton LLP as its independent auditors beginning in 2003.
Grant Thornton LLP is engaged to provide independent audit services for the
Company and to provide certain non-audit services including advice on
accounting, tax, and reporting matters.
The Audit Committee has retained Grant Thornton LLP as the Company's independent
auditors for 2006. Representatives of Grant Thornton LLP will be in attendance
at the Annual Meeting of Shareholders, and such representatives will have an
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions.
PRINCIPAL ACCOUNTING FIRM FEES
The following table sets forth the aggregate fees billed to the Company for the
fiscal years ended December 31, 2005 and December 31, 2004 by Grant Thornton
LLP, the Company's principal accounting firm for 2005 and 2004.
DECEMBER 31, DECEMBER 31,
2005 2004
------------ ------------
Audit Fees (1) $163,056 $135,160
Tax Fees (2) $ 10,700 11,150
All Other Fees (3) $ 36,200 34,977
TOTAL $209,956 $181,287
(1) Includes fees for external audit and audit of internal controls over
financial reporting required by Sarbanes-Oxley Section 404.
(2) Includes fees for services related to tax compliance and tax planning.
(3) Includes fees for SAS 70 and 401(k) audits.
The Audit Committee is responsible for pre-approving all auditing services and
permitted non-audit services to be performed by its independent auditors, except
as described below.
The Audit Committee establishes general guidelines for the permissible scope and
nature of any permitted non-audit services in connection with its annual review
of the audit plan and will review such guidelines with the Board of Directors.
Pre-approval may be granted by action of the full Audit Committee or, in the
absence of such Audit Committee action, by the Audit Committee Chair whose
action shall be considered to be that of the entire Committee. Pre-approval
shall not be required for the provision of non-audit services if (1) the
aggregate amount of all such non-audit services constitutes no more than 5% of
the total amount of revenues paid by the Company to the auditors during the
fiscal year in which the non-audit services are provided, (2) such services were
not recognized by the Company at the time of engagement to be non-audit
services, and (3) such services are promptly brought to the attention of the
Audit Committee and approved prior to the completion of the audit. No services
were provided pursuant to these exceptions.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
AND DIRECTOR NOMINATIONS
Shareholders may submit proposals appropriate for shareholder action at the
Company's Annual Meeting consistent with the regulations of the Securities and
Exchange Commission and the Company's Code of Regulations. For proposals to be
considered for inclusion in the Proxy Statement for the 2007 Annual Meeting, the
Company must receive the proposal no later than December 15, 2006. Such
proposals must be directed to DCB Financial Corp, Attention: Corporate
Secretary, 110 Riverbend Avenue, Lewis Center, OH 43035. Any shareholder who
intends to propose any other matter to be acted upon at the 2006 Annual Meeting
of Shareholders must inform the Company not less than sixty days prior to the
meeting. If notice is not provided by that date, the persons named in the
Company's Proxy for the 2007 Annual Meeting will be allowed to exercise their
discretionary authority to vote upon any such proposal without the matter having
been discussed in the Proxy Statement for the 2007 Annual Meeting.
In order to make a director nomination at a shareholder meeting it is necessary
that you notify DCB Financial Corp no fewer than 90 days in advance of the
meeting. In addition, the notice must meet all other requirements contained in
the Company's Code of Regulations.
SHAREHOLDER COMMUNICATIONS
Shareholders of the Company may send communications to the Board of Directors
through the Company's office of Corporate Secretary, DCB Financial Corp, 110
Riverbend Avenue, Lewis Center, OH 43035. Communications sent by shareholders
for proper, non-commercial purposes will be transmitted to the Board of
Directors or the appropriate committee, as soon as practicable.
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 2005 REPORT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
ON FORM 10-K, WILL BE AVAILABLE WITHOUT CHARGE TO SHAREHOLDERS ON REQUEST.
Address all requests, in writing, for this document to Corporate Secretary, DCB
Financial Corp, 110 Riverbend Avenue, Lewis Center, Ohio 43035.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
Only one Proxy Statement and Annual Report 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 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 Corporate Secretary, DCB Financial Corp, 110 Riverbend Avenue, Lewis Center,
Ohio 43035, 740.657.7000. 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
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY FORM AS PROMPTLY AS POSSIBLE
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
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
Terry M. Kramer, Edward Powers and Vicki Lewis, 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,
2006, at the Annual Meeting of its shareholders to be held on May 18, 2006, 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 three (3) members of Class I (term to expire 2009) to the
Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES.
Nominees:
---------
Jeffrey T. Benton For All Nominees [ ]
Gary Skinner Withhold Authority to Vote For All Nominees [ ]
Adam Stevenson (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 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. 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. This proxy may be revoked prior to its exercise by either
written notice or personally at the meeting or by a subsequently dated proxy.
- --------------------------- --------- --------------------------- ---------
Signature Date Signature Date
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.