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 2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, APRIL 18, 2000
Shareholders of Guaranty Bancshares, Inc.:
The 2000 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 18, 2000, beginning at 2:00 p.m. (local
time), for the following purposes:
1. To elect two directors of Class III to serve on the Board of
Directors of the Company until the Company's 2003 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
Fisk & Robinson, P.C. as the independent auditors of the books and
accounts of the Company for the year ending December 31, 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on March 8, 2000 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 17, 2000
YOUR VOTE IS IMPORTANT.
TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO 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.
<PAGE>
GUARANTY BANCSHARES, INC.
100 WEST ARKANSAS
MOUNT PLEASANT, TEXAS 75455
MARCH 17, 2000
------------------------
PROXY STATEMENT
FOR
2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, APRIL 18, 2000
------------------------
SOLICITATION, REVOCABILITY AND VOTING OF PROXIES
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 2000 Annual Meeting of Shareholders of the
Company to be held at 100 West Arkansas, Mount Pleasant, Texas, on Tuesday,
April 18, 2000, 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 2000 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 17, 2000.
VOTING OF PROXIES
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.
REVOCABILITY OF PROXIES
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.
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SOLICITATION
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.
ANNUAL REPORT
The Company's Annual Report to Shareholders, including financial
statements, for the year ended December 31, 1999, 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
8, 2000 (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 3,250,016 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
III 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 eight 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 III directors expires at the Meeting. The
terms of the current Class I and Class II directors expire at the annual meeting
of
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shareholders in 2001 and 2002, respectively. The three Class III nominees, if
elected at the Meeting, will serve until the annual meeting of shareholders in
2003.
The Board of Directors has nominated Bill G. Jones and Weldon Miller for
election as Class III directors at the Meeting. Messrs. Jones and Miller are
currently serving as Class III directors.
The Class III 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 both 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 but not both of the
nominees, all shares of Common Stock represented by any such proxy will be voted
FOR the election of the nominee 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. All of the nominees have consented to being
named herein and to serve if elected.
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")
- ---- --- --------------------------
Bill G. Jones 70 Chairman of the Board, Class III Director
and Chief Executive Officer of the
Company; Chairman of the Board of the Bank
Weldon Miller 64 Class III Director of the Company; Director
of the Bank
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 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.
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 has been the President
of Everybody's Furniture Company in Mount Pleasant, Texas for more than the past
five years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS.
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CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Company's Class I and Class II directors, whose terms of office do not expire at
the Meeting, and certain officers of the Company (other than Mr. Bill G. Jones):
NAME POSITIONS AGE
---- --------- ---
John A. Conroy........... Class I Director of the Company; Director of 82
the Bank
Jonice Crane............ Class II Director of the Company; Director of 73
the Bank
C. A. Hinton, Sr......... Class II Director of the Company; Director of 76
the Bank
Clifton A. Payne......... Class I Director, Senior Vice President and 42
Controller of the Company; Director,
Executive Vice President and Chief Financial
Officer of the Bank
Arthur B. Scharlach, Jr.. Class II Director and President of the 60
Company; Director, President and Chief
Executive Officer of the Bank
D.R. Zachry, Jr.......... Class I Director of the Company; Director of 76
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 has
been the owner of Conroy Ford Tractor Company in Mount Pleasant, Texas for more
than the past five years.
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
has been the Chairman of Hinton Production Company in Mount Pleasant, Texas for
more than the past five years.
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 1998. 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.
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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 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.
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 has been retired
for more than the past five years.
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 1999. 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, except for Mr. Zachry, who attended 72% of such
meetings.
The Board of Directors has an Audit Committee and a Compensation
Committee. 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 1999, the Audit Committee held 5
meetings. The Audit Committee is comprised 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 1999, the Compensation Committee held 6
meetings. The Compensation Committee is comprised of Messrs. Hinton (Chairman)
and Miller and Ms. Crane, each of whom is an outside director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Jonice Crane, C.A. Hinton, Sr., and
Weldon Miller, each of whom is an outside director of the Company. During 1999,
no member of the Compensation Committee was an officer or employee of the
Company or the Bank. Ms. Crane served as an Executive Vice President of the Bank
until 1996.
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
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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 three fiscal
years ended December 31, 1999:
NAME AND ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ------------------------------ ---- --------------------------------
Bill G. Jones................. 1999 $ 48,000 $16,400 $ 40,156(1)
Chairman of the Board and 1998 48,000 13,900 39,968
Chief Executive Officer 1997 48,000 24,159 40,733
Arthur B. Scharlach, Jr....... 1999 219,933 69,605 101,809(2)
President 1998 207,600 61,191 42,226
1997 195,994 51,916 14,750
Clifton A. Payne.............. 1999 106,400 43,930 15,497(3)
Senior Vice President and 1998 96,800 37,382 13,657
Controller 1997 86,476 28,587 8,630
Devry W. Garrett.............. 1999 134,250 17,925 15,441(4)
Legal Officer of the Bank 1998 127,604 19,763 14,694
1997 121,988 17,949 10,495
Russell L. Jones.............. 1999 107,400 40,430 14,841(5)
Senior Vice President 1998 93,800 36,871 13,043
1997 86,178 28,752 7,762
Byron Rhea.................... 1999 100,666 37,615 14,450(6)
Executive Vice President of 1998 92,971 32,716 11,869
the Bank 1997 85,176 26,586 7,784
- ------------------
(1) Consists of contributions by the Company to the 401(k) Plan of $4,830,
$4,642 and $5,412 in 1999, 1998 and 1997, respectively, and the payment of
$35,326, $35,326 and $35,321 in 1999, 1998 and 1997, respectively in connection
with a supplemental retirement plan.
(2) Consists of contributions by the Company to the 401(k) Plan of $12,000,
$12,290 and $14,750 in 1999, 1998 and 1997, respectively, and the payment of
$89,809 and $29,936 in 1999 and 1998, respectively, in connection with a salary
continuation plan.
(3) Consists of contributions by the Company to the 401(k) Plan of $11,313,
$10,064 and $8,630 in 1999, 1998 and 1997, respectively, and the payment of
$4,184 and $3,593 in 1999 and 1998, respectively, in connection with an
incentive retirement plan.
(4) Consists of contributions by the Company to the 401(k) Plan of $11,413,
$10,904 and $10,495 in 1999, 1998 and 1997, respectively, and the payment of
$4,028 and $3,790 in 1999 and 1998, respectively, in connection with an
incentive retirement plan.
(5) Consists of contributions by the Company to the 401(k) Plan of $10,617,
$9,577 and $7,762 in 1999, 1998 and 1997, respectively, and the payment of
$4,224 and $3,466 in 1999 and 1998, respectively, in connection with an
incentive retirement plan.
(6) Consists of contributions by the Company to the 401(k) Plan of $10,423,
$8,462 and $7,784 in 1999, 1998 and 1997, respectively, and the payment of
$4,027 and $3,407 in 1999 and 1998, respectively, in connection with an
incentive retirement plan.
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STOCK OPTION PLAN
The Company's Board of Directors and shareholders approved the Guaranty
Bancshares, Inc. 1998 Stock Incentive 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.
BONUS PLAN
The Company has established an incentive compensation program (the "Bonus
Plan") for its officers, including executive officers, and employees of the
Company and the Bank which provides for a bonus pool in an amount based on a
graduated percentage of the Bank's return on equity. For 1999, the bonus pool
was funded with 10% of after-tax income if the Bank achieved a return on equity
of 10.9%. The bonus pool increases to a maximum of 14.5% of after-tax income if
the Bank's return on equity was 14.9% or greater. The Bank's return on equity
for 1999 is 14.7% for the year. The percent of after-tax income used to fund the
bonus pool and the minimum return on equity requirements are determined annually
by the Board of Directors based on the Company's budget for that year.
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 $630,000, $559,000 and $306,000 in 1999, 1998 and
1997, respectively.
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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 (with 401(k)
provisions) ("401(k) Plan"). The 401(k) Plan covers substantially all employees
of the Company and six persons, three of whom are members of the Board of
Directors, serve as trustees. The 401(k) Plan calls for an employer matching
contribution on behalf of each 401(k) Plan participant of up to 4.0% of such
participant's qualified compensation. Contributions to the 401(k) Plan charged
to expenses totaled approximately $294,000, $271,000 and $234,000 in 1999, 1998,
1997, respectively. At December 31, 1999, the book value of 401(k) Plan assets
was approximately $7.0 million, with an approximate market value of $6.7
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 $17,000, $18,000 and $20,000 in 1999, 1998 and
1997 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 approximately $23,000 and $18,000 in 1999 and 1998,
respectively.
SALARY CONTINUATION PLAN. In August 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 approximately $90,000 and $30,000 in 1999 and 1998, respectively.
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 1999.
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 1999
compensation determinations were made by the Compensation Committee with respect
to the executive officers of the Company and the Bank.
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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 for each executive officer are determined by
comparisons to salary levels for executive officers of banks and bank holding
companies of similar size in the Company's market areas. 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. Base salary levels approximate the median
level of such comparative rates and are considered by the Compensation Committee
to be competitive and reasonable.
BONUS PLAN
In addition to the base salary, the Company has the Bonus Plan which
provides that certain officers, including executive officers, of the Company and
the Bank will receive incentive compensation in an amount based on both
individual consideration and Company performance. The aggregate amount of bonus
awarded to all eligible participants 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 Bank achieves a certain return on equity, as determined annually by
the Board of Directors. For 1999, the maximum funding occurred if the Bank's
return on equity was 14.9% 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's 401(k) 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 or other awards have been granted under the 1998 Plan.
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.
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1999 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND PRESIDENT
In reviewing the 1999 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 1999 at
$48,000 and Mr. Scharlach's salary for 1999 at $219,933. 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 1999, Mr. Jones earned
a bonus of $16,400 resulting in approximately 34% of his 1999 compensation being
dependent on the success of the Company, and Mr. Scharlach earned a bonus of
$69,605 resulting in approximately 32% of his 1999 compensation being depending
on the success of the Company. The amount contributed by the Company to the
401(k) Plan in fiscal year 1999 for the benefit of Mr. Jones was $4,830 and for
the benefit of Mr. Scharlach was $12,000. Mr. Jones also received a payment of
$35,326 in 1999 pursuant to a supplemental retirement plan. During 1999, the
Company accrued approximately $89,809 for the benefit of Mr. Scharlach pursuant
to a salary continuation 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 1999,
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. As of December 31, 1999, all of such loans aggregated $1.4 million
which was approximately 5.5% 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 the Record Date, 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, based on information furnished by such shareholders, 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............. 127,350 3.92%
Jonice Crane............... 97,692(1) 3.01%
Guaranty Bancshares, Inc.
Employee Stock Ownership
Plan (with 401(k)
provisions)............... 434,140 13.36%
Devry W. Garrett........... 24,426(2) *
C. A. Hinton, Sr........... 179,676(3) 5.53%
Bill G. Jones.............. 354,037(4) 10.89%
Russell L. Jones........... 133,558(5) 4.11%
Weldon Miller.............. 224,872(6) 6.92%
Clifton A. Payne........... 29,444(7) *
Byron M. Rhea.............. 27,687(8) *
Arthur B. Scharlach, Jr.... 148,775(9) 4.58%
D. R. Zachry, Jr........... 87,029(10) 2.68%
Directors and Executive
Officers as a Group(8).... 1,248,875 38.43%
- -------------------------
* 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 Ms. Crane's husband.
(2) Includes 5,432 shares held of record by the Devry W. Garrett IRA and
17,264 shares held of record by the Company's 401(k) Plan, over which Mr.
Garrett has investment control.
(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,
161 shares held of record by Mr. Jones' wife's IRA and 18,843 shares held
of record by the Company's 401(k) Plan, over which Mr. Jones has
investment control.
(5) Includes 7,164 shares held of record by Trust A under the Jones Family
Trust, of which Mr. Jones is trustee, 1,000 shares held of record by Trust
B1 under the Jones Family Trust, of which Mr. Jones is trustee, 1,000
shares held of record by Trust C under the Jones Family Trust, of which
Mr. Jones is
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trustee and 28,823 shares held of record by the Company's 401(k) Plan,
over which Mr. Jones has investment control.
(6) Includes 8,463 shares held of record by Everybody's Furniture Company, of
which Mr. Miller is the President, 38,657 shares held of record by the
Everybody's Furniture Company Profit Sharing Plan & Trust, of which Mr.
Miller is the trustee, 865 shares held of record by the Weldon Miller IRA
and 865 shares of held of record by Mr. Miller's wife's IRA.
(7) Includes 24,407 shares held of record by the Company's 401(k) Plan, over
which Mr. Payne has investment control.
(8) Includes 27,631 shares held of record by the Company's 401(k) Plan, over
which Mr. Rhea has investment control.
(9) Includes 10,338 shares held of record by the Arthur B. Scharlach, Jr. IRA,
34,041 shares held of record by Mr. Scharlach's wife, 140 shares held of
record by the Erin Scharlach Trust, of which Mr. Scharlach is the trustee,
140 shares held of record by the Emily Scharlach Trust, of which Mr.
Scharlach is the trustee and 63,963 shares held of record by the Company's
401(k) Plan, over which Mr. Scharlach has investment control.
(10) Includes 2,884 shares held of record by the D. R. Zachry IRA.
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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,
1999, with the cumulative total return of the S&P 500 Total Return Index ("S&P
500") and the Southwest Bank Index ("SWBI") 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. The historical stock price performance for the
Company's stock shown on the graph below is not necessarily indicative of future
stock performance.
COMPOSITE OF CUMULATIVE TOTAL RETURN*
GUARANTY BANCSHARES, INC., 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 12/31/99
------- -------- --------
Guaranty (GNTY) $100.00 $ 64.00 $ 68.86
Southwest Bank Index (SWBI) 100.00 94.51 90.68
S&P 500 100.00 111.80 135.19
*Assumes $100 invested on May 21, 1998 and that all dividends were reinvested.
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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 10% of the outstanding Common Stock to file initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than 10%
shareholders are required to furnish the Company with copies of all forms they
file pursuant to Section 16(a) of the Exchange Act.
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, 1999, all
Section 16(a) reporting requirements applicable to the Company's officers,
directors and greater than 10% shareholders were complied with except that John
A. Conroy was late in filing one report covering one transaction, Bill G. Jones
was late in filing one report covering one transaction, Russell L. Jones was
late in filing two reports covering four transactions, Weldon Miller was late in
filing two reports covering three transactions, Clifton A. Payne was late in
filing three reports covering four transactions, Arthur B. Scharlach, Jr. was
late in filing two reports covering five transactions and D. R. Zachry, Jr. was
late in filing one report covering one transaction. The required reports have
been filed with the Commission.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Fisk & Robinson, P.C. as the
independent auditors of the books and accounts of the Company for the year
ending December 31, 2000. Arnold, Walker, Arnold & Co., P.C. ("Arnold Walker")
served as the independent auditors of the books and accounts of the Company
during fiscal 1999, however, on January 19, 2000, Arnold Walker was notified
that they would be dismissed following the issuance of their report on the
Company's 1999 financial statements and their review of the Company's 1999 Form
10-K. Arnold Walker's dismissal was effective on February 23, 2000. The decision
to change accountants was recommended by the Audit Committee of the Board of
Directors of the Company and approved by the Company's Board of Directors.
Arnold Walker's report on the financial statements for the past two years
did not contain an adverse opinion or disclaimer of opinion, or was qualified or
modified as to uncertainty, audit scope or accounting principles. In connection
with the audits of the Company's financial statements during the two most recent
fiscal years ended December 31, 1999 and the subsequent interim period prior to
the dismissal of Arnold Walker, there were no disagreements between the Company
and Arnold Walker on any matters of accounting principles or practices,
financial statement disclosure or auditing scope and procedures which, if not
resolved to the satisfaction of Arnold Walker, would have caused Arnold Walker
to make reference to the matter in their reports.
During the Company's two most recent fiscal years and the subsequent
interim period prior to the dismissal of Arnold Walker, Arnold Walker did not
advise the Company with respect to any of the matters listed in paragraphs
(a)(1)(v)(A) through (D) of Item 304 of Regulation S-K.
Effective January 21, 2000, the Board of Directors of the Company
appointed Fisk & Robinson, P.C. as its principal accountant to audit the
Company's 2000 financial statements. During the Company's two most recent fiscal
years ended December 31, 1999 and subsequent interim period prior to the
engagement of Fisk & Robinson, P.C. neither the Company, nor anyone on its
behalf, consulted Fisk & Robinson, P.C. regarding the
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<PAGE>
application of accounting principals to a specified completed or proposed
transaction, or the type of opinion Fisk & Robinson, P.C. might render on the
Company's financial statements.
At the Meeting, the shareholders will be asked to consider and act upon a
proposal to ratify the appointment of Fisk & Robinson, 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 Fisk & Robinson, P.C.
will not be present at the Meeting.
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 Rule 14a-8 of the
Exchange Act to be presented at the Company's 2001 Annual Meeting of
Shareholders and included in the Company's proxy statement and form of proxy
relating to such meeting, such proposals must comply with Rule 14a-8 and be
submitted to the Secretary of the Company at the Company's principal executive
offices not later than November 17, 2000. Shareholder proposals should be
submitted to the Secretary of the Company at 100 West Arkansas, Mount Pleasant,
Texas 75455.
In addition, the Company's Amended and Restated Bylaws provide that only
such business which is properly brought before a shareholder meeting will be
conducted. For business to be properly brought before a meeting or nominations
of persons for election to the Board of Directors to be properly made at a
meeting by a shareholder, notice must be received by the Secretary of the
Company at the Company's principal executive offices not later than the close of
business on the 60th day prior to the meeting. Such notice must also provide
certain information set forth in the Amended and Restated Bylaws. A copy of the
Amended and Restated Bylaws may be obtained upon written request to the
Secretary of the Company.
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 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.
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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.
2000 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON TUESDAY, APRIL 18, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The 2000 Annual Meeting of Shareholders of Guaranty Bancshares, Inc. (the
"Company") will be held at 100 West Arkansas, Mount Pleasant, Texas, on Tuesday,
April 18, 2000, beginning at 2:00 p.m. (local time). The undersigned hereby
acknowledges receipt of the related Notice of 2000 Annual Meeting of
Shareholders and Proxy Statement dated March 17, 2000 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 2000 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 2003 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.
Bill G. Jones Weldon Miller
<PAGE>
2. RATIFICATION OF THE APPOINTMENT OF Fisk & Robinson, P.C. as the
independent auditors of the books and accounts of the Company for the year
ending December 31, 2000.
[ ] 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 2003 Annual Meeting of
Shareholders and until their successors are duly elected and qualified and FOR
the ratification of the appointment of Fisk & Robinson, P.C. as the independent
auditors of the books and accounts of the Company for the year ending December
31, 2000.
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: _____________________, 2000
