<PAGE> 1
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
Heritage Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Heritage Bancorp, Inc.
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
/ / 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
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
N/A
- --------------------------------------------------------------------------------
(3) Filing party:
N/A
- --------------------------------------------------------------------------------
(4) Date filed:
N/A
- --------------------------------------------------------------------------------
<PAGE> 2
January 4, 2000
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Heritage Bancorp, Inc. The meeting will be held at the main office of Heritage
Federal Bank at 201 West Main Street, Laurens, South Carolina on Wednesday,
February 2, 2000 at 10:00 a.m., local time.
The notice of annual meeting 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 Deloitte &
Touche LLP, 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/ J. Edward Wells
J. Edward Wells
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE> 3
HERITAGE BANCORP, INC.
201 WEST MAIN STREET
LAURENS, SOUTH CAROLINA 29360
(864) 984-4581
- ------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
- ------------------------------------------------------------------------------
The annual meeting of stockholders of Heritage Bancorp, Inc. ("Company")
will be held at the main office of Heritage Federal Bank, 201 West Main Street,
Laurens, South Carolina, on Wednesday, February 2, 2000, at 10:00 a.m., local
time, for the following purposes:
1. To elect two directors of the Company;
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending September 30,
2000; and
3. To transact any other business that may properly come before the
meeting.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Stockholders of record at the close of business on December 6, 1999 are
entitled to receive notice of the meeting and to vote at the meeting and any
adjournment or postponement of the meeting.
Please complete and sign the enclosed form of proxy, which is solicited by
the Board of Directors, and 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/ J. Edward Wells
J. Edward Wells
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Laurens, South Carolina
January 4, 2000
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.
<PAGE> 4
- --------------------------------------------------------------------------------
PROXY STATEMENT
OF
HERITAGE BANCORP, INC.
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 2, 2000
- --------------------------------------------------------------------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Heritage Bancorp, Inc. ("Heritage Bancorp"
or the "Company") to be used at the annual meeting of stockholders of the
Company. The Company is the holding company for Heritage Federal Bank ("Heritage
Federal"). The annual meeting will be held at the main office of Heritage
Federal, 201 West Main Street, Laurens, South Carolina on Wednesday, February 2,
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 January 4, 2000.
- --------------------------------------------------------------------------------
VOTING AND PROXY PROCEDURE
- --------------------------------------------------------------------------------
WHO CAN VOTE AT THE MEETING
You are entitled to vote your Heritage Bancorp common stock if the records
of the Company showed that you held your shares as of the close of business on
December 6, 1999. As of the close of business on that date, a total of 4,363,589
shares of Heritage Bancorp common stock were outstanding. Each share of common
stock has one vote. As provided in the Company's Certificate of Incorporation,
record holders of the Company's common stock who beneficially own, either
directly or indirectly, in excess of 10% of the Company's outstanding shares are
not entitled to any vote in respect of the shares held in excess of the 10%
limit.
ATTENDING THE MEETING
If you are a beneficial owner of Heritage Bancorp common stock held by a
broker, bank or other nominee (i.e., in "street name"), you will need proof of
ownership to be admitted to the meeting. A recent brokerage statement or letter
from a bank or broker are examples of proof of ownership. If you want to vote
your shares of Heritage Bancorp common stock held in street name in person at
the meeting, you will have to get a written proxy in your name from the broker,
bank or other nominee who holds your shares.
VOTE REQUIRED
The annual meeting will be held if a majority of the outstanding shares of
common stock entitled to vote is represented at the meeting. If you return valid
proxy instructions or attend the meeting in person, your shares will be counted
for purposes of determining whether there is a quorum, even if you abstain from
voting. Broker non-votes also will be counted for purposes for determining the
existence of a quorum. A broker non-vote occurs when a broker, bank or other
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received voting instructions from the
beneficial owner.
<PAGE> 5
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to specific
nominees. There is no cumulative voting for the election of directors. Directors
must be elected by a plurality of the votes cast at the annual meeting. This
means that the nominees receiving the greatest number of votes will be elected.
Votes that are withheld and broker non-votes will have no effect on the outcome
of the election. In voting on the approval of the ratification of the
appointment of Deloitte & Touche LLP as independent auditors, you may vote in
favor of the proposal, vote against the proposal or abstain from voting. This
matter will be decided by the affirmative vote of a majority of the shares
present in person or by proxy at the annual meeting and entitled to vote. On
this matter, abstentions will have the same effect as a negative vote and broker
non-votes will have no effect on the voting.
VOTING BY PROXY
This proxy statement is being sent to you by the Board of Directors of
Heritage Bancorp for the purpose of requesting that you allow your shares of
Heritage Bancorp common stock to be represented at the annual meeting by the
persons named in the enclosed proxy card. All shares of Heritage Bancorp common
stock represented at the meeting by properly executed proxies will be voted in
accordance with the instructions indicated on the proxy card. If you sign and
return a proxy card without giving voting instructions, your shares will be
voted as recommended by the Company's Board of Directors. The Board of Directors
recommends a vote FOR each of the nominees for director and FOR ratification of
Deloitte & Touche LLP as independent auditors.
If any matters not described in this proxy statement are properly
presented at the annual meeting, the persons named in the proxy card will use
their own judgment to determine how to vote your shares. This includes a motion
to adjourn or postpone the meeting in order to solicit additional proxies. If
the annual meeting is postponed or adjourned, your Heritage Bancorp common stock
may be voted by the persons named in the proxy card on the new meeting date as
well, unless you have revoked your proxy. The Company does not know of any other
matters to be presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy you must either advise the Secretary of the
Company in writing before your shares have been voted at the annual meeting,
deliver a later dated proxy, or attend the meeting and vote your shares in
person. Attendance at the annual meeting will not in itself constitute
revocation of your proxy.
If your Heritage Bancorp common stock is held in street name, you will
receive instructions from your broker, bank or other nominee that you must
follow in order to have your shares voted. Your broker or bank may allow you to
deliver your voting instructions via the telephone or the Internet. Please see
the instruction form that accompanies this proxy statement.
PARTICIPANTS IN HERITAGE FEDERAL'S ESOP AND 401(K) PLAN
If you participate in the Heritage Federal Bank Employee Stock Ownership
Plan or if you hold shares through Heritage Federal's 401(k) Plan, the proxy
card represents a voting instruction to the trustees. Each participant in the
ESOP and 401(k) Plan may direct the trustees as to the manner in which shares of
Heritage Bancorp 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 will be voted by the ESOP
trustees in the same proportion as shares for which the trustees have received
voting instructions.
2
<PAGE> 6
- --------------------------------------------------------------------------------
STOCK OWNERSHIP
- --------------------------------------------------------------------------------
The following table provides information as of December 6, 1999 with
respect to persons known to the Company to be the beneficial owners of more than
5% of the Company's outstanding common stock. A person may be considered to
beneficially own any shares of common stock over which he or she has, directly
or indirectly, sole or shared voting or investing power.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF COMMON STOCK
NAME AND ADDRESS SHARES OWNED OUTSTANDING
- ---------------- ------------------- -----------
<S> <C> <C>
Heritage Federal Bank 370,300 (1) 8.5%
Employee Stock Ownership Plan
201 West Main Street
Laurens, South Carolina 29360
(1)Includes 351,785 shares that have not been allocated to participants'
accounts and 18,515 shares that have been allocated to participants'
accounts. Under the terms of the ESOP, the trustees will vote unallocated
shares and allocated shares for which no voting instructions are received in
the same proportion as shares for which the trustees have received voting
instructions from participants. The trustees of the ESOP are J. Edward Wells
and Edwin I. Shealy, both of whom are executive officers of the Company.
</TABLE>
The following table provides information about the shares of Heritage
Bancorp common stock that may be considered to be owned by each director or
nominee for director of the Company and by all directors and executive officers
of the Company as a group as of December 6, 1999. Unless otherwise indicated,
each of the named individuals has sole voting power and sole investment power
with respect to the shares shown.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF THAT MAY BE ACQUIRED PERCENT OF
SHARES OWNED WITHIN 60 DAYS BY COMMON STOCK
NAME (EXCLUDING OPTIONS) EXERCISING OPTIONS OUTSTANDING
-------------------------------- ------------------- -------------------- ------------
<S> <C> <C> <C>
Aaron H. King 51,834(1) 41,650 2.1%
J. Riley Bailes 62,384(2) 41,650 2.4
John D. Lake 31,834(3) 41,650 1.7
John C. Owings, II 48,103(4) 41,650 2.0
J. Edward Wells 85,240(5) 52,070 3.1
All directors and executive 437,776 273,594 15.3
officers as a group (9 persons)
(1) Includes 13,334 shares owned by Mr. King's spouse and 18,500 shares of unvested restricted
stock as to which Mr. King exercises voting, but not investment power.
(2) Includes 9,167 shares owned by Mr. Bailes' spouse and 18,500 shares of unvested restricted
stock as to which Mr. Bailes exercises voting, but not investment power.
(3) Includes 18,500 shares of unvested restricted stock as to which Mr. Lake exercises voting, but not
investment power.
(4) Includes 961 shares owned by Mr. Owings' spouse, 13,340 shares held by a trust for which Mr. Owings
serves as a co-trustee and 18,500 shares of unvested restricted stock as to which Mr. Owings exercises
voting, but not investment power.
(5) Includes 14,668 shares owned by Mr. Wells' spouse, 2,572 shares allocated to Mr. Wells' account under
the Heritage Federal ESOP over which Mr. Wells exercises voting, but not investment power, and
46,000 shares of unvested restricted stock over which Mr. Wells exercises voting, but not investment
power.
</TABLE>
3
<PAGE> 7
- ------------------------------------------------------------------------------
PROPOSAL 1 -- ELECTION OF DIRECTORS
- ------------------------------------------------------------------------------
The Company's Board of Directors consists of five members. Four of them
are independent directors and one is a member of management. The Board is
divided into three classes with three-year staggered terms, with approximately
one-third of the directors elected each year. Two directors will be elected at
the annual meeting to serve for a three-year term, or until their respective
successors have been elected and qualified. The nominees are Aaron H. King and
J. Riley Bailes, both of whom are currently directors of the Company and
Heritage Federal.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the nominees named above. If any nominee is unable
to serve, the persons named in the proxy card would vote your shares to approve
the election of any substitute proposed by the Board of Directors.
Alternatively, the Board of Directors may adopt a resolution to reduce the size
of the Board. At this time, the Board of Directors knows of no reason why any
nominee might be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF BOTH OF THE
NOMINEES.
Information regarding the nominees and the directors continuing in office
is provided below. Unless otherwise stated, each individual has held his current
occupation for the last five years. The age indicated in each individual's
biography is as of September 30, 1999. The indicated period for service as a
director includes service as a director of Heritage Federal.
NOMINEES FOR ELECTION OF DIRECTORS
The directors standing for election are:
AARON H. KING. Mr. King retired as Senior Vice President and Branch
Manager of Heritage Federal in 1996 after 34 years with Heritage Federal. Age
75. Director since 1972.
J. RILEY BAILES. Mr. Bailes is the retired owner of a retail clothing
store in Laurens, South Carolina. Age 60. Director since 1986.
DIRECTORS CONTINUING IN OFFICE
The following director has a term ending in 2001:
J. EDWARD WELLS. Mr. Wells is the President and Chief Executive Officer of
Heritage Federal, positions he has held since 1972, and President and Chief
Executive Officer of Heritage Bancorp, positions he has held since the formation
of the Company in 1997. Mr. Wells joined Heritage Federal in 1967. Age 60.
Director since 1971.
The following directors have terms ending in 2002:
JOHN D. LAKE. Dr. Lake is a retired dentist. Age 71. Director since
1977.
4
<PAGE> 8
JOHN C. OWINGS, II. Mr. Owings is the owner of Laurens Lumber Co. in
Laurens, South Carolina. Age 47. Director since 1998.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company and Heritage Federal is conducted through
meetings and activities of their Boards of Directors and their committees.
During the fiscal year ended September 30, 1999, the Board of Directors of the
Company held eight meetings and the Board of Directors of Heritage Federal held
12 meetings. No director attended fewer than 75% of the total meetings of the
Boards of Directors and committees on which such director served.
The Audit Committee, consisting of the non-employee members of the Board
of Directors, receives and reviews all reports prepared by the Company's
external auditor. The Audit Committee met one time during the year ended
September 30, 1999.
The full Board of Directors acts as a Nominating Committee for the annual
selection of management's nominees for election as directors. The full Board of
Directors met once in its capacity as Nominating Committee in October 1999.
DIRECTORS' COMPENSATION
Directors of Heritage Federal receive a monthly retainer and a monthly
attendance fee. First term members receive a retainer of $425 and attendance fee
of $425. Second term members receive a retainer of $475 and attendance fee of
$475. For subsequent terms, directors receive a retainer of $625 and attendance
fee of $625. No additional fees are paid for service on committees. If the Board
of Directors declares a bonus for employees, then each Director who is not also
an employee receives a bonus based on their annual remuneration and computed at
the same rate as the employee bonus. For the year ended September 30, 1999, the
Heritage Federal paid an aggregate of $1,840 in bonuses to non-employee
Directors. No separate fees are paid for service on the Company's Board of
Directors.
During the year ended September 30, 1999, each non-employee director
received options to acquire 41,650 shares of Heritage Bancorp common stock and
18,500 shares of restricted stock. The stock options are all exercisable and the
restricted stock vests ratably over five years.
5
<PAGE> 9
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
The following information is furnished for Mr. Wells. No other executive
officer of Heritage Federal received salary and bonus of $100,000 or more during
the year ended September 30, 1999.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------ --------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
POSITIONS YEAR ($) ($) ($)(1) ($) (#) ($)
- ------------------ ------ --------- ------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Edward Wells 1999 $ 156,845 $ 5,038 $15,000(2) $885,500(3) 104,140 $231,439(4)
President and Chief 1998 150,138 4,740 -- -- -- 9,061
Executive Officer 1997 145,052 4,372 -- -- -- 21,754
(1) Does not include the aggregate amount of perquisites and other personal benefits, which was less than 10%
of the total annual salary and bonus reported.
(2) Consists of directors' fees.
(3) Represents the total value of the award of 46,000 shares of restricted stock on April 15, 1999, which award will
vest ratably over a five-year period. At September 30, 1999, the value of the unvested restricted stock award
was $790,625. Dividends will be paid on the restricted stock.
(4) Consists of employer contribution to Heritage Federal's 401(k) plan of $3,238, contribution to ESOP of $44,201
and payment of $4.00 per share special cash distribution with respect to unvested shares of restricted
stock, which totaled $184,000.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding stock option grants to
Mr. Wells during the year ended September 30, 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTIONS(3)
OPTIONS EMPLOYEES PRICE ------------------------
GRANTED IN PER EXPIRATION
NAME (#)(1) FISCAL YEAR SHARE(2) DATE 5% 10%
- ---------------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. Edward Wells 104,140 41.7% $15.10 04/15/09 $989,330 $2,506,650
- --------------------------
(1) One-half of the options granted are exercisable immediately and one-half of the options granted
are exercisable on April 15, 2000; provided, however, that options will be immediately exercisable
upon a change in control and in the event the optionee terminates employment due to death or
disability.
(2) Reflects reduction in exercise price to reflect the $4.00 per share special cash distribution paid
by the Company on June 22, 1999, as authorized under the anti-dilution provisions of the 1998 Stock
Option Plan.
(3) The dollar gains under these columns result from calculations required by the Securities and Exchange
Commission's rules and are not intended to forecast future price appreciation of Heritage Bancorp
common stock. It is important to note that options have value only if the stock price increases above
the exercise price shown in the table during the effective option period. In order for the executive
to realize the potential values set forth in the 5% and 10% columns in the table, the price per share
of the Company's common stock would be approximately $24.60 and $39.17, respectively, as of the
expiration date of the options.
</TABLE>
6
<PAGE> 10
OPTION VALUE AT FISCAL YEAR END
The following table provides information regarding unexercised stock options
for Mr. Wells as of September 30, 1999. Mr. Wells did not exercise any stock
options during the year ended September 30, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
NAME AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
- --------------------- ---------------------------- -----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
J. Edward Wells 52,070 52,070 $108,696 $108,696
- -------------------------------
(1) Value of unexercised in-the-money stock options equals the market value of shares
covered by in-the-money options on September 30, 1999 less the option exercise price.
Options are in-the-money if the market value of shares covered by the options is
greater than the exercise price.
</TABLE>
EMPLOYMENT AGREEMENT
The Company and Heritage Federal have entered into a three-year employment
agreement with Mr. Wells. Under the employment agreement, the current salary
level for Mr. Wells is $151,000, which amount is paid by Heritage Federal 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 agreement, the term may be extended for an additional year at the
discretion of the Board. The agreement is terminable by the Company and Heritage
Federal at any time, by Mr. Wells if he is assigned duties inconsistent with his
initial position, duties, responsibilities and status, or upon the occurrence of
certain events specified by federal regulations. If Mr. Wells' employment is
terminated without cause or upon Mr. Wells' voluntary termination following the
occurrence of an event described in the previous sentence, Heritage Federal
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 agreement also provides for a severance payment and other
benefits in the event of involuntary termination of employment in connection
with any change in control of the Company or Heritage Federal. A severance
payment also will be provided on a similar basis in connection with a voluntary
termination of employment where, subsequent to a change in control, Mr. Wells is
assigned duties inconsistent with his position, duties, responsibilities and
status immediately prior to such change in control.
The maximum present value of the severance benefits under the employment
agreement is 2.99 times Mr. Wells' average annual compensation during the
five-year period preceding the effective date of the change in control (the
"base amount"). The employment agreement provides that the value of the maximum
benefit may be distributed, at Mr. Wells' election, (1) in the form of a lump
sum cash payment equal to 2.99 times Mr. Wells' base amount or (2) a combination
of a cash payment and continued coverage under Heritage Federal's health, life
and disability programs for a 36-month period following the change in control,
the total value of which does not exceed 2.99 times Mr. Well's base amount.
Section 280G of the Internal Revenue Code provides that severance payments that
equal or exceed three times the individual's base amount are deemed to be
"excess parachute payments" if they are contingent upon a change in control.
7
<PAGE> 11
Individuals receiving excess parachute payments are subject to a 20% excise tax
on the amount of the payment in excess of the base amount, and the Company would
not be entitled to deduct such amount.
The employment agreement restricts Mr. Wells' right to compete against the
Company and Heritage Federal for a period of one year from the date of
termination of the agreement if he voluntarily terminates employment, except in
the event of a change in control.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE OF THE
COMPANY AND PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILINGS.
REPORT OF THE COMPENSATION COMMITTEE
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information in regard to the
compensation and benefits provided to the Company's Chief Executive Officer and
other executive officers of the Company. The disclosure requirements for the
Chief Executive Officer and other executive officers include the use of tables
and a report explaining the rationale and consideration that led to the
fundamental executive compensation decisions affecting those individuals.
No separate compensation is currently payable by the Company, consequently
the Compensation Committee of the Board of Directors of Heritage Federal as
directed by the Company's Board of Directors is responsible for establishing and
implementing policies governing executive compensation. Furthermore, this
Committee evaluates the performance of executive officers and approves
appropriate levels of compensation. The Compensation Committee of the Board of
Directors consists entirely of the non-employee directors, that is, Messrs.
Bailes, King, Lake and Owings. This Committee is responsible for establishing
and implementing policies governing executive compensation. Furthermore, it
evaluates the performances of these officers and approves appropriate levels of
compensation.
The Committee believes that compensation policy should reflect both
executives' management skills as well as Company performance and shareholder
returns. To this end, the following goals underlie the Committee's policies:
1) To attract and retain key executives who possess the
management skills and experience vital to the long-term
success of the Company and Heritage Federal.
2) To provide compensation that is competitive and consistent
with executive compensation levels found in the financial and
banking industries.
3) To motivate executives to enhance long-term shareholder value
by building their ownership in the Company.
4) To make the compensation program an integral part of the
Company's long-term planning and management process.
The Company, with stockholder approval, adopted the Management Recognition
and Development Plan and the 1998 Stock Option Plan under which executive
officers may receive grants of restricted stock
8
<PAGE> 12
and awards of stock options. The Company believes that stock ownership by its
executives is a significant factor in aligning the interests of the executives
with those of stockholders. Stock options and restricted stock awards under
these plans were allocated based upon regulatory practices and policies, the
practices of other recently converted financial institutions and the executive
officers' level of responsibility and contributions to the Company.
During the fiscal year ended September 30, 1999, the base salary of J.
Edward Wells was $156,845. In addition, he received a bonus in the amount of
$5,038 based on 1998 fiscal year-end operating results. Mr. Wells received a
grant of options to acquire 104,140 shares of Heritage Bancorp common stock and
an award of 46,000 shares of restricted stock. The Committee believes that
current level of executive salary is appropriate based on a review of peer group
compensation within the industry and the Company's performance.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF HERITAGE BANCORP, INC.
John D. Lake Aaron H. King
John C. Owings, II J. Riley Bailes
9
<PAGE> 13
- ------------------------------------------------------------------------------
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. The Company has used a peer
group of the SNL Thrift Index rather than the Nasdaq Bank Index, which it used
last year, because it believes that the business of the companies that comprise
the Thrift Index more closely resembles the business of Heritage Bancorp. Total
return assumes the reinvestment of all dividends. The base amount for the
Company's Common Stock is $22.313 per share, which was the closing price on the
initial day of trading on April 7, 1998. The initial offering price for the
Company's Common Stock was $15.00 per share.
[GRAPH APPEARS HERE]
---------------------------------------
4/07/98 9/30/98 3/31/99 9/30/99
--------- --------- --------- ---------
Heritage Bancorp, Inc................... 100.0 78.5 89.9 97.6
Nasdaq - total U.S...................... 100.0 94.9 137.7 154.1
SNL Thrift Index........................ 100.0 82.0 80.8 70.3
10
<PAGE> 14
__________________________
* Assumes $100 invested in the Company's Common Stock at the closing price per
share and each index on April 7, 1998 (the date on which the Company's Common
Stock was first traded publicly) and that all dividends and distributions were
reinvested. Source: SNL Securities.
- --------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 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) reports they file.
Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of the Company's
executive officers and directors has complied with applicable reporting
requirements for transactions in Heritage Bancorp common stock during the fiscal
year ended September 30, 1999.
- ------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- ------------------------------------------------------------------------------
Federal regulations require that all loans or extensions of credit to
executive officers and directors of insured financial institutions must be made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons,
except for loans made pursuant to programs generally available to all employees,
and must not involve more than the normal risk of repayment or present other
unfavorable features. Heritage Federal is therefore prohibited from making any
new loans or extensions of credit to executive officers and directors at
different rates or terms than those offered to the general public, except for
loans made pursuant to programs generally available to all employees, and has
adopted a policy to this effect. In addition, loans made to a director or
executive officer in an amount that, when aggregated with the amount of all
other loans to such person and his or her related interests, are in excess of
the greater of $25,000 or 5% of the institution's capital and surplus (up to a
maximum of $500,000) must be approved in advance by a majority of the
disinterested members of the Board of Directors.
11
<PAGE> 15
- ------------------------------------------------------------------------------
PROPOSAL 2 -- RATIFICATION OF AUDITORS
- ------------------------------------------------------------------------------
The Board of Directors has appointed Deloitte & Touche LLP to be its
auditors for the 2000 fiscal year, subject to the ratification by stockholders.
A representative of Deloitte & Touche LLP is expected to be present at the
annual meeting to respond to appropriate questions from stockholders and will
have the opportunity to make a statement should he or she desire to do so.
If the ratification of the appointment of the auditors is not approved by
a majority of the votes cast by stockholders at the annual meeting, other
independent public accountants will be considered by the Board of Directors. THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF AUDITORS.
- ------------------------------------------------------------------------------
MISCELLANEOUS
- ------------------------------------------------------------------------------
The Company will pay the cost of this proxy solicitation. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Heritage Bancorp common stock. In addition to soliciting
proxies by mail, directors, officers and regular employees of the Company may
solicit proxies personally or by telephone. None of these persons will receive
additional compensation for these activities. The Company has retained
ChaseMellon Consulting Services, L.L.C. to assist in soliciting proxies for a
fee of $3,500, plus reimbursable expenses.
The Company's Annual Report to Stockholders has been mailed to
stockholders of record as of the close of business on December 6, 1999. Any
stockholder who has not received a copy of the Annual Report may obtain a copy
by writing to the Secretary of the Company. The Annual Report is not to be
treated as part of the proxy solicitation material or as having been
incorporated herein by reference.
A COPY OF THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED
WITHOUT CHARGE TO STOCKHOLDERS OF RECORD AS OF THE CLOSE OF BUSINESS ON DECEMBER
6, 1999 UPON WRITTEN REQUEST TO CORPORATE SECRETARY, HERITAGE BANCORP, INC., 201
WEST MAIN STREET, LAURENS, SOUTH CAROLINA 29360.
- ------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- ------------------------------------------------------------------------------
Proposals that stockholders seek to have included in the proxy statement
for the Company's next annual meeting must be received by the Company no later
than September 6, 2000. Any such proposals will be subject to the requirements
of the proxy rules adopted by the Securities and Exchange Commission.
The Company's Certificate of Incorporation provides that in order for a
stockholder to make nominations for the election of directors or proposals for
business to be brought before the annual meeting, a stockholder must deliver
notice of such nominations and/or proposals to the Secretary not less than 30
nor more than 60 days prior to the date of the annual meeting; provided that if
less than 31 days' notice of the
12
<PAGE> 16
annual meeting is given to stockholders, such notice must be delivered not later
than the close of the tenth day following the day on which notice of the annual
meeting was mailed to stockholders. A copy of the Certificate of Incorporation
may be obtained from the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Edward Wells
J. Edward Wells
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Laurens, South Carolina
January 4, 2000
13
<PAGE> 17
HERITAGE BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 2, 2000
-------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors, with full power of
substitution, to act as proxy for the undersigned, and to vote all shares of
common stock of Heritage Bancorp, Inc. (the "Company") owned of record by the
undersigned at the Annual Meeting of Stockholders, to be held on February 2,
2000, at 10:00 a.m., local time, at 201 West Main Street, Laurens, South
Carolina, and at any and all adjournments thereof, as designated below with
respect to the matters set forth below and described in the accompanying Proxy
Statement and, in their discretion, for the election of a person to the Board of
Directors if any nominee named herein becomes unable to serve or for good cause
will not serve and with respect to any other business that may properly come
before the meeting. Any prior proxy or voting instructions are hereby revoked.
1. The election as directors of all nominees listed (except as marked to
the contrary below).
Aaron H. King J. Riley Bailes
FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- -------
/ / / / / /
-- -- --
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. The ratification of the appointment of Deloitte & Touche LLP as
independent auditors for the Company for the fiscal year ending
September 30, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
-- -- --
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
<PAGE> 18
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS LISTED. IF ANY
OTHER BUSINESS IS PRESENTED AT THE MEETING, INCLUDING WHETHER OR NOT TO ADJOURN
THE MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES IN THEIR BEST JUDGMENT. AT
THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE ANNUAL MEETING.
The under-signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated January 4, 2000 and the Annual Report to Stockholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
Dated:
--------------------------
--------------------------------
STOCKHOLDER SIGN ABOVE
--------------------------------
CO-HOLDER (IF ANY) SIGN ABOVE
-----------------------------
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
