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 the Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss. 240.14a-12
GREENE COUNTY BANCSHARES, 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.
|_| $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
______________________________________________________________________
2. Aggregate number of securities to which transaction applies:
______________________________________________________________________
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________
4. Proposed maximum aggregate value of transaction:
______________________________________________________________________
5. Total fee Paid:
______________________________________________________________________
Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount previously paid:____________________________________________________
2. Form, Schedule or Registration Statement No.:______________________________
3. Filing Party:______________________________________________________________
4. Date Filed:________________________________________________________________
[LETTERHEAD OF GREENE COUNTY BANCSHARES GOES HERE]
April 8, 2002
Dear Shareholder:
We invite you to attend the Annual Meeting of Shareholders (the "Annual
Meeting") of Greene County Bancshares, Inc. (the "Company") to be held at the
General Morgan Inn, 111 North Main Street, Greeneville, Tennessee, on Wednesday,
April 24, 2002 at 11:00 a.m., local time.
The Annual Meeting has been called for the election of directors and for
consideration of adoption of an amendment to the Company's Amended and Restated
Charter as set forth herein. Enclosed is a proxy statement, a proxy card and the
Company's Annual Report to Shareholders for the 2001 fiscal year. Directors and
officers of the Company as well as representatives of Crowe, Chizek and Company
LLP, the Company's independent auditors for the 2001 fiscal year, will be
present to respond to any questions shareholders may have.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. On
behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy as soon as possible, even if you currently plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend the Annual Meeting.
Thank you for your cooperation and your continuing support.
Sincerely,
R. Stan Puckett
Chairman of the Board, President
and Chief Executive Officer
GREENE COUNTY BANCSHARES, INC.
100 NORTH MAIN STREET
GREENEVILLE, TENNESSEE 37743
(423) 639-5111
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 2002
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Shareholders (the
"Annual Meeting") of Greene County Bancshares, Inc. (the "Company") will be held
on Wednesday, April 24, 2002 at 11:00 a.m., local time, at the General Morgan
Inn, 111 North Main Street, Greeneville, Tennessee.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon the
following matters:
(1) to elect three directors of the Company;
(2) to amend the Company's Amended and Restated Charter to decrease the
par value of the Common Stock to $2.00 per share; and
(3) to transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above or on any date or dates to which, by
original or later adjournments, the Annual Meeting may be adjourned.
Shareholders of record at the close of business on March 29, 2002 will be
entitled to vote at the Annual Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and choose to vote in person
at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Davis Stroud
Secretary
Greeneville, Tennessee
April 8, 2002
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE, AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY STATEMENT
OF
GREENE COUNTY BANCSHARES, INC.
100 NORTH MAIN STREET
GREENEVILLE, TENNESSEE 37743
(423) 639-5111
----------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 2002
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
This Proxy Statement is furnished to shareholders of Greene County
Bancshares, Inc. (the "Company") in connection with the solicitation of proxies
by the Company's Board of Directors to be used at the 2002 Annual Meeting of
Shareholders of the Company (the "Annual Meeting"), to be held on Wednesday,
April 24, 2002 at 11:00 a.m., local time, at the General Morgan Inn, 111 North
Main Street, Greeneville, Tennessee. The accompanying Notice of Annual Meeting
and form of proxy and this Proxy Statement are first being mailed to
shareholders on or about April 8, 2002.
- --------------------------------------------------------------------------------
VOTING AND REVOCABILITY OF PROXIES
- --------------------------------------------------------------------------------
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
EXECUTED BUT UNMARKED PROXIES WILL BE VOTED (I) FOR ELECTION OF THREE NOMINEES
AS DIRECTORS OF THE COMPANY AND (II) FOR APPROVAL OF THE AMENDMENT TO THE
COMPANY'S AMENDED AND RESTATED CHARTER TO DECREASE THE PAR VALUE OF THE COMMON
STOCK TO $2.00 PER SHARE. The proxy confers discretionary authority on the
persons named therein to vote with respect to the election of any person or a
director where the nominee is unable to serve or for good cause will not serve,
and with respect to any other matter presented to the Annual Meeting if such
notice has not been properly delivered to the Company in advance in accordance
with the Company's Bylaws. If any other matters are properly brought before the
Annual Meeting as to which proxies confer discretionary authority, the persons
named in the proxy will vote the shares represented by such proxies on such
matters as determined by a majority of the Board of Directors. Except for
procedural matters incident to the conduct of the Annual Meeting, the Board of
Directors does not know of any other matters that are to come before the Annual
Meeting. Proxies marked as abstentions and shares held in street name which have
been designated by brokers on proxies as not voted will not be counted as votes
cast. Such proxies will be counted for purposes of determining a quorum at the
Annual Meeting.
Shareholders who execute proxies may revoke them at any time prior to their
exercise by filing with the Secretary of the Company a written notice of
revocation, by delivering to the Company a duly executed proxy bearing a later
date, or by attending the Annual Meeting and voting in person. Please note that
the mere presence of a shareholder at the Annual Meeting will not, by itself,
automatically revoke such shareholder's proxy.
- --------------------------------------------------------------------------------
VOTING SECURITIES
- --------------------------------------------------------------------------------
The securities that may be voted at the Annual Meeting consist of shares of
the Company's common stock (the "Common Stock"). Each share entitles its owner
to one vote on each matter presented at the Annual Meeting. Persons who held
shares of Common Stock on March 29, 2002 (the "Record Date") are entitled to
vote at the Annual Meeting. The number of shares of Common Stock outstanding as
of the Record Date was 6,818,890.
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------------------------
Persons and groups beneficially owning more than 5% of the Common Stock are
required under federal securities laws to file certain reports with the
Securities and Exchange Commission ("SEC") detailing their ownership. The
following table sets forth the amount and percentage of the Common Stock
beneficially owned by any person or group of persons known to the Company to be
a beneficial owner of more than 5% of the Common Stock as of the Record Date.
Name and Address of Amount and Nature of Percent of Common
Beneficial Owner Beneficial Ownership (a) Stock Outstanding
------------------------------- ------------------------ ---------------------
Phil M. Bachman
1330 E. Allen Bridge Road 710,150(b) 10.41%
Greeneville, Tennessee 37743
- -------------------
(a) For purposes of this table, an individual is considered to "beneficially
own" any share of Common Stock which he or she, directly or indirectly,
through any contract, arrangement, understanding, relationship, or
otherwise, has or shares: (1) voting power, which includes the power to
vote, or to direct the voting of, such security; and/or (2) investment
power, which includes the power to dispose, or to direct the disposition
of, such security. In addition, an individual is deemed to be the
beneficial owner of any share of Common Stock of which he has the right to
acquire voting or investment power within 60 days of the Record Date.
(b) Includes 26,440 shares of Common Stock held directly or indirectly by Mr.
Bachman's wife as to which Mr. Bachman disclaims beneficial ownership. Had
such shares not been included, Mr. Bachman's ownership percentage would
have been 10.03%.
The following table sets forth, as of the Record Date, certain information
known to the Company as to Common Stock beneficially owned by each director and
executive officer of the Company and by all directors and executive officers of
the Company as a group.
Amount and Nature of Percent of Common
Name and Position Beneficial Ownership (a)(b) Stock Outstanding
---------------------------------------------- ------------------------------ ----------------------
Ralph T. Brown, Director 89,300 1.31%
R. Stan Puckett, Chairman of the Board,
President and Chief Executive Officer 113,500(c) 1.65%
Davis Stroud, Secretary and Director 5,910 *
Phil M. Bachman, Director 710,150(d) 10.41%
Terry Leonard, Director 55,830 *
James A. Emory, Director 50,090 *
W.T. Daniels, Director 7,500 *
Charles S. Brooks, Director 450 *
Jerald K. Jaynes, Director 8,650 *
H.J. Moser, III, Director 10,500 *
Bruce Campbell, Director 4,850 *
Charles H. Whitfield, Jr., Director 3,355 *
William F. Richmond, Senior Vice
President and Chief Financial Officer 6,402(e) *
All directors and executive officers as a
group (13 persons) 1,066,487 15.50%
(Footnotes on following page)
2
- -----------------------
* Less than 1% of the outstanding Common Stock.
(a) For the definition of "beneficial ownership," see Note (a) to the above
table.
(b) Includes shares owned directly by directors and executive officers of the
Company as well as shares held by their spouses and children, trusts of
which certain directors are trustees and corporations in which certain
directors own a controlling interest. Includes shares of Common Stock
subject to outstanding options which are exercisable within 60 days of the
Record Date.
(c) Includes options to acquire 54,000 shares of Common Stock currently
exercisable by Mr. Puckett at an exercise price equal to 150% of the book
value of the Common Stock at the date of grant (a weighted average price of
approximately $12.64 per share).
(d) Includes 26,440 shares of Common Stock held directly or indirectly by Mr.
Bachman's wife as to which Mr. Bachman disclaims beneficial ownership. Had
such shares not been included, Mr. Bachman's ownership percentage would
have been 10.03%.
(e) Includes options to acquire 6,402 shares of Common Stock currently
exercisable by Mr. Richmond at an exercise price equal to the estimated
fair market value of the Common Stock at date of grant (a weighted average
exercise price of approximately $21.28).
- --------------------------------------------------------------------------------
PROPOSAL 1 -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Board of Directors is currently composed of 12 members, 11 of
whom are listed in the table below, and Ralph Brown, who will retire at the
Annual Meeting. The Board of Directors has unanimously approved a reduction in
the size of the Board of Directors to 11 members effective upon the retirement
of Dr. Brown. The Company's Amended and Restated Charter requires that directors
be divided into three classes, as nearly equal in number as possible, the
members of each class to serve for a term of three years and until their
successors are elected and qualified, with one-third of the directors elected
each year. The Board of Directors, acting in its capacity as a nominating
committee, has nominated for election as directors, Bruce Campbell, Jerald K.
Jaynes, and R. Stan Puckett, each of whom are currently members of the Board, to
serve until his respective successor is elected and qualified. Under Tennessee
law, directors are elected by a plurality of the votes cast at an election.
It is intended that the persons named in the proxies solicited by the Board
of Directors will vote for the election of each of the nominees. If any nominee
is unable to serve or for good cause will not serve, the shares represented by
all properly executed proxies which have not been revoked will be voted for the
election of a substitute nominee as the Board of Directors may recommend. In the
alternative, the Board of Directors may, in its discretion, reduce its size to
eliminate the vacancy. At this time, the Board knows of no reason why any
nominee might be unable or unwilling to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION AS DIRECTORS OF ALL
THE NOMINEES LISTED BELOW.
3
The following table sets forth certain information with respect to each of
the Company's current directors whose term of office as a director will or,
assuming re-election, is expected to continue after the Annual Meeting. Each of
the Company's directors also currently serves as a director of Greene County
Bank (the "Bank"), the wholly owned subsidiary of the Company. There are no
arrangements or understandings between the Company and any director pursuant to
which such person has been selected as a director or nominee for director of the
Company, and no director or nominee is related to any other director, nominee or
executive officer by blood, marriage or adoption.
Director Current Term to Previous Five-Years Business
Name Age(a) Since (b) Expire Experience
- ---- ------ --------- ------ ----------
BOARD NOMINEE FOR TERM TO EXPIRE IN 2005
Bruce Campbell 50 2000 2002 President and Chief Operating Officer,
Forward Air Corporation (transportation)
Jerald K. Jaynes 64 1992 2002 Retired; former President & CEO, Unaka
Co. Inc. (manufacturing)
R. Stan Puckett 45 1989 2002 Chairman of the Board, President and
Chief Executive Officer of the Company
and the Bank
DIRECTORS CONTINUING IN OFFICE
Charles S. Brooks 63 1990 2003 Chairman of the Board, McInturff,
Milligan & Brooks (insurance agency)
W.T. Daniels 57 1987 2003 Property management
H.J. Moser, III 54 1999 2003 President, Tennessee Valley Resources,
Inc. (limestone and sand distributor)
Davis Stroud 68 1989 2003 Secretary of the Company and the Bank;
Retired; former Executive Vice President
of the Company and the Bank
Charles H. Whitfield, Jr. 43 2000 2003 President and Chief Executive Officer,
Laughlin Memorial Hospital (hospital
management)
Phil M. Bachman 64 1968 2004 President, Bachman-Bernard Motors
(automobile dealership)
Ralph T. Brown(c) 69 1979 2004 Dentist; retired 1996
James A. Emory 68 1983 2004 Retired; former President, J.A.E. Foods,
Inc. (restaurant management)
Terry Leonard 63 1975 2004 Owner/Operator, Leonard & Associates
(manufacturing)
- -----------------------
(a) As of December 31, 2001.
(b) Indicates year that director first served as a director of either the
Company or the Bank.
(c) Dr. Brown will retire from the Board effective at the Annual Meeting.
- --------------------------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
The Company conducts its business through meetings of the Board of
Directors. There are no standing committees of the Board of Directors of the
Company. The business of the Bank is conducted through its Board of Directors,
which met 14 times in 2001, 12 of which were regular meetings and two were
specially called meetings. Each member of the Board of Directors of the Company
and of the Bank attended at least 75% or more of the aggregate of (a) the total
number of meetings of the boards of directors and (b) the total number of
meetings held by all committees on which they served, with the exception of Mr.
Campbell, who attended 67% of the aggregate of such meetings.
4
The Board of Directors of the Company acts as a nominating committee for
selecting management's nominees for election as directors. Nominations may also
be made by shareholders, provided such nominations are made in writing and
submitted to the Secretary or the President of the Company in accordance with
the Company's Amended and Restated Charter. During 2001, the Board of Directors
met once in its capacity as a nominating committee.
The Audit Committee of the Bank also serves as the audit committee for the
Company. The Audit Committee of the Bank consists of Messrs. Jaynes, Leonard,
Brown and Stroud. Each of the directors who serve on the Audit Committee are
"independent" of the Company, as the term "independent" is defined under Rule
4200 of the listing standards of the National Association of Security Dealers,
Inc. For 2002, the Chairman of the Audit Committee will be Mr. Jaynes. This
committee meets at least quarterly to (1) monitor the accounting and financial
reporting practices of the Company, and (2) determine whether the Company has
adequate administrative, operating and internal accounting controls. The
Company's Board of Directors has adopted a written charter for the Audit
Committee, a copy of which was provided as an attachment to last year's Proxy
Statement. This committee met six times during 2001 in its capacity as the Audit
Committee for the Company. A copy of the Audit Committee Report is attached as
Appendix A.
The Bank's Compensation Committee also serves as the compensation committee
for the Company. The Compensation Committee consists of Messrs. Bachman,
Leonard, Daniels, Brown, Brooks and Campbell. It meets periodically to evaluate
the compensation and fringe benefits of the directors, officers and employees of
the Bank and the Company and recommend changes to the respective Boards of
Directors. The Compensation Committee met once during 2001.
- --------------------------------------------------------------------------------
DIRECTORS' COMPENSATION
- --------------------------------------------------------------------------------
Directors of the Company are compensated in their capacity as such at $400
for each quarterly meeting of the Company's Board of Directors. During 2001, the
Company's Board of Directors met three times.
Directors of the Company are also directors of the Bank and are compensated
by the Bank in their capacity as directors of the Bank. Directors of the Bank
receive $400 for each regular monthly Board meeting attended, plus payment of
such fee for up to two absences during a year, and $400 for each specially
called meeting attended. Each Bank director also receives an annual retainer fee
of $6,000, paid in equal quarterly amounts. Members of the Executive Committee
of the Bank's Board of Directors also receive $435 for each twice-monthly
meeting of the Committee attended, and the two permanent members of the
Committee receive an annual retainer of $1,500. Members of the Bank's Audit
Committee received $200 for each quarterly meeting. Compensation for all other
committee meetings is $200.
The Bank maintains a deferred compensation plan (the "Plan") pursuant to
which directors may elect to defer receipt of a portion of their fees by
entering into deferred fee agreements with the Bank. The agreements also provide
for payment of benefits under certain events of disability, early retirement,
termination of employment or death. The Bank is the beneficiary of life
insurance acquired with respect to participating directors for purposes of the
Plan.
5
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION AND OTHER BENEFITS
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE. The following table sets forth cash and noncash
compensation for each of the last three fiscal years awarded to or earned by the
Chief Executive Officer and each of the other executive officers of the Company.
No other officer of the Bank serves as an executive officer of the Company.
Long-Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
------------------------------------ ---------------------------- -------
Restricted Securities
Name and Principal Other Annual Stock Underlying LTIP All Other
Position Year Salary Bonus(a) Compensation(b) Award(s) Options/SARs(#)(f) Payouts Compensation (c)
-------- ---- ------ -------- --------------- -------- ------------------ ------- ----------------
R. Stan Puckett, 2001 $200,000 $66,500 9,000(d) $23,275
Chairman of the 2000 200,000 35,300 -- -- 9,000(d) -- 38,192
Board, President 1999 190,000 69,500 -- -- 9,000(d) -- 38,550
and Chief Executive
Officer of the
Company and
the Bank
William F. Richmond, 2001 $ 94,718 $31,500 2,579(e) $ 5,683
Senior Vice 2000 92,788 11,300 -- -- 2,450(e) -- 13,918
President and Chief 1999 88,900 21,500 -- -- 2,450(e) -- 13,335
Financial Officer
of the Company
and the Bank
- ----------------------------
(a) Bonus amounts reflect amounts earned during the stated fiscal year, even if
paid in the subsequent fiscal year. All amounts have been restated to
reflect this presentation.
(b) Executive officers of the Company receive indirect compensation in the form
of certain perquisites and other personal benefits. The amount of such
benefits in 2001, 2000 and 1999 received by the named executive officers
did not exceed 10% of the respective executive's annual salary and bonus.
(c) Reflects contributions by the Company to its retirement plans for the
benefit of each named officer and payments of directors' fees to Mr.
Puckett. Directors' fees paid to Mr. Puckett were $13,075 for 2001, $12,692
for 2000 and $14,550 for 1999. Contributions to retirement plans made by
the Company on behalf of Messrs. Puckett and Richmond for the years 2001,
2000 and 1999 are as follows: $10,200 in 2001, $25,500 in 2000 and $24,000
in 1999 for Mr. Puckett; and $5,683, $13,918 and $13,335, respectively, for
Mr. Richmond. A portion of directors' fees paid to Mr. Puckett is deferred
pursuant to agreements entered into individually with an insurance company.
(d) Mr. Puckett is granted options each year to purchase 9,000 shares of Common
Stock with an exercise price equal to 150% of the Common Stock's book value
at the time of grant and with a term of 10 years. Such options are granted
pursuant to a 1989 stock option plan adopted by the Company and as to which
Mr. Puckett is the sole participant.
(e) Granted pursuant to the Company's 1995 Stock Option Plan as to which
options are granted with an exercise price equal to fair market value at
date of grant and are exercisable for ten years from date of grant.
(f) Restated for the 5-for-1 stock split effected in May, 2001.
OPTION GRANTS IN FISCAL YEAR 2001. The following table contains information
concerning the grant of stock options to Mr. Puckett under a 1989 stock option
plan and to Mr. Richmond under the 1995 Stock Option Plan. Neither plan provides
for the grant of stock appreciation rights.
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Granted Employees in Price(c) Grant Date
Name Number of Shares(c) Fiscal Year ($ per share) Expiration Date Present Value
---- ---------------- ----------- ------------- --------------- -------------
R. Stan Puckett 9,000(a) 17.62% 15.09 12/11 $32,220(b)
William F. Richmond 2,579 5.05% 16.00 12/11 8,407(b)
(Footnotes on following page)
6
- -----------------------------------
(a) Options are granted with an exercise price equal to 150% of the book value
of the underlying stock on the date of grant.
(b) Represents the present value of the option at the date of grant as
determined using the Black-Scholes option pricing model. In calculating
the present value of the option grant, the following assumptions were
utilized: (i) the current market price of the underlying Common Stock at
the date of grant was $16.00; (ii) the continuously compounded risk-free
rate of return expressed on an annual basis was 5.17%; (iii) the risk of
the underlying Common Stock, measured by the standard deviation of the
continuously compounded annual rate of return of the Common Stock, was
20.14%; and (iv) dividends on the underlying Common Stock increased at an
annual rate of 2.5%. These assumptions are used for illustrative purposes
only. No assurance can be given that actual experience will correspond to
the assumptions utilized.
(c) Restated for the 5-for-1 stock split effected in May, 2001.
AGGREGATED OPTION EXERCISES IN 2001 AND YEAR-END OPTION VALUES. The
following table sets forth information concerning the value of options held by
the named executive officers at the end of the fiscal year.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year-End in-the-Money Options at
Shares Acquired Value Exercisable/Unexercisable Fiscal Year-End (a)(b)
Name on Exercise (#) Realized ($) (Number of Shares)(b) Exercisable/Unexercisable
---- --------------- ------------ --------------------- -------------------------
R. Stan Puckett -- -- 54,000/-- $181,440/--
William F. Richmond -- -- 6,402/7,287 $ 3,382/--
- -----------------------
(a) Represents the difference between fair market value of underlying Common
Stock at year-end (based on the most recent sales price known to
management) and the exercise price. Options are in-the-money if the fair
market value of the underlying securities exceeds the exercise price of the
Option and out-of-the-money if the exercise price of unexercisable options
exceeds current fair market value.
(b) Restated for the 5-for-1 stock split effected in May, 2001.
RETIREMENT PLANS. The Company maintains a contributory profit sharing plan
("PSP") covering certain employees with more than one year of service. The
Company contributes a discretionary and immediately vested 3% of compensation,
excluding bonuses and overtime, to the PSP. In addition, the Company contributes
an additional discretionary 3% of compensation, excluding bonuses and overtime,
which vests after two years of employment. The latter 3% discretionary
contribution excludes employees of the Bank's subsidiaries. The PSP allowed
employees to contribute between 3% to 10% of their compensation in 2001.
Beginning in 2002, the PSP allows employees to contribute up to 20% of their
compensation.
Contributions in the amount of $10,200 and $5,683 were made for the
accounts of Messrs. Puckett and Richmond, respectively, under the PSP in 2001.
Mr. Puckett and Mr. Richmond are fully vested under the PSP.
EMPLOYMENT CONTRACTS. The Company entered into an employment agreement with
Mr. Puckett effective January 23, 1996, without any specified term, to serve as
President and Chief Executive Officer of the Company. The agreement, which is
terminable by either party at any time, provides for a base salary plus
directors' fees, life insurance, participation in benefit plans and other fringe
benefits. If Mr. Puckett's employment is not continued by mutual agreement
following a merger or acquisition involving the Company, Mr. Puckett shall be
entitled to a payment equal to two years' compensation (defined to include his
base salary plus fringe benefits and the value of his stock options). The
payment that would be made to Mr. Puckett, assuming his termination of
employment under the foregoing circumstances at December 31, 2001, would have
been approximately $583,600. This provision may have an anti-takeover effect by
making it more expensive for a potential acquiror to obtain control of the
Company.
7
- --------------------------------------------------------------------------------
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
Decisions on compensation of the Company's Chief Executive Officer are made
by a seven-member Compensation Committee of the Board of Directors of the Bank.
Each member of the Compensation Committee is a non-employee director and is
appointed annually.
The Committee is responsible for developing and making recommendations to
the Board of Directors concerning compensation paid to the Chief Executive
Officer and, based upon the recommendation of the Chief Executive Officer, all
other employees. The Committee is further responsible for administering all
aspects of the Company's executive compensation program. Executive compensation
is intended to be set at levels that the Compensation Committee believes is
consistent with others in the Company's industry, and the Committee also
considers general economic conditions and other external factors.
Base salaries for executive officers are determined initially by evaluating
the responsibilities of the position held, and by reference to the competitive
marketplace for management talent, including a comparison of base salaries for
comparable positions at comparable companies within the financial services
industry. Annual salary adjustments are determined by evaluating the competitive
marketplace, the performance of the Company and the performance of the
executive. Compensation paid during 2001 to executive officers consisted of base
salary, bonus, stock options and contributions paid with respect to the
Company's retirement plans. It is the philosophy of the Compensation Committee
that stock options should be awarded to the key employees of the Company to
promote long-term interests between such employees and the Company's
shareholders and to assist in the retention of such employees. For 2001, based
on the factors discussed above and a review by the Committee, Mr. Puckett did
not receive any increase in his base pay, and Mr. Richmond received a 2.1%
increase in his base pay. Payments to the Company's retirement plan are made to
certain employees on a non-discriminatory basis.
Mr. Puckett receives a bonus award based upon return on average equity and
return on average assets of the Bank, as well as overall performance reviews.
Mr. Richmond receives a bonus award based upon the discretion of the President
and Chief Executive Officer of the Company. The bonus awarded to Messrs. Puckett
and Richmond in 2001 totaled 33.3% and 33.3%, respectively, of their base
salaries for 2001.
The Committee believes that Mr. Puckett's total compensation for 2001
appropriately reflected his contribution to the Company's financial results. The
Committee believes that the Company's overall performance was indicative of a
well-managed company during a challenging business climate.
COMPENSATION COMMITTEE
Terry Leonard, Chairman
Philip M. Bachman, Jr.
Ralph Brown
Charles Brooks
W.T. Daniels
Bruce Campbell
April 8, 2002
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- --------------------------------------------------------------------------------
The Compensation Committee consists of Messrs. Leonard, Bachman, Brown,
Brooks, Daniels and Campbell.
Except as described below with respect to Director Brooks, no member of the
Compensation Committee of the Board of Directors of the Company was (a) either
(i) an officer or employee of the Company or any of its subsidiaries during the
fiscal year ended December 31, 2001, (ii) a former officer of the Company or any
of its subsidiaries, or (iii) an insider (i.e., director, officer, director or
officer nominee, greater than 5% shareholder, or immediate family member of the
8
foregoing) of the Company or any of its subsidiaries that (b) engaged in
transactions with the Company or any subsidiary involving more than $60,000
during the fiscal year ended December 31, 2001.
The Company purchases insurance coverage from McInturff, Milligan and
Brooks of which Mr. Brooks is Chairman of the Board. During 2001, premiums
totaling $143,446 were paid by the Company to McInturff, Milligan and Brooks.
Management believes the fees paid are fair and reasonable and do not exceed
those premiums that would be paid to a third party firm.
- --------------------------------------------------------------------------------
CUMULATIVE STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph shows the cumulative total return on the Common Stock
of the Company over the last five years, compared with (1) the Standard & Poor's
Bank Composite Index and (2) the Standard & Poor's Major Regional Bank Index.
Cumulative total return on the stock or the index equals the total increase in
value since December 31, 1996 assuming reinvestment of all dividends paid into
the stock or the index, respectively. The graph was prepared assuming that $100
was invested on December 31, 1996 in the Common Stock and also in the securities
included in the indices used for comparison purposes. There is no established
public trading market in which shares of the Common Stock are regularly traded,
nor are there any uniformly quoted prices for the shares of Common Stock.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDICES
AT DECEMBER 31, 1996 THROUGH 2001
[GRAPH SHOWING CUMULATIVE SHAREHOLDER RETURN]
PERIOD ENDING
- ------------------------------------------------------------------------------------------------------------------------------
Index 1996 1997 1998 1999 2000 2001
- ------------------------------------------------------------------------------------------------------------------------------
Greene County Bancshares, Inc. 100.00 142.70 167.47 222.54 241.61 124.08
Standard & Poor's Bank Composite Index 100.00 141.06 147.02 124.57 142.38 138.90
Standard & Poor's Major Regional Bank Index 100.00 146.76 158.72 132.91 165.39 150.14
- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------------
The Company and its subsidiaries have had, and expect to have in the
future, transactions in the ordinary course of business with directors and
executive officers and members of their immediate families, as well as with
principal shareholders. All loans included in such transactions were made in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing for comparable transactions with
non-affiliated persons. It is
9
the belief of management that such loans neither involved more than the normal
risk of collectability nor presented other unfavorable features.
- --------------------------------------------------------------------------------
PROPOSAL 2 - DECREASE IN PAR VALUE OF COMMON STOCK
- --------------------------------------------------------------------------------
GENERAL
The Company's Amended and Restated Charter (the "Charter") currently
designates the par value of Common Stock at ten dollars ($10.00) per share. The
par value may only be changed by an amendment to the Charter. Under Tennessee
law, an amendment to the Charter must be approved by the Company's shareholders.
PROPOSED AMENDMENT
The proposed amendment to the Charter would decrease the par value of
Common Stock from ten dollars ($10.00) per share to two dollars ($2.00) per
share. The amendment would not affect the rights and privileges otherwise
available to current holders of shares of Common Stock.
CONSIDERATIONS IN SUPPORT OF THE AMENDMENT
The primary purpose of the decrease in the par value is to permit the
Company additional flexibility for future stock splits. A reduced par value will
also be more comparable to the par value of common stock of other bank holding
companies, including those within the Company's market area. The Board of
Directors believes that a decrease in the par value of Common Stock to $2.00 per
share is in the best interests of the shareholders by providing the Company with
greater flexibility for future stock splits and meeting other corporate needs
that may arise. THIS CHANGE WILL NOT DECREASE THE BOOK VALUE OR MARKET VALUE OF
YOUR SHARES OR CHANGE ANY OF YOUR RIGHTS AND PRIVILEGES AS A SHAREHOLDER OF THE
COMPANY.
VOTE REQUIRED
THE BOARD OF DIRECTORS HAS APPROVED ADOPTION OF THIS PROPOSAL AND
RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL. APPROVAL OF THE PROPOSAL
REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE TOTAL VOTES REPRESENTED AND
ENTITLED TO BE CAST AT THE ANNUAL MEETING AT WHICH A QUORUM IS PRESENT.
ALTHOUGH THE COMPANY BELIEVES THAT THE MATERIAL PROVISIONS OF THE AMENDMENT
TO THE CHARTER ARE SET FORTH ABOVE, REFERENCE SHOULD BE MADE TO THE TEXT OF THE
AMENDMENT, A COPY OF WHICH IS ATTACHED TO THIS PROXY STATEMENT AS APPENDIX B.
- --------------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater-than-10% shareholders
are required to furnish the Company with copies of all such reports. Based
solely on its review of copies of such reports received by it, or written
representations from certain reporting persons that no annual report of change
in beneficial ownership is required, the Company believes that, during and with
respect to the year ended December 31, 2001, all such filing requirements were
timely satisfied except as to a late-filed Form 4 by Director Whitfield relating
to a gift of stock.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Company entered into a three-year agreement in 2000 with the certified
public accounting firm of Crowe, Chizek and Company LLP to serve as independent
auditors for the Company, beginning with the fiscal year ended December 31,
2000. Crowe, Chizek and Company LLP served as the Company's independent auditors
for the year ended December 31, 2001.
10
On October 18, 2000, PricewaterhouseCoopers LLP was dismissed as the
principal accountants of the Company and Crowe, Chizek and Company LLP was
engaged as its principal accountants. The decision to change accountants was
approved by the Audit Committee. The audit reports of PricewaterhouseCoopers LLP
on the consolidated financial statements of the Company as of and for the years
ended December 31, 1999 and 1998, did not contain any adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principle. In connection with the audits of the two
most recent fiscal years ended December 31, 1999 and 1998, and the subsequent
interim period through October 18, 2000, there have been no disagreements with
PricewaterhouseCoopers LLP on any matter of accounting principles or practices,
financial statement disclosures, or auditing scope or procedure, which, if not
resolved to the satisfaction of PricewaterhouseCoopers LLP, would have caused
them to make reference thereto in their reports on the financial statements for
such years.
A representative of Crowe, Chizek and Company LLP is expected to be present
at the Annual Meeting and available to respond to appropriate questions, and
will have the opportunity to make a statement if he so desires.
During the year ended December 31, 2001, the Company incurred the following
principal independent auditor fees:
Audit Fees(a): $88,450
Financial Information Systems Design
and Implementation Fees: $ -0-
All Other Fees: $ 9,300(b)
-----------------------------
(a) Includes fees related to annual report on Form 10-K and quarterly
reports on Form 10-Q.
(b) Fees incurred were for accounting matters. The Audit Committee has
considered whether the provision of these services is compatible
with maintaining the independence of Crowe, Chizek and Company LLP.
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- --------------------------------------------------------------------------------
If a shareholder wishes to have a proposal included in the Company's proxy
statement for the Company's 2003 Annual Meeting of Shareholders, that proposal
must be received by the Company at its executive offices in Greeneville,
Tennessee by December 12, 2002. If the Company is not notified of a shareholder
proposal by March 15, 2003, then the Company may have the discretion to vote the
proxies received for the Annual Meeting of Shareholders against such shareholder
proposal, even though such proposal is not discussed in the proxy statement.
Shareholder proposals should be addressed to Secretary, Greene County
Bancshares, Inc., 100 North Main Street, Greeneville, Tennessee 37743. Nothing
in this paragraph shall be deemed to require the Company to include in its proxy
statement and form of proxy relating to the Company's 2003 Annual Meeting of
Shareholders any shareholder proposal that does not satisfy the requirements for
inclusion as established by the Securities and Exchange Commission at the time
of receipt.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any other business to be presented
for action by the shareholders at the Annual Meeting other than those matters
described in this Proxy Statement and matters incident to the conduct of the
Annual Meeting. If, however, any other matters are properly brought before the
Annual Meeting, it is intended that the persons named in the accompanying proxy
will vote such proxy on such matters as determined by a majority of the Board of
Directors.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone number without additional compensation.
11
The Company's 2001 Annual Report to Shareholders (the "Annual Report"),
including financial statements, has been mailed to all persons who were
shareholders of record as of the close of business on the Record Date. Any
shareholder who has not received a copy of the Annual Report may obtain a copy
by writing to the Secretary of the Company. The Annual Report is not to be
treated as a part of this proxy solicitation material or as having been
incorporated herein by reference.
BY ORDER OF THE BOARD OF DIRECTORS
Davis Stroud
Secretary
Greeneville, Tennessee
April 8, 2002
- --------------------------------------------------------------------------------
ANNUAL REPORT ON FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2001 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE
FURNISHED WITHOUT CHARGE TO PERSONS WHO WERE SHAREHOLDERS AS OF THE RECORD DATE
UPON WRITTEN REQUEST TO THE SECRETARY, GREENE COUNTY BANCSHARES, INC., 100 NORTH
MAIN STREET, GREENEVILLE, TENNESSEE 37743 OR BY CALLING (423) 639-5111.
- --------------------------------------------------------------------------------
12
APPENDIX A
AUDIT COMMITTEE REPORT
The Board of Directors of the Company has appointed an Audit Committee,
consisting of four directors, which assists the Board of Directors in fulfilling
its responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company.
In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company that
might bear on the auditors' independence consistent with Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees, as
amended, and has discussed with the auditors any relationships that may impact
their objectivity and independence and satisfied itself as to the auditors'
independence. The Audit Committee also discussed with management, the internal
auditors and the independent auditors the quality and adequacy of the Company's
internal controls and the internal audit function's organization,
responsibilities, budget and staffing. The Audit Committee reviewed with both
the independent and the internal auditors their audit plans, audit scope, and
identification of audit risks.
The Audit Committee reviewed and discussed with the independent auditors
all matters required by generally accepted auditing standards, including those
matters described in Statement on Auditing Standards No. 61, as amended,
Communication with Audit Committees, and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements. The Audit Committee also discussed the results of the
internal audit examinations.
The Audit Committee reviewed and discussed the audited financial statements
of the Company as of and for the fiscal year ended December 31, 2001, with
management and the independent auditors. Management has the responsibility for
the preparation of the Company's financial statements and the independent
auditors have the responsibility for the examination of those statements and
expressing an opinion on the conformity of those audited financial statements
with accounting principles generally accepted in the United States of America.
The Audit Committee held six meetings during 2001.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board of Directors
that the Company's audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2001, for
filing with the Securities and Exchange Commission.
February 19, 2002 Jerald K. Jaynes, Chair
Terry Leonard, Member
Ralph T. Brown, Member
Davis Stroud, Member
APPENDIX B
SECTION 6(B) OF THE COMPANY'S AMENDED AND RESTATED CHARTER WILL BE DELETED IN
ITS ENTIRETY AND SUBSTITUTED AS FOLLOWS:
Fifteen Million (15,000,000) shares of Common Stock, with a par value
of Two Dollars ($2.00) per share.
GREENE COUNTY BANCSHARES, INC.
100 NORTH MAIN STREET
GREENEVILLE, TENNESSEE 37743
REVOCABLE PROXY FOR THE ANNUAL MEETING
OF SHAREHOLDERS
APRIL 24, 2002
The undersigned hereby constitutes and appoints Davis Stroud and William F.
Richmond, and each of them, the proxies of the undersigned, with full power of
substitution, to attend the Annual Meeting of Shareholders of Greene County
Bancshares, Inc. (the "Company") to be held at the General Morgan Inn, 111 North
Main Street, Greeneville, Tennessee on Wednesday, April 24, 2002 at 11:00 a.m.,
local time, and any adjournments thereof, and to vote all the shares of stock of
the Company which the undersigned may be entitled to vote, upon the following
matters.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, WILL BE
VOTED IN ACCORDANCE WITH THE INSTRUCTIONS MARKED HEREIN, AND WILL BE VOTED (I)
FOR THE ELECTION OF DIRECTORS, (II) FOR APPROVAL OF THE AMENDMENT TO THE
COMPANY'S AMENDED AND RESTATED CHARTER TO DECREASE THE PAR VALUE OF THE COMMON
STOCK TO $2.00 PER SHARE AND,(III) AS DETERMINED BY A MAJORITY OF THE BOARD OF
DIRECTORS AS TO OTHER MATTERS, IF NO INSTRUCTIONS TO THE CONTRARY ARE MARKED
HEREIN AND TO THE EXTENT THIS PROXY CONFERS DISCRETIONARY AUTHORITY.
1. The Election of Directors: Bruce Campbell, Jerald K. Jaynes and R. Stan
Puckett
|_| FOR all nominees listed above |_| WITHHOLD AUTHORITY to
(except as marked to the contrary below). vote for all nominees
listed above.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME BELOW.)
2. Amendment to the Company's Amended and Restated Charter to decrease the
par value of the Common Stock to $2.00 per share.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. The transaction of such other business as may properly come before the
Annual Meeting or any adjournments thereof.
- --------------------------------------------------------------------------------
The undersigned hereby acknowledges receipt of a copy of the accompanying
Notice of Annual Meeting of the Shareholders and Proxy Statement and the Annual
Report to Shareholders for the fiscal year ended December 31, 2001, and hereby
revokes any proxy heretofore given. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE
ITS EXERCISE.
Date:
----------------------------------------------
Signature:
-----------------------------------------
Signature:
-----------------------------------------
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS HEREIN AND RETURN IN THE
ENCLOSED ENVELOPE. If acting as executor, administrator, trustee, guardian, etc.
you should so indicate when signing. If the signor is a corporation, please sign
the full name by duly appointed officer. If a partnership, please sign in
partnership name by authorized person. If shares are held jointly, each
shareholder named should sign.