SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
GUARANTY BANCSHARES, INC.
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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GUARANTY BANCSHARES, INC.
100 WEST ARKANSAS
MOUNT PLEASANT, TEXAS 75455
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, APRIL 20, 1999
Shareholders of Guaranty Bancshares, Inc.:
The 1999 Annual Meeting of Shareholders (the "Meeting") of Guaranty
Bancshares, Inc. (the "Company") will be held at 100 West Arkansas, Mount
Pleasant, Texas, on Tuesday, April 20, 1999, beginning at 2:00 p.m. (local
time), for the following purposes:
1. To elect three directors of Class II to serve on the Board of Directors
of the Company until the Company's 2002 Annual Meeting of Shareholders and until
their successors are duly elected and qualified;
2. To consider and act upon a proposal to ratify the appointment of
Arnold, Walker, Arnold & Co., P.C. as the independent auditors of the books and
accounts of the Company for the year ending December 31, 1999; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on March 10, 1999 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Meeting or at any adjournments thereof. A list of shareholders entitled to vote
at the Meeting will be available for inspection by any shareholder at the
offices of the Company during ordinary business hours for a period of at least
ten days prior to the Meeting.
You are cordially invited and urged to attend the Meeting. If you are
unable to attend the Meeting, you are requested to sign and date the enclosed
proxy and return it promptly in the enclosed envelope. If you attend the
Meeting, you may vote in person, regardless of whether you have given your
proxy. Your proxy may be revoked at any time before it is voted.
By order of the Board of Directors,
/s/ ARTHUR B. SCHARLACH, JR.
Arthur B. Scharlach, Jr.
President
Mount Pleasant, Texas
March 19, 1999
YOUR VOTE IS IMPORTANT.
TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE, AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE AT YOUR
EARLIEST CONVENIENCE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING. NO
ADDITIONAL POSTAGE IS NECESSARY IF THE PROXY IS MAILED IN THE UNITED STATES. THE
PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS VOTED AT THE MEETING.
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GUARANTY BANCSHARES, INC.
100 WEST ARKANSAS
MOUNT PLEASANT, TEXAS 75455
MARCH 19, 1999
------------------------
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, APRIL 20, 1999
------------------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Guaranty Bancshares, Inc.
(the "Company") for use at the 1999 Annual Meeting of Shareholders of the
Company to be held at 100 West Arkansas, Mount Pleasant, Texas, on Tuesday,
April 20, 1999, beginning at 2:00 p.m. (local time), and any adjournment thereof
(the "Meeting") for the purposes set forth in this Proxy Statement and the
accompanying Notice of 1999 Annual Meeting of Shareholders ("Notice of
Meeting"). This Proxy Statement, the Notice of Meeting and the enclosed form of
proxy will first be sent to shareholders on or about March 19, 1999.
PROXIES
This Proxy Statement is furnished to the shareholders of the Company for
solicitation of proxies on behalf of the Board of Directors of the Company for
use at the Meeting, and at any and all adjournments thereof. The purpose of the
Meeting and the matters to be acted upon are set forth herein and in the
accompanying Notice of Meeting.
Shares represented at the Meeting by an executed and unrevoked proxy in
the form enclosed will be voted in accordance with the instructions contained
therein. If no instructions are given on an executed and returned form of proxy,
the proxies intend to vote the shares represented thereby in favor of each of
the proposals to be presented to and voted upon by the shareholders as set forth
herein.
The Board of Directors knows of no other matters to be presented at the
Meeting. If any other matter should be presented at the Meeting upon which a
vote may be properly taken, shares represented by an executed and unrevoked
proxy received by the Board of Directors may be voted with respect thereto in
accordance with the judgment of the proxies. The proxy also confers on the
proxies the discretionary authority to vote with respect to any matter presented
at the Meeting for which advance notice was not received by the Company in
accordance with the Company's Bylaws.
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Any proxy given by a shareholder may be revoked by such shareholder at any
time before it is exercised by submitting to the Secretary of the Company a duly
executed proxy bearing a later date, delivering to the Secretary of the Company
a written notice of revocation, or attending the Meeting and voting in person.
The cost of this solicitation of proxies is being borne by the Company.
Solicitations will be made only by the use of the mail, except that, if deemed
desirable, officers and regular employees of the Company may solicit proxies by
telephone, telegraph or personal calls, without being paid additional
compensation for such services. Brokerage houses, custodians, nominees and
fiduciaries will be requested to forward the proxy soliciting material to the
beneficial owners of the common stock, par value $1.00 per share, of the Company
(the "Common Stock") held of record by such persons, and the Company will
reimburse them for their reasonable expenses incurred in this connection.
The Company's Annual Report to Shareholders, including financial
statements, for the year ended December 31, 1998, accompanies but does not
constitute part of this proxy statement.
VOTING SHARES AND VOTING RIGHTS
Only holders of record of Common Stock at the close of business on March
10, 1999 (the "Record Date"), are entitled to notice of and to vote at the
Meeting and any adjournments or postponements thereof. At that time, there were
outstanding 2,898,280 shares of Common Stock, which is the only outstanding
class of voting securities of the Company. A majority of the outstanding shares
of Common Stock must be represented at the Meeting in person or by proxy in
order to constitute a quorum for the transaction of business. Each holder of
Common Stock shall have one vote for each share of Common Stock registered, on
the Record Date, in such holder's name on the books of the Company.
The affirmative vote of the holders of a plurality of the outstanding
shares of Common Stock represented at the Meeting is required to elect the Class
II nominees to the Board of Directors. There will be no cumulative voting in the
election of directors. Abstentions and shares held of record by a broker or
nominee that are voted on any matter are included in determining whether a
quorum exists. An abstention, a non-vote or a withholding of authority to vote
with respect to one or more nominees for director will not have the effect of a
vote against such nominee or nominees.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock represented at the Meeting is required to approve the
appointment of the auditors. An abstention or a non-vote will have the effect of
a vote against the appointment.
ELECTION OF DIRECTORS
ELECTION PROCEDURES; TERM OF OFFICE
The Board of Directors currently consists of nine directors. In accordance
with the Company's Amended and Restated Bylaws, members of the Board of
Directors are divided into three classes, Class I, Class II and Class III. The
members of each class are elected for a term of office to expire at the third
succeeding annual meeting of shareholders following their election. The term of
office of the current Class II directors expires at the Meeting. The terms of
the current Class III and Class I directors expire at the annual meeting
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of shareholders in 2000 and 2001, respectively. The three Class II nominees, if
elected at the Meeting, will serve until the annual meeting of shareholders in
2002.
The Board of Directors has nominated Jonice Crane, C.A. Hinton, Sr. and
Arthur B. Scharlach, Jr. for election as Class II directors at the Meeting. Ms.
Crane and Messrs. Hinton and Scharlach are currently serving as Class II
directors.
The Class II nominees receiving the affirmative vote of the holders of a
plurality of the shares of Common Stock represented at the Meeting will be
elected. Unless the authority to vote for the election of directors is withheld
as to one or more of the nominees, all shares of Common Stock represented by
proxy will be voted FOR the election of the nominees. If the authority to vote
for the election of directors is withheld as to one or two but not all of the
nominees, all shares of Common Stock represented by any such proxy will be voted
FOR the election of the nominee or nominees, as the case may be, as to whom such
authority is not withheld. If a nominee becomes unavailable to serve as a
director for any reason before the election, the shares represented by proxy
will be voted for such other person, if any, as may be designated by the Board
of Directors. The Board of Directors, however, has no reason to believe that any
nominee will be unavailable to serve as a director.
Any director vacancy occurring after the election may be filled only by a
majority of the remaining directors, even if less than a quorum of the Board of
Directors. A director elected to fill a vacancy will be elected for the
unexpired portion of the term of his predecessor in office.
NOMINEES FOR ELECTION
The following table sets forth certain information with respect to each
nominee for election as a director of the Company:
POSITIONS WITH COMPANY AND
NAME AGE GUARANTY BANK (THE "BANK")
- ---- --- --------------------------
Jonice Crane 72 Class II Director of the
Company; Director
of the Bank
C. A. Hinton, Sr. 75 Class II Director of the
Company; Director
of the Bank
Arthur B. Scharlach, Jr. 59 Class II Director and
President of the
Company; Director, President
and Chief Executive Officer of the Bank
JONICE CRANE. Ms. Crane joined the Bank in 1943 and had 53 years of
continuous service until her retirement as an officer of the Bank in 1996. She
served as an Executive Vice President of the Bank from 1971 to 1996 and has
served as a director of the Bank since 1971 and a director of the Company since
its inception.
C. A. HINTON, SR. Mr. Hinton has served as a director of the Bank since
1960 and as a director of the Company since it was formed in 1980. Mr. Hinton is
the Chairman of Hinton Production Company in Mount Pleasant, Texas. In 1994,
Hinton Drilling Company filed for bankruptcy under Chapter 11.
ARTHUR B. SCHARLACH, JR. Mr. Scharlach is the President and a director of
the Company and President, Chief Executive Officer and a director of the Bank.
He joined the Bank in 1970 as a Vice President and Loan
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Officer and was elected to the Bank's Board of Directors in 1971. He was elected
a Senior Vice President of the Bank in 1974, President in 1979, Chief Operating
Officer in 1983 and Chief Executive Officer in 1989. He has served as a director
of the Company since its inception and as President since 1992. Mr. Scharlach is
a director and Vice Chairman of Texas Independent Bank, Dallas, Texas.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS.
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Company's Class I and Class III directors, whose terms of office do not expire
at the Meeting, and certain officers of the Company (other than Mr. Arthur B.
Scharlach, Jr.):
NAME POSITION AGE
------ ---------- -----
John A. Conroy....... Class I Director of the 81
Company; Director of
the Bank
Bill G. Jones........ Chairman of the Board, Class 69
III Director and Chief
Executive Officer of the
Company; Chairman of the Board
of the Bank
Russell L. Jones..... Class III Director and Senior 44
Vice President of the Company;
Director and Executive Vice
President of the Bank
Weldon Miller........ Class III Director of the 63
Company; Director of the Bank
Clifton A. Payne..... Class I Director, Senior Vice 41
President and Controller of the
Company; Director, Executive Vice
President and Chief Financial
Officer of the Bank
D. R. Zachry, Jr..... Class I Director of the 75
Company; Director of
the Bank
JOHN A. CONROY. Mr. Conroy has served as a director of the Company since
it was formed in 1980 and as a director of the Bank since 1975. Mr. Conroy is
the owner of Conroy Ford Tractor Company in Mount Pleasant, Texas.
BILL G. JONES. Mr. Jones joined the Bank as President and a director in
1969 and became Chairman of the Board in 1979. He retired as an officer of the
Bank in 1996 but continues to serve as Chairman of the
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Board. Mr. Jones has been Chairman of the Board of the Company since 1992 and
Chief Executive Officer of the Company since its formation in 1980.
RUSSELL L. JONES. Mr. Jones has been a director of the Company since 1992
and has served as Senior Vice President since 1992. Mr. Jones began working for
Talco State Bank in 1973. In 1982, he became a Director and Vice President of
Talco State Bank, which was acquired by the Company in 1980 and merged into the
Bank in 1997. Mr. Jones became a Senior Vice President of the Bank in 1996 and
was elected an Executive Vice President in 1998. Mr. Jones is the nephew of Bill
G. Jones.
WELDON MILLER. Mr. Miller became a director of the Company in 1980 and has
served as a director of the Bank since 1969. Mr. Miller is the President of
Everybody's Furniture Company in Mount Pleasant, Texas.
CLIFTON A. PAYNE. Mr. Payne joined the Bank in 1984 after four years in
private practice as a Certified Public Accountant. He became a Vice President of
the Bank in 1986 and was elected an Executive Vice President in 1996 and Chief
Financial Officer in 1988. In 1995, Mr. Payne was elected to the Board of
Directors of the Company and the Bank. Mr. Payne is also a Senior Vice President
and Controller of the Company.
D.R. ZACHRY, JR. Mr. Zachry has served as a director of the Bank since
1957 and as a director of the Company since its inception. He is retired.
Each officer of the Company is elected by the Board of Directors of the
Company and holds office until his successor is duly elected and qualified or
until his or her earlier death, resignation or removal.
OPERATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held 12 meetings during 1998. There
was no director who attended less than 75% of the aggregate of the (i) total
number of meetings of the Board and (ii) total number of meetings held by
committees on which he served.
The Board of Directors has established Audit and Compensation Committees.
The Audit Committee reviews the general scope of the audit conducted by the
Company's independent auditors and matters relating to the Company's internal
control systems. In performing its function, the Audit Committee meets
separately with representatives of the Company's independent auditors and with
representatives of senior management. During 1998, the Audit Committee held one
meeting. The Audit Committee is composed of Messrs. Conroy and Miller and Ms.
Crane, each of whom is an outside director.
The Compensation Committee is responsible for making recommendations to
the Board of Directors with respect to the compensation of the Company's
executive officers and is responsible for the establishment of policies dealing
with various compensation and employee benefit matters. The Compensation
Committee also administers the Company's stock option plans and makes
recommendations to the Board of Directors as to option grants to Company
employees under such plans. During 1998, the Compensation Committee held one
meeting. The Compensation Committee is comprised of Messrs. Hinton (Chairman)
and Miller and Ms. Crane, each of whom is an outside director.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the formation of the Compensation Committee in 1998, matters
related to compensation, employee benefit matters and stock options were
considered by the Personnel Committee of the Bank, which included Arthur B.
Scharlach, Jr., Clifton A. Payne and Russell L. Jones. As members of this
committee, Messrs. Scharlach, Payne and Russell Jones participated in
determinations as to compensation of executive officers, including themselves.
Final determination regarding compensation was made by the Board of Directors of
the Bank.
DIRECTOR COMPENSATION
Directors of the Company receive fees for attending Company Board
meetings. Inside directors are paid $175 for each meeting attended, and outside
directors are paid $400 for each meeting attended. The Board of Directors of the
Bank also meets monthly. Inside directors of the Bank are paid $375 for each
meeting of the Bank's Board of Directors attended, and outside directors are
paid $400 for each meeting attended. An Executive Committee meets weekly and
consists of all members of the Board of Directors of the Company. Inside
directors are paid $225 for each Executive Committee meeting attended and
outside directors are paid $250 for each Executive Committee meeting attended.
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chairman of the Board and Chief Executive Officer and each of the other five
most highly compensated executive officers of the Company and the Bank
(determined as of the end of the last fiscal year) for each of the two fiscal
years ended December 31, 1998:
ANNUAL COMPENSATION
NAME AND ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
--------------------- ------ -------- ------- -------------
Bill G. Jones................. 1998 $ 48,000 $ 13,900 $ 39,968(1)
Chairman of the Board and 1997 48,000 24,159 40,733
Chief Executive Officer
Arthur B. Scharlach, Jr....... 1998 207,600 61,191 42,226(2)
President 1997 195,994 51,916 14,750
Clifton A. Payne.............. 1998 96,800 37,382 13,657(3)
Senior Vice President and 1997 86,476 28,587 8,630
Controller
Devry W. Garrett.............. 1998 127,604 19,763 14,694(4)
Legal Officer of the Bank 1997 121,988 17,949 10,495
Russell L. Jones.............. 1998 93,800 36,871 13,043(5)
Senior Vice President 1997 86,178 28,752 7,762
Byron Rhea.................... 1998 92,971 32,716 11,869(6)
Executive Vice President of 1997 85,176 26,586 7,784
the Bank
- ----------
(1) Consists of contributions by the Company to the 401(k) Plan of $4,642 and
$5,412 in 1998 and 1997, respectively, and the payment of $35,326 and $35,321 in
1998 and 1997, respectively in connection with a supplemental retirement plan.
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(2) Consists of contributions by the Company to the 401(k) Plan of $12,290 and
$14,750 in 1998 and 1997, respectively, and $29,936 in 1998 in connection with a
salary continuation plan.
(3) Consists of contributions by the Company to the 401(k) Plan of $10,064 and
$8,630 in 1998 and 1997, respectively, and $3,593 in 1998 in connection with an
incentive retirement plan.
(4) Consists of contributions by the Company to the 401(k) Plan of $10,904 and
$10,495 in 1998 and 1997, respectively, and $3,790 in 1998 in connection with an
incentive retirement plan.
(5) Consists of contributions by the Company to the 401(k) Plan of $9,577 and
$7,762 in 1998 and 1997, respectively, and $3,466 in 1998 in connection with an
incentive retirement plan.
(6) Consists of contributions by the Company to the 401(k) Plan of $8,462 and
$7,784 in 1998 and 1997, respectively, and $3,407 in 1998 in connection with an
incentive retirement plan.
STOCK OPTION PLAN
The Company's Board of Directors and shareholders approved a new stock
option plan in 1998 (the "1998 Plan") which authorizes the issuance of up to
1,000,000 shares of Common Stock under both "non-qualified" and "incentive"
stock options to employees and "non-qualified" stock options to directors who
are not employees. Generally, under the 1998 Plan it is intended that the
options will vest 60% at the end of the third year following the date of grant
and an additional 20% at the end of each of the two following years; however, an
individual option may vest as much as 20% at the end of the first or second year
following the date of grant if necessary to maximize the "incentive" tax
treatment to the optionee for the particular option being granted. Options under
the 1998 Plan generally must be exercised within 10 years following the date of
grant or no later than three months after optionee's termination with the
Company, if earlier. The 1998 Plan also provides for the granting of restricted
stock awards, stock appreciation rights, phantom stock awards and performance
awards on substantially similar terms. No options or other awards have been
granted under the 1998 Plan. The 1998 Plan provides that in the event of a
change in control of the Company, all options granted immediately vest and
become exercisable. In addition, the 1998 Plan permits the Compensation
Committee, which administers the 1998 plan, discretion in the event of a change
in control to modify in certain respects the terms of awards under the 1998
Plan, including (i) providing for the payment of cash in lieu of such award,
(ii) limiting the time during which an option may be exercised, (iii) making
adjustments to options to reflect the change in control and (iv) providing that
options shall be exercisable for another form of consideration in lieu of the
Common Stock pursuant to the terms of the transaction resulting in a change in
control.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION ("SFAS 123"). This statement established fair value based
accounting and reporting standards for all transactions in which a company
acquires goods or services by issuing its equity investments, which includes
stock-based compensation plans. Under SFAS 123, compensation cost is measured at
the grant date based on the value of the award and is recognized over the
service period, which is usually the vesting period. Fair value of stock options
is determined using an option- pricing model. This statement encourages
companies to adopt as prescribed the fair value based method of accounting to
recognize compensation expense for employee stock compensation plans. Although
it does not require the fair value based method to be adopted, a company must
comply with the disclosure requirements set forth in the statement. The Company
has continued to apply accounting in Accounting Principles Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, ("APB 25") and related
Interpretations, and, accordingly, provides the pro forma disclosures of net
income and earnings per share.
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BONUS PLAN
The Company has a bonus plan for its officers and employees which provides
for a bonus pool in an amount based on a graduated percentage of return on
equity. The bonus pool is funded with 8% of after-tax income if a return on
equity of 13.2% is achieved. The bonus pool increases to a maximum of 14.5% of
after-tax income with a return on equity of 17.6% or greater. Allocation of the
bonus pool is in the discretion of the Board of Directors and is generally based
on management's recommendations regarding an employee's merit. The bonus pool
was $387,000 and $306,000 in 1998 and 1997, respectively.
BENEFIT PLANS
EMPLOYEE STOCK OWNERSHIP PLAN. Effective January 1, 1992, the Board of
Directors of the Company voted to restate the existing 401(k) profit sharing
(defined contribution) plan as an Employee Stock Ownership Plan ("ESOP")
containing 401(k) provisions. The ESOP covers substantially all employees of the
Company and six persons, three of whom are members of the Board of Directors,
serve as trustees. The ESOP calls for an employer matching contribution on
behalf of each ESOP participant of up to 4.0% of such participant's qualified
compensation. Contributions to the ESOP charged to expenses totaled
approximately $271,000, $234,000 and $232,000 in 1998, 1997 and 1996,
respectively. At December 31, 1998, the book value of ESOP assets was
approximately $6.5 million, with an approximate market value of $5.7 million.
SUPPLEMENTAL RETIREMENT PLAN. In 1992, the Company established a
non-qualified, non-contributory retirement plan for an executive officer who
retired from the Bank in 1996. The plan generally provides benefits equal to
amounts payable under the Bank's retirement plan and certain social security
benefits to aggregate a predetermined percentage of the executive officer's
average salary over the five year period immediately prior to his retirement.
The Company contributes to the retirement plan on a non-funded basis. Plan
expenses totaled approximately $18,000, $20,000 and $52,000 in 1998, 1997 and
1996, respectively.
EXECUTIVE INCENTIVE RETIREMENT PLAN. In 1998, the Company established a
non-qualified, non-contributory incentive retirement plan for certain executive
officers of the Company and the Bank. The plan provides retirement benefits in
amounts based on a selected percentage of salary, which varies depending upon
each officer's responsibility and longevity with the Company or the Bank. The
percentage of salary which will be contributed to the retirement plan by the
Company will be determined by the earnings performance of the Company, however,
no contribution will be made in any given year in which the Company's earnings
do not meet the target performance goal for that year. The plan is non-funded.
Plan expenses totaled $18,000 in 1998.
SALARY CONTINUATION PLAN. In 1998, the Company established a
non-qualified, non-contributory salary continuation plan for the Company's
President, Arthur B. Scharlach, Jr. The plan is designed to provide benefits
over a ten year period equal to 75% of Mr. Scharlach's projected compensation at
retirement as adjusted for amounts payable under the Company's retirement plan
and certain social security benefits. The plan is non-funded. Plan expenses
totaled $30,000 in 1998.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is a report from the Compensation Committee of the Company
describing the policies pursuant to which compensation was paid to executive
officers of the Company and the Bank during 1998.
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The Compensation Committee of the Board of Directors is responsible for
developing and making recommendations to the Board with respect to the Company's
executive compensation policies. C. A. Hinton, Sr. (Chairman), Weldon Miller and
Jonice Crane serve on the Compensation Committee. The Compensation Committee
prepares a report which sets forth the components of the Company's executive
officer compensation program and describes the basis on which the 1998
compensation determinations were made by the Compensation Committee with respect
to the executive officers of the Company and the Bank.
COMPENSATION PHILOSOPHY AND BASE SALARY
The Company believes that compensation of its executive officers should
enhance and reinforce the goals of the Company for profitable growth and
continuation of a sound overall condition by providing key employees with
additional financial rewards for the attainment of such growth and stable
financial and operating conditions. The Compensation Committee believes that
these goals are best supported by rewarding individuals for outstanding
contributions to the Company's success and by compensating its executive
officers competitively with the compensation of similarly situated executive
officers.
The base salary levels are determined through comparisons of salary levels
of executive officers of banks and bank holding companies of similar size. In
addition, the Compensation Committee takes into account individual experience,
individual performance, individual potential, cost of living considerations and
specific issues particular to the Company. Executive officer base salaries are
considered by the Compensation Committee to be competitive and reasonable.
BONUS PLAN
In addition to the base salary, the Company has adopted an incentive
compensation program (the "Bonus Plan") for officers and employees of the
Company and the Bank, including the named executive officers of the Company and
the Bank. The Bonus Plan provides that certain officers, including executive
officers, will receive incentive compensation in an amount based on both
individual consideration and Company performance. The aggregate amount of bonus
awarded is based on the funding of the bonus pool. The bonus pool is funded on a
graduated scale, with the maximum funding granted only if the Company achieves a
return on equity of 17.6% or greater. The bonus pool is allocated among all
employees, including executive officers, of the Company and the Bank based on a
number of factors including level of responsibility, individual performance and
Company and Bank performance.
CONTRIBUTORY PROFIT SHARING PLAN
In addition, each of the named executive officers are participants in the
Company-wide contributory profit sharing plan established pursuant to Internal
Revenue Code Section 401(k) covering substantially all employees. The Company
partially matches employee contributions to this plan up to 4% of the employee's
base salary.
INCENTIVE STOCK OPTION PLAN
Finally, each of the named executive officers and other senior officers of
the Company and the Bank may be selected to participate in the Company's 1998
Plan. No options have been granted under the 1998 Plan.
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The Compensation Committee will continue to monitor the base salary levels
and the various incentives of the named executive officers to ensure that
overall compensation is consistent with the Company's objectives and competitive
in the marketplace.
1998 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND PRESIDENT
In reviewing the 1998 compensation of the Company's Chief Executive
Officer, Bill G. Jones, and the Company's President, Arthur B. Scharlach, Jr.,
the Compensation Committee undertook the same evaluation set forth above with
respect to its other executive officers. In addition, the Compensation Committee
reviewed each of their compensation history, executive compensation survey data
and comparative performance information. Upon recommendation by the Compensation
Committee, the Board of Directors of the Bank set Mr. Jones' salary for 1998 at
$48,000 and Mr. Scharlach's salary for 1998 at $207,600. In addition to his base
salary, Mr. Jones and Mr. Scharlach each participates in the Company's Bonus
Plan described herein in which the amount of bonus received is based primarily
on the Company's Return on Equity. From the Bonus Plan in 1998, Mr. Jones earned
a bonus of $13,900 resulting in approximately 29% of his 1998 compensation being
dependent on the success of the Company, and Mr. Scharlach earned a bonus of
$61,191 resulting in approximately 29% of his 1998 compensation being depending
on the success of the Company. The amount contributed by the Company to the
401(k) plan in fiscal year 1998 for the benefit of Mr. Jones was $4,642 and for
the benefit of Mr. Scharlach was $12,290. Mr. Jones also received a payment of
$35,326 in 1998 pursuant to a supplemental retirement plan. The Compensation
Committee believes that each of Mr. Jones' and Mr. Scharlach's total
compensation is reasonable and competitive based on comparative performance
information and the overall performance of the Company.
The Compensation Committee
C. A. Hinton, Sr.
Weldon Miller
Jonice Crane
INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Many of the directors, executive officers and principal shareholders of
the Company (i.e., those who own 10% or more of the Common Stock) and their
associates, which include corporations, partnerships and other organizations in
which they are officers or partners or in which they and their immediate
families have at least a 5% interest, are customers of the Company. During 1998,
the Company made loans in the ordinary course of business to many of the
directors, executive officers and principal shareholders of the Company and
their associates, all of which were on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with persons unaffiliated with the Company and did not involve more
than the normal risk of collectibility or present other unfavorable features.
Loans to directors, executive officers and principal shareholders of the Company
are subject to limitations contained in the Federal Reserve Act, the principal
effect of which is to require that extensions of credit by the Company to
executive officers, directors and principal shareholders satisfy the foregoing
standards. On December 31, 1998, all of such loans aggregated $1.4 million which
was approximately 5.9% of the Company's Tier 1 capital at such date. The Company
expects to have such transactions or transactions on a similar basis with its
directors, executive officers and principal shareholders and their associates in
the future.
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BENEFICIAL OWNERSHIP OF COMMON STOCK BY
MANAGEMENT OF THE COMPANY AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company Common Stock as of December 31, 1998, by (i)
directors, executive officers of the Company and certain officers of the Bank
listed in the Summary Compensation Table on page 6 herein, (ii) each person who
is known by the Company to own beneficially 5% or more of the Common Stock and
(iii) all directors and executive officers as a group. Unless otherwise
indicated, each person has sole voting and dispositive power over the shares
indicated as owned by such person and the address of each shareholder is the
same as the address of the Company.
NUMBER PERCENTAGE
NAME OF SHARES BENEFICIALLY OWNED
-------- ------------- ---------------------
John A. Conroy............. 126,350 4.36%
Jonice Crane............... 97,692(1) 3.37%
Guaranty Bancshares, Inc.
Employee Stock Ownership
Plan...................... 407,514 14.06%
Devry W. Garrett........... 7,162(2) *
C. A. Hinton, Sr........... 179,676(3) 6.20%
Bill G. Jones.............. 334,194(4) 11.53%
Russell L. Jones........... 101,735(5) 3.51%
Weldon Miller.............. 222,142(6) 7.66%
Clifton A. Payne........... 1,330 *
Byron M. Rhea.............. 56 *
Arthur B. Scharlach, Jr.... 82,742(7) 2.85%
D. R. Zachry, Jr........... 92,029(8) 3.18%
Directors and Executive
Officers as a Group(9).... 1,237,890 42.71%
- ----------
* Indicates ownership which does not exceed 1.0%.
(1) Includes 3,500 shares held of record by the Jonice Crane IRA and 1,715
shares held of record by Horace Crane, the husband of Ms. Crane.
(2) Includes 5,432 shares held of record by the Devry W. Garrett IRA.
(3) Includes 2,884 shares held of record by the Charles A. Hinton IRA.
(4) Includes 22,827 shares held of record by the Bill G. Jones IRA Rollover
and 161 shares held of record by Alma Jones, the wife of Mr. Jones.
(5) Includes 5,164 shares held of record by Trust A under the Jones Family
Trust, of which Mr. Jones is trustee and 1,000 shares held of record by
Trust C under the Jones Family Trust, of which Mr. Jones
is trustee.
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(6) Includes 8,463 shares held of record by Everybody's Furniture Company, of
which Mr. Miller is the President and 37,657 shares held of record by the
Everybody's Furniture Company Profit Sharing Plan & Trust, of which Mr.
Miller is the trustee.
(7) Includes 9,991 shares held of record by the Arthur B. Scharlach, Jr. IRA,
34,041 shares held of record by Jane Scharlach, the wife of Mr. Scharlach,
105 shares held of record by the Erin Scharlach Trust, of which Mr.
Scharlach is the trustee and 105 shares held of record by the Emily
Scharlach Trust, of which Mr. Scharlach is the trustee.
(8) Includes 2,884 shares held of record by the D. R. Zachry IRA.
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total shareholder
return on the Company's Common Stock for the period from May 21, 1998, when the
Common Stock was first listed on the Nasdaq National Market, to December 31,
1998, with the cumulative total return of the S&P 500 Total Return Index and the
Southwest Bank Index for the same period. Dividend reinvestment has been
assumed. The Performance Graph assumes $100 invested on May 21, 1998 in the
Company's Common Stock, the S&P 500 Total Return Index and the Southwest Bank
Index.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
5/21/98 12/31/98
------------- --------------
GNTY ....... 100.00 64.00
SWBI ....... 100.00 94.51
S&P 500 .... 100.00 111.80
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's directors and executive officers and
persons who own more than ten percent of the outstanding Common Stock to file
with the Securities and Exchange Commission (the "Commission") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than
ten-percent shareholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, during the year ended December 31, 1998, all
Section 16(a) reporting requirements applicable to the Company's officers,
directors and greater than ten-percent shareholders were complied with except
that Mr. Russell L. Jones was late in filing three reports on Form 4 covering an
aggregate of three transactions, Mr. Miller was late in filing four reports on
Form 4 covering an aggregate of seven transactions and Mr. Scharlach was late in
filing three reports on Form 4 covering an aggregate of three transactions.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arnold, Walker, Arnold & Co., P.C. as
the independent auditors of the books and accounts of the Company for the year
ending December 31, 1999. Arnold, Walker, Arnold & Co., P.C. has served as the
Company's independent audit firm continuously for eighteen years. At the
Meeting, the shareholders will be asked to consider and act upon a proposal to
ratify the appointment of Arnold, Walker, Arnold & Co., P.C. The ratification of
such appointment will require the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock entitled to vote and present in person
or represented by proxy at the Meeting. Representatives of Arnold, Walker,
Arnold & Co., P.C. will be present at the Meeting, will be given an opportunity
to make a statement (if they desire to do so) and will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY SUCH
APPOINTMENT.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
In order for shareholder proposals submitted pursuant to the Commission's
Rule 14a-8 to be included in the Company's proxy statement and form of proxy
relating to the Company's 2000 Annual Meeting of Shareholders, such proposals
must be submitted to the Secretary of the Company at the Company's principal
executive offices not later than November 19, 1999. A shareholder choosing not
to use the procedures established in Commission Rule 14a-8 to submit a proposal
for action at the Company's 2000 Annual Meeting of Shareholders must deliver the
proposal to the Secretary of the Company not later than the close of business on
February 19, 2000.
OTHER MATTERS
The Board of Directors does not intend to bring any other matter before
the Meeting. Additionally, no shareholder of the Company has complied with the
advance notice provisions contained in the Company's
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<PAGE>
Bylaws, which preclude the bringing of matters before a meeting of shareholders
unless such provisions are complied with. Accordingly, no other matter is
expected to be brought before the Meeting. However, if any other matter does
properly come before the Meeting, the proxies will be voted in accordance with
the discretion of the person or persons voting the proxies.
You are cordially invited to attend the Meeting. Regardless of whether you
plan to attend the Meeting, you are urged to complete, date, sign and return the
enclosed proxy in the accompanying envelope at your earliest convenience.
By order of the Board of Directors,
/s/ ARTHUR B. SCHARLACH, JR.
Arthur B. Scharlach, Jr.
President
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PROXY
GUARANTY BANCSHARES, INC.
1999 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON TUESDAY, APRIL 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The 1999 Annual Meeting of Shareholders of Guaranty Bancshares, Inc. (the
"Company") will be held at 100 West Arkansas, Mount Pleasant, Texas, on Tuesday,
April 20, 1999, beginning at 2:00 p.m. (local time). The undersigned hereby
acknowledges receipt of the related Notice of 1999 Annual Meeting of
Shareholders and Proxy Statement dated March 19, 1999 accompanying this proxy.
The undersigned hereby appoints Bill G. Jones and Arthur B. Scharlach, Jr.
and each of them, attorneys and agents, with full power of substitution, to vote
as proxy all shares of Common Stock, par value $1.00 per share, of the Company
owned of record by the undersigned and otherwise to act on behalf of the
undersigned at the 1999 Annual Meeting of Shareholders and any adjournment
thereof in accordance with the directions set forth herein and with
discretionary authority with respect to such other matters, as may properly come
before such meeting or any adjournment thereof, including any matter presented
by a shareholder at such meeting for which advance notice was not received by
the Company in accordance with its Bylaws.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
AND WILL BE VOTED FOR THE FOLLOWING PROPOSALS UNLESS OTHERWISE INDICATED.
1. ELECTION OF DIRECTORS to serve until the 2002 Annual Meeting of
Shareholders and until their successors are duly elected and qualified.
/ / FOR all nominees listed below (except as otherwise indicated*)
/ / WITHHOLD AUTHORITY for all nominees listed below
* Instruction: To withhold authority to vote for any nominee,
draw a line through the name of such nominee in the list below.
Jonice Crane C. A. Hinton, Sr. Arthur B. Scharlach, Jr.
<PAGE>
2. RATIFICATION OF THE APPOINTMENT OF ARNOLD, WALKER, ARNOLD & CO., P.C.
as the independent auditors of the books and accounts of the Company for the
year ending December 31, 1999.
/ / FOR / / AGAINST / / ABSTAIN
This proxy is solicited by the Board of Directors and will be voted in
accordance with the undersigned's directions set forth herein. If no direction
is made, this proxy will be voted FOR the election of all nominees for director
named herein to serve on the Board of Directors until the 2002 Annual Meeting of
Shareholders and until their successors are duly elected and qualified and FOR
the ratification of the appointment of Arnold, Walker, Arnold & Co., P.C. as the
independent auditors of the books and accounts of the Company for the year
ending December 31, 1999.
Please sign your name exactly as it appears below. If shares are held
jointly, all joint owners should sign. If shares are held by a corporation,
please sign the full corporate name by the president or any other authorized
corporate officer. If shares are held by a partnership, please sign the full
partnership name by an authorized person. If you are signing as attorney,
executor, administrator, trustee or guardian, please set forth your full title
as such.
________________________________
________________________________
Signature(s) of Shareholder(s)
Date: _____________________, 1999
