SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement Confidential, for Use of the
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2)) / /
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
SOUTHWEST BANCORP, 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)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total Fee Paid:
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/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3 Filing Party:
4. Date Filed:
(GRAPHIC OMITTED)
March 19, 2004
Dear Fellow Shareholder:
We invite you to attend our 2004 Annual Meeting of Shareholders to be
held in the Auditorium, Room 215, of the Stillwater Public Library, 1107 South
Duck Street, Stillwater, Oklahoma on Thursday, April 22, 2004 at 11:00 a.m.,
Central Time.
At our Annual Meeting, we will discuss highlights of the past year and
the first quarter of 2004. The 2003 results are presented in detail in the
enclosed Annual Report.
The Annual Meeting has been called for the election of directors, to
vote on an amendment to our 1999 stock option plan, and to consider any other
matters as may properly come before the Annual Meeting or any adjournments.
Directors and officers of Southwest, as well as representatives of Ernst & Young
LLP, Southwest's independent auditors, will be present to respond to any
questions the shareholders may have.
YOUR VOTE IS IMPORTANT TO SOUTHWEST. Please complete the proxy card and
return it in the enclosed, postage-paid envelope.
Thank you for investing in Southwest.
You also are invited to a reception and hors d'oeuvres on the evening
of Wednesday, April 21, 2004, at 5:30 p.m. at the Stillwater Country Club in
Stillwater, Oklahoma. If you plan to attend this reception please contact Ms.
Glenda Nasworthy at (405) 742-1807 or by e-mail at GlendaNasworthy@BankSNB.com
by April 15, 2004, so we may make the proper arrangements.
Sincerely,
/s/ Rick Green
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Rick Green
SOUTHWEST BANCORP, INC.
608 SOUTH MAIN STREET
STILLWATER, OKLAHOMA 74074
(405) 372-2230
NOTICE OF ANNUAL MEETING
APRIL 22, 2004
The Annual Meeting of Shareholders of Southwest Bancorp, Inc.
("Southwest"), will be held in the Auditorium, Room 215, of the Stillwater
Public Library, 1107 South Duck Street, Stillwater, Oklahoma at 11:00 a.m.,
Central Time, on Thursday, April 22, 2004.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of four directors of Southwest;
2. The proposal to amend Southwest's 1999 Stock Option Plan to
increase the number of shares of Southwest Common Stock
reserved for issuance under the plan from 1,260,000 shares to
1,760,000; and
3. The transaction of such other matters as may properly come
before the Annual Meeting or any adjournments thereof.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
PERSONS NOMINATED FOR ELECTION AND "FOR" APPROVAL OF THE AMENDMENT TO THE 1999
STOCK OPTION PLAN. The Board is not aware of any other business to come before
the Annual Meeting.
Only shareholders of record at the close of business on March 5, 2004,
will be entitled to vote at the Annual Meeting and any adjournments or
postponements. A Proxy Card and a Proxy Statement for the Annual Meeting are
enclosed. Whether or not you attend the meeting in person, it is important that
your Southwest shares be represented and voted. Please vote by completing,
signing and dating your proxy card, and returning it as soon as possible in the
enclosed, postage-paid envelope. This proxy is revocable. You may change your
proxy later or vote in person at the meeting, if you wish.
A complete list of shareholders entitled to vote at the Annual Meeting
will be open for examination by any shareholder for any purpose germane to the
Annual Meeting during ordinary business hours at Southwest's main office during
the ten days prior to the Annual Meeting.
The proxy statement, voting instruction card, and Southwest's 2003
Annual Report are being distributed on or about March 19, 2004.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kerby E. Crowell
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KERBY E. CROWELL
SECRETARY
Stillwater, Oklahoma
March 19, 2004
P R O X Y S T A T E M E N T
Q U E S T I O N S AND A N S W E R S
Q: WHAT AM I VOTING ON?
A: You are voting on the re-election of the following four directors,
Thomas D. Berry, Rick Green, David P. Lambert, and Linford R. Pitts, each
for a three-year term (See page 2.), and a proposal to increase the number
of shares that may be issued under Southwest's 1999 Stock Option Plan (See
page 17).
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Q: WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
A: Shareholders of Southwest's common stock as of the close of business on
March 5, 2004 (the Record Date) are entitled to vote at the meeting.
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Q: HOW DO I VOTE?
A: You may vote by completing, signing, and dating the proxy card, and
returning it in the enclosed, postage-paid envelope. If you return your
signed proxy card but do not indicate your voting preference, your card
will be voted in favor of the re-election of all four directors and the
proposed amendment to the 1999 Stock Option Plan. You have the right to
revoke your proxy any time before the Annual Meeting, and shareholders who
attend the meeting may withdraw their proxies and vote in person if they
wish.
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Q: IS MY VOTE CONFIDENTIAL?
A: Yes, only the inspectors of election and a limited number of employees
and transfer agent personnel associated with processing the votes will know
how you cast your vote.
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Q: WHO WILL COUNT THE VOTES?
A: Computershare Investor Services, LLC, Southwest's transfer agent, will
tabulate the votes.
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Q: WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE PROXY CARD?
A: If you receive more than one proxy card, it indicates that you own
shares in more than one account, or your shares are registered in various
names. You should vote all proxy cards you receive by completing, signing,
dating, and returning each proxy card in the enclosed, postage-paid
envelope.
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Q: WHAT CONSTITUTES A QUORUM AT THE ANNUAL MEETING?
A: On the Record Date, there were 12,031,651 shares of Southwest common stock
issued and outstanding. Each share is entitled to one vote on all matters
voted on at the Annual Meeting. A majority of the outstanding shares,
present or represented by proxy, will be a quorum for the Annual Meeting.
If you submit a properly executed proxy card, you will be considered part
of the quorum. Abstentions and shares held for you by your broker or
nominee (broker shares) that are voted on any matter are included in the
quorum. Broker shares that are not voted on any matter are not included in
the quorum and are not included in determining the number of votes cast in
the election of directors.
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Q: WHO MAY ATTEND THE ANNUAL MEETING?
A: All shareholders as of the Record Date may attend, although seating is
limited.
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Q: WHAT PERCENTAGE OF SOUTHWEST STOCK DID DIRECTORS AND EXECUTIVE OFFICERS
OF SOUTHWEST OWN ON THE RECORD DATE?
A: Together, they owned approximately 11.3% of Southwest issued and
outstanding common stock.
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Q: WHO PAYS FOR THIS PROXY SOLICITATION AND HOW WILL SOLICITATION OCCUR?
A: Southwest's Board of Directors is soliciting this proxy, and Southwest
will pay the cost of the solicitation. In addition to the use of the mail,
employees of Southwest may solicit proxies personally or by telephone, fax,
or electronic mail, without additional compensation. Banks, brokerage
houses and other nominees and fiduciaries are requested to forward the
proxy material to beneficial owners of Southwest stock and to obtain
authorization to execute proxies on behalf of the beneficial owners. Upon
request, Southwest will reimburse these parties for their reasonable
expenses in forwarding proxy material to beneficial owners.
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PROPOSAL I -- ELECTION OF DIRECTORS
Your Board of Directors is currently composed of eleven members.
Directors of Southwest are divided into three classes and are elected for terms
of three years and until their successors are elected and qualified. At the
Annual Meeting, four directors will be elected for terms expiring at the 2007
Annual Meeting.
The Board of Directors has nominated for re-election Thomas D. Berry,
Rick Green, David P. Lambert, and Linford R. Pitts, all of whom are currently
directors, each to serve for a term of three years and until his or her
successor is elected and qualified. Each nominee must be elected by a plurality
of shares voted in this election. The individuals named as proxies on your proxy
card will vote for the election of each nominee unless you withhold
authorization.
Each shareholder voting in the election of directors is entitled to
cumulate his or her votes by multiplying the number of shares of common stock
owned of record by the shareholder on the Record Date by the number of directors
to be elected. Each shareholder is then entitled to cast his or her total
cumulated votes for one nominee or distribute his or her votes among any number
of the nominees being voted on at the Annual Meeting. Shareholders may not
cumulate their votes on the form of proxy solicited by the Board of Directors.
In order to cumulate votes, shareholders must attend the meeting and vote in
person or make arrangements with their own proxies. UNLESS OTHERWISE SPECIFIED
IN THE PROXY, HOWEVER, THE RIGHT IS RESERVED, IN THE SOLE DISCRETION OF THE
BOARD OF DIRECTORS, TO VOTE CUMULATIVELY, AND TO DISTRIBUTE VOTES AMONG SOME OR
ALL OF THE NOMINEES OF THE BOARD OF DIRECTORS IN A MANNER OTHER THAN EQUALLY SO
AS TO ELECT AS DIRECTORS THE MAXIMUM POSSIBLE NUMBER OF SUCH NOMINEES.
Each nominee has agreed to serve a three-year term, if elected. If any
nominee is unable to stand for re-election at this Annual Meeting, the Board may
reduce its size or nominate an alternate candidate, and the proxies will be
voted for the alternate candidate.
YOUR BOARD RECOMMENDS A VOTE FOR THESE DIRECTORS.
DIRECTOR NOMINEES
THOMAS D. BERRY DIRECTOR SINCE 1981
Mr. Berry, age 60, has been a director of Southwest since its
inception. He is involved in oil and gas exploration in North Central Oklahoma,
and is an Auctioneer and Real Estate Broker in Stillwater, Oklahoma.
RICK GREEN DIRECTOR SINCE 1998
Mr. Green, age 56, was appointed the Chief Executive Officer of
Southwest effective January 1, 1999. Mr. Green previously served as Chief
Operating Officer, President of the Central Oklahoma division, and Executive
Vice President of Stillwater National Bank & Trust Company ("Stillwater
National"), Southwest's national bank subsidiary. He is a member of the Oklahoma
City and Edmond Chambers of Commerce and has served as Chair/Ambassador of the
Stillwater
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Chamber of Commerce, on the Oklahoma State University Alumni Association
Homecoming and Honor Students Committees, as Chairman of Payne County Youth
Services, as Co-Chairman of the United Way of Stillwater Fund Drive and as a
member of the Advisory Board of the Oklahoma State University Technical
Institute. He is a member of the Commercial Real Estate Association of Oklahoma
City, the Oklahoma and Oklahoma City Homebuilders Associations, and past member
of the Stillwater Medical Center Committee on Physician Recruitment. Mr. Green
is also a member of Leadership Stillwater and Leadership Oklahoma City. Mr.
Green continues to be active as an alumnus of Oklahoma State University, serving
on various committees and boards, including the Board of Governors of the
Oklahoma State University Development Foundation.
DAVID P. LAMBERT DIRECTOR SINCE 1981
Mr. Lambert, age 64, has been a director of Southwest since its
inception Mr. Lambert has served as President and Chief Executive Officer of the
Lambert Construction Company, Stillwater, Oklahoma since 1974, and is a Trustee
of the Oklahoma Construction Advancement Foundation, and a member and past
chairman of the Stillwater Chamber of Commerce and a director of the Associated
General Contractors of America.
LINFORD R. PITTS DIRECTOR SINCE 1981
Mr. Pitts, age 66, has been a director of Southwest since its
inception. He is President of Stillwater Transfer & Storage, Inc. in Stillwater,
Oklahoma, and invests in real estate and in oil and gas properties and other
various small businesses. Mr. Pitts is a member of the Past President's Council
of the Stillwater Chamber of Commerce.
DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 2005
J. BERRY HARRISON DIRECTOR SINCE 1991
Mr. Harrison, age 65, is an Oklahoma State Senator, and has been a
rancher and farmer in Fairfax, Oklahoma since 1962. Mr. Harrison serves as
Conservation District Director of Osage County, President of the Oklahoma
Association of Conservation Districts, and is a member of many other civic
groups in his Senate District. James E. Berry II, Betty B. Kerns, and Robert B.
Rodgers are his cousins.
ERD M. JOHNSON DIRECTOR SINCE 1988
Mr. Johnson, age 74, is Operating Partner of Johnson Oil Partnership,
Midland, Texas. Mr. Johnson is a retired Petroleum Engineer and was Operating
Partner of Johnson Ranch, Fairfax, Oklahoma before its liquidation in 1997. Mr.
Johnson served from 1984-87 as a director of Beefmaster Breeders Universal, and
from 1987-89 as its Treasurer. Mr. Johnson is a former Trustee and Treasurer of
Trinity School of Midland, Texas and a former director and president of The
Racquet Club, Midland, Texas.
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BETTY B. KERNS DIRECTOR SINCE 2000
Ms. Kerns, age 59, was elected a director by the Board of Directors of
Southwest in December 1999, and began service in January 2000. She is the owner
of Betty Kerns & Associates, governmental affairs consultants, and is currently
a board member of the Stillwater Medical Center Authority and Comp Source
Oklahoma (formerly the State Insurance Fund). Her firm has represented many
governmental, corporate, charitable, trade association, and other clients. Ms.
Kerns previously was involved in politics and the Oklahoma state government as a
campaign organizer and Senate staff member. She has served on the Board of
Directors of the Payne County Sheltered Workshop, Payne County CASA Association,
the Professional Responsibility Commission of the Oklahoma Bar Association (Vice
Chairman), and an officer of state and local political party organizations.
James E. Berry II, J. Berry Harrison, and Robert B. Rodgers are her cousins.
RUSSELL W. TEUBNER DIRECTOR SINCE 2000
Mr. Teubner, age 47, was elected a director by the Board of Directors
of Southwest in December 1999 and began service in January 2000. He is a board
member of Esker S.A., a global enterprise connectivity software vendor. His
association with Esker began in June 1998, when he announced the merger of
Teubner & Associates, Inc. with Esker. Mr. Teubner was founder and CEO of
Teubner & Associates. The Stillwater Chamber of Commerce honored him as Citizen
of the Year in 1992, Small Business Person of the Year in 1991-92, and Small
Business Exporter of the Year in 1992-93. In 1993, he received the Outstanding
Young Oklahoman award given annually by the Oklahoma Jaycees. In 1997, Oklahoma
State University named Mr. Teubner as a recipient of their Distinguished Alumni
award. During 1996 and 1997 he served on the Citizen's Commission on the Future
of Oklahoma Higher Education. Currently, he serves on the board of TMSSequoia, a
software company, as well as the OSU Education and Research Foundation, the
Stillwater Center for Business Development, and the Global Commerce Network, a
non-profit organization devoted to helping business leaders extend their
influence into the social sector. Mr. Teubner is also a past director of the
Oklahoma City branch of the Federal Reserve Bank of Kansas City.
TERM EXPIRING IN 2006
JAMES E. BERRY II DIRECTOR SINCE 1998
Mr. Berry, age 58, has served as a director of Southwest since being
appointed to the Board of Directors in June 1998. Since 1988, Mr. Berry has been
the owner of Shading Concepts, which manufactures and sells solarium draperies.
From 1973 to 1988, Mr. Berry was a stockbroker in Oklahoma City with a major
Wall Street firm. J. Berry Harrison, Betty B. Kerns, and Robert B. Rodgers are
his cousins.
JOE BERRY CANNON DIRECTOR SINCE 1981
Mr. Cannon, age 67, has been a director of Southwest since its
inception. He is a Professor of Management at Oral Roberts University School of
Business in Tulsa, Oklahoma. Mr. Cannon
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served as Chairman, President, Chief Executive Officer and Senior Trust Officer
of First National Bank and Trust Co. in Blackwell, Oklahoma from 1968-1991. He
has been a member of the Kiwanis Club, a member of the First United Methodist
Church Board of Directors, and a member of the American and Oklahoma Bar
Associations.
ROBERT B. RODGERS DIRECTOR SINCE 1996
Mr. Rodgers, age 50, has been a director of Southwest since February
1996, and Chairman of the Board since December 31, 1999. He previously served as
Vice Chairman of the Board, beginning in May 1999. Mr. Rodgers is president of
Bob Rodgers Motor Company in Pauls Valley, Oklahoma, and is owner of Rapid
Roberts Enterprises. He is a former director and was the President and Chairman
of the Board of Directors of CDI II, a credit life insurance company
headquartered in Oklahoma City, Oklahoma. Mr. Rodgers also previously served on
the Board of Directors and was the Regional Vice President of the Oklahoma Auto
Dealers Association. Mr. Rodgers is currently the chairman of the Planning and
Zoning Commission for the City of Pauls Valley, Oklahoma. James E. Berry II, J.
Berry Harrison and Betty B. Kerns are his cousins.
BOARD MEETINGS AND COMMITTEES
Southwest's Board conducts its business through meetings of the Board
and of its committees. The Board meets monthly and may have additional special
meetings. The Board met twelve times during 2003. Each director attended at
least 91.67% of the total number of meetings of the Board and the committees on
which he or she served.
The Audit Committee of the Board oversees and reports to the Board of
Directors regarding accounting and financial reporting processes, the audits of
the financial statements, the qualifications and independence of Registered
Public Accounting Firms ("independent auditors") engaged to provide independent
audits and related services, and the performance of the internal audit function
and independent auditors; and performs the other duties of the committee
specified by federal securities laws and regulations, the Federal Deposit
Insurance Act and related regulations, the listing standards of the NASDAQ Stock
Market, Inc (the "Listing Standards"), and its charter. In addition the
committee, as directed by the Board, investigates and reports to the Board with
respect to specific matters involving financial reporting, financial accounting,
conflicts of interest, internal controls, and compliance with laws and
regulations relating to such matters. The committee, in its capacity as a
committee of the Board, is directly responsible for the appointment,
compensation, retention, evaluation, termination, and oversight of the work of
any independent auditor employed by Southwest for the purpose of preparing or
issuing an audit report or related work. The independent auditors report
directly to the committee. The committee is responsible for the resolution of
any disagreements between management of Southwest and the independent auditors
regarding financial reporting. All members of the committee are "independent" as
defined in applicable law, regulations of the Securities and Exchange Commission
("SEC"), the Federal Deposit Insurance Act and related regulations (the "FDIA"),
and the Listing Standards. Members of the committee also meet all other
applicable requirements of the SEC, FDIA, and the Listing Standards for
financial, accounting or related expertise. The Committee has adopted a written
charter, which has been approved by the Board of Directors. A copy of this
charter is attached as Annex A. The committee met ten times in 2003. Current
members are Joe Berry Cannon, Betty B.
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Kerns, Russell W. Teubner, and Linford R. Pitts, Chairman. Robert B. Rodgers,
Chairman of the Board of Directors, is an ex-officio member of the Audit
Committee. The Board has determined that Mr. Cannon qualifies as an audit
committee financial expert under the Listing Standards and applicable securities
regulations. Under SEC regulations and Southwest policy, the identification of a
person as an audit committee financial expert does not impose on such person any
duties, obligations, or liability greater than those to which he or she
otherwise is subject as a member of the audit committee and board of directors.
The Compensation Committee of the Board reviews Southwest's
compensation policies and employee benefit plans and programs, including their
establishment, modification, and administration. In addition, this committee
recommends compensation for Southwest's executive officers, determines
management incentive awards and stock option grants to eligible officers, and
recommends changes in director compensation. Members of the committees are
independent directors within the meaning of the Listing Standards. The committee
met six times in 2003. Current members are James E. Berry II, Erd M. Johnson,
Betty B. Kerns, David P. Lambert, Linford R. Pitts, and Russell W. Teubner,
Chairman. Robert B. Rodgers, Chairman of the Board of Directors, is an
ex-officio member of the Compensation Committee. In 2003, no Southwest executive
officer served as a member of the compensation committee of another entity that
had an executive officer who served as a Southwest director, and no Southwest
executive officer served as a director of another entity that had an executive
officer serving on Southwest's Compensation Committee.
Southwest has a Nominating Committee and a Director Search Committee
with responsibility for recommending persons to be nominated as directors. The
Chairman of the Board is the chairman of each committee. Members of the
committees are independent directors within the meaning of the Listing
Standards. The Nominating Committee has responsibility for recommending to the
Board of directors whether or not to nominate each director whose term expires
at the next annual meeting of shareholders. Members of the Nominating Committee
are the independent directors who were elected at the previous annual meeting
and the Chairman of the Board. The Nominating Committee met one time in 2003.
Current members are James E. Berry, II, Joe Berry Cannon, and Robert B. Rodgers,
Chairman. In its determination of whether or not to recommend a director for
nomination, the Nominating Committee considers whether or not such director
meets the minimum criteria for board membership based upon the director's
honesty, integrity, reputation in his or her community, existence of any actual
or potential conflicts of interest, and past service as director, and may
consider additional factors it deems appropriate. The Director Search Committee
has responsibility for identifying and recommending to the Board of directors
persons to be nominated as new directors of Southwest. The Committee also is
responsible for interviewing and investigating potential new directors. The
Director Search Committee met one time in 2003. Current members of the Committee
are J. Berry Harrison, David P. Lambert, Russell W. Teubner, and Robert B.
Rodgers, Chairman. In its determination of whether or not to recommend a
director for nomination, the Director Search Committee will consider whether or
not such director meets the minimum criteria for board membership described
above, and may consider additional factors it deems appropriate.
The Director Search Committee also is responsible for considering
persons recommended for nomination as directors by shareholders, other
directors, and officers. Under the charter of the
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Director's Search Committee, no shareholder nomination or recommendation need be
considered unless the Committee determines, in its good faith discretion, that
(i) the manner and substance of the recommendation or nomination and the related
information and materials provided in connection with the recommendation or
nomination complies with the procedural and substantive requirements of
Southwest's Certificate of Incorporation, relevant Bylaws, and state and federal
law, and (ii) if elected, the person recommended or nominated may lawfully serve
on the board. Shareholders may submit recommendations for director candidates
for consideration by the Director Search Committee to the Secretary by first
class mail. Please also see "Shareholder Proposals and Communications" on page
27 of this Proxy Statement.
The Nominating Committee and the Director Search Committee have written
charters that have been approved by the Board of Directors. Copies of these
charters are available on the governance area of Southwest's website at
www.oksb.com.
The Board of Directors has determined that all Directors other than Mr.
Green are independent under the Listing Standards.
DIRECTOR COMPENSATION
During 2003, the Chairman of the Board of Directors of Southwest
received an annual retainer of $16,000, the Chairmen of the Loan, Audit, and
Compensation Committees each received an annual retainer of $11,000, and other
non-officer Directors of Southwest each received an annual retainer of $8,000.
In addition, non-officer Directors received fees of $750 per board meeting
attended and a committee meeting fee of $300 per meeting if the meeting was held
the same day as the board meeting, or $600 if the committee meeting was held on
another day. Directors who also serve as Southwest officers did not receive
these fees.
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COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The shares of Southwest's common stock and trust preferred securities
that were beneficially owned on the Record Date by each person who was a
director or officer on that date or is a named executive officer are shown
below.
COMMON STOCK TRUST PREFERRED SECURITIES
------------------------------ ------------------------------
AMOUNT AND AMOUNT AND
NATURE OF PERCENTAGE NATURE OF PERCENTAGE
BENEFICIAL OF SHARES BENEFICIAL OF SECURITIES
NAME OWNERSHIP (1) OUTSTANDING (2) OWNERSHIP (1) OUTSTANDING (2)
- ---- ------------- -------------- ------------- ---------------
James E. Berry II 247,996 (3) 2.06%
Thomas D. Berry 57,774 (4) * 500 *
Joe Berry Cannon 104,598 (5) *
Rick Green 127,685 (6) 1.05
J. Berry Harrison 113,902 (7) *
Erd M. Johnson 195,661 (8) 1.63
Betty B. Kerns 15,926 (9) *
David P. Lambert 33,938 (10) *
Linford R. Pitts 32,007 (11) *
Robert B. Rodgers 74,838 (12) *
Russell W. Tuebner 45,082 (13) *
Kerby E. Crowell 83,390 (14) *
Jerry Lanier 38,321 (15) *
Joseph P. Root 38,167 (16) * 1,700 *
Stanley R. White 31,198 (17) *
All Directors and
Executive Officers
as a Group
(21 persons) 1,417,636 (18) 11.30% 2,600 *
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* Less than one percent of shares outstanding.
(1) Beneficial ownership is defined by rules of the Securities and Exchange
Commission, and includes shares that the person has or shares voting or
investment power over and shares that the person has a right to acquire
within 60 days from March 5, 2004. Unless otherwise indicated,
ownership is direct and the named individual exercises sole voting and
investment power over the shares listed as beneficially owned by such
person. A decision to disclaim beneficial ownership is made by the
individual, not Southwest.
(2) In calculating the percentage ownership of each named individual and
the group, the number of shares outstanding includes any shares that
the person or the group has the right to acquire within 60 days of
March 5, 2004.
(3) Excludes 31,000 shares held by his spouse and children and includes
6,326 shares that Mr. Berry has the right to acquire within 60 days of
March 5, 2004, pursuant to the exercise of stock options.
(4) Includes 6,326 shares that Mr. Berry has the right to acquire within 60
days of March 5, 2004, pursuant to the exercise of stock options.
(5) Excludes 54,810 shares beneficially owned by his spouse, as trustee,
and 2,984 shares held by his spouse. Includes 6,326 shares that Mr.
Cannon has the right to acquire within 60 days of March 5, 2004,
pursuant to the exercise of stock options.
(6) Includes 420 shares held jointly with his spouse and 3,190 shares held
by his spouse. Includes 113,130 shares that Mr. Green has the right to
acquire within 60 days of March 5, 2004, pursuant to the exercise of
stock options.
(7) Includes 6,326 shares that Mr. Harrison has the right to acquire within
60 days of March 5, 2004, pursuant to the exercise of stock options.
(8) Excludes 35 shares held by his spouse. Includes 9,053 shares held by
Johnson Oil Partnership of which Mr. Johnson is a general partner.
Includes 2,675 shares that Mr. Johnson has the right to acquire within
60 days of March 5, 2004, pursuant to the exercise of stock options.
(9) Excludes 8,264 shares beneficially owned by her spouse. Includes 6,326
shares that Ms. Kerns has the right to acquire within 60 days of March
5, 2004, pursuant to the exercise of stock options.
(10) Includes 21,000 shares held by his spouse and 3,000 shares held by a
trust of which he is co-trustee... Includes 6,326 shares that Mr.
Lambert has the right to acquire within 60 days of March 5, 2004,
pursuant to the exercise of stock options.
(11) Includes 6,326 shares that Mr. Pitts has the right to acquire within 60
days of March 5, 2004, pursuant to the exercise of stock options.
(notes continued on following page)
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(12) Excludes any shares owned by his father, James W. Rodgers, Jr., and his
mother, Sarah Jane Berry Rodgers. Includes 2,259 shares held by his
children and as custodian under an individual retirement account and
6,326 shares that Mr. Rodgers has the right to acquire with 60 days of
March 5, 2004, pursuant to the exercise of stock options.
(13) Includes 6,326 shares that Mr. Teubner has the right to acquire within
60 days of March 5, 2004, pursuant to the exercise of stock options.
(14) Includes 67,374 shares that Mr. Crowell has the right to acquire within
60 days of March 5, 2004, pursuant to the exercise of stock options.
(15) Includes 35,772 shares that Mr. Lanier has the right to acquire within
60 days of March 5, 2004, pursuant to the exercise of stock options.
(16) Includes 34,442 shares that Mr. Root has the right to acquire within 60
days of March 5, 2004, pursuant to the exercise of stock options.
(17) Includes 7,282 shares that Mr. White has the right to acquire within 60
days of March 5, 2004, pursuant to the exercise of stock options.
(18) Includes shares held by certain directors and executive officers as
custodians under Uniform Transfers to Minors Acts, by their spouses and
children, and for the benefit of certain directors and executive
officers as custodians under individual retirement accounts ("IRAs")
and living trusts. Includes 508,536 shares that executive officers and
directors have the right to acquire within 60 days of March 5, 2004,
pursuant to the exercise of stock options. Does not include shares
beneficially owned by Directors of Stillwater National Bank and Trust
Company or SNB Bank of Wichita who are not also directors of Southwest.
OWNERS OF MORE THAN 5% OF SOUTHWEST'S COMMON STOCK
Beneficial owners of more than 5% of the common stock are required to
file certain ownership reports under the federal securities laws. The following
table shows the common stock beneficially owned by persons who have filed these
reports reporting beneficial ownership that exceeds 5% of Southwest's
outstanding common stock at March 5, 2004.
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF SHARES
NAME OWNERSHIP (1) OUTSTANDING (2)
- ---- ------------- ---------------
FMR Corp 1,013,629 (3) 8.42%
Joyce P. Berry 662,702 (4) 5.51
- --------------------
(1) Beneficial ownership is defined by rules of the Securities and Exchange
Commission, and includes shares that the person has or shares voting or
investment power over. A decision to disclaim beneficial ownership or
to include shares held by others is made by the shareholder, not by
Southwest.
(2) Calculated by Southwest based upon shares reported as beneficially
owned by the listed persons and shares of Southwest common stock
outstanding at March 5, 2004.
(3) The address of FMR Corp is 82 Devonshire Street, Boston, Massachusetts
02109.
(4) The address of Joyce P. Berry is 2005 West Third Street, Stillwater,
Oklahoma 74074. Does not include 98,500 shares held by her children as
to which she disclaims beneficial ownership.
10
EXECUTIVE COMPENSATION AND OTHER BENEFITS
The following table summarizes compensation earned by or awarded to
Southwest's Chief Executive Officer and Southwest's four most highly compensated
other executive officers for 2003 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
---------------------------
AWARDS PAYOUTS
----------- -------
ANNUAL COMPENSATION (1) SECURITIES
NAME AND ------------------------- UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS (2) PAYOUTS COMPENSATION (3)
- ------------------ ---- ------ ----- ---------------- ------- ----------------
Rick Green 2003 $368,015 $90,180 28,580 -- $55,813
President and 2002 325,000 76,050 38,876 -- 44,768
Chief Executive Officer 2001 290,000 76,560 -- -- 22,000
Stanley R. White 2003 230,800 23,657 16,750 24,208
President, Managing Director 2002 215,000 58,488 19,894 -- 21,115
and Senior Trust Officer 2001 182,500 40,459 -- -- 19,766
Tulsa Region
Jerry L. Lanier 2003 184,000 21,436 8,670 23,208
Executive Vice President and 2002 160,000 21,520 11,692 -- 18,433
Chief Lending Officer 2001 125,750 17,731 -- 14,899
Kerby E. Crowell 2003 175,000 25,069 8,670 27,891
Executive Vice President, 2002 160,000 26,560 12,994 -- 23,601
Chief Financial Officer, and 2001 139,750 28,090 -- -- 18,929
Secretary
Joseph P. Root 2003 166,000 24,070 8,398 20,498
President, Central 2002 155,000 12,013 12,940 -- 17,751
Oklahoma Division 2001 139,167 19,831 -- -- 16,431
- --------------------
(1) The value of other annual compensation did not exceed the lesser
of $50,000 or 10% of salary and bonus for any Named Executive Officer.
(2) In each case, represents stock options granted under Southwest's Stock
Option Plan. Shares adjusted for 2:1 stock split effected August 29,
2003.
(3) Amounts for 2003 included Profit Sharing Plan and Supplemental Profit
Sharing Plan credits and contributions of $49,678 for Mr. Green; and
Profit Sharing Plan contributions of $22,176 each for Mr. White, Mr.
Lanier, and Mr. Crowell, and of $19,991 for Mr. Root. Southwest accrues
expense to the Supplemental Profit Sharing Plan in amounts sufficient
to ensure that Mr. Green obtains the same profit sharing contribution
as a percentage of compensation as other officers and employees of
Southwest without regard to limitations of the qualified profit sharing
plan. The Supplemental Profit Sharing Plan is unfunded.
11
OPTION GRANTS IN 2003
VALUES AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM (3)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ------------------------
NAME GRANTED (1) IN YEAR PRICE (2) DATE 5% 10%
- ---- ----------- ------------- --------- ------------- -------- --------
Rick Green 28,580 18.60% $11.72 03-11-2008 $92,543 $204,494
Stanley R. White 16,750 10.90% $11.72 03-11-2008 $54,237 $119,850
Jerry L. Lanier 8,670 5.65% $11.72 03-11-2008 $28,074 $62,035
Kerby E. Crowell 8,670 5.65% $11.72 03-11-2008 $28,074 $62,035
Joseph P. Root 8,398 5.47% $11.72 03-11-2008 $27,193 $60,089
- -------------------
(1) Options granted vested one-third upon the date of grant and an
additional one-third upon each of the next two anniversaries of the
date of grant.
(2) In each case, the exercise price was equal to the market price of the
Common Stock on the date of Grant.
(3) The rates of appreciation are used for illustration only. No assurance
can be given that actual experience will correspond to the assumed
rates.
YEAR-END OPTION VALUES
The number and potential realizable value at the end of the year of
options held by each of the Named Executive Officers are shown below.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END AT YEAR-END (1)
SHARES ACQUIRED VALUE ---------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
Rick Green 120,602 $1,154,472 90,645 96,211 $898,650 $998,945
Stanley R. White 98,132 637,085 37,714 41,798 445,308 419,268
Jerry L. Lanier 18,000 144,630 25,985 36,377 275,119 362,494
Kerby E. Crowell 57,000 438,330 60,152 39,512 630,560 400,730
Joseph P. Root -- -- 22,830 39,312 242,228 396,223
- ------------------
(1) Calculated based on the product of: (a) the number of shares subject to
options and (b) the difference between the fair market value of the
underlying common stock at December 31, 2003, based on the average of
the high and low sale prices of the common stock on December 31, 2003,
as reported on the Nasdaq National Market of $18.33 per share, and the
exercise price of the options of $4.25 to $11.72 per share.
No stock appreciation rights ("SARs") were exercised by the Named Executive
Officers during 2003. No SARs were held by any Named Executive Officer at
year-end. No options or SARs held by any Named Executive Officer repriced during
Southwest's last ten full years.
SEVERANCE ARRANGEMENTS
Under Stillwater National's Severance Compensation Plan, certain
executive officers of Stillwater National are entitled to lump-sum severance
compensation upon a qualifying termination of service equal to a percentage of
their respective total annual base compensation in effect at the date of
termination. For purposes of the Severance Compensation Plan, a qualifying
12
termination of service is defined as either an involuntary termination of
service or a voluntary termination of service for good reason, in either case
within two years following a change-in-control occurring after the effective
date of the Severance Compensation Plan. Good reason would include: (i) a
reduction in their base salary; (ii) their assignment without their consent to a
location other than in Oklahoma; (iii) the failure to maintain them in a
position of comparable authority or responsibility; or (iv) a material reduction
in their level of incentive compensation or benefits. A change-in-control is
deemed to occur whenever: (i) any entity or person becomes the beneficial owner
of or obtains voting control over 50% or more of the outstanding shares of
common stock of either Southwest or Stillwater National; (ii) the shareholders
of either Southwest or Stillwater National approve (a) a merger or consolidation
in which Southwest or Stillwater National is not the survivor or pursuant to
which the outstanding shares of either would be converted into cash, securities
or other property of another corporation other than a transaction in which
shareholders maintain the same proportionate ownership interests, or (b) a sale
or other disposition of all or substantially all of the assets of either
Southwest or Stillwater National; or (iii) there shall have been a change in a
majority of the Boards of Directors of either Southwest or Stillwater National
within a twelve-month period unless each new director was approved by the vote
of two-thirds of the directors still in office who were in office at the
beginning of the twelve-month period. Messrs. Green, White, and Crowell, would
have received lump-sum severance payments of $360,000, $230,800, and $175,000,
respectively, upon a qualifying termination of service if such termination had
occurred on December 31, 2003. Mr. Lanier and Mr. Root are not participants in
the Severance Compensation Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
As members of the Compensation Committee, it is our duty to review
compensation policies applicable to senior officers; to consider the
relationship of corporate performance to that compensation; to recommend salary
and bonus levels for senior officers for consideration by the Boards of
Directors of Southwest and Stillwater National and to administer various
incentive plans.
Southwest seeks to establish market-competitive compensation for its
senior officers that rewards achievement of Southwest goals. Under the
compensation policies of Southwest, which are endorsed by the Compensation
Committee, compensation is paid based both on the senior officer's knowledge,
skills and performance and the performance of Southwest. The base compensation
of the officers is based upon the Committee's assessment of comparable base
salaries and the officer's proficiency and performance. Regular annual bonuses
and grants under Southwest's Stock Option Plan are based upon Southwest's and
the officer's performance. Eighty percent of the annual bonus and option grants
for the Chief Executive Officer is based upon Southwest's performance, and
twenty percent is based upon personal performance. In assessing the performance
of Southwest for purposes of compensation decisions, the Compensation Committee
considers actual versus targeted (i) increases in annual earnings per share,
(ii) annual returns on average shareholders' equity, and (iii) annual returns on
average assets. Awards of regular bonuses are based upon the performance in the
most recent year. Stock option awards are based upon cumulative performance over
a three-year period. Additional performance bonuses and option grants also may
be made within the discretion of the Compensation Committee and the Board of
Directors. The Compensation Committee also may consider other factors, and may
change the basis of assessing Southwest's performance.
13
Southwest's policy is not a plan or contract that conveys rights to base
compensation, bonuses, or grants of options, all of which are discretionary.
The Committee conducted a review of the Chief Executive Officer's base
compensation in December 2002. As a result of this review, Mr. Green's salary
was increased by $35,000 to $360,000 effective January 1, 2003. A regular bonus
of $90,180 was awarded to Mr. Green in February 2004 based upon 2003
performance.
All members of the Compensation Committee are independent directors as
defined in the Listing Standards. No member of the Compensation Committee is a
former or current officer or employee of Southwest or any of its subsidiaries.
March 5, 2004
Russell W. Teubner, Chairman
James E. Berry II
Erd M. Johnson
Betty B. Kerns
David P. Lambert
Linford R. Pitts
Robert B. Rodgers
14
STOCK PERFORMANCE COMPARISONS
The following table compares the cumulative total return on a
hypothetical investment of $100 in Southwest's common stock at the closing price
on December 31, 1998 through December 31, 2003, with the hypothetical cumulative
total return on the Nasdaq Stock Market Index (U.S. Companies) and the Nasdaq
Bank Index for the comparable period.
[OBJECT OMITTED]
-------- -------- -------- -------- -------- ---------
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- -------- -------- ---------
Southwest $100 $ 76 $ 65 $ 106 $158 $222
-------- -------- -------- -------- -------- ---------
NASDAQ Stock Market
Index (U.S.). 100 186 113 90 62 93
-------- -------- -------- -------- -------- ---------
NASDAQ Bank Index 100 96 110 119 122 157
-------- -------- -------- -------- -------- ---------
15
PROPOSAL II
AMENDMENT OF THE 1999 STOCK OPTION PLAN
TO INCREASE AVAILABLE SHARES
At the Annual Meeting, the shareholders are being asked to approve an
amendment to Southwest's 1999 Option Plan in order increase the number of shares
of Common Stock reserved for issuance under the plan, and the number of shares
of Common Stock for which options may be granted, to an aggregate of 1,760,000.
Without this amendment, fewer than 100,000 shares will be available for issuance
under the Plan.
REASONS FOR THE AMENDMENT
Since adoption of the 1999 Option Plan five years ago, awards for an
aggregate of 1,164,704 shares, net of forfeited options, have been granted to
key employees and directors of Southwest or reserved for future issuance in
accordance with the terms of outstanding awards. Only 95,296 shares remain
available for issuance under the Option Plan. The Board of Directors believes
that this number of shares is inadequate to permit Southwest to appropriately
compensate employees, officers and directors in coming years.
The Board of Directors believes that the availability of a stock based
compensation program intended to provide directors and key employees with at
least a moderate portion of their overall compensation package, and that will
enable them to participate in the growth and prosperity of Southwest as
reflected in the stock price, is necessary in order to attract and retain high
caliber directors, officers, and employees in key positions. The Board of
Directors also believes that such a plan is necessary to align the interests of
such persons with the interests of Southwest's shareholders, which will increase
their incentive to improve Southwest's performance. As such, the Board of
Directors believes that the authorization of additional shares for issuance
under the Option Plan is necessary in order to permit Southwest's continued
growth and profitability.
If the amendment to the 1999 Option Plan is approved, the total number
of shares subject to issuance under future awards pursuant to the 1999 Option
Plan will be 595,296, or 4.95% of the outstanding Common Stock.
PURPOSE OF THE OPTION PLAN
The purpose of the Option Plan is to advance the interests of Southwest
by providing directors and selected key employees of Southwest and its
affiliates with the opportunity to acquire shares of Southwest's common stock.
By encouraging stock ownership, Southwest seeks to attract, retain, and motivate
the best available personnel for positions of substantial responsibility; to
provide additional incentive to directors and key employees of Southwest and its
affiliates to promote the success of the business as measured by the value of
its shares; and generally to increase the commonality of interests among
directors, key employees, and other shareholders.
The Option Plan was approved by Southwest shareholders in 1999. It
replaced the Southwest Bancorp 1994 Stock Option Plan. At March 5, 2004, fewer
than 100,000 shares were
16
reserved for issuance under the Option Plan and options of 1,079,712 were
outstanding under the Option Plan and the 1994 Stock Option Plan.
DESCRIPTION OF THE OPTION PLAN
ADMINISTRATION. The Option Plan is administered by a committee (the
"Committee") of at least three directors appointed by the Board, unless the
Board chooses to administer the Plan directly. Subject to the terms of the
Option Plan, the Committee has the authority to select participants and to grant
options and other awards under the Option Plan, to determine the terms of those
awards, and otherwise to administer and interpret the Option Plan. Decisions of
the Committee are final and conclusive. Members of the Committee will be
indemnified to the full extent permissible under Southwest's Certificate of
Incorporation and Bylaws in connection with any claims or other actions relating
to any action taken under the Option Plan. The Board currently intends to
administer the Plan directly with the advice of the Compensation Committee.
TYPES OF AWARDS; ELIGIBLE PERSONS. The Committee may grant stock
options, stock appreciation rights ("SARs") and restricted stock under the
Option Plan to directors and key employees designated by the Committee. A total
of 48 persons, including all of Southwest's executive officers and all outside
directors, currently participate in the Option Plan. The amount and value of
awards that may be made in the future to directors and named executive officers
are not yet determinable. The Committee has granted only options, and has not
granted SARs or restricted stock awards. The number of options awarded in March
2004 would not have changed if the amendment had been effective at that date,
but future awards may be reduced or eliminated if the amendment is not approved.
Options may be either incentive stock options ("ISOs") as defined in
Section 422 of the Internal Revenue Code (the "Code"), or options that are not
ISOs ("Non-ISOs"). Directors who are not employees are not eligible to receive
ISOs.
FINANCIAL EFFECTS OF AWARDS. Southwest will receive no monetary
consideration for the granting of awards under the Option Plan. It will receive
no monetary consideration other than the option price for shares of common stock
issued to optionees upon the exercise of their options. It will receive no
monetary consideration upon the exercise of SARs or the vesting of restricted
stock. Under current accounting standards adopted by Southwest, recognition of
compensation expense is not required when stock options are granted at the fair
market value of the common stock on the date the option is granted. Stock
options are considered, however, in the calculation of diluted earnings per
share of Southwest. Awards of SARs generally require recognition of compensation
expense based upon the difference between their exercise price and the market
value of the shares to which they relate. Awards of restricted stock generally
require the recognition of compensation expense based upon the market value of
the stock. The accounting treatment of awards is subject to change based upon
future actions by the SEC and accounting rule-making organizations.
SHARES AVAILABLE FOR GRANTS. The Option Plan reserves authorized but
unissued shares of common stock for issuance upon the exercise of options SARs,
or the grant of restricted stock. In the event of any merger, consolidation,
recapitalization, reorganization, reclassification, stock dividend, split-up,
combination of shares or similar event in which the number or kind of shares
is changed without receipt or payment of consideration by Southwest, the number
and kind of shares
17
of stock as to which options, SARs and restricted stock may be awarded under the
Option Plan, the affected terms of all outstanding options, SARs and shares of
restricted stock, and the aggregate number of shares of common stock remaining
available for grant under the Option Plan will be adjusted. Generally, the
number of shares as to which SARs are granted are charged against the aggregate
number of shares available for grant under the Option Plan, provided that, in
the case of an SAR granted in conjunction with an option, under circumstances in
which the exercise of the SAR results in termination of the option and vice
versa, only the number of shares of common stock subject to the option shall be
charged against the aggregate number of shares of common stock remaining
available under the Option Plan. If awards should expire, become unexercisable,
or be forfeited for any reason without having been exercised or become vested in
full, the shares of common stock subject to such awards shall, unless the Option
Plan shall have been terminated, be available for the grant of additional awards
under the Option Plan.
DURATION OF THE OPTION PLAN AND GRANTS. The Option Plan has a term of
10 years from February 18, 1999, its effective date, after which date no awards
may be granted. The maximum term for an award is ten years from the date of
grant, except that the maximum term of an ISO (and an SAR granted in tandem with
an ISO) may not exceed five years if the optionee owns more than 10% of the
common stock on the date of grant. The expiration of the Option Plan, or its
termination by the Committee, will not affect any award then outstanding.
OPTIONS. The exercise price of options may not be less than 100% of the
fair market value of the common stock on the date of grant. In the case of an
optionee who owns more than 10% of the outstanding common stock on the date of
grant, the option price may not be less than 110% of fair market value of the
shares. As required by federal tax laws, to the extent that the aggregate fair
market value (determined when an ISO is granted) of the common stock with
respect to which ISOs are exercisable by an optionee for the first time during
any calendar year (under all Option Plans of Southwest and of any subsidiary)
exceeds $100,000, the options will be treated as Non-ISOs, and not as ISOs. In
the event that the fair market value per share of the common stock falls below
the exercise price of previously granted options, the Committee will have the
authority, with the consent of the optionee, to cancel outstanding options and
to issue new options with an exercise price equal to the then current fair
market price per share of the common stock.
SARS. An SAR may be granted in tandem with all or part of any option
granted under the Option Plan or without any relationship to any option. An SAR
granted in tandem with an ISO must expire no later than the ISO, must have the
same exercise price as the ISO and may be exercised only when the ISO is
exercisable and when the fair market value of the shares subject to the ISO
exceeds the exercise price of the ISO. For SARs granted in tandem with options,
the optionee's exercise of the SAR cancels his right to exercise the option, and
vice versa. Regardless of whether an SAR is granted in tandem with an option,
exercise of the SAR will entitle the optionee to receive, as the Committee
prescribes in the grant, all or a percentage of the difference between (i) the
fair market value of the shares of common stock subject to the SAR at the time
of its exercise, and (ii) the fair market value of such shares at the time the
SAR was granted (or, in the case of SARs granted in tandem with options, the
exercise price). The exercise price as to any particular SAR shall not be less
than the fair market value of the optioned shares on the date of grant.
EXERCISE OF OPTIONS AND SARS. The exercise of options and SARs will be
subject to the terms and conditions established by the Committee in a written
agreement between the Committee
18
and the optionee. In the absence of Committee action to the contrary: (A) an
otherwise unexpired ISO shall cease to be exercisable upon (i) an employee's
termination of employment for "just cause" (as defined in the Option Plan), (ii)
the date three months after an employee terminates service for a reason other
than just cause, death, or disability, or (iii) the date one year after an
employee terminates service due to disability, or two years after termination of
such service due to his death; (B) an unexpired Non-ISO shall be exercisable at
any time (but not later than the date on which the Non-ISO would otherwise
expire.) Notwithstanding the provisions of any option which provides for its
exercise in installments as designated by the Committee, such option shall
become immediately exercisable upon the optionee's death or permanent and total
disability.
An otherwise exercisable SAR may be exercised only during the period
beginning on the third business day following the release for publication of
Southwest's quarterly or annual financial information, and ending on the twelfth
business day following such date. In no event, however, will any option or SAR
be exercisable after its expiration date, as to fractional shares of common
stock or prior to the optionee's satisfaction of any income tax withholding
requirements.
A participant may exercise options or SARs, subject to provisions
relative to their termination and limitations on their exercise, only by (i)
written notice of intent to exercise the option or SAR with respect to a
specified number of shares of common stock, and (ii) in the case of options,
payment to Southwest (contemporaneously with delivery of such notice) in cash,
in common stock, or a combination of cash and common stock, of the amount of the
exercise price for the number of shares with respect to which the option is then
being exercised. Common stock utilized in full or partial payment of the
exercise price for options shall be valued at its market value at the date of
exercise. Although directors and executive officers of Southwest generally would
be prohibited from profiting from certain purchases and sales of shares within
any six-month period under the federal securities laws, they generally will not
be prohibited by such laws from exercising options and immediately selling the
shares they receive, provided at least six months elapses between the grant of
the option and the sale of the common stock purchased on exercise of the option.
As a result, officers, like Southwest's and its affiliates' other participating
employees, generally will be permitted to benefit in the event the market price
for the shares exceeds the exercise price of their options, without being
subject to loss in the event the market price falls below the exercise price.
RESTRICTED STOCK. The Committee has broad discretion at the time of
making a restricted stock grant to determine a period of between six months and
five years during which the shares granted will be subject to restrictions, and
the conditions that must be satisfied in order for the shares of restricted
stock to become unrestricted (i.e., vested and nonforfeitable). For example, the
Committee may condition vesting upon a grantee's continued employment or upon
the grantee's attainment of specific corporate, divisional, or individual
performance standards or goals. The Committee may impose special vesting rules
applicable if the grantee retires, becomes disabled, or dies before the
expiration of the restriction period or satisfaction of the restrictions
applicable to an award of restricted stock.
The Committee shall determine the percentage of the award of restricted
stock which shall vest in the event of death, disability, or retirement prior to
the expiration of the restriction period or the satisfaction of the restrictions
applicable to an award of restricted stock. Notwithstanding the restriction
period and the restrictions imposed by the Committee on the restricted stock,
the
19
Committee may shorten the restriction period or waive any restrictions if the
Committee concludes that it is in the best interests of Southwest to do so.
Until a grantee's interest vests, his or her restricted stock is
nontransferable and forfeitable. Nevertheless, the grantee is entitled to vote
the restricted stock and to receive dividends and other distributions made with
respect to the restricted stock. To the extent that a grantee becomes vested in
his or her restricted stock at any time during the restriction period and has
satisfied applicable income tax withholding obligations, Southwest will deliver
unrestricted shares of common stock to the grantee. At the end of the
restriction period, the grantee will forfeit to Southwest any shares of
restricted stock as to which he or she did not earn a vested interest during the
restriction period.
CHANGE IN CONTROL. Upon a change in control, all options and SARs are
immediately exercisable and fully vested, and all shares of restricted stock
become fully vested. At that time, the Committee may grant the optionee the
right to receive a cash payment in an amount equal to the excess of the market
value of the shares subject to an option over the exercise price of the option.
If there is (i) a liquidation or dissolution of Southwest, (ii) a merger or
consolidation in which Southwest is not the surviving entity; or (iii) the sale
or disposition of all or substantially all of Southwest's assets, then all of
the outstanding options must be surrendered in return for options for shares of
the acquiring company, shares of the acquiring company with a market value equal
to the excess of the market value of the shares subject to option on the date of
the transaction over the exercise price of the option, or cash equal to the
excess of the market value of the shares subject to option on the date of the
transaction over the exercise price of the option, as determined by the
Committee. In no event, however, may an option be exchanged for cash or an SAR
exercised within the six-month period following the date of its grant.
A change in control under the Option Plan means any one of the
following events: (1) the acquisition of ownership or control of 51% or more of
any class of voting securities of Southwest or Stillwater National; (2) the
exercise of a controlling influence over the management or policies of
Stillwater National or Southwest by any person or by persons acting as a group
within the meaning of Section 13(d) of the Securities Exchange Act of 1934, or
(3) the failure of Continuing Directors to constitute at least two-thirds of the
Board of Southwest or Stillwater National during any period of two consecutive
years. A change in control does not include acquisition of ownership or control
of voting securities of Southwest by an employee benefit plan sponsored by
Southwest or Stillwater National; acquisition of voting securities by Southwest
through share repurchase or otherwise; or acquisition by an exchange of voting
securities with a successor to Southwest in a reorganization, such as a
re-incorporation, that does not have the purpose or effect of significantly
changing voting power or control. Continuing directors are those individuals who
were directors at the Effective Date of the Option Plan and those other
individuals whose election or nomination for election as a director was approved
by a vote of at least two-thirds of the continuing directors then in office. An
offer to effect a change in control means any offer to buy or acquire,
solicitation of an offer to sell, tender offer for, or request of invitation for
tenders of, 25% or more of any class of voting securities of Southwest for
value. The decision of the Committee as to whether a change in control has
occurred or an offer to effect a change in control has been received is
conclusive and binding.
Although these provisions are included in the Option Plan primarily for
the protection of an employee-optionee in the event of a change in control of
Southwest, they may also be regarded as
20
having a takeover defensive effect, which may reduce Southwest's vulnerability
to hostile takeover attempts and certain other transactions which have not been
negotiated with and approved by the Board.
NONTRANSFERABILITY. ISOs may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent and distribution, or pursuant to the terms of a qualified
domestic relations order. Other awards may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent and distribution, pursuant to the terms of a qualified
domestic relations order, or, in the sole discretion of the Committee, in
connection with a transfer for estate or retirement planning purposes to a trust
established for such purposes.
CONDITIONS ON ISSUANCE OR SALE OF SHARES. The Committee has the
authority to impose restrictions on shares issued under the Option Plan that it
deems appropriate or desirable, including the authority to impose a right of
first refusal or to establish repurchase rights or both of these restrictions.
The Committee may not issue shares unless the issuance complies with applicable
securities laws, and to that end may require that an optionee or grantee make
certain representations or warranties. In addition, no shares that have been
acquired upon exercise of an option may be sold or otherwise disposed of (except
by gift or upon death) before the end of a six-month period that begins on the
date the option was granted.
AMENDMENT AND TERMINATION OF THE OPTION PLAN. The Board may from time
to time amend the terms of the Option Plan and, with respect to any shares at
the time not subject to options, suspend or terminate the Option Plan.
Shareholder approval is required for an amendment that would increase the number
of shares subject to the Option Plan or that would extend the term of the Option
Plan. No amendment, suspension or termination of the Option Plan will, without
the consent of any affected holders of an option, alter or impair any rights or
obligations under the option.
FEDERAL INCOME TAX CONSEQUENCES
ISOS. An employee recognizes no taxable income upon the grant of ISOs.
If the optionee holds the option shares for at least two years from the date the
ISO is granted and one year from the date the ISO is exercised, any gain
realized on the sale of the shares received upon exercise of such ISO is taxed
as long-term capital gain. However, the difference between the fair market value
of the stock at the date of exercise and the exercise price of the ISO will be
treated as an item of tax preference in the year of exercise for purposes of the
alternative minimum tax. If the employee disposes of the shares before the
expiration of either of the special holding periods, the disposition is a
"disqualifying disposition." In this event, the employee will be required, at
the time of the disposition of the stock, to treat the lesser of the gain
realized or the difference between the exercise price and the fair market value
of the stock at the date of exercise as ordinary income and the excess, if any,
as capital gain.
Southwest will not be entitled to any deduction for federal income tax
purposes as the result of the grant or exercise of an ISO, regardless of whether
or not the exercise of the ISO results in liability under the alternative
minimum tax. However, if the employee has ordinary income taxable as
compensation as a result of a disqualifying disposition, Southwest will be
entitled to deduct an
21
equivalent amount, subject to federal income tax limitations on annual executive
compensation deductions.
NON-ISOS. In the case of a Non-ISO, an optionee will recognize ordinary
income upon the exercise of the Non-ISO in an amount equal to the difference
between the fair market value of the shares on the date of exercise and the
option price (or, if the optionee is subject to certain restrictions imposed by
the federal securities laws, upon the lapse of those restrictions unless the
optionee makes a special tax election within 30 days after the date of exercise
to have the general rule apply). Upon a subsequent disposition of such shares,
any amount received by the optionee in excess of the fair market value of the
shares as of the exercise will be taxed as capital gain. Southwest will be
entitled to a deduction for federal income tax purposes at the same time and in
the same amount as the ordinary income recognized by the optionee in connection
with the exercise of a Non-ISO, subject to federal income tax limitations on
annual executive compensation deductions.
SARS. The grant of an SAR has no tax effect on the optionee or
Southwest. Upon exercise of the SARs, however, any cash or common stock received
by the optionee in connection with the surrender of his or her SAR will be
treated as compensation income to the optionee, and Southwest will be entitled
to a business expense deduction for the amounts treated as such compensation
income, subject to federal income tax limitations on annual executive
compensation deductions.
RESTRICTED STOCK. The grant of restricted stock has no tax effect on
Southwest or the grantee. When the shares become vested pursuant to the
restricted stock award, the grantee will recognize ordinary income equal to the
fair market value of the shares delivered to him or her under the restricted
stock award, and Southwest will be entitled to a business expense deduction in
the same amount, subject to federal income tax limitations on annual executive
compensation deductions.
RECOMMENDATION AND VOTE REQUIRED
Approval of the Option Plan requires the favorable vote of a majority
of the votes represented at the Annual Meeting (assuming a quorum of a majority
of the outstanding shares of common stock is present).
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE
OPTION PLAN.
CERTAIN TRANSACTIONS
Southwest's banking subsidiaries have and expect to have in the future,
banking and other transactions with certain officers and directors of Southwest
and its subsidiaries and with greater than 5% shareholders of Southwest and
their immediate families and associates. These transactions are in the ordinary
course of business, and loans have been and will be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons. In the opinion of
Southwest's management, these loans did not involve more than normal risk of
collectibility or present other unfavorable features.
22
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on Southwest's review of the copies of initial statements
of beneficial ownership on Form 3 and reports of changes in beneficial ownership
on Form 4 that it has received in the past year, annual statements of changes in
beneficial ownership on Form 5 with respect to the last fiscal year, and written
representations that no such annual statement of change in beneficial ownership
was required, all directors, executive officers, and beneficial owners of more
than 10% of its common stock have timely filed those reports with respect to
2003. Southwest makes no representation regarding persons who have not
identified themselves as being subject to the reporting requirements of Section
16(a) of the Securities Exchange Act of 1934, or as to the appropriateness of
disclaimers of beneficial ownership.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
A representative of Ernst & Young LLP, Southwest's independent
certified public accounting firm, is expected to be present at the Annual
Meeting to respond to shareholders' questions and will have the opportunity to
make a statement.
FEES
The following table presents fees for professional audit services
rendered by Ernst & Young, LLP for the audit of the annual financial statements
of Southwest Bancorp, Inc. and subsidiaries for the year ended December 31,
2003, and fees billed for other services rendered by Ernst & Young.
2003 2002
---------- -----------
Audit Fees (1) $205,500 $155,000
Audit-Related Fees (2)(3) 21,000 15,000
Tax Services (3)(4) 49,589 65,000
All Other Fees (3)(5) 2,500 2,500
---------- -----------
Total $278,689 $237,500
========== ===========
- ----------
(1) Audit fees consist of fees and expenses for professional services
rendered for the audit of Southwest's consolidated financial statements
and SNB Wichita's financial statements, for review of financial
statements included in Southwest's quarterly reports on Form 10-Q, and
for other services normally provided by the independent auditor in
connection with statutory and regulatory filings or engagements.
Amounts shown are for the audits for, and the review of Forms 10-Q
filed within, the indicated years, regardless of when the fees and
expenses were billed or the services were rendered.
(2) Audit-related fees are fees for assurance and related services provided
by Ernst & Young that are related to the performance of audits or
reviews of financial statements but are not reported in the preceding
Audit fees category. The fees shown above were for services related to
Southwest's profit sharing plan and Federal Home Loan Bank collateral
requirements.
(3) Includes fees and expenses for services rendered for the years shown
regardless of when the fees and expenses were billed.
(4) Tax services fees consist of fees for compliance tax services including
tax planning and advice and preparation of tax returns.
(5) Other fees were for accounting research services.
23
PREAPPROVAL OF SERVICES
The Audit Committee is required to preapprove all auditing services and
permitted non-audit services provided by Southwest's independent auditors, under
Securities and Exchange Commission regulations that became effective in May
2003. There is an exception for preapproval of nonaudit services if the
aggregate amount of all such non-audit services provided to Bancorp constitutes
not more than 5 percent of the total amount of revenues paid by it to its
independent auditors during the fiscal year in which the non-audit services are
provided; such services were not recognized by Southwest at the time of the
engagement to be non-audit services; and the non-audit services are promptly
brought to the attention of the committee and approved prior to the completion
of the audit by the committee or by one or more members of the committee to whom
authority to grant such approval has been delegated by the committee. All audit
services and permitted non-audit services to be performed by Southwest's
independent auditor have been preapproved by the Audit Committee as required by
Securities and Exchange Commission regulations and the Audit Committee's charter
without exception.
REPORT OF THE AUDIT COMMITTEE
The Southwest Audit Committee oversees and reports to the Board of
Directors regarding accounting and financial reporting processes, the audits of
the financial statements, the qualifications and independence of independent
auditors engaged to provide independent audits and related services, and the
performance of the internal audit function and independent auditors; and also
performs the other duties of the committee specified by federal securities laws
and regulations, the Federal Deposit Insurance Act and related regulations, the
Listing Standards and its charter. The Committee (1) has reviewed and discussed
the audited financial statements included in Southwest's 2003 Annual Report on
Form 10-K with management; (2) has discussed with independent auditors the
matters required to be discussed by Statement of Auditing Standards 61; and (3)
has received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, and has
discussed independence with the independent auditor. Based upon this review,
discussion, disclosures, and materials described in (1) through (3), the
Committee recommended to the Board of Directors that the audited financial
statements be included in the 2003 Annual Report and Form 10-K. The Committee
also has considered whether the amount and nature of non-audit services rendered
by the independent accountant are consistent with its independence.
March 5, 2004 Linford R. Pitts, Chairman
Joe Berry Cannon
Betty B. Kerns
Robert B. Rodgers
Russell W. Teubner
CODE OF ETHICS
The Board of Directors of Southwest has adopted a code of ethics that
applies to all directors, officers, and employees of Southwest and its
consolidated subsidiaries. This code, which fulfills the requirements of the
Listing Standards and the criteria established by applicable
24
SEC regulation, is available through the governance area of Southwest's website
at www.oksb.com.
OTHER MATTERS
The Board is not aware of any business to come before the Annual
Meeting other than those matters described above in this Proxy Statement and
matters incident to the conduct of the Annual Meeting. However, if any other
matters should properly come before the Annual Meeting, it is intended that
proxies in the accompanying form will be voted as determined by a majority of
the Board of Directors.
SHAREHOLDER PROPOSALS AND COMMUNICATIONS
Any shareholder proposal to take action at the year 2005 Annual Meeting
of Shareholders must be received at Southwest's executive office at 608 South
Main Street, Stillwater, Oklahoma 74074 no later than November 17, 2004, in
order to be eligible for inclusion in Southwest's proxy materials for that
meeting. Any such proposals shall be subject to the requirements of the proxy
rules adopted under the Securities Exchange Act of 1934. Under Southwest's
Certificate of Incorporation, a shareholder proposal or nomination for director
may be eligible for consideration at an annual or special meeting if written
notice is delivered or mailed to the Secretary not less than thirty days nor
more than sixty days before the meeting, provided that, if less than forty days
notice of the meeting has been given, such written notice may be delivered or
mailed by the close of the tenth day after the date notice of the meeting was
mailed. Such notices also must include information required by and comply with
procedures established by the Certificate of Incorporation.
Southwest's shareholders may communicate with the board of directors or
any individual director by addressing correspondence to the board or such
director in care of the Secretary at Southwest's main office by mail, courier,
or facsimile or by e-mail through Southwest's "contact us" button on the
Investor Relations area of its website at www.banksnb.com.
The board of directors believes it is important for all directors to
attend the annual meeting of shareholders in order to show their support for
Southwest and to provide an opportunity for shareholders to express any concerns
to them. Southwest has adopted a policy that all directors should attend each
annual meeting of shareholders unless they are unable to attend by reason of
personal or family illness or pressing matters.
25
2003 ANNUAL REPORT TO SHAREHOLDERS
Southwest's 2003 Annual Report to Shareholders, including consolidated
financial statements, has been mailed to all shareholders of record as of the
close of business on the Record Date. Any shareholder who has not received a
copy of such Annual Report may obtain a copy by writing to the Secretary. Such
Annual Report is not to be treated as a part of the proxy solicitation material
or as having been incorporated herein by reference.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kerby E. Crowell
--------------------
KERBY E. CROWELL
SECRETARY
Stillwater, Oklahoma
March 19, 2004
ANNUAL REPORT ON FORM 10-K
A COPY OF SOUTHWEST'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2003, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE
FURNISHED WITHOUT CHARGE TO SHAREHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO: KERBY E. CROWELL, SOUTHWEST BANCORP, INC., P.O. BOX 1988,
STILLWATER, OKLAHOMA 74076.
26
ANNEX A
SOUTHWEST BANCORP, INC.
STILLWATER NATIONAL BANK AND TRUST COMPANY
JOINT AUDIT COMMITTEE CHARTER
CONTENTS
PAGE
----
I. PURPOSE AND GENERAL RESPONSIBILITIES............................... 1
II. JOINT COMMITTEE.................................................... 1
III. RELATIONSHIPS WITH INDEPENDENT AUDITORS............................ 1
IV. APPROVAL OF AUDIT SERVICES......................................... 2
V. REVIEW OF FINANCIAL STATEMENTS..................................... 3
VI. EXTERNAL REPORTS................................................... 4
VII. RELATIONSHIP WITH INTERNAL AUDITORS................................ 4
VIII. COMPLAINT PROCEDURES............................................... 4
IX. INTERNAL REPORTS................................................... 4
X. MEMBERSHIP......................................................... 4
XI. MEETING FREQUENCY.................................................. 5
XII. CONDUCT OF MEETINGS................................................ 5
XIII. AUTHORITY, SUPPORT, AND ADVICE..................................... 5
XIV. FUNDING............................................................ 5
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SOUTHWEST BANCORP, INC.
STILLWATER NATIONAL BANK AND TRUST COMPANY
JOINT AUDIT COMMITTEE CHARTER
I. PURPOSE AND GENERAL RESPONSIBILITIES
1. The Audit Committee:
a. Oversees and reports to the Board of Directors regarding (a)
accounting and financial reporting processes, (b) audits of the
financial statements, (c) the qualifications and independence of
Registered Public Accounting Firms ("Independent auditors") engaged to
provide independent audits and related services, and (d) the
performance of the internal audit function and independent auditors;
b. Performs the other duties of the committee specified by federal
securities laws and regulations, the Federal Deposit Insurance Act and
related regulations (the "FDIA"), the listing standards of the NASDAQ
Stock Market, Inc. ("Listing Standards"), and this charter.
c. In addition to its other duties and powers specified in this
charter, as directed by the Board, investigates and reports to the
Board with respect to specific matters involving financial reporting,
financial accounting, conflicts of interest, internal controls, and
compliance with laws and regulations relating to such matters.
II. JOINT COMMITTEE
2. Meetings of Southwest and Bank Committees are held jointly. Each Board
has authority with respect to its Committee. The Committees and the
Boards are referred to in the singular in this charter from time to
time for convenience.
III. RELATIONSHIPS WITH INDEPENDENT AUDITORS
3. The independent auditors are ultimately accountable to the Board and to
the committee, as representatives of the shareholders. The committee,
in its capacity as a committee of the Board, is directly responsible
for the appointment, compensation, retention, evaluation, termination,
and oversight of the work of any independent auditor employed by
Southwest for the purpose of preparing or issuing an audit report or
related work. The independent auditors report directly to the
committee.
4. The committee is responsible for the resolution of any disagreements
between management of Southwest and the independent auditors regarding
financial reporting.
5. At least annually, the committee:
a. Reviews with management and the independent auditors the reports
required to be provided to the committee by the independent auditor by
Section 10A of the Securities Exchange Act of 1934 ("Section 10A"),
the scope of services required by the audit, major risk factors,
critical accounting policies, alternative treatments of financial
information, audit conclusions regarding significant accounting
estimates, and the compliance of the audit with the audit procedures
required by
A-2
Section 10A relating to detection of illegal acts, identification of
related party transactions, and evaluation of Southwest as a going
concern.
b. Receives and considers a formal written statement from the
independent auditor delineating all relationships between the auditor
and Southwest, as required by Independent Standards Board Standard No.
1, and actively engages in a dialogue with the independent auditor
with respect to any disclosed relationships or services that may
affect the objectivity and independence of the auditors and takes
appropriate action to oversee the independence of the independent
auditor.
6. The committee discusses with management and the independent auditors any
illegal acts reported to the committee by the independent auditors that the
independent auditor detected or which otherwise came to the independent
auditor's attention in the course of the audit, and recommends that the
Board take appropriate remedial action.
IV. APPROVAL OF AUDIT SERVICES
7. All auditing services (including, without limitation, comfort or "agreed
upon procedures" letters in connection with securities underwritings) and
permitted non-audit services, other than as provided by section 8, below,
provided to Southwest by its independent auditors shall be preapproved by
the committee. Approval of the committee may be obtained by majority vote
of the committee members at any meeting of the committee or by written
consent of a majority of committee members without a meeting of the
committee.
8. Pre-approval under the preceding section is not required with respect to
the provision of non-audit services if:
a. the aggregate amount of all such non-audit services provided to
Southwest constitutes not more than 5 percent of the total amount of
revenues paid by Southwest to its independent auditors during the
fiscal year In which the non-audit services are provided; and
b. such services were not recognized by Southwest at the time of the
engagement to be non-audit services; and
c. the non-audit services are promptly brought to the attention of the
committee and approved prior to the completion of the audit by the
committee or by one or more members of the committee to whom authority
to grant such approval has been delegated by the committee.
9. Southwest's independent auditors shall not provide any prohibited
non-audit service to Southwest. Prohibited non-audit services are
defined as follows:
a. bookkeeping or other services related to the accounting records or
financial statements of Southwest;
b. financial information systems design and implementation;
c. appraisal or valuation services, fairness opinions, or
contribution-in-kind reports;
d. actuarial services;
e. internal audit outsourcing services;
A-3
f. management functions or human resources;
g. broker or dealer, investment adviser, or investment banking services;
h. legal services and expert services unrelated to the audit; and
i. any other service that is determined by the Public Company Accounting
Oversight Board to be impermissible.
10. Southwest's independent auditors may be engaged by the committee to
perform any non-audit service, including tax services, that is not
described in section 9, above, if that non-audit service is approved in
advance by the committee in accordance with section 7, above.
11. Approval of any non-audit service to be performed by the independent
auditor shall be disclosed in Southwest's periodic reports, as required
under applicable SEC regulation.
V. REVIEW OF FINANCIAL STATEMENTS
12. The committee reviews and discusses the audited financial statements
with management.
13. The committee discusses with the independent auditors the matters
required by Statement of Auditing Standards No. 61, as amended, which
requires auditors to communicate certain matters to the Committee. These
matters include the methods used to account for any significant unusual
transactions, the effect of significant accounting policies in any
controversial or emerging areas for which there is a lack of authoritative
guidance or consensus, the process used by management in formulating
certain accounting estimates and the basis for the auditor's conclusions
regarding the reasonableness of those estimates, and any disagreements with
management over the application of accounting principles, the basis for
management's accounting estimates, and the disclosures in the financial
statements.
14. Based upon the reviews and discussions referred to in sections 5(b), 12
and 13, recommending to the Board whether the financial statements
should be included in Southwest's annual report on Form 10-K.
15. The committee discusses with management and the independent auditors
issues regarding accounting principles and practices that could
significantly affect the financial statements or the adequacy of the
internal control system including required or suggested changes in
auditing and accounting principles and practices, and reviews with
management and the independent auditors their assessments of the
adequacy of internal controls, and the resolution of identified
material weaknesses and reportable conditions in internal controls.
16. The committee, or, at the discretion of the committee, one or more
members of the committee, reviews the quarterly financial statements
included in Southwest's Forms 10-Q with management and the independent
auditors.
VI. EXTERNAL REPORTS
17. The committee:
a. Issues a report to be included in Southwest's annual proxy materials
stating that
A-4
the Committee has fulfilled the responsibilities set forth in sections
5(b), 12, 13, and 14.
b. Reviews with management the basis for the annual Management Reports
regarding the annual financial statements, internal control structure,
procedures for financial reporting, and compliance with laws and
regulations relating to safety and soundness required by the Federal
Deposit Insurance Act ("FDIA") and implementing regulations; and with
the independent auditors the basis for their reports required by the
FDIA.
VII. RELATIONSHIP WITH INTERNAL AUDITORS
18. The committee approves the appointment of any accounting firm engaged to
perform internal audit functions, and reviews the fees to be paid to such
firm.
19. The committee reviews and approves the scope of internal audits and
significant reports by the internal audit function, and reviews the
effectiveness of the internal audit function in monitoring the system of
internal controls.
VIII. COMPLAINT PROCEDURES
20. The committee will establish procedures for (i) the receipt, retention, and
treatment of complaints received by Southwest regarding accounting,
internal accounting controls, or auditing matters; and (ii) the
confidential, anonymous submission by employees of Southwest, of concerns
regarding questionable accounting or auditing matters, when and as required
by law or the Listing Standards.
IX. INTERNAL REPORTS
21. The committee reports to the full Board of Directors of Southwest. The
Board establishes the Charter, membership, and duties of the committee. The
committee:
a. Reviews and reassesses the charter of the committee each year, and
recommends any proposed changes to the Board for approval; and
b. Provides regular reports of its activities to the Board.
X. MEMBERSHIP
22. The Committee consists of at least three members. The Board of Directors,
by a majority vote of the Board, establishes the number of members, the
membership of the Committee, and the Chair of the Committee at the annual
organizational meeting and at other times the Board deems appropriate.
Members of the committee shall serve for one year terms or until their
earlier resignation, retirement or removal by the Board or until their
successors are appointed. No member of the committee shall be removed
except by majority vote of the full Board then in office.
23. All members of the committee are "independent" as defined in applicable
law, regulations of the Securities and Exchange Commission ("SEC"), the
Federal Deposit Insurance Act and related regulations (the "FDIA"), and the
listing standards of the NASDAQ Stock Market, Inc. ("Listing Standards").
Members of the committee also meet all other applicable requirements of the
SEC, FDIA, and Listing Standards for financial,
A-5
accounting or related expertise. The committee includes one or more members
having the qualifications of an audit committee financial expert, when and
as required by applicable SEC regulations or the Listing Standards except
as determined by the Board.
XI. MEETING FREQUENCY
24. The committee meets at least quarterly, and at such other times as are
established by the Board, the committee, or the Chair of the committee.
XII. CONDUCT OF MEETINGS
25. The committee establishes reasonable rules for the conduct of meetings and
required notice of meetings, subject to oversight by the Board of Directors
and the requirements of this charter.
26. The committee meets by conference call or in person, and also may act by
unanimous consent and, pursuant to Section 16 of this charter, by
delegation to the extent the committee determines is necessary for timely
action. The committee will review all delegated actions at its next
following meeting. A majority of the committee constitutes a quorum.
Minutes of the committee are not required, but may be kept. Reports and
recommendation to the Board of Directors are written.
XIII. AUTHORITY, SUPPORT, AND ADVICE
27. The committee's functions shall be supported by the Chief Financial
Officer. The committee may hold meetings with independent auditors,
internal audit personnel, outside counsel to Southwest and the Bank, and
others as it deems appropriate. The committee is advised by the independent
auditors and Southwest's outside counsel, and also may, but is not required
to, engage separate counsel or other advisors to the committee. The
committee may rely on these advisors regarding the application, contents,
and meaning of auditing and accounting standards, laws, and regulations.
The committee may rely on the independent auditors to identify the matters
required to be discussed and disclosed by the independent auditors.
XIV. FUNDING
28. Southwest shall provide for appropriate funding, as determined by the
committee, for payment of compensation to the independent auditors employed
by Southwest for the purpose of rendering an audit report or performing
other audit, review, or attest services for Southwest and to any advisors
employed by the committee and for payment of ordinary administrative
expenses of the committee that are necessary or appropriate in carrying out
its duties.
A-6
PROXY - SOUTHWEST BANCORP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
April 22, 2004
--------------------
The undersigned hereby appoints James E. Berry, II, J. Berry Harrison, and
Robert L. Hert, with full powers of substitution to act, as attorneys and
proxies for the undersigned, to vote all shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
(the "Annual Meeting"), to be held in the Auditorium, Room 215, of the
Stillwater Public Library, 1107 South Duck Street, Stillwater, Oklahoma on
Thursday, April 22, 2004 at 11:00 a.m., Central Time, and at any and all
adjournments thereof, as indicated below and in accordance with the
determination of a majority of the Board of Directors with respect to other
matters which come before the Annual Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE NOMINEES AND FOR THE AMENDMENT OF THE 1999
STOCK OPTION PLAN. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING,
THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE WITH THE
DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL
MEETING. THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO
VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEE IS
UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE
CONDUCT OF THE ANNUAL MEETING.
Should the undersigned be present and elect to vote at the Annual Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Annual Meeting of the shareholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. The undersigned hereby revokes any and all proxies
heretofore given with respect to the shares of Common Stock held of record by
the undersigned.
- --------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------
Issue I.
ELECTION OF DIRECTORS
The Board of Directors recommends a vote "FOR" each of the listed nominees.
FOR WITHHOLD
Thomas D. Berry [ ] [ ]
Rick Green [ ] [ ]
David P. Lambert [ ] [ ]
Linford R. Pitts [ ] [ ]
INSTRUCTION: To withhold your vote for any individual nominee, insert that
nominee's name on the line provided below.
Issue II. Amendment of the 1999 Stock Option Plan.
The Board of Directors recommends a vote FOR the following amendment.
FOR AGAINST ABSTAIN
Amendment of 1999 Stock Option Plan to increase the
number of shares of Common Stock authorized to be [ ] [ ] [ ]
issued under the Plan from 1,260,000 to 1,760,000.
[ ] Please check here if you plan to attend the Annual Meeting.
---------------------
Unless contrary direction is given, the right is reserved in the sole discretion
of the Board of Directors to distribute votes among some or all of the above
nominees in a manner other than equally so as to elect as directors the maximum
possible number of such nominees.
AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
The undersigned acknowledges receipt from the Company prior to the execution of
this proxy of a Notice of Annual Meeting, the Company's Proxy Statement for the
Annual Meeting and the 2003 Annual Report to Shareholders. Please sign exactly
as your name appears on the envelope in which this card was mailed. When signing
as attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
Signature 1 Signature 2 Date (dd/mm/yyyy)
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