<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
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
Coddle Creek Financial Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
CODDLE CREEK FINANCIAL CORP.
347 North Main Street
Mooresville, North Carolina 28115
(704) 664-4888
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 20, 2000
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders (the
"Annual Meeting") of Coddle Creek Financial Corp. (the "Company") will be held
on April 20, 2000, at 11:00 a.m., Eastern Time, at the main office of the
Company at 347 North Main Street, Mooresville, North Carolina.
The Annual Meeting is for the purpose of considering and voting upon the
following matters:
1. To elect six persons who will serve as directors of the Company until
the 2000 Annual Meeting of stockholders or until their successors are
duly elected and qualified;
2. To ratify the selection of McGladrey & Pullen LLP as the independent
auditor for the Company for the fiscal year ending December 31, 2000;
and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof. The Board of Directors is not
aware of any other business to be considered at the Annual Meeting.
The Board of Directors has established March 10, 2000, as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournments thereof. In the event there are not
sufficient shares present in person or by proxy to constitute a quorum at the
time of the Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies by the Company.
By Order of the Board of Directors
/s/ Billy R. Williams
Billy R. Williams
Secretary
Mooresville, North Carolina
March 20, 2000
A form of proxy is enclosed to enable you to vote your shares at the Annual
Meeting. You are urged, regardless of the number of shares you hold, to
complete, sign, date and return the proxy promptly. A return envelope, which
requires no postage if mailed in the United States, is enclosed for your
convenience.
<PAGE>
CODDLE CREEK FINANCIAL CORP.
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
April 20, 2000
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
General
This Proxy Statement is being furnished to stockholders of Coddle Creek
Financial Corp. (the "Company") in connection with the solicitation by the board
of directors of the Company (the "Board of Directors" or "Board") of proxies to
be used at the 2000 Annual Meeting of Stockholders (the "Annual Meeting") to be
held on April 20, 2000, at 11:00 a.m., Eastern Time, at the main office of the
Company at 347 North Main Street, Mooresville, North Carolina, and any
adjournments thereof. This Proxy Statement and the accompanying form of proxy
were first mailed to stockholders on or about March 20, 2000. The Company's
office is located at 347 North Main Street, Mooresville, North Carolina 28115
and its telephone number is (704) 664-4888.
Other than the matters listed on the attached Notice of 2000 Annual Meeting
of Stockholders, the Board of Directors knows of no matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares represented thereby in accordance with their best judgment on such
other business, if any, that may properly come before the Annual Meeting or any
adjournments thereof.
Revocability of Proxy
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a beneficial owner of
shares of the Company's outstanding common stock (the "Common Stock") that are
not registered in your own name, you will need appropriate documentation from
the holder of record of your shares to vote personally at the Annual Meeting.
Solicitation
The Company will pay the cost of preparing, assembling and mailing this
Proxy Statement and other proxy solicitation expenses, if any. In addition to
the use of the mail, proxies may be solicited personally or by telephone by
directors, officers and regular employees of the Company and its wholly-owned
savings bank subsidiary, Mooresville Savings Bank, Inc., SSB (the "Bank"),
without additional compensation therefor. Brokerage houses and nominees have
been requested to forward these proxy materials to the beneficial owners of
shares held of record by such persons, and upon request, the Company will
reimburse such persons for their reasonable out-of-pocket expenses in doing so.
Voting Securities and Vote Required for Approval
Regardless of the number of shares of Common Stock owned, it is important
that stockholders be present in person or represented by proxy at the Annual
Meeting. Stockholders are requested to vote by completing, signing, dating and
returning the enclosed proxy in the enclosed postage-paid envelope. Any
stockholder may vote for, against, or withhold authority to vote on any matter
to come before the Annual Meeting. If the enclosed proxy is properly completed,
signed, dated and returned, and not revoked, it will be voted in accordance with
the instructions therein. If a proxy is returned with no instructions given,
the proxy will be voted FOR all of the matters described in this Proxy
---
<PAGE>
Statement calling for a vote of the stockholders. If instructions are given
with respect to some but not all proposals, such instructions as are given will
be followed and the proxy will be voted FOR the proposals on which no
---
instructions are given.
The close of business on March 10, 2000 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of those
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. As of the Record Date, the Company had
outstanding 699,156 shares of Common Stock. Each share of Common Stock entitles
its owner to one vote on each matter calling for a vote of stockholders at the
Annual Meeting.
The presence, in person or by proxy, of the holders of at least a majority
of shares of Common Stock entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Since many of our stockholders
cannot attend the Annual Meeting, it is necessary that a large number be
represented by proxy. Accordingly, the Board of Directors has designated proxies
to represent those stockholders who cannot be present in person and who desire
to be so represented. In the event there are not sufficient stockholders
present, in person or by proxy, to constitute a quorum or to approve or ratify
any proposal at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit the further solicitation of proxies.
In order to be elected, a nominee need only receive a plurality of the
votes cast in the election of the applicable class of directors for which he has
been nominated. As a result, those persons nominated for election who receive
the largest number of votes will be elected as directors. Accordingly, shares
not voted for any reason with respect to any one or more nominees will not be
counted as votes against such nominees. No stockholder has the right to
cumulatively vote his or her shares in the election of directors.
The proposals to ratify the appointment of the Company's independent
auditor for the year ending December 31, 2000 will be approved if the votes cast
in favor of the proposal exceed the votes cast opposing the proposal.
Abstentions will be counted for purposes of determining whether a quorum is
present at the Annual Meeting. Abstentions will not be counted in tabulating
the votes cast on any proposal submitted to the stockholders. Broker non-votes
will not be counted either for determining the existence of a quorum or for
tabulating votes cast on any proposal.
2
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that any person who acquires the beneficial ownership of more than 5%
of the Common Stock of the Company notify the Securities and Exchange Commission
(the "SEC") and the Company. Following is certain information, as of the Record
Date, regarding all persons or "groups", as defined in the Exchange Act, who
held of record or who are known to the Company to own beneficially more than 5%
of the Company's Common Stock.
<TABLE>
<CAPTION>
Amount and
Nature of Percentage
Name and Address Beneficial of
of Beneficial Owner Ownership/1,2/ Class/3/
- ------------------- -------------- -----------
<S> <C> <C>
Claude U. Voils, Jr. 85,919/4,5/ 12.23%
221 South Academy Street
Mooresville, NC 28115
Jack G. Lawler 85,919/4,5/ 12.23%
1312 7/th/ Avenue, N.E.
Jacksonville, AL 36265
Donald R. Belk 89,472/4,5,6/ 12.74%
630 Belk Road
Mt. Ulla, NC 28125
Don E. Mills, Jr. 76,398/4,7/ 10.92%
121 Colony Drive
Mooresville, NC 28115
Salem Investment Counselors, Inc. 55,460/8/ 7.93%
P.O. Box 25437
Winston-Salem, NC 27114-5427
</TABLE>
___________________________________
/1/ Voting and investment power is not shared unless otherwise indicated.
/2/ Unless otherwise noted, all shares are owned directly or indirectly by the
named individuals, by their spouses and minor children, or by other entities
controlled by the named individuals.
/3/ Based upon a total of 699,156 shares of Common Stock outstanding at the
Record Date.
/4/ Includes 75,198 allocated and unallocated shares of the Company's Common
Stock held by the Mooresville Savings Bank, Inc., SSB Employee Stock Ownership
Plan (the "ESOP"). Messrs. Voils, Lawler, Belk and Mills serve as the trustees
of the ESOP, and the trustees of the ESOP share certain voting and investment
power for such shares.
/5/ Includes (i) 3,372 shares of the Common Stock which may be purchased within
60 days of the Record Date by each of Messrs. Voils, Lawler and Belk pursuant to
options granted under the Coddle Creek Financial Corp. Stock Option Plan (the
"Stock Option Plan" or the "Plan"), and (ii) 1,349 shares of the Company's
Common Stock awarded to each of Messrs. Voils, Lawler and Belk on January 26,
1999 under the Mooresville Savings Bank, Inc., SSB Management Recognition Plan
(the "MRP"), 25% (337 shares) of which vested immediately upon grant, 25% of
which vested on January 26, 2000, and 25% of which shall vest on each of January
26, 2001 and January 26, 2002.
/6/ Includes 1,553 shares owned by Mr. Belk's wife, for which Mr. Belk disclaims
beneficial ownership.
/7/ Includes (i) 200 shares of the Common Stock which may be purchased within 60
days of the Record Date pursuant to options granted under the Company's Stock
Option Plan and (ii) 400 shares of the Company's Common Stock awarded to Mr.
Mills on January 26, 2000 under the MRP,
3
<PAGE>
25% of which vested on January 26, 2000, and 25% of which shall vest on each
anniversary thereafter until all such shares have vested on January 26, 2003.
/8/ Based upon the Schedule 13G filed February 22, 2000, Salem Investment
Counsellors, Inc. ("Salem"), a registered investment advisor, is deemed to
beneficially own 55,460 shares of the Company's common stock as of December 31,
1999, all of which are shares held in investment vehicles for which Salem serves
as investment manager. Salem disclaims beneficial ownership of all such shares.
Set forth below is certain information, as of the Record Date, regarding
those shares of Common Stock owned beneficially by each of the members of the
Board of Directors (including nominees for re-election at the Annual Meeting),
each of the members of the board of directors of the Bank, certain executive
officers of the Company and the Bank, and the directors and executive officers
of the Company and the Bank as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Percentage
Beneficial of
Name and Address Ownership/1,2/ Class/3/
- ---------------- --------------- -----------
<S> <C> <C>
George W. Brawley, Jr.,President, Chief 31,907/4,5/ 4.54%
Executive Officer and Chairman of the
Board of Directors of the Bank and the
Company, Nominee for Re-election
143 Bufflehead
Mooresville, NC 28115
Dale W. Brawley, Executive Vice 20,121/5,6/ 2.86%
President and Treasurer of the Bank and
the Company, Director of the Company,
Nominee for Re-election
523 Houston Road
Troutman, NC 28166
Claude U. Voils, Jr., Director of the Bank 85,919/7,8/ 12.23%
and the Company, Nominee for Re-election
221 South Academy Street
Mooresville, NC 28115
Jack G. Lawler, Director of the Bank and 85,919/7,8/ 12.23%
the Company, Nominee for Re-election
1312 7/TH/ Avenue, N. E.
Jacksonville, AL 36265
Donald R. Belk, Director of the Bank and 89,472/7,8,9/ 12.74%
the Company, Nominee for Re-election
630 Belk Road
Mt. Ulla, NC 28125
Don E. Mills, Jr., Director of the Bank and 76,398/7,10/ 10.92%
the Company, Nominee for Re-Election
121 Colony Drive
Mooresville, NC 28115
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of Percentage
Beneficial of
Name and Address Ownership/1,2/ Class/3/
- ---------------- --------------- ----------
<S> <C> <C>
Billy R. Williams, Secretary and 7,550/5,11/ 1.08%
Controller of the Bank and the Company
143 Clark Branch Lane
Mooresville, NC 28115
Directors and Executive Officers as a 171,692/5,12/ 23.86%
Group (7 Persons)
</TABLE>
________________________________________
/1/ Voting and investment power is not shared unless otherwise indicated.
/2/ Unless otherwise noted, all shares are owned directly or indirectly by the
named individuals, their spouses and/or minor children, or other entities
controlled by the named individuals at the Record Date.
/3/ Based upon a total of 699,156 shares of Common Stock outstanding at the
Record Date.
/4/ Includes (i) 4,215 shares of the Common Stock which may be purchased within
60 days of the Record Date pursuant to options granted under the Company's Stock
Option Plan, (ii) 6,745 shares of the Company's Common Stock awarded to Mr. G.
Brawley on January 26, 1999 under the MRP, 25% (1,686 shares) of which vested
immediately upon grant, 25% of which vested on January 26, 2000, and 25% of
which shall vest on each of January 26, 2001 and January 26, 2002, (iii) 557
shares allocated to Mr. G. Brawley under the ESOP through December 31, 1998, and
(iv) 6,000 shares owned by Mr. G. Brawley's wife, for which Mr. G. Brawley
disclaims beneficial ownership.
/5/ Excludes ESOP allocation during the fiscal year ending December 31, 1999
for each of Messrs. G. Brawley, D. Brawley and Williams as a result of
information being unavailable at the mailing of this proxy statement.
/6/ Includes (i) 4,215 shares of the Common Stock which may be purchased within
60 days of the Record Date pursuant to options granted under the Company's Stock
Option Plan, (ii) 3,297 shares of Common Stock held in the Bank's 401(k) Plan
for the benefit of Mr. D. Brawley, (iii) 6,745 shares of the Company's Common
Stock awarded to Mr. D. Brawley on January 26, 1999 under the MRP, 25% (1,686
shares) of which vested immediately, 25% of which vested on January 26, 2000,
and 25% of which shall vest on each of January 26, 2001 and January 26, 2002,
and (iv) 336 shares allocated to Mr. D. Brawley under the ESOP through December
31, 1998.
/7/ Includes 75,198 allocated and unallocated shares of the Company's Common
Stock held by the Mooresville Savings Bank, Inc., SSB Employee Stock Ownership
Plan (the "ESOP"). Messrs. Voils, Lawler, Belk and Mills serve as the trustees
of the ESOP, and the trustees share certain voting and investment power for such
shares.
/8/ Includes (i) 3,372 shares of the Common Stock which may be purchased within
60 days of the Record Date by each of Messrs. Voils, Lawler and Belk pursuant to
options granted under the Company's Stock Option Plan, and (ii) 1,349 shares of
the Company's Common Stock awarded to each of Messrs. Voils, Lawler and Belk on
January 26, 1999 under the MRP, 25% (337 shares) of which vested immediately
upon grant, and 25% of which shall vest on each of January 26, 2001 and January
26, 2002.
/9/ Includes 1,553 shares owned by Mr. Belk's wife, for which Mr. Belk
disclaims beneficial ownership.
/10/ Includes (i) 200 shares of the Common Stock which may be purchased within
60 days of the Record Date pursuant to options granted under the Company's Stock
Option Plan and (ii) 400 shares of the Company's Common Stock awarded to Mr.
Mills on January 26, 2000 under the MRP, 25% of which vested on January 26,
2000, and 25% of which shall vest on each anniversary thereafter until all such
shares have vested on January 26, 2003.
/11/ Includes (i) 1,686 shares of the Common Stock which may be purchased within
60 days of the Record Date pursuant to options granted under the Company's Stock
Option Plan, (ii) 2,034 shares of the Common Stock held in the Bank's 401(k)
Plan for the benefit of Mr. Williams, (iii) 2,697 shares of Common Stock awarded
on January 26, 1999 under the MRP, 25% (674 shares) of which vested immediately
upon grant, 25%
5
<PAGE>
of which vested on January 26, 1999, and 25% of which shall vest on each of
January 26, 2001 and 2002, and (iv) 227 shares allocated to Mr. Williams under
the ESOP through December 31, 1998.
/12/ The 75,198 shares held by the ESOP for which the trustees, Messrs. Voils,
Lawler, Belk and Mills share voting and investment power have been included only
once in the total number of shares owned beneficially by the directors and
officers as a group.
Willis L. Barnette served as a member of the Board of Directors until his
death on May 31, 1999. At the time of his death, Mr. Barnette owned 7,349
(1.05%) shares of the Company's Common Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of the Company's Common
Stock, to file reports of ownership and changes in ownership with the SEC.
Executive officers, directors and greater than ten percent beneficial owners are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during the fiscal year ended December 31,
1999, all of its executive officers and directors and greater than ten percent
beneficial owners complied with all applicable Section 16(a) filing
requirements.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
The Articles of Incorporation and Bylaws of the Company provide that the
number of directors of the Company shall not be less than five (5) nor more than
fifteen (15). The exact number of directors shall be fixed from time to time by
the Board of Directors. The Board of Directors has currently fixed the size of
the Board at six (6) members.
The Articles of Incorporation and Bylaws provide that, at all times that
the number of directors is less than nine (9), each director shall be elected to
a term ending as of the next succeeding annual meeting of shareholders or until
his or her earlier death, resignation, retirement, removal or disqualification
or until his or her successor shall be elected and shall qualify.
The Board of Directors has nominated the six (6) persons named below for
election as directors for the term specified or until their earlier death,
resignation, retirement, removal or disqualification or until their successors
are elected and qualify. All nominees currently serve as Directors of the
Company.
The persons named in the accompanying form of proxy intend to vote any
shares of the Common Stock represented by valid proxies received by them to
elect the six (6) nominees listed below as directors for the term expiring at
the 2001 Annual Meeting of the shareholders, unless authority to vote is
withheld or such proxies are revoked. In the event that any of the nominees
should become unavailable to accept nomination or election, it is intended that
the proxy holders will vote to elect in his stead such other person as the
present Board of Directors may recommend or to reduce the number of directors to
be elected at the Annual Meeting by the number of such persons unable or
unwilling to serve (subject to the requirements of the Company's Articles of
Incorporation and Bylaws). The present Board of Directors has no reason to
believe that any of the nominees named herein will be unable to serve if elected
to office. In order to be elected as a director, a nominee need only receive a
plurality of the votes cast.
6
<PAGE>
The following table sets forth as to each nominee, his name, age, principal
occupation during the last five years and the year he was first elected as a
director of the Bank or the Company.
<TABLE>
<CAPTION>
Age on
December 31, Principal Occupation Term Director
Name 1999 During Last Five Years Expires Since/1/
- ---- ---- ----------------------- ------- --------
<S> <C> <C> <C> <C>
Donald R. Belk 68 President, E. F. Belk & Son 2000 1974
Electrical Contractors
Dale W. Brawley 42 Executive Vice President and 2000 1997
Treasurer of the Company and
the Bank
George W. Brawley, Jr. 66 President, Chief Executive 2000 1968
Officer and Chairman of the
Board of Directors of the Bank
and the Company
Jack G. Lawler 71 Retired President, Taltronics, 2000 1992
division of Tally Industries, a
precision instruments
manufacturer
Don E. Mills, Jr. 42 Optometrist; Optometric Eye 2000 1999/2/
Care Center
Claude U. Voils, Jr. 70 Retired Chemist; National Starch 2000 1970
</TABLE>
___________________________
/1/ The date listed is the date each nominee, other than Dale Brawley, began
serving on the Bank's board of directors. Dale Brawley is a member of the
Company's Board of Directors but not a member of the Bank's board of directors.
/2/ Dr. Mills was elected to the Board of Directors by the remaining board
members on September 13, 1999.
George W. Brawley, Jr. is the father of Dale W. Brawley and the brother-in-
law of Donald R. Belk. Dale W. Brawley is the nephew of Donald R. Belk.
The Board of Directors recommends a vote FOR all of the listed nominees for
---
election as directors.
Board of Directors of the Bank
The Bank currently has a five (5) member board of directors which is
currently comprised of all of the same persons who are currently directors of
the Company other than Dale W. Brawley.
Meetings of the Board and Committees of the Board
The Board of Directors is scheduled to meet on a monthly basis or as
needed. During fiscal 1999, the Board of Directors held 12 meetings. Each
member of the Board of Directors attended at least 75% of the aggregate number
of meetings of the Board of Directors, the Bank's board of directors and
committees of both boards on which he served
7
<PAGE>
during the year ended December 31, 1999, or such portion of the year during
which he served as a member of the Board of Directors.
The Board of Directors has one standing committee -- the Audit Committee.
The Audit Committee of the Board consists of all members of the Board of
Directors, except George W. Brawley, Jr. and Dale W. Brawley. This committee is
scheduled to meet quarterly to review and discuss the annual audit report from
the Company's and the Bank's independent auditor, and it also meets on an as-
needed basis. It is responsible for meeting with and retaining internal
auditors, overseeing the adequacy of internal control, and ensuring compliance
with the Bank's policies and procedures and with generally accepted accounting
principles. The committee met four (4) times during the fiscal year ended
December 31, 1999.
The Bank's board of directors has appointed three standing committees to
which certain responsibilities have been delegated -- the Audit Committee,
Executive Committee and the Buildings and Grounds Committee. The members of the
Company's Audit Committee also serve on the Bank's Audit Committee. The Bank's
Audit Committee meets on an as-needed basis and performs similar functions as
the Company's Audit Committee. The Bank's Audit Committee met four (4) times
during the fiscal year ended December 31, 1999, one of which was a joint meeting
with the Company's Audit Committee.
The Executive Committee is composed of directors Voils, G. Brawley, Belk
and Mills. The Executive Committee makes recommendations to the full board of
directors of the Bank and acts on policies adopted by the board of directors of
the Bank in the absence of a meeting of the entire board of directors. This
committee meets on an as needed basis, and during the fiscal year ended December
31, 1999, the Executive Committee met one (1) time.
Directors' Compensation
Directors' Fees. Members of the Board of Directors receive no fees or
compensation for their service. However, all members of the Board of Directors,
other than Dale Brawley, are also directors of the Bank and are compensated for
that service. For their service on the Bank's board of directors, all members of
the Bank's board receive $1,200 per month. No additional fees were paid for
service on Board Committees.
Deferred Compensation. Messrs. Belk, G. Brawley, Lawler, and Voils have
entered into one or more unfunded deferred compensation agreements under seven
(7) substantially similar, but separate plans with the Bank under which the
participating Directors have waived payment of their Board of Directors fees and
specified amounts for a period of five or six years, depending upon the plan.
Upon attaining 55, 65 or 70 years of age, depending upon the plan, the Directors
will be eligible to receive a specified payment in equal monthly installments
over a period of one hundred twenty (120) months. Such payment shall be made to
the designated beneficiary of the Director should the Director die prior to
attaining the age specified in the agreements. The agreements also provide for
payments of benefits in the event the Director otherwise terminates his
directorship, subject to a five year vesting schedule. Some agreements provide
for the forfeiture of benefits in some circumstances. Certain unfunded deferred
compensation agreements were amended in December, 1998 to defer payment until
the participant reaches age 70 or retires, if earlier, and to increase the
benefit by 5% for each year of deferral. Participants already receiving payments
have been allowed to defer further payments until age 70 or retirement, if
earlier.
The Bank has purchased life insurance policies on the lives of the
Directors to assist the Bank in meeting its obligations under the agreements.
Mr. Voils has begun receiving monthly payments under some of his deferred
compensation agreements. The total expense related to the Directors' deferred
compensation arrangements was $61,808 in the fiscal year ended December 31,
1999.
Retirement Plans. In addition, the Bank has entered into certain Retirement
Plan Agreements with Messrs. Belk, G. Brawley and Voils. The agreements provide
for a monthly payment of $1,000 upon retirement following a Director's
attainment of age 65 (but no sooner than five years from the date of the
Retirement Plan Agreement), death
8
<PAGE>
or disability. The agreements also provide for payment of benefits in the event
the Director otherwise terminates his directorship subject to a vesting
schedule. Payments under the agreements are to be made in equal monthly
installments over a period of one hundred twenty (120) months. Payments under
the Agreements to each of Messrs. G. Brawley, Belk and Voils began in November,
1998, and each of them received $2,000 during fiscal year 1998 under such
agreements. Mr. Voils also received $9,135 during fiscal 1999. In December,
1998, the agreements were amended to provide for payment of the remainder of
benefits upon the Director's attainment of age 70. As a result, Messrs. G.
Brawley and Belk received no payments under the agreements during fiscal 1999.
The Bank has purchased life insurance policies to assist the Bank in meeting its
obligations under the Agreements. The Bank had no recorded expense related to
the Directors' Retirement Plan Agreements in the fiscal year ended December 31,
1999 as a result of scheduled payments, which were previously expensed, being
further deferred as a result the most recent amendments of the Retirement Plan
Agreements.
Stock Option Plan and Management Recognition Plan. Members of the Board of
Directors participate in the Coddle Creek Financial Corp. Stock Option Plan (the
"Stock Option Plan" or the "Plan") and the Mooresville Savings Bank, Inc. SSB
Management Recognition Plan (the "MRP"), each of which were adopted by the
stockholders on January 26, 1999, with certain amendments approved by the
stockholders on April 21, 1999. Each of these plans are discussed more fully in
the discussion entitled "Executive Compensation - Stock Option Plan" and
"Executive Compensation - Management Recognition Plan" set forth below.
Executive Officers
The following table sets forth certain information with respect to the
persons who are executive officers of either the Company or the Bank or both.
<TABLE>
<CAPTION>
Age on Employed By
December 31, Positions and Occupations the Bank or the
Name 1999 During Last Five Years Company Since
- ---- ------------ ------------------------- ---------------
<S> <C> <C> <C>
George W. Brawley, Jr. 66 President Chief Executive Officer and 1957
Chairman of the Board of Directors of
the Company and the Bank
Dale W. Brawley 42 Executive Vice President and 1980
Treasurer of the Company and the
Bank
Billy R. Williams 39 Secretary and Controller of the 1986
Company and the Bank
</TABLE>
George W. Brawley, Jr., President, Chief Executive Officer and Chairman of
the Board of Directors of the Company and the Bank, holds a fifty percent (50%)
ownership interest in Mooresville Insurance Agency, Inc., an insurance agency
which rents approximately 300 square feet of office space from, and places
insurance coverage for, the Bank. Dale W. Brawley, Executive Vice President and
Treasurer of the Company and the Bank and Director of the Company, holds a ten
percent (10%) ownership interest in the insurance agency. Mr. G. Brawley's wife
holds the remaining forty percent (40%) ownership interest in the insurance
agency. Neither Mr. G. Brawley nor Mr. D. Brawley is active in the management of
the insurance agency. Mooresville Insurance Agency, Inc. has rented space from
the Bank since 1964 and has had a formal lease agreement since 1993. The lease
was an arms-length agreement entered into by the Bank's board, with neither Mr.
G. Brawley nor D. Brawley participating in the discussion. The Bank's board
feels that the rent approximates the fair value of the leased space. The
insurance agency rents its office space from the Bank at the market rate for
similar space in Mooresville, and the Bank's customers are not referred to the
insurance agency. The insurance agency paid the Bank $1,185 and $1,185 in rent
during the 1998 and 1999 fiscal years,
9
<PAGE>
respectively, and the insurance agency received approximately $3,986 and $2,513
in insurance commissions on the Bank's insurance coverage during the 1998 and
1999 fiscal years, respectively. The current lease between the insurance agency
and the Bank terminates on November 30, 2002.
Executive Compensation
The executive officers of the Company are not paid any cash compensation by
the Company. However, the executive officers of the Company also are executive
officers of the Bank and receive cash compensation from the Bank.
The following table sets forth for the fiscal years ended December 31,
1999, 1998 and 1997 certain information as to the cash compensation received by
and the amounts accrued for the benefit of George W. Brawley, the President and
Chief Executive Officer of the Bank; Dale W. Brawley, the Executive Vice
President and Treasurer of the Bank; and Billy R. Williams, the Secretary and
Controller of the Bank. No other executive officer of the Bank had cash
compensation during the year ended December 31, 1999 that exceeded $100,000 for
services rendered in all capacities to the Bank.
10
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
--------------------------------------- ---------------------------------------------
Securities
Underlying Options/
Stock Appreciation
Other Annual Restricted Rights
Name And Year Ending Compensation Stock ("Sars") All Other
Principal Position December 31, Salary Bonus ($)/1/ Awards/2/ (in Shares) Compensation
- ------------------ ------------ ------ ----- ------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
George W. Brawley, Jr. 1999 $ 181,740/3/ 185,928/4/ ----- $ 321,247/5/ 16,862/16,862/6/ $ (43,029)/7,8/
President, Chief Executive
Officer and Chairman of 1998 $ 164,644/9/ $ 35,136 ----- -------- ---------- $ 218,894/10/
the Board of Directors
1997 $ 154,700/11/ $ 20,560/12/ ----- -------- ---------- $ 307,339/13/
Dale W. Brawley, Executive 1999 $ 101,100/14/ $167,493/15/ ----- $ 321,247/5/ 16,862/16,862/6/ $ 69,467/8,15/
Vice President, Treasurer
and Director 1998 $ 90,723/16/ $ 28,720 ----- -------- ---------- $ 67,650/17/
1997 $ 91,100/18/ $ 14,336/19/ ----- -------- ---------- $ 57,121/20/
Billy R. Williams, 1999 $ 70,000/21/ $ 67,699/22/ ----- $ 128,461/23/ 6,745/6,745/6/ $ 12,654/8,24/
Secretary and Controller
1998 $ 56,669 $ 13,948 ----- -- ---------- $ 23,012/25/
1997 $ 52,800 $ 10,696 ----- -- ---------- $ 9,603/26/
</TABLE>
_____________________
Footnotes on following page
11
<PAGE>
/1/Under the "Other Annual Compensation" category, perquisites for the fiscal
years ended December 1999, 1998 and 1997 did not exceed the lesser of $50,000 or
10% of salary and bonus as reported for Messrs. G. Brawley and Williams.
/2/At the end of the fiscal year ended December 31, 1999, Messrs. G. Brawley,
D. Brawley and Williams had 5,059, 5,059 and 2,023 shares of Common Stock
(respectively), which had not vested under the MRP, which had a market value of
$150,506, $150,506 and $60,184, respectively, based upon the $29.75 per share
market price at the close of December 31, 1999. Messrs. G. Brawley, D. Brawley
and Williams have rights of ownership with respect to such restricted shares
granted, including the right to receive dividend. Each person received the
$17.18 per share return of capital dividend declared August 17, 1999 on his
restricted shares. For further information regarding such restricted stock, See
footnotes 5 and 22 below.
/3/Includes (a) $14,400 in directors fees, (b) $300 in real estate appraisal
fees paid to Mr. G. Brawley in the fiscal year ended December 31, 1999, and (c)
$13,920 deferred until the fiscal year ending December 31, 2000.
/4/$107,061 represents 1,686 of the 6,745 shares of the Common Stock awarded to
Messrs. G. Brawley and D. Brawley on January 26, 1999 under the MRP, which
vested immediately upon grant and had a market value of $63.50 per share on the
date of grant.
/5/Represents 5,059 shares of the 6,745 shares of the Common Stock awarded to
Messrs. G. Brawley and D. Brawley under the MRP, which did not vested under the
MRP on the date of grant (January 26, 1999). The restricted shares of the
Common Stock had a market value of $63.50 per share on the date of grant and
$29.75 per share as of December 31, 1999. Twenty-five percent (25%) of the
shares granted vested on the date of grant (January 23, 1999), and the shares
will continue to vest at 25% each year thereafter until all such shares are
vested on January 26, 2002. Messrs.. G. Brawley and D. Brawley has rights of
ownership with respect to the shares granted, including the right to receive
dividends.
/6/The options granted pursuant to the Company's Stock Option Plan entitles
Messrs. G. Brawley, D. Brawley and Williams to purchase, at any time after
vesting and before October 20, 2009, shares of the Common Stock in exchange for
an exercise price of $31.00 per share, which represents the fair market value of
the shares on the date of grant. These options begin vesting 25% on the date of
grant and will continue to vest at 25% each year thereafter until all such
options are vested on October 20, 2002. Under the Stock Option Plan, options
become 100% vested upon certain events, including the death or disability of the
holder. In tandem with the options, Messrs. G. Brawley, D. Brawley and
Williams was granted stock appreciation rights ("SARs"), which vest in the same
quantity and on the same schedule as the options. See "Executive Compensation -
Stock Option Plan" for information about the terms of the Stock Option Plan,
including a further description of the SARs.
/7/As a result of amendments to various compensation, directors retirement and
supplemental income agreements established for the benefit of Mr. G. Brawley
which postponed the date payments would begin under such plans, expenses
previously accrued under the prior accelerated payment schedule were credited to
the Bank resulting in a net credit of $54,490 under such plans. This credit is
offset by the $11,460 contributed to the Bank's 401(k) and the Non-qualified
Excess Benefit Plan for the benefit of Mr. G. Brawley.
/8/Excludes allocation of ESOP shares during the fiscal year ending December 31,
1999 to Mr. G. Brawley, Mr. D. Brawley and Mr. Williams with a market value of
$29.75 per share as of December 31, 1999, due to that information being
unavailable at date of mailing of this proxy statement.
/9/Includes (a) $14,400 in directors fees (of which $3,600 was deferred) and (b)
$6,200 in real estate appraisal fees paid to Mr. G. Brawley in the fiscal year
ended December 31, 1998.
/10/Includes (a) $174,250 accrued under various deferred compensation, salary
continuation, Directors' retirement and supplemental income agreements
established for the benefit of Mr. G. Brawley, and (b) $11,563 contributed to
the Bank's 401(k) and the Non-Qualified Excess Benefit Plan for the benefit of
Mr. G. Brawley. Also includes 575 shares of Common Stock of the Company with a
market value of $33,081 (originally estimated as$34,534) as of December 31, 1998
which were allocated to Mr. G. Brawley under the ESOP for the year.
/11/Includes (a) $14,400 in directors fees (of which $3,600 was deferred) and
(b) $8,300 in real estate appraisal fees paid to Mr. G. Brawley in the fiscal
year ended December 31, 1997.
/12/Includes $10,000 bonus awarded in connection with the conversion of the Bank
from a North Carolina chartered mutual savings bank to a North Carolina
chartered stock savings bank which was consummated on December 30, 1997 (the
"Conversion").
/13/Includes (a) $137,887 accrued under various deferred compensation, salary
continuation, Directors' retirement and supplemental income agreements
established for the benefit of Mr. G. Brawley; (b) $11,808 contributed to the
Bank's 401(k) and the Non-Qualified Excess Benefit Plan for the benefit of Mr.
G. Brawley; (c) $645 expensed in connection with the establishment of the ESOP;
and (d) $156,999 contributed to the Bank's Defined Benefit Pension Plan for the
benefit of Mr. G. Brawley. The Defined Benefit Plan was terminated effective
October 20, 1997.
/14/Includes (a) $300 in real estate appraisal fees paid to Mr. D. Brawley in
the fiscal year ended December 31, 1999 and (b) $8,400 deferred until fiscal
year ending December 31, 2000.
/15/Includes (a) $62,551 accrued under various deferred compensation, salary
continuation, and supplemental income agreements established for the benefit of
Mr. D. Brawley, and (b) $6,916 contributed to the Bank's 401(k) and the Non-
Qualified Excess Benefit Plan for the benefit of Mr. D. Brawley.
12
<PAGE>
/16/Includes $6,200 in real estate appraisal fees paid to Mr. D. Brawley in the
fiscal year ended December 31, 1998.
/17/Includes (a) $40,709 accrued under various deferred compensation, salary
continuation, and supplemental income agreements established for the benefit of
Mr. D. Brawley, and (b) $6,978 contributed the Bank's 401(k) and the Non-
Qualified Excess Benefit Plan for the benefit of Mr. D. Brawley. Also includes
347 shares of Common Stock of the Company with a market value of $19,963
(previously estimated as $20,832) as of December 31, 1998 that were allocated to
Mr. D. Brawley under the ESOP for the year.
/18/Includes (a) $3,600 deferred into certain deferred compensation arrangements
and (b) $8,300 in real estate appraisal fees paid to Mr. D. Brawley in the
fiscal year ended December 31, 1997.
/19/Includes $8,000 bonus paid in connection with the Conversion.
/20/Includes (a) $37,887 accrued under various deferred compensation, salary
continuation, and supplemental income agreements established for the benefit of
Mr. D. Brawley; (b) $7,148 contributed to the Bank's 401(k) and the Non-
Qualified Excess Benefit Plan for the benefit of Mr. D. Brawley; (c) $400
expensed in connection with the establishment of the ESOP; and (d) $11,686
contributed to the Bank's Defined Benefit Pension Plan for the benefit of Mr. D.
Brawley. The Defined Benefit Plan was terminated effective October 20, 1997.
/21/Includes $5,833 deferred until the fiscal year ending December 31, 2000.
/22/$42,799 represents 674 of the 2,697 shares of the Common Stock awarded to
Mr. Williams on January 26, 1999 under the MRP, which vested immediately upon
grant and at a market value of $63.50 per share on the date of grant.
/23/Represents 2,023 shares of the Common Stock of the 2,697 shares awarded to
Mr. Williams under the MRP, which did not vest under the MRP on the date of
grant (January 26, 1999). The restricted shares of the Common Stock had a
market value of $63.50 per share on the date of grant and $29.75 per share as of
December 31, 1999. Twenty-five percent (25%) of the shares granted vested on
the date of grant (January 23, 1999), and the shares will continue to vest at
25% each year thereafter until all such shares are vested on January 26, 2002.
Mr. Williams has rights of ownership with respect to the shares granted,
including the right to receive dividends.
/24/Includes (a) $8,010 accrued under a supplemental income agreement with the
Bank and (b) $4,644 contributed to the Bank's 401(k) and the Non-Qualified
Excess Benefit Plan for the benefit of Mr. Williams.
/25/Includes (a) 4,923 accrued under a supplemental income agreement with the
Bank, and (b) $4,685 contributed to the Bank's 401(k) and the Non-Qualified
Excess Benefit Plan for the benefit of Mr. Williams. Also includes 233 shares
of stock with a market value of $13,404 for the 1998 fiscal year.
/26/Includes (a) $4,591 accrued under a supplemental income agreement with the
Bank, (b) $4,754 contributed to the Bank's 401(k) and the Non-Qualified Excess
Benefit Plan for the benefit of Mr. Williams, and (c) $258 expensed in
connection with the establishment of the ESOP.
Bonus Compensation. Employees receive annual discretionary holiday
bonuses, which during fiscal years 1999, 1998 and 1997 totaled $55,172, $60,774,
and $54,000, respectively, in the aggregate paid for all employees. The Bank
anticipates that discretionary bonuses will continue to be paid to its employees
in the future. However, as is the case with the Bank's compensation
arrangements in general, the Bank's bonus compensation is subject to regulatory
oversight, and therefore, could be changed in the future in response to
regulatory requirements or otherwise. The amounts of the year-end bonuses paid
to Messrs. George Brawley, Dale Brawley and Billy Williams during fiscal 1999 in
connection with the Bank's fiscal 1998 performance were 24,000, 22,000 and
20,000, respectively. The executive officers of the Bank also received a year-
end bonus for the fiscal year 1999 which was paid by the Bank during fiscal
2000.
Deferred Compensation, Supplemental Income and Salary Continuation
Agreements. The Bank has entered into three separate but substantially similar
deferred compensation agreements with Dale W. Brawley, Executive Vice President
and Treasurer. The terms of these agreements are generally described in
"Directors Compensation," as are the terms of George W. Brawley, Jr.'s six
deferred compensation agreements; however, unlike the terms of the agreements
for the directors, Mr. D. Brawley's agreements were not amended in December
1998. During the fiscal years ended December 31, 1999, the Bank accrued $8,061
towards the cost of the benefits to be provided to Mr. G. Brawley and Mr. D.
Brawley under these agreements.
The Bank has also entered into separate salary continuation agreements with
Mr. G. Brawley, Mr. D. Brawley and eight other non-executive employees of the
Bank. These agreements provide that the employee will receive a
13
<PAGE>
monthly payment of $834 for five years upon the later of retirement or reaching
65 years of age, for a total payment of $50,000. Mr. G. Brawley's agreement was
amended in December 1998 to defer payment until he reaches age 70. In the event
of the employee's death before all payments have been made, benefits would be
payable to designated beneficiaries. In addition, if the employee should die
prior to reaching 65 years of age, certain monthly payments would be made for a
five-year period to designated beneficiaries. In the event the employee
terminates his employment, for reasons other than death, prior to reaching 65
years of age, the monthly benefit payment would be reduced. The Bank has
purchased life insurance on the lives of the participants to reimburse the Bank
at the death of the participant for a part of the Bank's cost associated with
the agreements. The annual life insurance premium associated with the agreements
for Mr. G. Brawley and Mr. D. Brawley is $3,951 and $314, respectively. During
the fiscal year ended December 31, 1999, the Bank accrued $604 towards the cost
of the benefits to be provided to Mr. G. Brawley and Mr. D. Brawley under these
agreements.
In 1993, the Bank entered supplemental income agreements with Mr. G.
Brawley, Mr. D. Brawley and Billy R. Williams, Secretary and Controller, and two
other employees. These agreements provide that the employee will receive an
annual retirement benefit at the earlier of age 60, if retired, or at age 65;
however, Mr. G. Brawley's agreement was amended in December, 1998 to defer
payment until Mr. G. Brawley reaches age 70. The annual benefit provided is
$25,000, $15,000 and $7,900 for Mr. G. Brawley, Mr. D. Brawley and Mr. Williams,
respectively. A death benefit payable to the beneficiary of the employee and a
disability benefit, both equal to the retirement benefit, are also provided
under the agreements. During the fiscal year ended December 31, 1999, the Bank
accrued $24,206 towards the cost of the benefits to be provided to Mr. G.
Brawley, Mr. D. Brawley and Mr. Williams under these agreements.
Stock Option Plan. On January 26, 1999, the stockholders of the Company
approved the Coddle Creek Financial Corp. Stock Option Plan, and certain
amendments to the Plan were approved by stockholders on April 21, 1999. The
Company has reserved 67,477 shares of its Common Stock for issuance upon the
exercise of options that have been granted under the Stock Option Plan. All
directors, officers, and employees of the Company, the Bank and any of the
Bank's subsidiaries are eligible for participation in the Plan.
The Stock Option Plan is administered by a committee of the Company's Board
of Directors (the "Stock Option Plan Committee"). The Stock Option Plan
Committee, in its sole discretion, determines who will participate in the Stock
Option Plan. Options granted pursuant to the Stock Option Plan vests in
accordance with each Optionee's Stock Option and Grant Agreement executed by
such Optionee and the Company. Options become 100% vested upon death,
disability, or termination of employment for any reason upon a change in
control, as provided in the Stock Option Plan, if earlier.
On October 20, 1999, the Stock Option Plan Committee granted options to
purchase 58,136 shares of the Company's Common Stock to eligible participants of
the Plan. No cash consideration was paid for the options. The awarded options
have an exercise price of $31.00, the fair market value of the Common Stock on
the date of grant. The exercise price may be paid either in cash, by check,
bank draft or money order or, if permitted by the Committee, by delivering
shares of Common Stock with a fair market value equal to the exercise price.
Options granted under the Stock Option Plan have a term of ten (10) years and
are not transferrable except upon death.
Twenty-five percent (25%) of the options awarded to employees and officers
of the Bank and the Company vested immediately upon grant (October 20, 1999),
with 25% vesting on each anniversary date thereafter, so that all options
awarded to such officers and employees will have vested no later than October
20, 2002. All stock options granted to non-employee members of the Board of
Directors, other than Don E. Mills, Jr., vested immediately upon grant. Stock
options granted to Mr. Mills vested 25% on the date of grant, with 25% vesting
on each anniversary date thereafter, so that all stock options awarded to Mr.
Mills will vest no later than October 20, 2002.
The following table provides certain information with respect to the
grant of stock options to certain executive officers made during fiscal year
ended December 31, 1999. No options were exercised by any of the foregoing
persons during the fiscal year ended December 31, 1999.
14
<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees Price Expiration
Name Granted/(1)/ in Fiscal Year ($/sh)/(2)/ Date
- --------------------------- ------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C>
George Brawley 16,862/16,862 35.71%/35.71% $31.00 October 20, 2009
Dale Brawley 16,862/16,862 35.71%/35.71% $31.00 October 20, 2009
Billy Williams 6,745/6,745 14.28%/14.28% $31.00 October 20, 2009
<CAPTION>
Potential Realizable Value at assumed
Annual Rates of Stock Price
Appreciation for Option Term/(3)/
------------------------------------------
Name 5%($) 10%($)
- ---------------- ----- ------
<S> <C> <C>
George Brawley 328,776 833,183
Dale Brawley 328,776 833,183
Billy Williams 131,479 333,194
</TABLE>
/(1)/ Twenty-five percent (25%) of the options vested upon grant (October 20,
1999), and 25% will vest each year thereafter until all such options are
fully vested on October 20, 2002.
/(2)/ Represents the closing selling price of the Company's Common Stock on
Nasdaq on the date of grant (October 20, 1999).
/(3)/ Calculates the potential realizable value of the options granted assuming
the market price of the underlying Common Stock appreciates in value from
the date of grant to the end of the 10 year option term at the designated
annualized rate.
15
<PAGE>
The following table also provides additional information with respect to
outstanding stock options held by certain executive officers at the fiscal year
ended December 31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in-the-Money
Shares Acquired Value Securities Underlying Options/SARs at
Name On Exercise Realized Options/SARs at FY-END/(1)/ FY-End/(2)/
- --------------------------- --------------- -------- ----------------------------- ---------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George Brawley 0 0 4,215/4,215 12,647/12,647 $ 0 $ 0
Dale Brawley 0 0 4,215/4,215 12,647/12,647 $ 0 $ 0
Billy R. Williams 0 0 1,686/1,686 5,059/5,059 $ 0 $ 0
</TABLE>
/(1)/ All stock options were granted on October 20, 1999, and 25% were vested
immediately on that date.
/(2)/ Dollar amounts shown represent the value of stock options held as of
December 31, 1999. Options are considered to be "in-the-money" if the fair
market value of the Company's common stock exceeds the exercise or base price of
the shares subject to the options at the fiscal year end (December 31, 1999). At
December 31, 1999, the exercise price of the stock options was $31.00, and the
closing market price per share for the Common Stock as reported by Nasdaq was
$29.75.
Options granted under the Stock Option Plan were granted in tandem
with stock appreciation rights, pursuant to which Optionees have the right to
surrender exercisable options in exchange for payment by the Company of an
amount equal to the excess of the market value of shares of the Common Stock
subject to the surrendered options over the exercise price of the surrendered
options. At the discretion of the Stock Option Plan Committee, this payment may
be made in cash or in shares of Common Stock or in some combination of cash and
Common Stock. Stock appreciation rights shall terminate upon exercise of the
options to which they are attached. Stock appreciation rights are subject to the
same vesting and termination provisions as are applicable to the stock options
to which they are attached.
Under the terms of the Stock Option Plan, the Board of Directors may
award existing directors and employees cash payments at the time of payment of a
dividend or other distribution with respect to the Common Stock. The cash
payment shall equal the dividend or distribution paid per share multiplied by
the number of shares of Common Stock subject to the non-forfeited, unexercised
options held by such optionee. During the last three quarters for the fiscal
year ended December 31, 1999, the Board of Directors awarded such cash payments
to director and employee option holders at such times as dividends were paid
with respect to the Common Stock.
In the event of a stock split, reverse stock split or stock dividend,
the number of shares of Common Stock under the Stock Option Plan, the number of
shares to which any option relates and the exercise price per share under any
option shall be adjusted to reflect such increase or decrease in the total
number of shares of Common Stock outstanding. In addition, in the event the
Company declares a special cash dividend or return of capital, the per share
exercise price of all previously granted options which remain unexercised as of
the date of such declaration may be proportionately adjusted to give effect to
such special cash dividend or return of capital as of the date of payment of
such special cash dividend or return of capital, subject to certain limitations.
16
<PAGE>
Management Recognition Plan. Pursuant to the Mooresville Savings Bank,
Inc., SSB Management Recognition Plan, 26,979 shares of the Common Stock have
been reserved for issuance pursuant to the terms of the MRP. The MRP is
administered by committee of the Bank's Board of Directors (see "MRP
Committee"). All directors, officers and employees of the Company, the Bank,
and any of the Bank's subsidiaries are eligible for participation in the MRP.
The MRP Committee, in its sole discretion, determines who will participate in
the MRP.
At this time, approximately 30 directors, officers and employees are
eligible to participate in the MRP. On January 26, 1999, the MRP Committee
awarded a total of 24,281 restricted and unrestricted shares of Common Stock to
eligible participants under the MRP. On January 26, 2000, 400 additional
restricted and unrestricted shares of the Common Stock were awarded to Don E.
Mills, Jr. As of December 31, 1999 and the Record Date, 2,698 shares and 2,298
shares, respectively, remained unallocated under the MRP. No cash consideration
was paid for the shares awarded, which had a market value of $63.50 per share of
the Common Stock at the time of the award. Twenty-five percent (25%) of the
shares which were vested immediately upon grant (January 26, 1999), with twenty-
five (25%) vesting on each anniversary date thereafter, so that all shares
currently awarded will have vested no later than January 26, 2002. Grants of
the Common Stock under the MRP immediately vest upon the death, disability or
termination of employment with the Bank or the Company for any reason following
a change of control of the Company or the Bank, as defined in the MRP. The
awards under the MRP are not forfeitable upon vesting.
Shares of order under the MRP were issued from authorized but unissued
shares of the Common Stock. Shares issued under the MRP are issued at no cost to
the recipients. Recipients are entitled to vote MRP shares and receive all
dividends and cash distributions with respect thereto.
Other Benefits. The Bank provides its employees with group medical,
dental, life and disability insurance benefits, and its retirees with partial
payment of medical insurance dependent coverage. Employees are provided with
vacation and sick leave. The Bank maintains a 401(k) retirement plan pursuant
to which the Bank may make discretionary matches equal to fifty percent of an
employees contribution up to six percent of such employee's salary, as well as a
non-qualified excess benefit plan which allows executive employees to contribute
the maximum amount that would otherwise be allowed under the 401(k) plan but for
certain limits imposed under the Internal Revenue Code. Mr. G. Brawley and Mr.
D. Brawley, two of three on-staff appraisers, also receive $50.00 per real
estate loan appraisal performed for the Bank, under guidelines adopted by the
Bank's Board of Directors. Those guidelines require outside appraisers for all
loans in excess of $250,000.
Employment Agreements. The Bank has entered into employment agreements
with George W. Brawley, Jr., President and Chief Executive Officer, Dale W.
Brawley, Executive Vice President and Treasurer, and Billy R. Williams,
Secretary and Controller, in order to establish their duties and compensation
and to provide for their continued employment with the Bank. The current annual
base salaries for Mr. G. Brawley, Mr. D. Brawley and Mr. Williams under the
agreements are $177,060, $106,848 and $74,200, respectively. The agreements
provide for an initial term of employment of three years. Commencing on the
first anniversary date and continuing on each anniversary date thereafter,
following a performance evaluation of the employee, each agreement may be
extended for an additional year so that the remaining term shall be three years,
unless written notice of non-renewal is given by the Board of Directors. The
agreements also provide that the base salary shall be reviewed by the Board of
Directors not less often than annually. In the event of a change in control (as
defined below), the agreements will automatically be extended so that they will
have a three-year term after the change in control. In addition, the employment
agreements provide for possible profitability and discretionary bonuses and
participation in all other pension, profit-sharing or retirement plans
maintained by the Bank or the Company for employees of the Bank, as well as
fringe benefits normally associated with the employee's office. It is
contemplated that each employee will receive holiday bonuses computed on the
same basis as those paid to other employees. See "Bonus Compensation." The
employment agreements provide that they may be terminated by the Bank for cause,
as defined in the agreements, and that they may otherwise be terminated by the
Bank (subject to vested rights) or by the employee. In the event of a change of
control (as defined below), each employee's salary shall be adjusted to include
an amount equal to the
17
<PAGE>
average of the two previous years' annual discretionary bonuses and such
adjusted base salary shall be increased by a minimum of 6% annually.
The employment agreements provide that the nature of the employees'
compensation, duties or benefits cannot be diminished following a change in
control of the Bank or the Company. For purposes of the employment agreements,
a change in control generally will occur if (i) after the effective date of the
employment agreements, any "person" (as such term is defined in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act) directly or indirectly, acquires beneficial
ownership of voting stock, or acquires irrevocable proxies or any combination of
voting stock and irrevocable proxies, representing 25% or more of any class of
voting securities of either the Company or the Bank, or acquires in any manner
control of the election of a majority of the directors of either the Company or
the Bank, (ii) either the Company or the Bank consolidates or merges with or
into another corporation, association or entity, or is otherwise reorganized,
where neither the Company nor the Bank is the surviving corporation in such
transaction, or (iii) all or substantially all of the assets of either the
Company or the Bank are sold or otherwise transferred to, or are acquired by,
any other entity or group.
Severance Plan
In connection with the conversion of the Bank from a North Carolina
chartered mutual savings bank to a North Carolina chartered stock savings bank
which was consummated on December 30, 1997, the Bank's board of directors
adopted a Severance Plan for the benefit of its employees. The Severance Plan
provides that in the event there is a "change in control" (as defined in the
Severance Plan) of the Bank or the Company and (i) the Bank or any successor of
the Bank terminates the employment of any full time employee of the Bank in
connection with, or within 24 months after the change in control, other than for
"cause" (as defined in the Severance Plan), or (ii) an employee terminates his
or her employment with the Bank or any successor following a decrease in the
level of such employee's annual base salary rate or a transfer of such employee
to a location more than 40 miles distant from the employee's primary work
station within 24 months after a change in control, the employee shall be
entitled to a severance benefit equal to the greater of (a) an amount equal to
two weeks' salary at the employee's existing salary rate multiplied times the
employee's number of complete years of service as a the Bank employee or (b) the
amount of one month's salary at the employee's salary rate at the time of
termination, subject to a maximum payment equal to one half of the employee's
annual salary. Officers of the Bank who, at the time of a "change in control,"
are parties to employment agreements having a remaining term of more than two
years are not covered by the Severance Plan.
Employee Stock Ownership Plan
In connection with the Conversion, the Bank established the Employee Stock
Option Plan ("ESOP") for eligible employees of the Bank. Employees with one
year of service with the Bank who have attained age 21 are eligible to
participate. As part of the Conversion, the ESOP borrowed funds from the
Company and used the funds to purchase shares of Common Stock, and additional
shares of the Common Stock have been bought since the Conversion. As of
December 31, 1999, the ESOP has purchased 75,198 shares of the Common Stock.
Collateral for the Company's loan to the ESOP is the Common Stock purchased by
the ESOP. The loan and interest calculated at the rate of 8% will be repaid
principally from the Bank's contributions to the ESOP over a period of fifteen
(15) years or less. Regular dividends paid on shares held by the ESOP may also
be used to reduce the loan. The loan has not been guaranteed by the Bank.
Shares purchased by the ESOP and pledged as security for the loan is held in a
suspense account for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account in
an amount proportional to the repayment of the ESOP loan are allocated among
ESOP participants on the basis of relative compensation in the year of
allocation. Benefits vest in full upon five years of service with credit given
for years of service prior to the Conversion. Benefits are payable upon death
or disability. The Bank's contributions to the ESOP are not fixed, so benefits
payable and corresponding expenses under the ESOP cannot be estimated.
18
<PAGE>
The Bank's board of directors may instruct the trustees regarding
investment of funds contributed to the ESOP. Participating employees may
instruct the trustees as to the voting of all shares allocated to their
respective accounts and held in the ESOP. The unallocated shares held in the
suspense account, and all allocated shares for which voting instructions are not
received, are voted by the trustees in their discretion subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended.
Compensation Committee Interlocks and Insider Participation
The Board of Directors of the Company does not have a Compensation
Committee. The Bank's full board of directors determines the compensation for
the executive officers. Mr. G. Brawley participates in the deliberations of the
Bank's board of directors regarding compensation of executive officers other
than himself. He does not participate in the discussion or the decisions
regarding his own compensation.
Report of Bank's Board of Directors on Executive Compensation
It is the responsibility of the Bank's board of directors to review and
evaluate the performance of the Bank's executive officers. The salaries of each
of the executive officers is determined based upon the executive officer's
contributions to the Bank's overall profitability, maintenance of regulatory
compliance standards, professional leadership, and management effectiveness in
meeting the needs of day-to-day operations. The salaries are recommended to the
Bank's board of directors by the Bank's Executive Committee and approved by the
entire board of directors. The Bank's board of directors also compares the
compensation of the executive officers with compensation paid to executive
officers of comparable financial institutions in North Carolina and executives
in other businesses in the Bank's market area.
Performance Graph
The Company is required to provide its stockholders with a line graph
comparing the Company's cumulative total shareholder return with a performance
indicator of the overall stock market and either a published industry index or a
Company-determined peer comparison. The purpose of the chart is to help
stockholders determine the reasonableness of the Executive Committee's decisions
with respect to the setting of various levels of executive officer compensation.
Shareholder return (measured through increases in stock price and payment of
dividends) is often a benchmark used in assessing corporate performance and the
reasonableness of compensation paid executive officers.
However, the stockholders should recognize that corporations often use a
number of other performance benchmarks (in addition to shareholder return) to
set various levels of executive officer compensation. Stockholders may consider
other relevant performance indicators in assessing shareholder return, such as
growth in earnings per share, book value per share, and cash dividends per
share, along with other performance measures such as return on equity and return
on assets.
The following graph compares the Company's cumulative shareholder return on
the Common Stock with the Nasdaq Total Return Index and with a savings
institution peer group of similar companies with assets of less than $250
million.
19
<PAGE>
Coddle Creek Financial Corp.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Period Ending
----------------------------------------------
Index 12/31/97 6/30/98 12/31/98 6/30/99 12/31/99
- ---------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C>
Coddle Creek Financial Corp. 100.00 97.05 81.73 79.46 58.02
NASDAQ - Total US/1/ 100.00 120.25 140.91 172.46 254.57
SNL * $250M Thrift Index 100.00 100.20 81.27 79.67 76.32
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100 on 12/31/97.
* Less Than
SNL Securities LC (804) 977-1600
(C)2000
/1/Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago 1999. Used with permission. All rights
reserved. crsp.com
20
<PAGE>
Certain Indebtedness and Transactions of Management
The Bank makes loans to its executive officers and directors in the
ordinary course of its business. These loans are currently made on the same
terms, including interest rates and collateral, as those then prevailing for
comparable transactions with nonaffiliated persons, and do not involve more than
the normal risk of collectibility or present any other unfavorable features.
Applicable regulations prohibit the Bank from making loans to its executive
officers and directors on terms more favorable than could be obtained by non-
executive employees of the Bank. The Bank's policy concerning loans to
executive officers and directors currently complies with such regulations.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
McGladrey & Pullen LLP, the Company's and the Bank's independent auditor
for the year ended December 31, 2000 has been selected as the Company's and the
Bank's independent auditor for the 2000 fiscal year. Such selection is being
submitted to the Company's stockholders for ratification. A representative of
McGladrey & Pullen, LLP is expected to attend the Annual Meeting and will be
afforded an opportunity to make a statement, if he/she so desires, and to
respond to appropriate questions from stockholders.
The Board of Directors recommends that the stockholders vote FOR this proposal.
---
PROPOSALS FOR 2001 ANNUAL STOCKHOLDERS' MEETING
It is presently anticipated that the 2001 Annual Meeting of Stockholders
will be held in April of 2001. In order for shareholder proposals to be
included in the proxy materials for that meeting, such proposals must be
received by the Secretary of the Company at the Company's executive office not
later than December 11, 2000, and meet all other applicable requirements for
inclusion in the proxy statement.
The Company's bylaws provide that, in order to be eligible for
consideration at the annual meeting of stockholders, all nominations of
directors, other than those made by the Company's Board of Directors, must be
made in writing and must be delivered to the Secretary of the Company not less
than 30 days nor more than 50 days prior to the meeting at which such
nominations will be made; provided, however, if less than 21 days notice of the
meeting is given to stockholders, such nominations must be delivered to the
Secretary of the Company not later than the close of business on the seventh day
following the day on which the notice of meeting was mailed.
In the alternative, a shareholder may commence his own proxy solicitation
and present a proposal from the floor at the 2001 Annual Meeting of Shareholders
of the Company. In order to do so, the shareholder must notify the Secretary of
the Company in writing, at the Company's principal executive office no later
than February 24, 2001 of his proposal. If the shareholder wants to stop the
Company from voting proxies (under the discretionary authority granted by the
form of proxy to be solicited by the Company for use at the 2001 Annual Meeting)
on his proposal, the notice must also state the shareholder's intent to solicit
the required number of votes for passage of his proposal and the shareholder
must provide evidence to the Company that the solicitation has occurred.
OTHER MATTERS
Management knows of no other matters to be presented for consideration at
the Annual Meeting or any adjournments thereof. If any other matters shall
properly come before the Annual Meeting, it is intended that the proxy holders
named in the enclosed form of proxy will vote the shares represented thereby in
accordance with their judgment, pursuant to the discretionary authority granted
therein.
21
<PAGE>
MISCELLANEOUS
The Annual Report of the Company for the year ended December 31, 1999,
which includes financial statements audited and reported upon by the Company's
independent auditor, is being mailed along with this Proxy Statement; however,
it is not intended that the Annual Report be a part of this Proxy Statement or a
solicitation of proxies.
THE FORM 10-K FILED BY THE COMPANY WITH THE SEC, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, WILL BE PROVIDED FREE OF CHARGE TO ANY OF THE
COMPANY'S STOCKHOLDERS UPON WRITTEN REQUEST DIRECTED TO: CODDLE CREEK FINANCIAL
CORP., P.O. BOX 1117, MOORESVILLE, NORTH CAROLINA 28115, ATTENTION: BILLY R.
WILLIAMS.
By Order of the Board of Directors,
/s/ Billy R. Williams
Billy R. Williams
Secretary
Mooresville, North Carolina
March 20, 2000
22
<PAGE>
REVOCABLE PROXY
CODDLE CREEK FINANCIAL CORP.
[X] MARK FOR VOTES
AS IN THIS EXAMPLE
Annual Meeting of Stockholders
April 20, 2000 -- 11:00 a.m.
(Solicited on behalf of the Board of Directors)
The undersigned holder of Common Stock of Coddle Creek Financial Corp. (the
"Company"), revoking all proxies heretofore given, hereby constitutes and
appoints the official proxy committee of the Company, comprises of all of the
members of the Board of Directors of the Company, each with full power of
substitution, for the undersigned and in the name, place and signed of the
undersigned to vote all of the undersigned's shares of said stock, according to
the number of votes and with all the powers the undersigned would possess if
personally present, at the 2000 Annual Meeting of Shareholders of Coddle Creek
Financial Corp., to be held at the main office of the Company at 347 North Main
Street, Mooresville, North Carolina, on April 20, 2000 at 11:00 A.M. Eastern
Daylight Time, and at any adjournments or postponements thereof.
Please be sure to sign and date -------------------------------------
this Proxy in the box below. Date
- --------------------------------------------------------------------------------
- --Stockholder sign above-----Co-holder (if any) sign above----------------------
With- For All
For hold Except
1. The approval of the election of the [_] [_] [_]
following names directors:
George W. Brawley Jr., Dale W. Brawley, Claude U. Volia, Jr., Jack G. Lawler,
Donald R. Belk, and Dan E. Mills Jr., who will serve as directors until the 2001
Annual Meeting of Stockholders or until their successors are duly elected and
qualified
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
For Against Abstain
2. The ratification and approval of the [_] [_] [_]
appointment of McGladrey & Pullen LLP,
as the Company and Bank's Independent
author for the fiscal year ended
December 31, 2000.
3. The Proxies are authorized to vote in their discretion upon such other
members as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
The shares represented by this Proxy will be voted in the manner directed. In
the absence of any direction, the shares will be voted FOR each nominee listed
above, FOR the ratification and approval of the appointment of McGladrey &
Pullen LLP as the Company's independent auditors for the fiscal year ending
December 31, 2000, and in accordance with their discretion on such other matters
as may properly come before the Meeting. If instructions are given with respect
to one but not all proposals, such instructions as are given will be followed
and the proxy will be voted as indicated above on the proposal(s) for which no
instructions are given.
Signature(s) should conform to names as registered. For jointly owned shares,
each owner should sign. When signing as attorney, executor, administrator,
trustee, guardian or officer of a corporation, please give full title.
- --------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
CODDLE CREEK FINANCIAL CORP.
- --------------------------------------------------------------------------------
The above signed hereby acknowledges receipt of the Notice of Meeting and
Proxy Statement each dated March 20, 2000, relating to the Meeting and hereby
revokes any proxy or proxies heretofore given.
Each property executed Proxy will be voted in accordance with the
specification made above and in the discretion of the Proxies on any other
matter that may come before the meeting. Where no choice is specified, this
Proxy will be voted (i) FOR all listed nominees to serve as directors and (ii)
FOR the ratification and approval of the appointment of McGladrey & Pullen LLP
as the Company's Independent auditors for the fiscal year ending December 31,
2000 and in accordance with their discretion on such other matters as may
properly come before the Meeting.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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