KILLBUCK BANCSHARES, INC
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL SHAREHOLDER MEETING
APRIL 10, 2000
KILLBUCK BANCSHARES, INC.
165 N. Main Street
Killbuck, OH 44637
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
April 10, 2000
TO THE HOLDERS OF SHARES OF COMMON STOCK:
Notice is hereby given that the Annual Meeting of the Shareholders of
Killbuck Bancshares, Inc. (the "Corporation") will be held at the main office
of the Corporation, 165 N. Main Street, Killbuck, Ohio, on Monday, April 10,
2000, at 7:30 p.m. (local time), for the purpose of considering and voting
upon the following matters:
1. The election of three Directors (to be elected to Class B of the
Corporation's staggered Board of Directors) to serve a three-year term
or until their successors shall have been elected and qualified.
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF. THE BOARD OF DIRECTORS AT PRESENT KNOWS OF
NO OTHER BUSINESS TO BE PRESENTED BY OR ON BEHALF OF THE CORPORATION.
Shareholders of record at the close of business on March 11, 2000, are the
only shareholders entitled to notice of and to vote at the Annual Shareholders
Meeting.
By order of the Board of Directors
Luther E. Proper
Luther E. Proper, President and Chief
Executive Officer
March 13, 2000
IMPORTANT
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK, SIGN, DATE, AND
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED SELF-ADDRESSED ENVELOPE AS
PROMPTLY AS POSSIBLE. NO POSTAGE IS REQUIRED.
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KILLBUCK BANCSHARES, INC.
KILLBUCK, OHIO
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Killbuck Bancshares, Inc. (the "Corporation") of
proxies to be voted at the Annual Meeting of Shareholders to be held on
Monday, April 10, 2000, in accordance with the foregoing notice.
Killbuck Bancshares, Inc. is a registered bank holding company of which
The Killbuck Saving Bank Company (hereinafter collectively "Corporation") is
its principal subsidiary.
The solicitation of proxies on the enclosed form is made on behalf of the
Board of Directors of the Corporation. All costs associated with the
solicitation will be borne by the Corporation. The Corporation does not
intend to solicit proxies other than by use of the mails, but certain officers
and regular employees of the Corporation or its subsidiaries, without
additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies. The proxy materials are first being mailed to
shareholders on or about March 13, 2000.
Any shareholder executing a proxy has the right to revoke it by the
execution of a subsequently dated proxy, by written notice delivered to the
Secretary of the Corporation prior to the exercise of the proxy or in person
by voting at the meeting. The shares will be voted in accordance with the
direction of the shareholder as specified on the proxy. In the absence of
instructions, the proxy will be voted "FOR" the election of the three persons
listed in this Proxy Statement.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on March 11, 2000,
will be eligible to vote at the Annual Meeting or any adjournment thereof. As
of March 11, 2000, the Corporation had outstanding 705,240 shares of no par
value common stock. Shareholders are entitled to one vote for each share of
common stock owned as of the record date.
All Directors and Executive Officers of the Corporation as a group
(comprised of eleven individuals), beneficially held 57,438 shares of the
Corporation's common stock as of February 29, 2000, representing 8.14 percent
of the outstanding common stock of the Corporation.
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PRINCIPAL SHAREHOLDERS:
- ----------------------
To the Corporation's knowledge, except as noted below, no person or
entity owns beneficially, directly or indirectly, 5 percent or more of the
Corporation's outstanding common stock as of February 29, 2000.
AMOUNT AND NATURE OF % OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------------------------ -------------------- -----
The Holmes Limestone Co. 45,120 Shares 6.40%
P.O. Box 295
Berlin, Ohio 44610
PROPOSAL #1 ELECTION OF DIRECTORS AND INFORMATION
WITH RESPECT TO DIRECTORS AND OFFICERS
CLASSIFICATION SYSTEM FOR THE ELECTION OF DIRECTORS
The Corporation has a staggered system for the election of Directors.
Directors are divided into three classes as nearly equal in number as
possible. The Corporation has ten Directors, and they are elected to serve a
three-year term.
INFORMATION WITH RESPECT TO NOMINEES
The following information is provided with respect to each Class B (term
to expire in 2000) nominee for Director and each present and continuing
Director whose term of office extends beyond the Annual Meeting of the
Corporation's Shareholders. Those nominees receiving the greatest number of
votes will be elected as Directors. There is no minimum number of votes
required to elect a Director.
Name and Age Principal Occupation During Past Director of the
Five Years Corporation
Since
- ------------ -------------------------------- ---------------
Robert D. Bell Chairman of the Board, Killbuck 1992
(Age 73) Bancshares, Inc. and The Killbuck
Term expires 2000 Savings Bank Co.
Allan R. Mast Co-Owner Holmes M&M Construction 1992
(Age 50)
Term expires 2000
Luther E. Proper President and CEO, Killbuck Bancshares 1992
(Age 50) and The Killbuck Savings Bank Co
Term expires 2000
THE DIRECTORS UNANIMOUSLY RECOMMEND A VOTE IN FAVOR OF THIS PROPOSAL #1.
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INFORMATION WITH RESPECT TO DIRECTORS NOT STANDING FOR REELECTION
Name and Age Principal Occupation During Director of the
Past 5 Years Corporation Since
- ------------ --------------------------- -----------------
John W. Baker County Commissioner 1992
(Age 55) (President, Burgett Insurance
Term expires 2002 through December 31, 1997)
Ted Bratton Farmer 1999
(Age 39)
Term expires 2001
Richard L. Fowler President, Mobile Homes of Ohio 1992
(Age 68)
Term expires 2002
Thomas D. Gindlesberger Attorney-at-Law 1992
(Age 73)
Term expires 2001
Dean J. Mullet President, Mullet Cabinet 1996
(Age 47)
Term expires 2001
Kenneth E. Taylor Farmer 1992
(Age 47)
Term expires 2002
Michael S. Yoder Owens-Brockway
(Age 58) (Retired 1999) 1994
Term expires 2001
The business experience of each of the above-listed nominees and
Directors during the past five years was that typical to a person engaged in
the principal occupation listed. Unless otherwise indicated, each of the
nominees and Directors has had the same position or another executive position
with the same employer during the past five years.
Shareholders desiring to nominate individuals to serve as Directors may
do so by following the procedure outlined in the Corporation's Code of
Regulations requiring advance notice to the Corporation of such nomination and
certain information regarding the proposed nominee.
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SECURITY OWNERSHIP OF MANAGEMENT
Shares of Corporation
Common Stock Percentage of
Owned Beneficially as Beneficial Ownership
Name & Age of 2/29/00 as of 2/29/00
- ---------- ---------- -------------
John W. Baker (1) 106 .02%
Robert D. Bell (2) 2,865 .41%
Ted Bratton (3) 245 .03%
Richard L. Fowler (4) 7,938 1.13%
Thomas D. Gindlesberger 35,000 4.96%
Craig A. Lawhead (5) 1,500 .21%
Allan R. Mast (6) 1,980 .28%
Dean J. Mullet (7) 190 .03%
Luther E. Proper 6,700 .95%
Kenneth E. Taylor 514 .07%
Michael S. Yoder (8) 400 .06%
All directors and executive
officers as a group (11 persons) 57,438 8.14%
- -------------------------------------------------------------------
(1) 100 shares owned individually, 6 shares owned by son.
(2) 2,500 shares owned individually, 365 shares in spouse's name.
(3) 118 shares owned individually, 107 shares owned jointly with spouse, 20
owned by son.
(4) 3,993 shares owned individually, 3,945 shares owned jointly with spouse.
(5) 625 shares owned individually, 855 shares owned jointly with spouse,
20 shares in minor daughter's name.
(6) 375 shares owned individually, 905 shares owned jointly with spouse,
700 shares owned in name of Holmes M & M Construction.
(7) 130 owned individually, 60 owned in name of Mullet Cabinet.
(8) 250 owned individually, 150 owned in spouse's name.
COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
Committees
----------
The Board of Directors conducts its business through meetings of the
Board and through its committees. In accordance with the Code of Regulations
of the Corporation, the Board of Directors has appointed and maintains an
Audit Committee, Executive Committee, Investment Committee, Securities
Committee and Loan Committee.
The Corporation's nominating function is performed by the Board of
Directors acting as a committee of the whole. In conducting its nominating
function, the Board of Directors of the Corporation is responsible for making
annual nominations for Directors to fill vacancies created by expired terms of
Directors and from time to time, making appointments to fill vacancies created
prior to the expiration of a Director's term. During 1999, the Board met once
to consider and act upon the nomination of Directors.
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The Audit Committee reviews with the Corporation's independent auditors,
the audit plan, the scope and results of their audit engagement and the
accompanying management letter, if any; reviews the scope and results of the
Corporation's internal auditing procedures; consults with the independent
auditors and management with regard to the Corporation's accounting methods
and the adequacy of its internal accounting controls; approves professional
services provided by the independent auditors; reviews the independence of the
independent auditors; and reviews the range of the independent auditors' audit
and nonaudit fees. The Audit Committee is composed of Messrs. Baker, Mast,
Taylor and Yoder (Chairman). The Audit Committee met 4 times during 1999.
The Executive Committee is responsible for administering the
Corporation's employee benefit plans; setting the compensation of the
President and Chief Executive Officer; reviewing the criteria that form the
basis for management's officer and employee compensation recommendations and
reviewing management's recommendations in this regard. The Executive
Committee is composed of Messrs. Baker, Bell, Bratton, Gindlesberger, and Mast
(Chairman). The Executive Committee met 12 times during 1999.
The Investment Committee is responsible for reviewing the securities
portfolio of the Corporation. The Corporation's Securities Committee reviews
and makes recommendations to the full Board on matters affecting the market
for the Corporation's common stock and the Corporation's dividend policy.
The Loan Committee reviews loan policy matters and approves loan requests
as required by internal policy.
The Board of Directors of the Corporation meets bi-monthly for its
regular meetings and upon call for special meetings. During 1999, the Board
met 24 times. All Directors of the Corporation attended at least 75 percent
of the Board and Committee Meetings that they were scheduled to attend during
1999.
Director Compensation
---------------------
Directors of the Corporation and its subsidiary, The Killbuck Savings
Bank Company, received an annual retainer of $6,000 during 1999. The Chairman
of the Board received an annual retainer of $8,400. Effective January 1,
2000, the fee stayed the same. In addition, committee members receive $150
per committee meeting attended.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following remuneration table sets forth all direct remuneration paid
by the Bank in 1999, 1998 and 1997 to the Corporation's President and Chief
Executive Officer. No other Officers total compensation exceeded $100,000 for
the year ended 1999.
SUMMARY COMPENSATION TABLE
Annual Compensation
All Other
Name and Principal Position Year Salary Bonus Compensation
--------------------------- ---- ------ ----- ------------
Mr. Luther E. Proper 1999 $123,500 $21,790 $1,641
President and Chief 1998 $116,000 $22,844 $1,717
Executive Officer 1997 $108,500 $22,597 $1,990
REPORT OF THE EXECUTIVE COMMITTEE OF KILLBUCK BANCSHARES, INC. ON COMPENSATION
Under rules established by the Securities and Exchange Commission (the
"SEC"), the Corporation is required to provide certain data and information in
regard to the compensation and benefits provided to the Corporation's
President and Chief Executive Officer and, if applicable, the four other most
highly compensated Executive Officers, whose compensation exceeded $100,000
during the Corporation's fiscal year. The disclosure requirements, as applied
to the Corporation, include only the Corporation's President and Chief
Executive Officer Mr. Luther E. Proper. The disclosure includes the use of
tables and a report explaining the rationale and considerations that led to
fundamental executive compensation decisions affecting such officers.
Killbuck Bancshares, Inc. is a holding company and owns a single operating
subsidiary, The Killbuck Savings Bank Company. Killbuck Bancshares, Inc. has
no direct employees. All disclosures contained in this Proxy Statement
regarding executive compensation reflect compensation paid by The Killbuck
Savings Bank Company. The Executive Committee of the Corporation has the
responsibility of determining the compensation policy and practices with
respect to all Executive Officers. At the direction of the Board of
Directors, the Executive Committee has prepared the following report for
inclusion in this Proxy Statement.
Compensation Philosophy. This report reflects the Corporation's
-----------------------
compensation philosophy as endorsed by the Executive Committee. The Executive
Committee makes a recommendation regarding the level of compensation for Mr.
Proper. The Executive Committee determines the level of compensation for all
other Executive Officers within the constraints of the amounts approved by the
Board.
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Essentially, the executive compensation program of the Corporation has
been designed to:
Support a pay-for-performance policy that awards Executive Officers for
corporate performance.
Motivate key Executive Officers to achieve strategic business goals.
Provide compensation opportunities which are comparable to those offered
by other peer group companies; thus allowing the Corporation to compete
for and retain talented executives who are critical to the Corporation's
long-term success.
Salaries. Effective January 1, 1999, the Executive Committee recommended
--------
and the Board increased the salary paid to Mr. Proper. The increase
reflected consideration of competitive data reported in compensation surveys
and the Executive Committee's assessment of the performance of such executives
over the intervening year and recognition of the Corporation's performance
during 1998. In addition, the Executive Committee approved compensation
increases for all other Executive Officers of the Corporation. Executive
Officer salary increase determinations are based upon an evaluation of such
executives' performance against goals set in the prior year.
Cash Bonus Plan. The Corporation maintains a cash bonus plan (the "Bonus
---------------
Plan") which allocates a portion of the Corporation's net income for the
purpose of employee cash bonuses on an annual basis. The award of a bonus to
any employee under the terms of the Bonus Plan is discretionary and in the
case of Mr. Proper is determined by the Board of Directors upon the
recommendation of the Executive Committee, and in all other cases is
determined by the Executive Committee upon recommendation of management.
The Executive Committee has determined that a significant portion of
executive compensation should be payable in an annual bonus which shall be
based principally upon the financial performance of the Corporation. The
Executive Committee believes that it is important to reward executive
management based upon the success of the Corporation.
THIS REPORT ON COMPENSATION IS SUBMITTED BY THE EXECUTIVE COMMITTEE MEMBERS:
John Baker, Robert Bell, Ted Bratton, Thomas Gindlesberger, Allan Mast
EXECUTIVE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Luther E. Proper, the Corporation's President and Chief Executive
Officer served as an Ex Officio member of the Executive Committee of the
Corporation, which is responsible for compensation matters (see "Report of the
Executive Committee of Killbuck Bancshares, Inc. on Compensation" in this
Proxy Statement).
Although Mr. Proper attends meetings of the Executive Committee as an Ex
Officio member, he did not attend those portions of meetings, nor participate
in any decisions, regarding his own compensation as an Executive Officer.
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PERFORMANCE GRAPH - FIVE-YEAR SHAREHOLDER RETURN COMPARISON
The SEC requires that the Corporation include in this Proxy Statement a
line-graph presentation comparing cumulative five-year shareholder returns on
an indexed basis with a broad equity market index and either a nationally
recognized industry standard or an index of peer companies selected by the
Corporation. The Corporation has selected the Dow Jones Equity Market Index
and the Dow Jones Regional Bank Index for purposes of this performance
comparison. The chart below compares the value of $100 invested on December
31, 1994, in the Corporation's stock, the Dow Jones Equity Market Index and
the Dow Jones Regional Bank Index.
(Line graph belongs in this area)
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG KILBUCK
BANCSHARES, INC., DOW JONES EQUITY MARKET INDEX & DOW JONES MAJOR REGIONAL
BANK INDEX FOR FISCAL YEAR ENDING DECEMBER 31
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
KILLBUCK
BANCSHARES, INC. $100.00 $140.07 $202.44 $300.84 $408.76 $437.73
DOW JONES EQUITY
MARKET INDEX $100.00 $137.67 $169.39 $226.91 $291.91 $351.37
DOW JONES REGIONAL
BANK INDEX $100.00 $159.93 $219.70 $343.19 $385.68 $331.35
ASSUMES $100 INVESTED ON JANUARY 1, 1995
IN KILLBUCK BANCSHARES, INC. COMMON STOCK,
DOW JONES EQUITY MARKET INDEX & DOW JONES MAJOR
REGIONAL BANK INDEX
*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors of the Corporation and their associates were customers of, and
have had transactions with, the Corporation in the ordinary course of business
during 1999.
These transactions consisted of extensions of credit by the Corporation
in the ordinary course of business and were made on substantially the same
terms as those prevailing at the time for comparable transactions with other
persons. In the opinion of the management of the Corporation, those
transactions do not involve more than a normal risk of being collectible or
present other unfavorable features. The Corporation expects to have, in the
future, banking transactions in the ordinary course of its business with
Directors and their associates on the same terms, including interest rates and
collateral on loans, as those prevailing at the time of comparable
transactions with others. During 1999, Mr. Thomas Gindlesberger provided
legal services to the Corporation, for which his firm received $30,000. The
Corporation expects to retain the services of Mr. Gindlesberger in the future.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors, and persons who own more than ten
percent of a registered class of the Corporation's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, Directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Corporation with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Corporation or written representations that no Form 5s were required, the
Corporation believes that during 1999 all Section 16(a) filing requirements
applicable to its officers and Directors were complied with. The Corporation
has no shareholders who are ten percent beneficial owners.
SELECTION OF AUDITORS
S. R. Snodgrass, A.C. has been appointed to serve as the Independent
Auditor for the Corporation and its subsidiary for the fiscal year ended
December 31, 1999. It is the intention of the Corporation to appoint S. R.
Snodgrass, A.C. as Independent Auditor for 2000. Representatives of S. R.
Snodgrass, A.C. are expected to be present at the Annual Meeting to respond to
appropriate questions from shareholders and to have the opportunity to make
any statements they consider appropriate.
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SHAREHOLDER PROPOSALS
If any stockholder of the Corporation wishes to submit a proposal to be
included in next year's Proxy Statement and acted upon at the annual meeting
of the Corporation to be held in 2001, the proposal must be received by the
Secretary of the Corporation at the principal executive offices of the
Corporation, 165 N. Main Street, Killbuck, Ohio 44637, prior to the close of
business on November 17, 2000. On any other proposal raised by a stockholder
for next year's annual meeting, the Corporation intends that proxies received
by it will be voted in the interest of the Corporation in accordance with the
judgment of the persons named in the proxy and the proposal will be considered
untimely, unless notice of the proposal is received by the Corporation not
later than January 30, 2001.
The Corporation's Code of Regulations establish advance notice procedures
as to the nomination, other than by or at the direction of the Board of
Directors, of candidates for election as directors. In order to make a
director nomination at a stockholder meeting, it is necessary that you notify
the Corporation: (i) with respect to an election to be held at an annual
meeting of Shareholders, not fewer than 45 days in advance of the
corresponding date for the date of the preceding year's annual meeting of
Shareholders, and (ii) with respect to an election to be held at a special
meeting of Shareholders for the election of Directors, the close of business
on the seventh day following the date on which notice of such meeting is first
given to Shareholders. Therefore a shareholder desiring to make a nomination
for consideration at the annual meeting of the Corporation in 2001 must
provide notice of such nominee to the Corporation not later than January 30,
2001. In addition, the notice must meet all other requirements contained in
the Corporation's Code of Regulations. Any stockholder who wishes to take
such action should obtain a copy of the Code of Regulations and may do so by
written request addressed to the Secretary of the Corporation at the principal
executive offices of the Corporation.
OTHER MATTERS
The Board of Directors of the Corporation is not aware of any other
matters that may come before the meeting. However, the enclosed Proxy will
confer discretionary authority with respect to matters which are not known to
the Board of Directors at the time of printing hereof and which may properly
come before the meeting. A copy of the Corporation's 1999 report filed with
the Securities and Exchange Commission, on Form 10-K, will be available
without charge to shareholders on request. Address all requests, in writing,
for this document to: Mr. Luther E. Proper, President & CEO, Killbuck
Bancshares, Inc., 165 N. Main Street, Killbuck, Ohio 44637.
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KILLBUCK BANCSHARES, INC.
165 N. Main Street, Killbuck, Ohio 44637
PROXY
PLEASE SIGN AND RETURN IMMEDIATELY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS APRIL 10, 2000
The undersigned hereby appoints Richard L. Fowler, Thomas D. Gindlesberger and
Michael S. Yoder, or any one of them (with full power of substitution for me
and in my name, place and stead), to vote all the common stock of said
Corporation, standing in my name on its books on March 11, 2000, at the
stockholders meeting, to be held at The Killbuck Savings Bank Company, 165 N.
Main Street, Killbuck, Ohio on April 10, 2000 at 7:30 p.m. (local time), or
any adjournments thereof, upon all matters as set forth in the Notice of
Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged.
1. ELECTION OF THREE DIRECTORS TO CLASS B
The Board of Directors recommends a vote for the election of directors.
Nominees: Robert D. Bell, Allan R. Mast and Luther E. Proper
For All the Nominees Withholding Authority for All the Nominees
(To withhold authority to vote for any one or more nominees, draw a line
through such nominee's name.)
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR AN ADJOURNMENT THEREOF.
This proxy will be voted as directed above, and if no direction is given, will
be voted FOR PROPOSAL 1.
Dated: , 2000
-------------- -------------------------------------------
- -------------------------------------------
Signatures of stockholder(s)
This proxy must be signed exactly as the name appears hereon.
(When signing as Attorney, Executor, Administrator, Trustee, Guardian, please
give full title. If more than one Trustee, all should sign. All joint owners
must sign.)