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
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CAVALRY BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
CAVALRY BANCORP, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] 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:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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<PAGE>
March 24, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Cavalry Bancorp, Inc., the holding company for Cavalry Banking. The meeting will
be held at the Bank's main office located at 114 West College Street,
Murfreesboro, Tennessee 37130, on Thursday, April 27, 2000 at 10:00 a.m., local
time.
The Notice of Annual Meeting of Stockholders and Proxy Statement appearing
on the following pages describe the formal business to be transacted at the
meeting. During the meeting, we will also report on the operations of the
Company. Directors and officers of the Company, as well as a representative of
Rayburn, Betts & Bates, P.C., the Company's independent auditors, will be
present to respond to appropriate questions of stockholders.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER
OR NOT YOU ATTEND THE MEETING IN PERSON AND REGARDLESS OF THE NUMBER OF SHARES
YOU OWN. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE URGE YOU TO COMPLETE AND
MAIL THE ENCLOSED PROXY CARD. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON
EVEN IF YOU HAVE PREVIOUSLY MAILED A PROXY CARD.
We look forward to seeing you at the meeting.
Sincerely,
/s/Ed C. Loughry, Jr.
Ed C. Loughry, Jr.
Chairman of the Board and Chief Executive Officer
<PAGE>
CAVALRY BANCORP, INC.
114 WEST COLLEGE STREET
MURFREESBORO, TENNESSEE 37130
(615) 893-1234
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 2000
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Cavalry
Bancorp, Inc. ("Company") will be held at the main office of Cavalry Banking
located at 114 West College Street, Murfreesboro, Tennessee 37130, on Thursday,
April 27, 2000, at 10:00 a.m., local time, for the following purposes:
(1) To elect three directors of the Company;
(2) The approval of the appointment of Rayburn, Betts & Bates, P.C. as
the Company's independent auditors for the fiscal year ending
December 31, 2000; and
(3) To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the meeting may be adjourned. Stockholders of record at the close
of business on March 1, 2000 are entitled to notice of and to vote at the
meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which is
solicited by the Board of Directors, and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend the meeting and vote in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Ira B. Lewis, Jr.
IRA B. LEWIS, JR.
CORPORATE SECRETARY
Murfreesboro, Tennessee
March 24, 2000
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
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<PAGE>
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PROXY STATEMENT
OF
CAVALRY BANCORP, INC.
114 WEST COLLEGE STREET
MURFREESBORO, TENNESSEE 37130
(615) 893-1234
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ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 2000
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cavalry Bancorp, Inc. ("Company") to be
used at the Annual Meeting of Stockholders of the Company ("Meeting"). The
Company is the holding company for Cavalry Banking ("Bank"). The Meeting will
be held at the main office of the Bank located at 114 West College Street,
Murfreesboro, Tennessee 37130, on Thursday, April 27, 2000, at 10:00 a.m., local
time. This Proxy Statement and the enclosed proxy card are being first mailed
to stockholders on or about March 24, 2000.
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VOTING AND PROXY PROCEDURE
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Stockholders Entitled to Vote. Stockholders of record as of the close of
business on March 1, 2000 ("Voting Record Date") are entitled to one vote for
each share of common stock ("Common Stock") of the Company then held. At the
close of business on the Voting Record Date the Company had 7,104,801 shares of
Common Stock issued and outstanding.
Quorum. The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of Common Stock entitled to vote is necessary
to constitute a quorum at the Meeting. Abstentions and broker non-votes will be
counted as shares present and entitled to vote at the Meeting for purposes of
determining the existence of a quorum.
Voting. The Board of Directors solicits proxies so that each stockholder
has the opportunity to vote on the proposals to be considered at the Meeting.
When a proxy card is returned to the Company properly signed and dated, the
shares represented thereby will be voted in accordance with the instructions on
the proxy card. Where no instructions are indicated, proxies will be voted FOR
the nominees for directors set forth below, and FOR the approval of the
appointment of independent auditors. If a stockholder attends the Meeting, he
or she may vote by ballot.
If a stockholder is a participant in the Cavalry Banking Employee Stock
Ownership Plan ("ESOP"), the proxy card represents a voting instruction to the
trustees of the ESOP as to the number of shares in the participant's plan
account. Each participant may direct the trustees as to the manner in which
shares of Common Stock allocated to the participant's plan account are to be
voted. Unallocated shares of Common Stock held by the ESOP, and allocated
shares for which no voting instructions are received from participants, will be
voted by the trustees in the same proportion as shares for which the trustees
have received voting instructions.
The directors to be elected at the Meeting will be elected by a plurality
of the votes cast by stockholders present in person or by proxy and entitled to
vote. Pursuant to the Company's Charter, stockholders are not permitted to
cumulate their votes for the election of directors. Votes may be cast for or
withheld from each nominee. Votes that are withheld and broker non-votes will
have no effect on the outcome of the election because directors will be elected
by a plurality of the votes cast.
<PAGE>
With respect to the other proposal to be voted upon at the Meeting,
stockholders may vote for or against the proposal or may abstain from voting.
Approval of the appointment of independent auditors requires the affirmative
vote of a majority of the shares of Common Stock present in person or by proxy
and entitled to vote. Broker non-votes will have no effect on the outcome of
this proposal. Abstentions, however, will have the same effect as a vote
against this proposal.
Revocation of a Proxy. Stockholders who execute proxies retain the right
to revoke them at any time. Proxies may be revoked by written notice delivered
in person or mailed to the Secretary of the Company or by filing a later proxy
prior to a vote being taken on a particular proposal at the Meeting. Attendance
at the Meeting will not automatically revoke a proxy, but a stockholder in
attendance may request a ballot and vote in person, thereby revoking a prior
granted proxy.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, disclosing such
ownership pursuant to the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Based on such reports, the following table sets forth, at the close of
business on the Voting Record Date, certain information as to those persons who
were beneficial owners of more than 5% of the outstanding shares of Common
Stock. Management knows of no persons other than those set forth below who
beneficially owned more than 5% of the outstanding shares of Common Stock at the
close of business on the Voting Record Date. The table also sets forth, as of
the close of business on the Voting Record Date, certain information as to
shares of Common Stock beneficially owned by the Company's directors and all
directors and executive officers as a group.
2
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percent of Shares
Name(1) Beneficially Owned (2) Outstanding
- ---------------------------------- ---------------------- ------------
BENEFICIAL OWNERS OF MORE THAN 5%
<S> <C> <C>
Cavalry Banking Employee . . . . . 602,227 8.5 %
Stock Ownership Plan Trust
DIRECTORS
William H. Huddleston, IV. . . . . 36,786 0.5
Gary Brown . . . . . . . . . . . . 104,026 1.5
Frank E. Crosslin, Jr. . . . . . . 78,267 1.1
Tim J. Durham. . . . . . . . . . . 90,751 1.3
Ed Elam. . . . . . . . . . . . . . 44,419 0.6
James C. Cope. . . . . . . . . . . 48,671 0.7
Terry G. Haynes. . . . . . . . . . 104,171 1.5
Ed C. Loughry, Jr.(3). . . . . . . 117,737 1.7
Ronald F. Knight(3). . . . . . . . 104,875 1.5
All Executive Officers and . . . . 974,632 13.7
Directors as a Group (16 persons)
</TABLE>
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(1) The address for the Cavalry Banking Employee Stock Ownership Plan Trust
and each director is 114 West College Street, Murfreesboro,
Tennessee 37130.
(2) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has or shares voting and/or investment power
with respect to such security. The table includes Management
Recognition Plan restricted stock awards and shares owned by spouses,
other immediate family members in trust, shares held in retirement
accounts or funds for the benefit of the named individuals, and other
forms of ownership, over which shares the persons named in the table may
possess voting and/or investment power.
(3) Messrs. Loughry and Knight are also executive officers of the Company.
3
<PAGE>
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of nine members. In accordance
with the Company's Charter, the Board is divided into three classes with
three-year staggered terms, with one-third of the directors elected each year.
Three directors will be elected at the Meeting to serve for the respective term
set forth in the following table, or until their respective successors have been
elected and qualified. The nominees for election this year are Ronald F.
Knight, Tim J. Durham and Ed Elam, each of whom is a current member of the Board
of Directors of the Company and of the Bank.
It is intended that the proxies solicited by the Board of Directors will be
voted for the election of the nominees named in the table below. If any nominee
is unable to serve, the shares represented by all valid proxies will be voted
for the election of such substitute as the Board of Directors may recommend or
the Board of Directors may adopt a resolution to amend the Bylaws and reduce the
size of the Board. At this time the Board of Directors knows of no reason why
any nominee might be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES
NAMED IN THE TABLE BELOW.
The following table sets forth certain information regarding the nominees
for election at the Meeting.
<TABLE>
<CAPTION>
Year First Elected or Term to
Name Age(1) Appointed Director(2) Expire
- ---- ------ --------------------- --------
BOARD NOMINEES
<S> <C> <C> <C>
Ronald F. Knight. . . . . 49 1990 2003(3)
Tim J. Durham . . . . . . 46 1986 2003(3)
Ed Elam . . . . . . . . . 59 1977 2003(3)
DIRECTORS WHOSE TERM EXPIRES
Ed C. Loughry, Jr.. . . . 57 1982 2001
Frank E. Crosslin, Jr.. . 63 1985 2001
James C. Cope . . . . . . 50 1992 2001
Terry G. Haynes . . . . . 42 1997 2002
William H. Huddleston, IV 36 1999 2002
Gary Brown. . . . . . . . 57 1984 2002
<FN>
- -------------------------------------
(1) As of December 31, 1999.
(2) Includes prior service on the Board of Directors of the Bank.
(3) Assuming the individual is elected.
</TABLE>
4
<PAGE>
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below:
Ronald F. Knight joined the Bank in 1972 and currently serves as President
and Chief Operating Officer. Mr. Knight was the 1999 Chairman of the Rutherford
County Chamber of Commerce and serves on the Rutherford County Economic
Development Council. He also serves on the Board of the Tennessee Housing
Development Agency, has been a committee member of the United Way and is
co-founder of a local charity, "Christmas For The Children." Mr. Knight has
also served as a director of the Tennessee Bankers Association.
Tim J. Durham is the owner of Durham Realty & Auction, Inc., a real estate
and auction service company in Murfreesboro, Tennessee. Mr. Durham is also a
partner in D&H Development Co., a commercial and residential developer. Mr.
Durham currently serves on the Board of the Rutherford County Chamber of
Commerce and he is a member of the Murfreesboro Water and Sewer Board. He also
served on the Murfreesboro Planning Commission for eight years and is a former
member of the Board of Zoning Appeals. Mr. Durham is past President and
Director of the Rutherford County Board of Realtors.
Ed Elam is the Rutherford County Clerk in Murfreesboro, Tennessee, a
position he has held since 1974. Mr. Elam is a member of the Christy/Houston
Foundation Board and the Evergreen Cemetery Board. He is also active in the
American Cancer Society as a Relay for Life Volunteer.
Ed C. Loughry, Jr. joined the Bank in 1968 and currently serves as Chairman
of the Board and Chief Executive Officer. Mr. Loughry has served on the Boards
of Directors of the Rutherford County Chamber of Commerce, United Way, Heart
Fund, the Federal Home Loan Bank of Cincinnati and the Tennessee Bankers
Association. He currently serves on the Healthnet Board and the ABA BankPac
Board. He was selected Business Person of the Year in 1993 by the Rutherford
County Chamber of Commerce.
Frank E. Crosslin, Jr. is Chairman of the Board of Crosslin Supply Company,
Inc., a building supply company in Smyrna, Tennessee. Mr. Crosslin is a member
of the Rutherford County Industrial Bond Board. Mr. Crosslin is also a past
director of the Tennessee Housing Development Agency, the Public Building
Authority of Rutherford County and the Smyrna Economic Development Board.
James C. Cope is a partner in the law firm, Murfree, Cope, Hudson &
Scarlett in Murfreesboro, Tennessee. Mr. Cope serves as attorney for Rutherford
County, Tennessee, Middle Tennessee Electric Membership Corporation, the
Murfreesboro Housing Authority, the Smyrna/Rutherford County Airport Authority
and otherwise engages in a general civil practice of law. He is past President
of the Middle Tennessee State University Foundation and the Murfreesboro Rotary
Club.
Terry G. Haynes is the Chief Executive Officer, General Manager and Chief
Operating Officer of Haynes Bros. Lumber Co., a retail building supply dealer
located in Murfreesboro, Tennessee. Mr. Haynes is a past Chairman of the
Rutherford County Chamber of Commerce.
William H. Huddleston, IV, a professional engineer and registered land
surveyor licensed in the State of Tennessee, is the President of
Huddleston-Steele Engineering, Inc. in Murfreesboro, Tennessee. Mr. Huddleston
currently serves on the Rutherford County Annexation Coordinating Committee,
City of Murfreesboro Construction Board of Adjustments and Appeals, the Webb
School Alumni Board and the First United Methodist Church Administrative Board.
Gary Brown is the owner and manager of Roscoe Brown, Inc., a heating and
air conditioning company, Murfreesboro, Tennessee. Mr. Brown is a member of the
Murfreesboro Water Sewer Department Board, the Electrical Examining Board, the
Middle Tennessee State University Foundation Board and the Rutherford County
Chamber of Commerce Board.
5
<PAGE>
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Bank conduct their business
through meetings of both of the Boards and through each Board's committees.
During the fiscal year ended December 31, 1999, the Board of Directors of the
Company held 13 meetings, and the Board of Directors of the Bank held 13
meetings. No director of the Company or the Bank, except Frank Crosslin,
attended fewer than 75% of the total meetings of the Boards and committees on
which such person served during this period. Due to illness, Mr. Crosslin was
able to attend only 73% of the total Board and committee meetings.
Committees of the Company's Board. The Company's Board of Directors has
established Audit, Compensation and Nominating Committees.
The Audit Committee of the Company also serves as the Audit Committee of
the Bank and consists of Directors Durham (Chairman), Huddleston, Crosslin and
Haynes. The Committee receives and reviews all reports prepared by the
Company's and Bank's external and internal auditors. The Committee meets
semi-annually in April and October to review the reports issued by the internal
auditor and the external auditor. The Committee also oversees the Company's and
the Bank's Y2K compliance. The Audit Committee met 4 times during the year
ended December 31, 1999.
The Compensation Committee of the Company also serves as the Compensation
Committee of the Bank and consists of Directors Brown (Chairman), Durham, and
Cope. The Compensation Committee makes recommendations to the full Board of
Directors concerning employee compensation. The Compensation Committee met 4
times during the fiscal year ended December 31, 1999.
The full Board of Directors acts as a Nominating Committee for the annual
selection of management's nominees for election as directors of the Company.
The full Board of Directors met in January 2000 to nominate the candidates for
election as directors at the Meeting.
6
<PAGE>
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DIRECTORS' COMPENSATION
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All Directors of the Company receive a monthly fee of $500. All outside
directors of the Bank, other than the Vice-Chairman of the Board, receive a
monthly fee of $1,000. The Vice-Chairman of the Board receives a monthly fee of
$1,050. Outside directors receive an additional fee of $200 per Executive
Committee, Audit Committee, Compensation Committee and Trust Committee meeting
attended. Directors' fees totaled $103,400 for the year ended December 31,
1999.
Under the 1999 Management Recognition Plan, which was adopted by the
Company's stockholders on April 22, 1999, non-employee directors Brown, Cope,
Crosslin, Durham, Elam and Haynes each received stock awards of 12,922 shares of
restricted stock.
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EXECUTIVE COMPENSATION
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SUMMARY COMPENSATION TABLE
The following information is provided for Messrs. Loughry and Knight, the
only executive officers who received salary and bonus compensation in excess of
$100,000 in 1999.
<TABLE>
<CAPTION>
Annual Compensation(1) Long-term Compensation
-------------------------- -----------------------
Restricted All
Name and Stock Other Annual
Position Year Salary($) Bonus Awards($) Compensation
- -------- ---- --------- ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
Ed C. Loughry, Jr. . . . . . 1999 $168,000 $29,064 $1,686,672(2) $43,184(3)
Chairman and Chief Executive 1998 $168,000 $56,112 $35,052
Officer of the Company and . 1997 $162,000 $45,360 $29,143
the Bank
Ronald F. Knight . . . . . . 1999 $140,000 $24,220 $1,349,526(4) $43,184(3)
President and Chief. . . . . 1998 $140,000 $46,760 $33,652
Operating Officer of the . . 1997 $135,000 $37,800 $25,143
Company and the Bank
<FN>
(1) The aggregate amount of perquisites and other personal benefits was less
than 10% of the total annual salary and bonus reported.
(2) Represents the value as of April 22, 1999 (the date of grant) of 75,382
shares granted to Mr. Loughry pursuant to the terms of the Company's 1999
Management Recognition Plan. These shares vest over a five-year period at the
rate of 20% per year. Mr. Loughry is entitled to receive dividends on these
shares on the same basis as other shareholders, and as a result, he received
$565,365 in connection with the special cash dividend paid by the Company in
December 1999. As of December 31, 1999, the total value of all shares granted
to Mr. Loughry under this plan was $1,243,803.
(3) For fiscal 1999, includes Director fees, market value of stock allocated
under the ESOP, employer paid 401(k) matching contributions, employer paid
medical, dental, group term life and disability insurance premiums.
(4) Represents the value as of April 22, 1999 (the date of grant) of 60,314
shares granted to Mr. Knight pursuant to the terms of the Company's 1999
Management Recognition Plan. These shares vest over a five-year period at the
rate of 20% per year. Mr. Knight is entitled to receive dividends on these
shares on the same basis as other shareholders, and as a result, he received
$452,355 in connection with the special cash dividend paid by the Company in
December 1999. As of December 31, 1999, the total value of all shares granted
to Mr. Knight under this plan was $995,181.
- ------------------------------------------
</TABLE>
7
<PAGE>
EMPLOYMENT AGREEMENTS. The Company and the Bank (collectively, the
"Employers") have entered into three-year employment agreements ("Employment
Agreements") with Messrs. Loughry and Knight (individually, the "Executive").
Under the Employment Agreements, the current salary levels for Messrs. Loughry
and Knight are $168,000 and $140,000, respectively, which amounts are paid by
the Bank and may be increased at the discretion of the Board of Directors or an
authorized committee of the Board. On each anniversary of the commencement date
of the Employment Agreements, the term of each agreement may be extended for an
additional year at the discretion of the Board of Directors. The agreements are
terminable by the Employers at any time, by the Executive if the Executive is
assigned duties inconsistent with his initial position, duties, responsibilities
and status, or upon the occurrence of certain events specified by federal
regulations. In the event that an Executive's employment is terminated without
cause or upon the Executive's voluntary termination following the occurrence of
an event described in the preceding sentence, the Bank would be required to
honor the terms of the agreement through the expiration of the current term,
including payment of current cash compensation and continuation of employee
benefits.
The Employment Agreements provide for severance payments and other benefits
in the event of involuntary termination of employment in connection with any
change in control of the Employers. Severance payments also will be provided on
a similar basis in connection with a voluntary termination of employment where,
subsequent to a change in control, the Executive is assigned duties inconsistent
with his position, duties, responsibilities and status immediately prior to such
change in control. The term "change in control" is defined in the agreement as
having occurred when, among other things, (a) a person other than the Company
purchases shares of Common Stock pursuant to a tender or exchange offer for such
shares, (b) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities, (c) the membership of the Board of
Directors changes as the result of a contested election, or (d) stockholders of
the Company approve a merger, consolidation, sale or disposition of all or
substantially all of the Company's assets, or a plan of partial or complete
liquidation.
The maximum value of the severance benefits under the Employment Agreements
is 2.99 times the Executive's average annual compensation during the five-year
period preceding the effective date of the change in control (the "base
amount"). Such amounts will be paid in a lump sum within ten business days
following the termination of employment. Had a change in control of the
Employers occurred in 1999, Messrs. Loughry and Knight would be entitled to
payments of approximately $1,009,054 and $845,613 respectively. Since the
amounts received by Messrs. Loughry and Knight in the special cash distribution
on their MRP shares was taxable compensation to them, such amounts are included
in the base amount calculation.
The Employment Agreements restrict each Executive's right to compete
against the Employers for a period of one year from the date of termination of
the agreement if an Executive voluntarily terminates employment, except in the
event of a change in control.
MANAGEMENT RECOGNITION PLAN. On April 22, 1999 the stockholders of the
Company approved the Management Recognition Plan (the "MRP"). Effective April
22, 1999 restricted stock awards of 301,530 shares of Common Stock were made to
19 directors, officers and employees of the Bank. The MRP serves to reward
performance, promote retention and build the participant's equity interest in
the Company by providing long-term incentives and rewards to officers, key
employees and other persons who provide services to the Company and who
contribute to the success of the Company by their innovation, industry, loyalty
and exceptional service. The MRP is administered by the Compensation Committee.
All officers, employees, directors and directors emeriti of the Company and its
subsidiaries are eligible for participation in the MRP.
The Compensation Committee, in its sole discretion, determines who will
participate in the MRP. Initially, 301,530 shares authorized under the MRP were
allocated pursuant to the plan. Therefore, 0 shares plus any forfeited shares
are subject to allocation later, unless the plan is amended. During the fiscal
year ended December 31, 1999, no MRP shares were forfeited or reallocated to
participants. The shares awarded under the MRP were issued from authorized but
unissued shares of Common Stock. Shares issued under the MRP are issued at no
cost to recipients. The 19 recipients of MRP shares are entitled to vote MRP
shares and receive all dividends and cash distributions with respect thereto.
The shares granted vest at a rate of 20% on the first anniversary of the
effective date of the award of shares under the MRP, and 20% on each subsequent
anniversary date, so that the shares would be completely vested at the end of
five years after the date of award. Awards of Common Stock under the MRP would
immediately vest upon the disability or death of a recipient.
In the event of a change in control (as defined in the MRP) of the Company,
each outstanding award will become fully vested at the election of the recipient
made within 60 days of the change in control. Otherwise, the restricted shares
would continue to vest as if such change in control had not occurred. The awards
are not forfeitable upon vesting. The MRP may be amended by the Board of
Directors of the Bank at any time without stockholder approval unless such
approval is required to comply with tax laws or regulatory requirements. No such
amendment shall impair the rights of a recipient of an award without the
recipient's consent.
8
<PAGE>
STOCK OPTION PLAN. On April 22, 1999 the stockholders of the Company
approved the Cavalry Bancorp, Inc. 1999 Stock Option Plan (the "Stock Option
Plan"). The Stock Option Plan is administered by the Compensation Committee. The
Company has reserved 753,825 shares of the Common Stock for issuance upon the
exercise of options which have been granted under the Stock Option Plan. All
officers, employees, directors and directors emeriti of the Company and the
Company's subsidiaries are eligible for participation in the Stock Option Plan.
The Compensation Committee, in its sole discretion, determines who will
participate in the Stock Option Plan.
No options to purchase shares of the Common Stock were granted during
fiscal year 1999. The Compensation Committee determines the vesting schedule of
options at the time of grant. Options become 100% vested upon death or
disability, if earlier. Options granted under the Stock Option Plan may be
incentive or non-qualified stock options. In the case of an incentive stock
option, an optionee is not deemed to have received taxable income upon the grant
or exercise of the stock option, provided the shares are not disposed of by the
optionee for at least one year after the date of exercise and two years after
the date of grant. No compensation deduction may be taken by the Company at the
time of the grant or exercise of an incentive option, assuming these holding
periods are satisfied. In the case of a non-qualified stock option, an optionee
is deemed to receive ordinary income upon exercise of the stock option in an
amount equal to the amount by which the exercise price is exceeded by the fair
market value of the stock. The amount of any ordinary income deemed to be
received by the optionee upon the exercise of a non-qualified stock option is a
deductible expense of the Company for tax purposes.
Options granted under the Stock Option Plan have a term of ten years, are not
transferable except upon death and continue to be exercisable upon retirement.
In the event of a change in control (as defined in the Stock Option Plan) of the
Company, each outstanding award will become fully vested at the election of the
recipient made within 60 days of the change in control. Otherwise, the options
would continue to vest as if such change in control had not occurred. The Stock
Option Plan may be amended by the Board of Directors of the Company with out
shareholder approval unless such approval is required to comply with a tax law
or regulatory requirement.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following Report of the Compensation Committee and
Performance Graph shall not be incorporated by reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE. Under rules established by the SEC,
the Company is required to provide certain data and information in regard to the
compensation and benefits provided to the Company's and the Bank's Chief
Executive Officer and named executive officers. Insofar as no separate
compensation is currently paid by the Company, the Personnel/Compensation
Committee of the Bank (the "Committee"), at the direction of the Board of
Directors of the Company, has prepared the following report for inclusion in
this proxy statement.
The Personnel/Compensation Committee of the Bank's Board of Directors is
responsible for establishing and implementing all compensation policies of the
Bank and its subsidiaries. The Committee is also responsible for evaluating the
performance of the Chairman and the President of the Company and the Bank and
approving an appropriate compensation level. The President evaluates the
performance of the Executive Vice President and certain Senior Vice Presidents
of the Company and the Bank and recommends to the Committee individual
compensation levels for approval by the Committee.
The Committee believes that a compensation plan for executive officers
should take into account management skills, long-term performance results and
shareholders' returns. The principals underlying compensation policies are:
(1) to attract and retain key executives who are highly qualified and are vital
to the long-term success of the Bank and its subsidiaries; (2) to provide levels
of compensation competitive with those offered throughout the banking industry;
(3) to motivate executives to enhance long-term shareholder value by helping
them build their ownership in the Company; and (4) to integrate the compensation
program with the Bank's long-term strategic planning and management process.
The Bank's current compensation plan involves a combination of salary and
bonuses to reward short-term performance, and restricted stock under the MRP to
encourage long-term performance. The committee anticipates that in the future
it will grant stock options to further encourage long-term performance. The
salary levels of executive officers are designed to be competitive within the
banking and financial services industries. Independent compensation surveys,
such as The SNL Executive Compensation Review, are used to review the
compensation levels of management as compared with peers with comparable
responsibilities in other financial institutions.
The Annual Incentive Plan is based on annual performance of the Bank. The
Plan is designed to provide for bonuses based upon a multiple derived from a
formula that combines the return on equity and a return on assets as a
percentage of salary for corporate officers. The multiple for Chairman Loughry
and President Knight is 17.3 and the multiple for all other corporate officers
is 8.65. In addition, the Committee will sometimes award an additional cash
bonus to individuals who provided exemplary service that was beneficial to the
long-term goals of the Bank.
9
<PAGE>
During the fiscal year ended December 31, 1999, the base salary of Ed C.
Loughry, Chairman and Chief Executive Officer of the Company and the Bank, was
$168,000, which represented no increase from the previous fiscal year, plus an
incentive bonus of $29,064. During the fiscal year ended December 31, 1999, the
base salary of Ronald F. Knight, President and Chief Operating Officer of the
Company and the Bank, was $140,000, which represented no increase from the
previous fiscal year, plus an incentive bonus of $24,220. In determining not to
increase the salaries of Messrs. Loughry and Knight, the Compensation Committee
took into account the directors fees which such executives receive from the
Company and the MRP awards received by them. In 1999, the Board of Directors
and shareholders approved the MRP and Stock Option Plan. In the case of the
MRP, the Committee granted 75,382 restricted shares to Mr. Loughry and 60,314
restricted shares to Mr. Knight in recognition of their significant contribution
to the Company's financial performance and the substantial role such executives
are expected to play in the Company's future performance. The Committee
believes the current compensation of Messrs. Loughry and Knight is appropriate
based on competitive salary surveys and the performance of the Company and the
Bank.
The Committee also recommends to the Board of Directors the amount of fees
paid for service on the Board. The Committee did not recommend a change in
Board fees during the fiscal year ended December 31, 1999.
10
<PAGE>
Personnel/Compensation Committee
/s/Gary Brown, Chairman
/s/Tim J. Durham
/s/James C. Cope
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. No executive
officer of the Company or the Bank has served as a member of the compensation
committee of another entity, one of whose executive officers served on the
Personnel Committee. No executive officer of the Company or the Bank has served
as a director of another entity, one of whose executive officers served on the
Personnel Committee. No executive officer of the Company or the Bank has served
as a member of the compensation committee of another entity, one of whose
executive officers served as a director of the Company or the Bank.
PERFORMANCE GRAPH. The following graph compares the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return on the Nasdaq Index (U.S. Companies) and with the SNL Thrift Index.
[GRAPHIC OMITED]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PERIOD ENDING
-----------------------------------------------------------------
INDEX . . . . . . . . 3/17/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
- --------------------- ------- ------- ------- -------- ------- ------- ------- --------
Cavalry Bancorp, Inc. 100.00 106.01 91.64 104.10 116.62 111.95 93.13 118.77
NASDAQ - Total US*. . 100.00 106.21 95.92 124.47 139.23 152.33 155.81 224.87
SNL Thrift Index. . . 100.00 97.24 76.25 82.91 83.48 82.49 72.63 67.72
</TABLE>
- --------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of any registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Executive officers, directors and greater than 10%
stockholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received and
written representations provided to the Company by the above referenced persons,
the Company believes that during the fiscal year ended December 31, 1999 all
filing requirements applicable to its reporting officers, directors and greater
than 10% stockholders were properly and timely complied with.
11
<PAGE>
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TRANSACTIONS WITH MANAGEMENT
- --------------------------------------------------------------------------------
At December 31, 1999, loans to directors and executive officers, any member
of the immediate family of a director or executive officer, any corporation or
organization of which any director and executive officer is an executive officer
of partner of or is directly or indirectly the beneficial owner of 10% or more
of any class of equity securities or any trust or other estate in which a
director or executive officer has a substantial beneficial interest or serves as
a trustee to totaled approximately $5.3 million. All loans or extensions of
credit to those persons or entities above were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons or entities, except for loans
made pursuant to programs generally available to all employees, and do not
involve more than the normal risk of repayment or present other unfavorable
features.
Chairman and Chief Executive Officer Ed C. Loughry, Jr.'s wife is a
principal partner in an insurance agency from which the Bank purchases some of
its insurance coverage. Mr. Loughry has no ownership interest in the insurance
agency and does not participate in its business affairs. Mrs. Loughry is not
paid any direct commissions on sales to the Bank. Premiums paid to the
insurance agency by the Bank amounted to approximately $117,877 for the year
ended December 31, 1999.
The Company has employed Mr. Cope's law firm, Murfree, Cope, Hudson & Scarlett
from time to time. Fees and expenses arose out of general corporate and other
ordinary course of business services provided by the firm, and account for less
than 5% of the firm's 1999 gross revenues.
- --------------------------------------------------------------------------------
PROPOSAL II -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Rayburn, Betts & Bates, P.C. was the Company's independent auditors for the
fiscal year ended December 31, 1999. The Board of Directors has appointed
Rayburn, Betts & Bates, P.C. as independent auditors for the fiscal year ending
December 31, 2000, subject to approval by stockholders. A representative of
Rayburn, Betts & Bates, P.C. is expected to be present at the Meeting to respond
to appropriate stockholders' questions and will have the opportunity to make a
statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE APPOINTMENT OF RAYBURN, BETTS & BATES, P.C. AS INDEPENDENT AUDITORS OF
THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
12
<PAGE>
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MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, directors, officers and regular employees of
the Company may solicit proxies personally or by telephone without additional
compensation. The Company has retained Corporate Communications, Nashville,
Tennessee, to assist in soliciting proxies for a fee of $2,500, plus
reimbursable expenses.
The Company's Annual Report to Stockholders has been mailed to stockholders
as of the close of business on the Voting Record Date. Any stockholder who has
not received a copy of such Annual Report may obtain a copy by writing to the
Secretary of the Company. The Annual Report is not to be treated as part of the
proxy solicitation material or as having been incorporated herein by reference.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy solicitation
materials for next year's Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at the Company's main
office at 114 West College Street, Murfreesboro, Tennessee 37130, no later than
November 24, 2000. Any such proposals shall be subject to the requirements of
the proxy solicitation rules adopted under the Exchange Act.
The Company's Charter generally provides that stockholders will have the
opportunity to nominate directors of the Company if such nominations are made in
writing and are delivered to the Secretary of the Company 120 calendar days in
advance of the month and day the Company's proxy statement to stockholders was
mailed to stockholders the preceding year; provided however, that if notice is
given fewer than 40 calendar days before the meeting, such written notice shall
be delivered to the Secretary of the Company not later than the close of
business on the tenth calendar day following the day on which notice of the
meeting was mailed to stockholders. The notice must set forth (i) the name,
age, business address and, if known, residence address of each nominee proposed
in such notice, (ii) the principal occupation or employment of each nominee,
(iii) the number of shares of stock of the Company which are beneficially owned
by each such nominee, (iv) such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
proposed nominee pursuant to the Exchange Act, including, without limitation,
such person's written consent to being named in the proxy statement as a nominee
and to serving as a director, if elected, and (v) as to the stockholder giving
such notice (a) his name and address as they appear on the Company's books and
(b) the class and number of shares of the Company which are beneficially owned
by such stockholder.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Ira B. Lewis, Jr.
IRA B. LEWIS, JR.
SECRETARY
Murfreesboro, Tennessee
March 24, 2000
13
<PAGE>
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FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999,
AS FILED WITH THE SEC WILL BE FURNISHED WITHOUT CHARGE TO PERSONS WHO WERE
STOCKHOLDERS AS OF THE CLOSE OF BUSINESS ON THE VOTING RECORD DATE UPON WRITTEN
REQUEST TO IRA B. LEWIS, JR., SECRETARY, CAVALRY BANCORP, INC., 114 WEST COLLEGE
STREET, MURFREESBORO, TENNESSEE 37130.
<PAGE>
REVOCABLE PROXY
CAVALRY BANCORP, INC.
THIS PROXY IS SOLICTIED BY THE BOARD OF DIRECTORS
FIRST ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 2000
The undersigned hereby appoints the official Proxy Committee of the Board
of Directors of Cavalry Bancorp, Inc. with full power of substitution, as
attorneys and proxies for the undersigned, to vote all shares of common stock of
Cavalry Bancorp, Inc. ("Company") which the undersigned is entitled to vote at
the First Annual Meeting of Stockholders ("Meeting"), to be held at the main
office of Cavalry Banking located at 114 West College Street, Murfreesboro,
Tennessee, on Thursday, April 27, 2000, at 10:00 a.m. local time, and at any and
all adjournments thereof, as indicated.
Should the undersigned b presented and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no further
force and effect.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THE PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
(Continued on reverse side)
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FOLD AND DETACH HERE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE BELOW PROPOSALS.
1. The election as director of the nominees listed below (except as marked
to the contrary below).
Nominees: Ronald F. Knight (three-year term) Tim J. Durham (three-year term)
Ed Elam (three-year term)
[ ] VOTE FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
INSTRUCTIONS: To withhold your vote for any individual nominee, write that
nominee's name on the line below.
- --------------------------------------
2. Approve the Appointment of Rayburn, Betts & Bates, P.C. as the Company's
Independent Auditor.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other matters as may properly come before
the meeting.
The undersigned acknowledges receipt from the Company prior to the execution of
this proxy of the Notice of Annual Meeting of Stockholders, a Proxy Statement
for the Annual Meeting of Stockholders, and the 1999 Annual Report to
Stockholders.
- ----------------------------------------------
DATE
- ---------------------------------------------
PRINT NAME OF STOCKHOLDER
- ---------------------------------------------
SIGNATURE OF STOCKHOLDER
- ---------------------------------------------
PRINT NAME OF STOCKHOLDER
- ---------------------------------------------
SIGNATURE OF STOCKHOLDER
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE. Please sign exactly as your name appears on the
enclosed card. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held jointly, only one
signature is required, but each holder should sign, if possible.
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^ FOLD AND DETACH HERE ^
