SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant|_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement*
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
OAK HILL FINANCIAL, 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:
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:
* On April 25, 2001, Oak Hill Financial, Inc. (the "Company") held its Annual
Meeting of Stockholders, in connection with which the definitive proxy
statement, proxy card and notice of special meeting that follows this paragraph
were provided to each stockholder of the Company of record as of March 13, 2001.
The Annual Meeting of Stockholders was held on April 25, 2001. This filing is
being made in connection with the Company's obligation to comply with the
Securities Exchange Act of 1934, as amended. It is intended to further
disseminate the information which was made available to the Company's
stockholders of record on March 13, 2001 to other potential investors in the
Company and to those stockholders of the Company that acquired shares of the
Company after March 13, 2001, in addition to the investment community and the
general public.
OAK HILL FINANCIAL, INC.
14621 State Route 93
Jackson, Ohio 45640
NOTICE OF ANNUAL MEETING
OF
SHAREHOLDERS
To Be Held April 25, 2001
Jackson, Ohio
March 13, 2001
To the Shareholders:
The Annual Meeting of Shareholders of Oak Hill Financial, Inc. (the
"Corporation") will be held at the Ohio State University Extension South
District Office, 17 Standpipe Road, Jackson, Ohio 45640, on April 25, 2001, at
1:00 p.m., local time, for the following purposes:
1. To elect the following five Directors for terms expiring in 2003 (Class I),
as successors to the class of Directors whose terms expire in 2002: Evan E.
Davis, C. Clayton Johnson, John D. Kidd, D. Bruce Knox, and Richard P.
LeGrand.
2. To ratify the appointment of the firm of Grant Thornton LLP to serve as
independent auditor for the Corporation for the year 2001.
3. To consider and act upon such other matters as may properly come before the
Annual Meeting or any adjournment thereof.
On March 13, 2001, there were 5,097,631 common shares outstanding. Each
shareholder is entitled to one vote for each common share held regarding each
matter properly brought before the meeting. Holders of record of the Corporation
at the close of business on March 13, 2001, are entitled to notice of and to
vote at the Annual Meeting and at any adjournment thereof.
By Order of the Board of Directors,
/s/H. Tim Bichsel
H. Tim Bichsel
Secretary
EVERY SHAREHOLDER'S VOTE IS IMPORTANT. IF YOU ARE UNABLE TO BE PRESENT AT THE
ANNUAL MEETING, YOU ARE REQUESTED TO COMPLETE AND RETURN PROMPTLY THE ENCLOSED
PROXY SO THAT YOUR SHARES WILL BE REPRESENTED. A STAMPED, ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
OAK HILL FINANCIAL, INC.
14621 State Route 93
Jackson, Ohio 45640
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION
On behalf of the Board of Directors of Oak Hill Financial, Inc. (the
"Corporation"), a proxy is solicited from you to be used at the Corporation's
Annual Meeting of Shareholders ("Annual Meeting") to be held April 25, 2001, at
1:00 p.m., local time, at the Ohio State University Extension South District
Office, 17 Standpipe Road, Jackson, Ohio 45640. This Proxy Statement is being
mailed on or about March 22, 2001.
Proxies in the form enclosed herewith are being solicited on behalf of
the Corporation's Board of Directors. Proxies which are properly executed and
returned will be voted at the Annual Meeting as directed; proxies properly
executed and returned which indicate no direction will be voted in favor of the
proposals set forth in the notice attached hereto and more fully described in
this Proxy Statement. Proxies indicating an abstention from voting on any matter
will be tabulated as a vote withheld on such matter and will be included in
computing the number of shares present for purposes of determining the presence
of a quorum for the Annual Meeting. If a broker indicates on the form of proxy
that it does not have discretionary authority as to certain common shares to
vote on a particular matter, those common shares will be considered as present
but not entitled to vote with respect to that matter. Any shareholder giving the
enclosed proxy has the power to revoke the same prior to its exercise by filing
with the Secretary of the Corporation a written revocation or duly executed
proxy bearing a later date, or by giving notice of revocation in open meeting.
VOTING SECURITIES
As of March 13, 2001, the record date fixed for the determination of
shareholders entitled to vote at the Annual Meeting, there were 5,097,631 shares
of the Corporation's common stock outstanding. Each such share is entitled to
one vote on each matter properly coming before the Annual Meeting.
OWNERSHIP OF COMMON STOCK BY PRINCIPAL SHAREHOLDERS
As of February 24, 2001, persons known by the Corporation to own
beneficially more than 5% of the outstanding common shares of the Corporation
are set forth below.
No. of Shares of Common
Name(1) Stock Beneficially Owned(2) Percentage of Class(3)
---- ------------------------ -------------------
Evan E. Davis 919,987(4) 17.08%
John D. Kidd 524,372(4)(5)(6) 9.73%
D. Bruce Knox 349,534(4)(5) 6.49%
- -----------------------------
(1) The address of Evan E. Davis, John D. Kidd, and D. Bruce Knox is c/o Oak
Hill Financial, Inc., 14621 State Route 93, Jackson, Ohio 45640.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities.
(3) "Percentage of class" is calculated by dividing the number of shares
beneficially owned by the total number of outstanding shares of the
Corporation on February 24, 2001 plus the number of shares such person has
the right to acquire within 60 days of February 24, 2001.
(4) Includes 23,375 shares which could be acquired by Messrs. Davis and Kidd,
and 36,875 shares which could be acquired by Mr. Knox under stock options
exercisable within 60 days of February 24, 2001. Includes 258,862 shares
held by a Trust as to which Mr. Knox is a Trustee and partial beneficiary.
(5) Includes shares acquired pursuant to Oak Hill Financial's 401(k) Plan for
which investment power is exercised.
(6) Includes shares held in Trust by Oak Hill Financial, Inc.'s 401(k) Plan for
which Mr. Kidd, as a Trustee, exercises shared voting power.
OWNERSHIP OF COMMON STOCK BY MANAGEMENT
As of February 24, 2001, the directors of the Corporation, the
executive officers of the Corporation named in the Summary Compensation Table,
and all executive officers and directors of the Corporation as a group
beneficially owned common shares of the Corporation as set forth below.
Amount and Nature of
Beneficial Ownership Percentage
Name of Common Stock(1) of Class(2)
---- ---------------------- ---------------
Evan E. Davis, Chairman and Director 919,987(3) 17.08%
John D. Kidd, President, Chief Executive Officer and
Director 524,372(3)(5)(6) 9.73%
Richard P. LeGrand, Executive Vice President and
Director 61,485(3)(5)(6) 1.14%
H. Tim Bichsel, Secretary 42,983(3)(5)(6) *
Ralph E. Coffman, Jr., Vice President 24,650(3)(5) *
Ronald J. Copher, Chief Financial Officer and Treasurer 18,588(3)(5)(6) *
D. Bruce Knox, Chief Information Officer and Director 349,534(3)(4)(5) 6.49%
David G. Ratz, Chief Administrative Officer 36,254(3)(5) *
Barry M. Dorsey, Ed.D., Director 20,950(3) *
C. Clayton Johnson, Director 11,250(3) *
Rick A. McNelly, Director 28,294(3) *
Donald R. Seigneur, Director 18,750(3) *
H. Grant Stephenson, Director 17,125(3) *
All directors and executive officers
as a group (13 persons) 2,074,222(7) 38.50%
(1) For purposes of the above table, a person is considered to "beneficially
own" any shares with respect to which he exercises sole or shared voting or
investment power or as to which he has the right to acquire the beneficial
ownership within 60 days of February 24, 2001. Unless otherwise indicated,
voting power and investment power are exercised solely by the person named
above or shared with members of his household.
-2-
(2) "Percentage of class" is calculated by dividing the number of shares
beneficially owned by the total number of outstanding shares of the
Corporation on February 24, 2001 plus the number of shares such person has
the right to acquire within 60 days of February 24, 2001. An "*" indicates
less than one percent (1%).
(3) Includes 23,375 shares which could be acquired by Messrs. Davis and Kidd,
37,875 shares which could be acquired by Mr. LeGrand, 28,500 shares which
could be acquired by Mr. Bichsel, 23,875 shares which could be acquired by
Mr. Coffman, 15,250 shares which could be acquired by Mr. Copher, 36,875
shares which could be acquired by Mr. Knox, 34,250 shares which could be
acquired by Mr. Ratz, 11,250 shares which could be acquired by Mr. Johnson,
and 13,750 shares which could be acquired by Messrs. Dorsey, McNelly,
Seigneur and Stephenson under stock options exercisable within 60 days of
February 24, 2001.
(4) Also includes 258,862 shares held by a Trust as to which Mr. Knox is a
Trustee and partial beneficiary.
(5) Includes shares acquired pursuant to Oak Hill Financial's 401(k) Plan for
which investment power is exercised.
(6) Includes shares held in Trust by Oak Hill Financial Inc.'s 401(k) Plan for
which Messrs. Kidd, LeGrand, Bichsel and Copher, as Trustees, exercise
shared voting power.
(7) Includes 289,625 shares, which may be purchased under stock options
exercisable within 60 days of February 24, 2001.
ELECTION OF DIRECTORS
The Board of Directors has nominated five persons for a two-year term
(Class I). The terms of the remaining directors in Class II will continue as
indicated below. The accompanying proxy will be voted for the election of those
five persons named under Class I in the following table unless otherwise
directed. In the event that any of the nominees for director shall become
unavailable (which management does not expect), the proxies may be voted for a
substitute nominee at the discretion of those named as proxies. The election of
each nominee requires the favorable vote of a plurality of all votes cast by the
holders of the Corporation's common stock.
The Board of Directors recommends that the shareholders vote FOR the
election of each nominee for Class I Director.
Position with Corporation and/or Principal Occupation or
-
Name and Age Employment For the Last Five Years Director Since
------------ ----------------------------------- --------------
Nominees - Terms
Expire in 2003 (Class I):
Evan E. Davis, 67 Chairman of the Corporation since its formation in 1981. He 1981
served as President of the Corporation from 1981 to June
1995. Mr. Davis' family founded Oak Hill Banks ("Oak Hill")
in 1902, and Mr. Davis has served as Director of the Bank
since 1957 and a Director of the Corporation since 1981.
C. Clayton Johnson, 56 President of the law firm of Johnson & Oliver, Portsmouth, 1997
Ohio. He has served as a Director of the Corporation since
March 1997.
John D. Kidd, 61 President of the Corporation since June 1995, Executive Vice 1981
President from 1981 to June 1995, and Chief Executive Officer
since 1981. He has served as President of Oak Hill from
October 1991 to September 1997, and as Chairman since October
1997. Mr. Kidd has served as Chief Executive Officer and
Executive Vice President since joining Oak Hill in 1970. He
served as Director of Oak Hill since 1970 and Director of the
Corporation since 1981. Mr. Kidd has served as a Director of
Towne Bank ("Towne") since October 1999.
-3-
D. Bruce Knox, 40 Chief Information Officer of the Corporation since January 1997
2000. Executive Vice President of Oak Hill since July 1,
1998, and Senior Vice President of Oak Hill since October 2,
1997. He served as President and a director of Unity Savings
Bank ("Unity") from January 1, 1996 until the merger on
October 1, 1997. He served as Executive Vice President and
Director of Unity and its successors from January 1, 1989
until December 31, 1995.
Richard P. LeGrand, 60 Executive Vice President of the Corporation since October 1987
1991 and Vice President from 1985 to October 1991. He has
served as Director of the Corporation since January 1987 and
as Director of Oak Hill since July 1993. Mr. LeGrand served
as Senior Vice President of Oak Hill from February 1986 to
October 1991, as Executive Vice President from October 1991
to September 1997, and President and Chief Executive Officer
since October 1997.
Continuing Directors -
Terms Expire in 2002
(Class II):
Barry M. Dorsey, Ed.D, 58 President of the University of Rio Grande and Rio Grande 1995
Community College since July 1991. Mr. Dorsey served as
Associate Director from July 1980 to July 1990 and as Deputy
Director from July 1990 to June 1991 of the State Council for
Higher Education for Virginia.
Rick A. McNelly, 44 Chief Executive Officer and co-owner of McNelly, Patrick and 1995
Associates, an employee benefits advisory and insurance
agency, since 1981.
Donald R. Seigneur, 49 Partner in the public accounting firm of Whited Seigneur Sams 1995
& Rahe, CPAs, Chillicothe, Ohio, since 1979.
H. Grant Stephenson, 51 Partner in the law firm of Porter, Wright, Morris & Arthur, 1995
Columbus, Ohio, since 1986.
-4-
MEETINGS OF THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
During 2000, the Board of Directors held five regularly scheduled
meetings. All of the incumbent directors and each nominee standing for
re-election attended more than 75% of the regularly scheduled meetings during
the last fiscal year.
Each director received $500 per meeting attended as a director of the
Corporation. On December 28, 2000, each non-employee director of the Corporation
was granted an option to purchase 3,000 of the Corporation's shares. Such
options become exercisable immediately at the grant date as to 50% of the
covered shares and become exercisable in full on December 28, 2001. The exercise
price for each option granted is 100% of the fair market value on the date of
grant.
The Board of Directors does not have a nominating committee. This
function is served by the Board of Directors.
The Board of Directors has a standing Stock Option and Compensation
Committee and a standing Audit Committee. Effective for meetings occurring after
April 2000, each director serving on such committees received $500 per meeting
attended.
The Stock Option and Compensation Committee (the "Compensation
Committee") makes recommendations to the Board of Directors with respect to the
compensation of the executive officers of the Corporation and with respect to
the grant of stock options. The members of the Compensation Committee are
Messrs. Dorsey, McNelly, and Stephenson. The Compensation Committee held three
meetings during the last fiscal year, and all members attended. The report of
the Compensation Committee with respect to the year 2000 begins on page 9
herein.
The Audit Committee oversees the Corporation's financial reporting
process on behalf of the Board of Directors. Functions of the Committee include
the engagement of the independent auditor, reviewing with the independent
auditor the plans and results of the audit engagement of the Corporation,
reviewing the scope and results of the procedures for internal auditing,
reviewing the independence of the independent auditor and similar functions. In
its oversight role, the Committee assures that management fulfills its
responsibilities in preparing the financial statements. The Committee reviews
and discusses with the internal audit department, management and the Board such
matters as accounting policies, internal controls and procedures for preparation
of financial statements. The Board has adopted a written charter for the Audit
Committee, which is attached to this Proxy Statement as Exhibit 1. The members
of the Audit Committee are Messrs. Seigneur, Johnson, and McNelly. All members
of the Audit Committee meet the independence standards of Rule 4200(a)(15) of
the National Association of Securities Dealers listing standards. The Audit
Committee held five meetings during the last fiscal year, and all members
attended. The report of the Audit Committee with respect to the year 2000 begins
on page 14 herein.
EXECUTIVE OFFICERS
The officers of the Corporation are elected annually by the Board of
Directors and serve at the pleasure of the Board. In addition to Evan E. Davis,
Chairman of the Board, John D. Kidd, President and Chief Executive Officer,
Richard P. LeGrand, Executive Vice President, and D. Bruce Knox, Chief
Information Officer, the following persons are officers of the Corporation:
H. Tim Bichsel, age 60, has served as Secretary of the Corporation
since June 1995 and as Treasurer from June 1995 to January 2001. He served as
Chief Operations Officer of the Corporation from January 2000 to June 2000. He
also served as Vice President of the Corporation from February 1994 to February
1995. Mr. Bichsel has served as Secretary of Oak Hill since February 1995. He
served as Executive Vice President of Oak Hill from February 1996 to February
2000 and since July 2000. From April 1993 to February 1996 he served as Senior
Vice President. From February 1992 to April 1993, he served as a computer
software specialist for Peerless Systems, Inc., a banking computer software
company. Before 1992, Mr. Bichsel was employed in a variety of positions,
including Senior Vice President and Secretary with Fifth Third Bank of Southern
Ohio, formerly known as First Security Bank of Hillsboro, Ohio, from 1973 to
November 1991.
-5-
Ralph E. Coffman, Jr., age 49, has served as Vice President of the
Corporation since June 1999. He has served as President and Chief Executive
Officer and Director of Towne since October 1999. Mr. Coffman served as
Executive Vice President of Oak Hill from July 1998 to September 1999. From June
1997 to June 1998, he served as Senior Vice President of Oak Hill, and from
September 1996 to May 1997, he served as Area President for Oak Hill. From
September 1995 to August 1996, he served as owner and president of 3C's Snax,
Inc. of New Lexington, Ohio. Before 1995, Mr. Coffman was employed in a variety
of positions, including Chief Executive Officer of American Community Bank of
Lima, Ohio, from November 1992 to February 1994.
Ronald J. Copher, age 43, has served as Chief Financial Officer of the
Corporation since July 1999 and as Treasurer since February 2001. He served as
Executive Vice President of Oak Hill from July 1999 to February 2000. From
January 1985 to June 1999, he served in a variety of positions in the financial
services practice of Grant Thornton LLP. He most recently served as Partner and
Practice Leader of the Financial Services Industry Group of Southern California.
David G. Ratz, age 43, has served as Chief Administrative Officer of
the Corporation since January 2000. He served as Vice President of the
Corporation from October 1995 to December 1999. He served as Senior Vice
President of Oak Hill from October 1995 to February 1996, and as Executive Vice
President from July 1998 to February 2000. From December 1986 to September 1995,
he served as a marketing and human relations consultant to community banking
organizations as Vice President of Young & Associates, Kent, Ohio.
-6-
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation
paid during the last three completed fiscal years by the Corporation and its
subsidiaries to the Chief Executive Officer, Chairman of the Board, and the four
other highest-paid executive officers of the Corporation whose total salary and
bonus annually exceed $100,000 for services in all capacities for the
Corporation:
Summary Compensation Table
Long Term
Compensa-
Annual Compensation tion Award
(g)
(a) (e) Securities (i)
Name and Principal Position (b) (c) (d) Other Annual Underlying All Other
--------------------------- Year Salary Bonus Compensation(1) Options(2) Compensation(3)
---- ------ ----- --------------- ------------ ---------------
JOHN D. KIDD 2000 $189,840 -- -- -- $10,568
President and Chief Executive 1999 $176,307 -- $3,400 7,000 $ 4,800
Officer 1998 $164,856 -- $6,100 7,000 $19,631
EVAN E. DAVIS 2000 $ 68,496 -- -- -- $ 1,420
Chairman of the Board 1999 $ 57,394 -- $3,900 7,000 --
1998 $ 52,000 -- $6,400 7,000 $ 2,084
RICHARD P. LEGRAND 2000 $174,768 $16,500 -- 6,500 $10,568
Executive Vice President 1999 $161,976 $16,500 $3,400 7,000 $ 4,800
1998 $143,710 $22,000 $6,400 7,000 $19,631
RALPH E. COFFMAN, JR. 2000 $123,602 $15,000 -- 6,000 $ 8,325
Vice President 1999 $112,204 $15,000 -- 6,000 $ 3,021
1998 $ 81,936 $15,000 -- 5,500 $ 9,697
RONALD J. COPHER 2000 $116,313 $11,250 -- 5,000 $10,568
Chief Financial Officer 1999 $ 57,500 $ 5,625 -- 17,750 --
1998 -- -- -- -- --
D. BRUCE KNOX 2000 $116,664 $11,250 -- 5,000 $ 7,561
Chief Information Officer 1999 $109,800 $ 7,500 $3,400 3,125 $ 3,519
1998 $101,830 $10,000 $6,400 6,250 $12,655
(1) Includes amounts paid as director fees for 1998 and the first six months of
1999. Beginning in July 1999, director fees were included in salary for all
directors who were also employees of the Corporation or its subsidiaries.
(2) All shares are subject to options granted under the 1995 Stock Option Plan.
(3) Includes matching and profit sharing contributions for the Corporation's
401(k) plan for the fiscal years shown.
-7-
The following table shows all individual grants of stock options to the
named executive officers of the Corporation during the year ended December 31,
2000.
Potential Realizable Value
Options/SAR Grants in Last Fiscal Year(1) At Assumed Annual Rates
Of Stock Price Appreciation
Individual Grants For Option Term(2)
% of
Total
Options
Name Number of Granted
Securities To Exercise
Underlying Employees Price Expiration
Options In Fiscal ($/Share) Date
Year 0%($) 5%($) 10%($)
EVAN E. DAVIS
Chairman of the Board -- -- -- -- -- -- --
JOHN D. KIDD
President and Chief Executive
Officer -- -- -- -- -- -- --
RICHARD P. LEGRAND
Executive Vice President 6,500 4.74% $14.75 12/28/10 $0 $60,295 $152,800
RALPH E. COFFMAN, JR.
Vice President 6,000 4.38% $14.75 12/28/10 $0 $55,657 $141,046
RONALD J. COPHER
Chief Financial Officer 5,000 3.65% $14.75 12/28/10 $0 $46,381 $117,539
D. BRUCE KNOX
Chief Information Officer 5,000 3.65% $14.75 12/28/10 $0 $46,381 $117,539
- ------------------------------------
(1) All options are granted at 100% of fair market value on the date of grant.
The options become exercisable immediately at the grant date as to 50% of
the covered shares and become exercisable in full on December 28, 2001. In
addition, the options expire on the date specified in the option which, in
no event, is not later than 10 years after the date of grant, provided,
that the optionee remained in the employment of the Corporation or its
affiliates. The option exercise period may be shortened upon an optionee's
disability, retirement or death.
(2) The amounts under the columns labeled "5%($)" and "10%($)" are included by
the Corporation pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Corporation's common stock. Such amounts are
based on the assumption that the option holders hold the options granted
for their full term. The actual value of the options will vary in
accordance with the market price of the Corporation's common stock. The
column headed "0%($)" is included to illustrate that the options were
granted at fair market value and option holders will not recognize any gain
without an increase in the stock price, which increase benefits all
shareholders commensurately.
-8-
The following table shows aggregate option exercises in the last fiscal year and
year-end values.
Aggregated Option/SAR Exercises in Last Fiscal Year and
Fiscal Year-End Option/SAR Values
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised
Options at Fiscal Year In-the-Money Options at
End Fiscal Year End ($)(1)
Value
Name Shares Realized ($) Unexercisable Unexercisable
Acquired
On Exercise Exercisable Exercisable
EVAN E. DAVIS
Chairman 12,500 $53,250 23,375 -- -- --
JOHN D. KIDD
President and Chief Executive
Officer -- -- 23,375 -- -- --
RICHARD P. LEGRAND
Executive Vice President -- -- 37,875 3,250 $ 63,828 --
RALPH E. COFFMAN, JR.
Vice President 9,375 $59,063 23,875 3,000 -- --
RONALD J. COPHER
Chief Financial Officer -- -- 15,250 7,500 -- --
D. BRUCE KNOX
Chief Information Officer -- -- 36,875 2,500 -- --
(1) Represents total gain which would have been realized if all in the money
options held at fiscal year-end had been exercised, determined by
multiplying the number of shares underlying the options by the difference
between the per share option exercise price and per share fair market value
at year-end. The fair market value as determined by the closing price of
the Corporation's common stock on December 31, 2000 was $14.5625. An option
is in the money if the fair market value of the underlying shares exceeds
the exercise price of the option.
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Philosophy and Composition of the Compensation Committee
The Corporation's executive compensation program is designed to enable
the Corporation to attract, motivate and retain top quality executive officers
by providing a fully competitive and comprehensive compensation package. It
provides for competitive base salaries that reflect individual performance as
well as variable incentive awards in cash for the achievement of financial
performance goals established by the Compensation Committee and approved by the
Board of Directors. In addition, long-term stock-based incentive awards are
granted to strengthen the mutuality of interest between the executive officers
and the Corporation's shareholders and to motivate and reward the achievement of
important long-term performance objectives of the Corporation.
The Corporation's executive compensation program is administered by the
Compensation Committee of the Board of Directors, composed entirely of
non-employee directors of the Corporation: Barry M. Dorsey, Rick A. McNelly, and
H. Grant Stephenson.
-9-
The Compensation Committee has the authority and responsibility to
determine and administer the Corporation's officer compensation policies and to
establish the salaries of executive officers, the formula for bonus awards to
executive officers, and the grant of stock options to executive officers and
other key employees under the Corporation's 1995 Stock Option Plan. In general,
the philosophy of the Compensation Committee is to attract and retain qualified
executives, reward current and past individual performance, provide short-term
and long-term incentives for superior future performance, and relate total
compensation to individual performance and performance of the Corporation. The
preferred compensation policy of the Compensation Committee is to set base pay
at the lower end of the comparable market ranges, establish performance-based
annual cash bonus opportunities, and grant significant option positions to key
employees to provide greater long-term incentives.
Executive Compensation Program
The Compensation Committee is responsible for the establishment of the
base salary, as well as the award level for the annual bonus compensation
program, both subject to approval by the Board of Directors. The Compensation
Committee is also responsible for the award level and administration of the
stock option programs for executive officers, as well as for recommendations
regarding other executive benefits and plans, both of which also are subject to
approval by the Board of Directors. In completing its assignments, the
Compensation Committee takes into account the views of the Management of the
Corporation.
The Compensation Committee has reviewed the executive compensation
program being utilized and compared it with similar programs of banking
corporations that shared one or more common traits with the Corporation (such as
market capitalization, asset size and geographic location). As an overall
evaluation tool in determining levels of compensation for the Corporation's
Chief Executive Officer and other executive officers, the Compensation Committee
reviews the compensation policies of other banking companies, as well as
published surveys of salaries in the financial industry. The Compensation
Committee has not defined or established a specific comparison group of bank
holding companies for determination of compensation. Those listed in the salary
surveys which share one or more common traits with the Corporation, such as
market capitalization, asset size, geographic location, similar lines of
business and financial returns on assets and equity, are given more weight. The
companies listed in the various salary surveys may not be included in the SNL
$500M-$1B Bank Asset-Size Index (an index included in the Corporation's
Performance Graph below).
Components of the Named Executive Officer Compensation
For 2000, the executive compensation program for the Named Executive
Officers in this Proxy, Messrs. Kidd, Davis, LeGrand, Coffman, Copher and Knox
(the "Named Executive Officers") consisted of four primary components: (i) a
base salary; (ii) incentive compensation; (iii) executive benefits, such as
insurance and retirement benefits; and (iv) benefits which are generally
available to all employees. These components are discussed in detail below.
Base Salary. The Named Executive Officers' base salaries and
performance are reviewed annually during July with salary increases made
effective for the twelve month period beginning July 1 of the current year
through June 30 of the following year. The salaries and performance reviews are
determined primarily by examining the individual officer's level of
responsibility for his position, comparing that position to similar positions
within the Corporation, and comparing the officer's salary with salaries
detailed in the salary surveys for executives with similar experience and
responsibilities outside of the Corporation.
Significant weight also is given to the views of the Management of the
Corporation regarding whether a Named Executive Officer has succeeded in the
annual performance goals established by the Chief Executive Officer for each
Executive Officer. The nature of these goals differs, depending upon each
officer's job responsibilities. Goals are both qualitative in nature--such as
the development and retention of key personnel, the quality of products and
services, and management effectiveness--and quantitative in nature, such as
sales and revenue goals and cost containment.
The Named Executive Officer's base salary is then established by the
Committee, taking into account the items listed above as well as the
Corporation's overall performance during the preceding year. The Committee does
not place a specific value on any of the above-listed factors. The base salary
is subject to approval by the Board of Directors.
-10-
Incentive Compensation. Incentive compensation includes two programs: the
award of cash bonuses and the award of stock options under the 1995 Stock Option
Plan. The participants and awards under the Corporation's incentive plans are
determined by the Compensation Committee, subject to approval by the Board of
Directors.
Cash Incentive Compensation. The Corporation's policy for cash
incentive compensation is to reward the achievement of financial objectives
established in advance by Management and the Board of Directors to the beginning
of each year. The performance targets focus upon the net operating income ( NOI
) of the Corporation and, depending upon the duties of a Named Executive
Officer, the NOI of a subsidiary. Targets also are set for individual
performance goals. In making awards, the Compensation Committee has the
discretion to consider these goals and other factors related to the individual
performance of the Named Executive Officer in making an award to him or her.
All incentive bonus awards are currently paid in cash. The bonuses paid
or accrued in 2000 were based upon the Corporation's 2000 performance.
Stock Options. The purpose of the Corporation's 1995 Stock Option Plan
is to provide long-term incentives to key employees and to motivate key
employees to improve the performance of the Corporation and thereby increase the
Corporation's common stock price.
The number of shares of common stock subject to the options granted
during 2000 was determined based on a subjective evaluation of the past
performance of the individual, the total compensation being paid to the
individual, the individual's scope of responsibility, and the anticipated value
of the individual's contribution to the Corporation's future performance. No
specific weight was given to any of these factors. Options awarded to each Named
Executive Officer during previous years were reviewed by the Compensation
Committee in determining the size of an option awarded for 2000.
Each stock option awarded during 2000 had an exercise price equal to
the fair market value of the underlying common stock of the Corporation on the
date of the grant. Generally, stock options granted to new employees of the
Corporation vest and become exercisable immediately and terminate ten years from
the date of grant. All stock options awarded during 2000 become exercisable
immediately at the grant date as to 50% of the covered shares and become
exercisable in full on December 28, 2001.
The total number of option grants made in 2000 for all participants in
the 1995 Stock Option Plan was for 137,000 shares of the Corporation's Common
Stock, of which 22,500 shares, or 16.4% were awarded to the Named Executive
Officers.
Determination of the Chief Executive Officer's Compensation
The compensation package entered into with Mr. Kidd is detailed in this
Proxy under the tables and descriptive paragraphs of the section entitled
Executive Compensation.
Mr. Kidd's base salary for 2000 was determined by the Compensation
Committee through an assessment of several areas, including the financial
results of the Corporation as compared with peer companies and his overall
performance as a leader of the Corporation. In determining compensation, the
financial results as compared with peer companies were given the most weight by
the Compensation Committee; overall performance as a leader was given
significant, but lesser, weight. In addition to these factors, the Compensation
Committee also reviewed information to determine if there were any overall
trends in the financial services industry regarding compensation of chief
executive officers that would suggest further adjustments to the amounts to be
paid to Mr. Kidd.
Based on these factors, the Compensation Committee determined that Mr.
Kidd should receive an increase from his current base salary and an incentive
compensation consisting of a cash bonus in 2000. Mr. Kidd declined both the
proposed salary increase and the cash bonus.
Beginning in July 1999 and continuing during 2000, director fees
previously paid to Mr. Kidd separate and apart from his salary were added to his
salary. The director fees included in Mr. Kidd's 1999 and 2000 base salary were
$3,400 and $8,500, respectively.
-11-
Deductibility of Executive Compensation
The Compensation Committee has reviewed the qualifying compensation
regulations issued by the Treasury Department under Code Section 162(m) which
provide that no deduction is allowed for applicable employee remuneration paid
by a publicly held corporation to a covered employee if the remuneration paid to
the employee exceeds $1.0 million for the applicable taxable year, unless
certain conditions are met. Currently, remuneration is not expected to exceed
the $1.0 million base for any employee. Therefore, compensation should not be
affected by the qualifying compensation regulations.
The foregoing report has been respectfully furnished by the members of
the Compensation Committee, being:
Barry M. Dorsey
Rick A. McNelly
H. Grant Stephenson
-12-
PERFORMANCE GRAPH
Comparison of Cumulative Total Return
Among the Corporation, the Nasdaq Stock Market - U.S. Index,
The SNL $500M -$1B Bank Asset-Size Index and
The SNL $250M-$500M Bank Asset-Size Index
The following Performance Graph compares the performance of the
Corporation with that of the Nasdaq Stock Market - U.S. Index and the SNL
$500M-$1BM Bank Asset-Size Index, each of which are published industry indices.
The comparison of the cumulative total return to shareholders for each of the
periods assumes that $100 was invested on October 11, 1995 (the effective date
the Corporation's Common Stock was registered under the Securities and Exchange
Act of 1934, as amended), in the Common Stock of the Corporation and in the
Nasdaq Stock Market - U.S. Index and the SNL $500M-$1BM Bank Asset-Size Index
and that all dividends were reinvested.
[Total performance graph plotting points set forth below]
Period Ending
---------------------------------------------------------------------------
Index 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- --------------------------------------------------------------------------------------------------------------------
Oak Hill Financial, Inc. 100.00 143.73 246.61 256.06 212.60 217.65
NASDAQ - Total US* 100.00 123.04 150.69 212.51 394.92 237.62
SNL $500M-$1B Bank Index 100.00 125.01 203.22 199.81 184.96 177.04
-13-
REPORT OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
In accordance with its written charter, the Audit Committee (or the
"Committee") of the Board assists the Board in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing, and
financial reporting practices of the Corporation. During the current year, the
Committee met five times and also met with management and the independent
auditor to discuss the Corporation's quarterly financial statements prior to the
filing of its Quarterly Report on Form 10-Q with the Securities and Exchange
Commission and the related quarterly earnings announcement.
In discharging its oversight responsibility as to the audit process,
the Committee obtained from the independent auditor a formal written statement
describing all relationships between the auditor and the Corporation that might
bear on the auditor's independence consistent with Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," discussed with
the auditor any relationships that may impact its objectivity and independence
and satisfied itself as to the auditor's independence. The Committee also
discussed with management, the internal auditor and the independent auditor the
quality and adequacy of the Corporation's internal controls and the internal
audit functions' organization, responsibilities, budget, and staffing. The
Committee reviewed with both the independent and the internal auditor their
plans, audit scope, and identification of audit risks.
The Audit Committee discussed and reviewed with the internal and
independent auditors all communications required by generally accepted auditing
standards, including a discussion of the quality, not just the acceptability of
the accounting principles, the reasonableness of significant adjustments,
clarity of disclosures in the financial statements, and other matters described
in Statement on Auditing Standards No. 61, as amended, "Communication with Audit
Committees." With and without management present, the Committee discussed and
reviewed the results of the internal audit examinations and the results of the
independent auditor's examination of the financial statements.
The Audit Committee reviewed the audited financial statements of the
Corporation as of and for the fiscal year ended December 31, 2000 with
management and the independent auditor. Management has the responsibility for
the preparation of the Corporation's financial statements, and the independent
auditor has the responsibility for the examination of those statements.
Based on the above-mentioned review and discussions with management and
the independent auditor, the Audit Committee recommended to the Board that the
Corporation's audited financial statements be included in its Annual Report on
Form 10-K for the fiscal year ended December 31, 2000 for filing with the
Securities and Exchange Commission. The Audit Committee and the Board have also
recommended the reappointment, subject to shareholder approval, of the
Corporation's independent auditor.
Donald R. Seigneur, Chair
C. Clayton Johnson
Rick A. McNelly
-14-
PRINCIPAL ACCOUNTING FIRM FEES
Audit Fees
Fees for the calendar year 2000 audit of the Corporation's consolidated
financial statements and the reviews of Quarterly Reports on Form 10-Q were
$67,225 of which $8,225 had been billed through December 31, 2000.
Financial Information Systems Design and Implementation Fees
Grant Thornton LLP did not render any services to the Corporation in
2000 with respect to the above captioned services.
All Other Fees
Aggregate fees billed for all other services rendered by Grant Thornton
LLP during the year ended December 31, 2000 were $73,420. These services
included:
o assistance with Securities and Exchange Commission filings;
o accounting technical advice;
o income tax consulting and return preparation;
o employee benefit plans and statutory audits; and
o other management consulting services
The Audit Committee has considered whether the provision of these
services is compatible with maintaining the principal accountant's independence.
APPOINTMENT OF INDEPENDENT AUDITOR
The Board of Directors has appointed Grant Thornton LLP as the
independent auditor for the Corporation and its subsidiaries for the fiscal year
ending December 31, 2001. Although not required, the Board of Directors is
submitting its selection to the shareholders of the Corporation for
ratification. Grant Thornton LLP has served as independent auditor for the
Corporation and its subsidiaries during the past year. The Board of Directors
believes that the reappointment of Grant Thornton LLP for the fiscal year ending
December 31, 2001 is appropriate because of the firm's reputation,
qualifications, and experience. The Board of Directors will reconsider the
appointment of Grant Thornton LLP if its election is not ratified by the
shareholders.
Management expects that representatives of Grant Thornton LLP will be
present at the Annual Meeting, will have the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
The affirmative vote of a majority of the votes entitled to be cast by
the holders of the Corporation's common stock present in person or represented
by proxy at the Annual Meeting is required for ratification.
The Board of Directors recommends a vote FOR this proposal. Unless a contrary
choice is specified, proxies solicited by the Board of Directors will be voted
for the proposal.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Compensation Committee Interlocks and Insider Participation
Currently, Messrs. Dorsey, McNelly and Stephenson, who are not
employees of the Corporation, are members of the Compensation Committee.
Effective July 1, 2000, Evan E. Davis, a director and Chairman of the
Corporation, serves on the Executive Committee of the Board of Trustees (the
"Executive Committee") of the University of Rio Grande (the "University") of
which Mr. Dorsey is the President. The Executive Committee of the University
acts on matters involving Mr. Dorsey's compensation.
-15-
Transactions with Directors and Officers
Some of the officers and directors of the Corporation and the companies
with which they are associated are customers of Oak Hill or Towne. The loans to
such officers and directors (a) were made in the ordinary course of business,
(b) were made on substantially the same terms, including interest rates and
nature of collateral, as those prevailing at the time for comparable
transactions with other persons, and (c) did not involve more than the normal
risk of collectibility or present other unfavorable features.
Oak Hill and Towne have had, and expect to have in the future, banking
transactions in the ordinary course of business with directors, officers,
principal shareholders, and their associates on the same terms, including
interest rates and collateral on loans, as those prevailing at the same time for
comparable transactions with others.
Miscellaneous
H. Grant Stephenson, a director of the Corporation, is a partner in the
law firm of Porter, Wright, Morris & Arthur, which provides legal services to
the Corporation. C. Clayton Johnson, a director of the Corporation, is President
and co-owner of the law firm of Johnson & Oliver, which provides legal services
to the Corporation. Rick A. McNelly, a director of the Corporation, is co-owner
of McNelly, Patrick and Associates, an employee benefits advisory and insurance
agency, which provides benefits and insurance services to the Corporation.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's officers and directors, and greater than 10%
shareholders, to file reports of ownership and changes in ownership of the
Corporation's securities with the Securities and Exchange Commission. Copies of
the reports are required by SEC regulation to be furnished to the Corporation.
Based solely on the Corporation's review of the copies of such reports,
the Corporation believes that all its officers, directors, and greater than 10%
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during fiscal 2000.
SHAREHOLDER PROPOSALS
If an eligible shareholder wishes to present a proposal for action at
the next Annual Meeting of the Corporation to be held in 2002, it shall be
presented to management by certified mail, written receipt requested, not later
than December 1, 2001, for inclusion in the corporation's Proxy Statement and
form of Proxy relating to that meeting. Any such proposal must comply with Rule
14a-8 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). Proposals should
be sent to Oak Hill Financial, Inc., Attention: David G. Ratz, Chief
Administrative Officer, 14621 State Route 93, Jackson, Ohio 45640. Any
shareholder proposal submitted outside the processes of Rule 14a-8 under the
1934 Act for presentation to the Corporation's 2001 Annual Meeting of
Shareholders will be considered untimely for purposes of Rule 14a-4 and 14a-5 if
notice thereof is received by the Corporation after February 14, 2002.
-16-
ANNUAL REPORT
The Corporation's Annual Report for the year ended December 31, 2000 is
being mailed to each shareholder with this Proxy Statement.
The Corporation files annually with the Securities and Exchange
Commission an annual report on Form 10-K. This report includes financial
statements and schedules thereto. A SHAREHOLDER OF THE CORPORATION MAY OBTAIN A
COPY OF THE ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND
SCHEDULES THERETO, FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000, WITHOUT CHARGE
BY SUBMITTING A WRITTEN REQUEST THEREFORE TO THE FOLLOWING ADDRESS:
Oak Hill Financial Inc.
Attention: David G. Ratz
14621 State Route 93
Jackson, Ohio 45640.
OTHER MATTERS
Management and the Board of Directors of the Corporation know of no
business to be brought before the Annual Meeting other than as set forth in this
Proxy Statement. However, if any matters other than those referred to in this
Proxy Statement should properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote such proxy on such
matters in accordance with their best judgment.
EXPENSES
The expense of proxy solicitation will be borne by the Corporation.
Proxies will be solicited by mail and may be solicited, for no additional
compensation, by some of the officers, directors and employees of the
Corporation or its subsidiaries, by telephone, telegraph or in person. Brokerage
houses and other custodians, nominees and fiduciaries may be requested to
forward soliciting material to the beneficial owners of shares of the
Corporation and will be reimbursed for their related expenses.
-17-
APPENDIX 1
OAK HILL FINANCIAL, INC.
AUDIT COMMITTEE CHARTER
Purpose
The Audit Committee [the "Committee"] shall provide assistance to the
Board of Directors of Oak Hill Financial, Inc. [the "Corporation"] in fulfilling
their responsibility to the shareholders with respect to oversight of the
accounting and financial reporting practices, the quality and integrity of the
financial reports, the adequacy of the systems of internal controls, and the
independence and performance of the internal audit department and independent
auditor of the Corporation and its subsidiaries.
Composition
The Committee shall be composed of a minimum of three Directors,
including a Chairperson. Each of the Committee members shall meet the
independence requirements of the Nasdaq Stock Market, Inc. [the "Nasdaq"]. In
accordance with Nasdaq requirements, all members of the Committee upon
appointment or within a reasonable time after appointment to the Committee shall
be "financially literate," i.e., able to read and understand fundamental
financial statements, including the Corporation's balance sheet, income
statement and cash flow statement, and at least one member of the Committee
shall have past employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable experience or
background, including a current or past position as a chief executive or
financial officer or other senior officer with financial oversight
responsibilities.
Meetings
The Committee shall meet four times per year or more frequently as
circumstances require. The Committee may ask members of management or others to
attend meetings and provide pertinent information as necessary. The Committee
shall keep written minutes of its meetings.
Function
The Committee's function is one of oversight and review, and it is not
expected to audit the Corporation, to control the Corporation's accounting or
financial practices or to define the standards to be used in preparation by
management of the Corporation's financial statements.
In carrying out its oversight and review responsibilities, the Committee
shall:
o maintain direct lines of communication between itself, the Board of
Directors, the independent auditor, the internal audit department, the
financial and senior management of the Corporation and legal counsel.
o annually review and recommend to the Board of Directors the independent
auditor, which is ultimately accountable to the Committee and the Board of
Directors, to audit the financial statements of the Corporation.
o receive on an annual basis from the independent auditor the written
disclosures and statement, as required by Independence Standards Board
Standard 1, Independence Discussions With Audit Committees, regarding the
auditor's independence, actively engage in a dialogue with the independent
auditor with respect to any disclosed relationships or services that may
impact the objectivity and independence of the independent auditor, and
recommend, if necessary, that the Board of Directors take appropriate
action to oversee that the Corporation has engaged an independent auditor.
o review as required legal and regulatory matters including reports received
from regulators that may have a material impact on the Corporation's
financial statements.
-18-
o meet with the independent auditor and management of the Corporation prior
to the conduct of the annual financial statement audit to review the scope
of the proposed audit for the current year.
o discuss with management and the independent auditor the Corporation's
quarterly financial statements prior to the filing of its Quarterly Report
on Form 10-Q with the Securities and Exchange Commission [the "SEC"]. The
discussions would properly include issues concerning significant
adjustments, management judgments and accounting estimates, significant new
accounting policies and disagreements with management.
o review and discuss with management the Corporation's audited annual
financial statements and the independent auditor's opinion rendered with
respect to such financial statements.
o discuss with the independent auditor the matters required to be discussed
pursuant to Statement on Auditing Standards No. 61 [SAS 61], Communications
With Audit Committees, as amended, relating to the conduct of the annual
audit, including the quality, not just the acceptability, of the
Corporation's accounting principles and underlying estimates in its audited
financial statements. The discussions under SAS 61 would properly include
significant proposed and actual changes to the Corporation's accounting
principles or applications thereof. The Committee shall also discuss with
the independent auditor the last peer review and the status of significant
litigation or disciplinary actions by the SEC or others.
o prep and review the Audit Committee Report, for inclusion in the
Corporation's annual proxy statement. The Audit Committee Report shall
state whether the Audit Committee:
1. has reviewed and discussed the audited consolidated financial
statements with management;
2. has discussed with the independent auditor the matters required to be
discussed by SAS 61, as amended;
3. has received the written disclosures and statement from the
independent auditor required by Independence Standards Board Standard
1, as amended, and has discussed with the auditor the independence of
the auditor; and
4. has recommended to the Board of Directors, based on the Committee's
review and discussion of items 1 through 3 above, that the
Corporation's consolidated financial statements be included in the
Annual Report on Form 10-K for the last fiscal year for filing with
the SEC.
5. has considered whether the provision of non-audit services by the
independent auditor is compatible with maintaining its independence.
o review annually the internal audit department of the Corporation including
the independence and authority of its reporting obligations, the proposed
plans of audit, and the coordination of such plans with the independent
auditor and the Corporation's accounting and financial human resources.
o review with the independent auditor, the internal audit department, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Corporation, any recommendations
for the improvement of such internal controls or particular areas where new
or additional controls or procedures are desirable.
o receive prior to each Committee meeting, a summary of findings from
completed internal audits and a progress report on the approved internal
audit plan, with explanations for any deviations from the original plan.
o provide sufficient opportunity for the internal audit department and the
independent auditor to meet with the members of the Committee without
members of management present.
o discuss with the Board of Directors significant matters from each Committee
meeting.
o investigate or authorize an investigation of any matter brought to the
Committee's attention within the scope of its duties, with the power to
retain independent accountants, counsel, or others for this purpose.
-19-
o review and reassess the adequacy of this Committee's charter on an annual
basis and recommend proposed changes to the Board of Directors for
approval.
o review such other matters in relation to the financial affairs of the
Corporation and its internal and external audits as the Board of Directors
or the Committee considers appropriate.
-20-