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 '240.14a-11(c) or '240.14a-12
CAPITAL BANK CORPORATION
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on
which the filing fee is calculated and state how it was
determined): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
[ ] 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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE>
[Insert Capital Bank Corporation Logo]
4400 Falls of Neuse Road
Raleigh, North Carolina 27609
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 17, 1999
To Our Shareholders:
We cordially invite you to attend the 1999 Annual Meeting of
Shareholders of Capital Bank Corporation (the "Company"), which we are holding
on Thursday, June 17, 1999 at 3:00 p.m., local time, at the North Raleigh
Hilton, 3415 Wake Forest Road in Raleigh, North Carolina for the following
purposes:
(1) To elect seven nominees to serve as Class II directors with
terms continuing until the Annual Meeting of Shareholders in
2002;
(2) To elect one nominee to serve as a Class I director with a
term continuing until the Annual Meeting of Shareholders in
2001;
(3) To ratify the action of the Board of Directors in appointing
PricewaterhouseCoopers LLP as independent accountants for the
fiscal year ending December 31, 1999; and
(4) To transact such other business as may properly come before
the annual meeting or any adjournment or postponement of the
meeting.
Shareholders of record at the close of business on April 15, 1999 are
entitled to notice and to vote at the annual meeting and any and all
adjournments or postponements of the meeting.
It is important that your shares be represented at the meeting,
regardless of the number of shares you may hold. Even though you may plan to
attend the meeting in person, please complete and return the enclosed proxy in
the envelope provided. If you attend the meeting, you may revoke your proxy and
vote in person.
By Order of the Board of Directors
/s/ James A. Beck
-----------------
James A. Beck
President and
Chief Executive Officer
Raleigh, North Carolina
April 29, 1999
<PAGE>
CAPITAL BANK CORPORATION
4400 Falls of Neuse Road
Raleigh, North Carolina 27609
PROXY STATEMENT
Annual Meeting of Shareholders to be held June 17, 1999
This Proxy Statement and the accompanying proxy card are being
furnished to shareholders of Capital Bank Corporation (the "Company") on or
about April 29, 1999, in connection with the solicitation of proxies by the
Board of Directors of the Company for use at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held on June 17, 1999 at 3:00 p.m., local time, at
the North Raleigh Hilton, 3415 Wake Forest Road in Raleigh, North Carolina, and
at any adjournment or postponement thereof. All expenses incurred in connection
with this solicitation shall be paid by the Company. In addition to solicitation
by mail, certain officers, directors, and regular employees of the Company, who
will receive no additional compensation for their services, may solicit proxies
by telephone or other personal communication means.
Purposes of the Annual Meeting
The principal purposes of the meeting are:
o to elect seven nominees to serve as Class II directors of the
Company with three-year terms continuing until the Annual Meeting
of Shareholders in 2002;
o to elect one nominee to serve as a Class I director of the
Company with a three-year term continuing until the Annual Meeting
of Shareholders in 2001;
o to ratify the action of the Board of Directors in appointing
PricewaterhouseCoopers LLP as independent accountants for the
fiscal year ending December 31, 1999; and
o to transact such other business as may properly come before
the Annual Meeting or any adjournment or postponement.
Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is exercised. Proxies may be revoked by
filing with the Secretary of the Company written notice of revocation, by duly
executing a subsequent proxy and filing it with the Secretary of the Company
before the revoked proxy is exercised, or by attending the Annual Meeting and
voting in person. If the proxy card is signed and returned, but voting
directions are not made, the proxy will be voted in favor of the proposals set
forth in the accompanying proxy card and described in this Proxy Statement.
Record Date and Voting Rights
The Board of Directors has fixed the close of business on April 15,
1999 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting and all adjournments or
postponements of the meeting. As of the close of business on April 15, 1999, the
Company had outstanding 3,658,689 shares of Common Stock, the holders of which,
or their proxies, are entitled to one vote per share. Unless otherwise stated in
this Proxy Statement, the presence at the Annual
<PAGE>
Meeting, in person or by proxy, of the holders of a majority of the shares
entitled to vote at the meeting will constitute a quorum.
Recent Events
At a special meeting of shareholders held on March 26, 1999, the
shareholders of Capital Bank approved the reorganization of Capital Bank into a
bank holding company named "Capital Bank Corporation." In the holding company
reorganization, the shareholders of Capital Bank each received a right to one
share of Company stock for each share of Capital Bank stock that they owned.
Thus, the shareholders of Capital Bank before the holding company reorganization
are now the shareholders of the Company. In addition, on March 31, 1999 the
Company completed its acquisition of Home Savings Bank of Siler City, Inc., SSB
in a stock-for-stock exchange in which the Company issued 1,181,038 shares of
its Common Stock. As used in this Proxy Statement, the term "Company" refers
only to Capital Bank prior to the holding company reorganization, and to Capital
Bank Corporation and its subsidiaries, Capital Bank and Home Savings Bank of
Siler City, Inc., SSB, after the holding company reorganization.
Share Ownership of Management
The following table sets forth certain information as of April 15, 1999
regarding shares of Common Stock of the Company owned of record or known by the
Company to be owned beneficially by (i) each director, (ii) each director
nominee, (iii) each executive officer named in the Summary Compensation Table in
this Proxy Statement and (iv) all directors and executive officers as a group.
Except as set forth in the footnotes, the persons listed below have sole voting
and investment power with respect to all shares of Common Stock owned by them,
except to the extent that such power may be shared with a spouse. The mailing
address of each of the directors and executive officers is in care of the
Company's address. There are no shareholders known to the Company who owned in
excess of five percent of the Common Stock as of April 15, 1999.
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership (1)
------------------------
Name No. of Shares Percent of Class
---- ------------- ----------------
<S> <C> <C>
Charles F. Atkins (2) 64,500 1.8%
Lamar Beach (3) 11,300 *
James A. Beck (4) 26,550 *
Edwin E. Bridges (5) 93,199 2.5
William C. Burkhardt (6) 28,000 *
L.I. Cohen, Jr. (7) 52,000 1.4
David J. Gospodarek 5,500 *
John F. Grimes (8) 10,723 *
Carolyn W. Grant (9) 9,600 *
Darleen M. Johns 7,500 *
Robert L. Jones 17,500 *
O.A. Keller, III (10) 47,500 1.3
Oscar A. Keller, Jr. (11) 47,750 1.3
Vernon Malone 2,600 *
George R. Perkins, III (12) 43,773 1.2
Donald W. Perry (13) 14,800 *
Franklin G. Shell (14) 5,970 *
J. Rex Thomas (15) 9,500 *
Bruce V. Wainright (16) 15,600 *
Samuel J. Wornom, III (17) 30,500 *
All directors and executive
officers as a group (21 persons)(18) 551,965 14.7%
</TABLE>
<PAGE>
- ---------------
* Less than one percent
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission ("SEC"). Accordingly,
they may include securities owned by or for, among others, the spouse
and/or minor children of the individual and any other relative who has the
same home as such individual, as well as other securities as to which the
individual has or shares voting or investment power or has the right to
acquire under outstanding stock options within 60 days of April 15, 1999.
Beneficial ownership may be disclaimed as to certain of the securities.
Except as otherwise indicated below, the shares owned by the directors
named above include 2,500 shares subject to presently exerciseable options.
(2) Includes 61,000 shares of Common Stock held by entities for which Mr.
Atkins is an officer and the principal stockholder.
(3) Includes 800 shares of Common Stock held by Mr. Beach's wife.
(4) Includes 500 shares of Common Stock held by Mr. Beck's wife, 12,550 shares
held in an Individual Retirement Account and 13,000 shares subject to
presently exerciseable options.
(5) Includes 28,430 shares allocated to Mr. Bridges' ESOP account over which he
exercises sole voting power and 28,682 shares subject to presently
exerciseable options. 11,397 shares owned by Mr. Bridges are held in an
Individual Retirement Account and 353 shares are held for the benefit of
Mr. Bridges' minor child.
(6) Includes 500 shares of Common Stock held by Mr. Burkhardt's wife.
(7) Includes 22,250 shares of Common Stock held by Mr. Cohen's wife and 4,500
shares held in the Profit Sharing Plan of Lee Iron & Metal Co., a company
in which Mr. Cohen is the principal stockholder. Mr. Cohen and his wife
serve as co-trustees of such Profit Sharing Plan.
(8) Includes 2,560 shares with respect to which Mr. Grimes exercise shared
voting and investment power and 4,916 shares subject to presently
exerciseable options.
(9) Includes 100 shares of Common Stock held by Ms. Grant's child and 3,875
shares held in an Individual Retirement Account.
(10) Includes 18,000 shares of Common Stock held jointly with Mr. Keller's wife,
20,000 shares held in Individual Retirement Accounts, 4,000 shares held by
Mr. Keller's children and grandchildren and 5,000 shares subject to
presently exerciseable options. Oscar A. Keller, Jr. is the father of O.A.
Keller, III.
<PAGE>
(11) Includes 21,500 shares of Common Stock held jointly with Mr. Keller's wife,
21,500 shares held by an entity in which Mr. Keller is an officer and
principal stockholder and 3,750 shares subject to presently exerciseable
options.
(12) Includes 14,000 shares held by Mr. Perkins' father who appointed Mr.
Perkins as his proxy for purposes of voting the Company's Common Stock
pursuant to a revocable proxy agreement dated April 30, 1998.
(13) Includes 9,000 shares held jointly with Mr. Perry's wife and 2,300 shares
held by his children.
(14) Includes 3,470 shares held by Mr. Shell in an Individual Retirement Account
and 1,000 shares subject to presently exerciseable options.
(15) Includes 1,000 shares of Common Stock held by a child of Mr. Thomas and
3,000 shares held by Mr. Thomas's wife.
(16) Includes 100 shares of Common Stock held by Dr. Wainright's wife.
(17) Includes 1,000 shares of Common Stock held in a trust for the benefit of
Mr. Wornom's grandchild, for which Mr. Wornom serves as a trustee, and
1,000 shares held by a child of Mr. Wornom.
(18) Includes the shares of Common Stock beneficially owned by the directors of
the Company and by two executive officers of the Company who are not also
directors.
Proposal 1: Election of Directors
The Company's Board of Directors is divided into three classes, as nearly
equal in number as possible. Each year the shareholders will elect the members
of one of the three classes to a three year term of office. In accordance with
the Company's Bylaws, on April 15, 1999 the Board of Directors appointed Edwin
E. Bridges and John F. Grimes to fill a vacancy created by the resignation of
Marty R. Kittrell and to add a director within the range permitted by the
Company's Bylaws.
The term of office of the Class II directors expires at the 1999 Annual
Meeting, the term of office of the Class III directors expires at the 2000
Annual Meeting of Shareholders, and the term of office of the Class I directors
expires at the 2001 Annual Meeting of Shareholders, or in any event at such time
as their respective successors are duly elected and qualified or their earlier
resignation, death or removal from office. Pursuant to the Company's Bylaws, the
term of office of directors who were elected by the Board or shareholders to
fill a vacancy (whether caused by a resignation, an increase in the number of
directors or otherwise) expires at the next meeting of shareholders at which
directors are elected. Consequently, the terms of office of Messrs. Bridges and
Grimes expire at the 1999 Annual Meeting and they are being nominated for
election.
<PAGE>
The following table lists the directors of the Company and the classes in
which they serve as of the date of this Proxy Statement:
Class I Class II Class III
------- -------- ---------
(Term Expiring 2001) (Term Expiring 1999) (Term Expiring 2000)
Charles F. Atkins Edwin E. Bridges Lamar Beach
James A. Beck L.I. Cohen, Jr. William C. Burkhardt
Carolyn W. Grant Robert L. Jones David J. Gospodarek
John F. Grimes Vernon Malone Darleen M. Johns
Oscar A. Keller, Jr. J. Rex Thomas O.A. Keller, III
Donald W. Perry Bruce V. Wainright George R. Perkins, III
Samuel J. Wornom, III
The Board of Directors has nominated the Class II directors indicated
above for election at the 1999 Annual Meeting to serve until the 2002 Annual
Meeting of Shareholders (or until such time as their respective successors are
elected and qualified or their earlier resignation, death or removal from
office). The seven candidates who receive the highest number of votes as Class
II directors will be elected as Class II directors of the Company.
The Board of Directors has also nominated John F. Grimes for election at
the 1999 Annual Meeting to serve as a Class I director until the 2001 Annual
Meeting of Shareholders (or until such time as his respective successor is
elected and qualified or his earlier resignation, death or removal from office).
Mr. Grimes will be elected as a Class I director of the Company if he receives
the highest number of votes as a Class I director.
The Board of Directors has no reason to believe that the persons named
above as nominees for directors will be unable or will decline to serve if
elected. However, in the event of death or disqualification of any nominee or
the refusal or inability of any nominee to serve as a director, it is the
intention of the proxyholders named in the accompanying proxy card to vote for
the election of such other person or persons as the proxyholders determine in
their discretion. In no circumstance will the proxy be voted for more than eight
nominees. Properly executed and returned proxies, unless revoked, will be voted
as directed by the shareholder or, in the absence of such direction, will be
voted in favor of the election of the recommended nominees.
Under North Carolina law, directors are elected by a plurality of the
votes cast by the holders of the Common Stock of the Company at a meeting at
which a quorum is present. "Plurality" means that the individuals who receive
the largest number of votes cast, even if less than a majority, are elected as
directors up to the maximum number of directors chosen at the meeting per each
class. Consequently, any shares not voted (whether by abstention, broker nonvote
or otherwise) have no impact in the election of directors except to the extent
the failure to vote for an individual results in another individual receiving a
larger number of votes.
<PAGE>
The Board of Directors recommends that shareholders vote FOR the election
of the nominees.
Set forth below are the names and other information pertaining to the
Board's nominees and other directors whose terms of office will continue after
the Annual Meeting:
<TABLE>
<CAPTION>
Name Position With Company Age Elected Director
---- --------------------- --- ----------------
Class I
<S> <C> <C> <C>
Charles F. Atkins (3)(5) Director 50 1997
James A. Beck (1)(3)(4)(6) President, Chief Executive Officer, 46 1997
and Director
Carolyn W. Grant (3)(6) Director 48 1997
John F. Grimes (2)(3) Director 56 1999
Oscar A. Keller, Jr. (1)(3) Director 77 1997
Don W. Perry (2)(5) Director 40 1997
Class II
Edwin E. Bridges (4)(5) President and CEO of Home Savings and 45 1999
Director
L.I. Cohen, Jr. (3)(6) Director 62 1997
Robert L. Jones (1)(3)(6) Director 62 1997
Vernon Malone (3)(5) Director 67 1997
J. Rex Thomas (3)(5) Director 53 1997
Bruce V. Wainright (4) Director 52 1997
Samuel J. Wornom, III (1)(4)(6) Director 56 1997
Class III
Lamar Beach (3) Director 70 1997
William C. Burkhardt (1)(2)(6) Director 61 1997
David J. Gospodarek (2)(3) Director 51 1997
Darleen M. Johns (4)(5) Director 51 1997
O.A. Keller, III (1)(3)(6) Chairman of the Board of Directors 54 1997
George R. Perkins, III (2)(4) Director 31 1997
</TABLE>
<PAGE>
- --------------------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Loan Committee
(4) Member of Asset and Liability Committee
(5) Member of Community Reinvestment Committee
(6) Member of the Compensation Committee
Class I
Charles F. Atkins has served as a director since the Company's
inception. He is currently and has been for the past five years President of
CAM-L Corporation, a real estate development/procurement company located in
Sanford, North Carolina.
James A. Beck has served as a director since the Company's inception.
He is currently President and Chief Executive Officer of the Company, a position
he has held since the Company commenced operations. Mr. Beck served as Chairman,
President and Chief Executive Officer of SouthTrust Bank of North Carolina, N.A.
from January 1991 until June 1996 when it was merged into the SouthTrust
Charlotte-based bank. Mr. Beck served as President and a director of the
combined bank until January 1997, when he resigned to join the Company.
Carolyn W. Grant has served as a director since the Company's
inception. She is currently the Vice President, International Business
Development, of Longistics Corp., a privately-held logistics business that
operates the foreign trade zone in the Raleigh-Durham area of North Carolina.
From 1996 through 1997, Ms. Grant was the Southeast Regional Manager for Plants
by Grant-TruGreen/Chemlawn and from 1976 to 1996 was the President and owner of
Plants by Grant, Inc., Raleigh, North Carolina. Ms. Grant is a Commissioner of
the North Carolina Board of Transportation and a member of the Executive
Committee of the Board of Directors of the Greater Raleigh Chamber of Commerce.
John F. Grimes was appointed a director of the Company on April 15,
1999 following the share exchange with Home Savings Bank of Siler City, Inc.,
SSB. He is currently and has been for the past five years a partner in Budd Tire
Company, a truck and auto tire dealership.
Oscar A. Keller, Jr. has served as a director since the Company's
inception. He is currently and has been for the past five years President and
CEO of Parkview Retirement Home, a retirement facility located in Sanford, North
Carolina. Mr. Keller is the father of Oscar A. Keller, III.
Don W. Perry has served as a director since the Company's inception. He
is currently and has been for the past five years Assistant Vice President of
Lee Brick and Tile, a brick manufacturing company located in Sanford, North
Carolina.
Class II
Edwin E. Bridges was appointed a director of the Company on April 15,
1999 following the share exchange with Home Savings Bank of Siler City, Inc.,
SSB. He is currently President of Home
<PAGE>
Savings Bank of Siler City, Inc., SSB, but will assume the role of Market
Executive of Chatham County upon the merger of Home Savings into Capital Bank.
Prior thereto, he served as President and Chief Executive Officer of Home
Savings.
L.I. Cohen, Jr. has served as a director since the Company's inception.
He is currently and has been for the past five years Chief Executive Officer of
Lee Iron and Metal Co., Inc., a recycling business located in Sanford, North
Carolina.
Robert L. Jones has served as a director since the Company's inception.
He is currently and has been for the past five years Chairman of the
construction firm DJB Construction Group or its predecessor, Davidson & Jones
Construction Company, each of which is located in Raleigh, North Carolina. Mr.
Jones is also a director of Carolina Power & Light Company, a public utility
company based in Raleigh, North Carolina and of Giant Cement Holdings, Inc., a
cement and aggregate mining company, based in Summerville, South Carolina.
Vernon Malone has served as a director since the Company's inception.
He is a retired educator and is currently chairman of the Wake County, North
Carolina, Board of Commissioners.
J. Rex Thomas has served as a director since the Company's inception.
He is currently the President of Thomas Commercial Inc., a commercial real
estate company located in Raleigh, North Carolina. Prior thereto, Mr. Thomas was
for 17 years a partner with Highwoods Properties, a publicly-held real estate
company headquartered in Raleigh, North Carolina.
Bruce V. Wainright has served as a director since the Company's
inception. He is currently and has been for the past five years President and
Owner of Dr. Bruce V. Wainright, D.D.S. P.A.
Samuel J. Wornom, III has served as a director since the Company's
inception. He is currently and has been for the past five years President of
Nouveau Properties, an investment company located in Sanford, North Carolina.
Class III
Lamar Beach has served as a director since the Company's inception. In
November 1997, Mr. Beach retired after selling his interests in Spanco
Corporation, a textiles corporation located in Sanford, North Carolina, of which
he had been President and Chief Executive Officer for more than the past five
years.
William C. Burkhardt has served as a director since the Company's
inception. He is currently and has been for the past 18 years President and
Chief Executive Officer of Austin Quality Foods, a snack foods company located
in Cary, North Carolina. Mr. Burkhardt is presently a member of the Board of
Directors of Public Service Company of North Carolina and has been since 1989.
David J. Gospodarek has served as a director since the Company's
inception. He is a Certified Public Accountant and has been a principal in the
accounting office of Gospodarek, Lunsford & Associates, Raleigh, North Carolina,
for the past five years.
Darleen M. Johns has served as a director since the Company's
inception. She is currently and has been for the past five years President and
Chief Executive Officer of Alphanumeric Systems, Inc., a computer integration
company located in Raleigh, North Carolina.
8
<PAGE>
O.A. Keller, III has served as a director and as Chairman of the Board
of Directors since the Company's inception. He is currently and has been for the
past five years President and Chief Executive Officer of Earthtec Environmental
Corp., an environmental services company located in Sanford, North Carolina and
Columbus, Ohio, and Chief Executive Officer of Global Contracting Services,
Inc., Columbus, Ohio.
George R. Perkins, III has served as a director since the Company's
inception. He is currently Vice President of Sales for Frontier Spinning Mills,
a textiles company, located in Sanford, North Carolina. Between 1993 and 1996,
Mr. Perkins was a sales representative for Unifi, Inc., a textile company,
headquartered in Greensboro, North Carolina.
Board of Directors Meetings and Committees
The Board of Directors met ten times during 1998. The Board has an
Executive Committee, Audit Committee, Loan Committee, Asset and Liability
Committee, Community Reinvestment Committee and Compensation Committee. The
Executive Committee has the authority to exercise all powers of the Board of
Directors during intervals between meetings of the Board. During fiscal year
1998, the Executive Committee met seven times. The Audit Committee reviews the
results and scope of the audit and other services provided by the Company's
independent auditors. The Audit Committee also recommends to the Board the
appointment of independent auditors. During fiscal year 1998, the Audit
Committee met three times. The role of the Loan Committee is to approve direct
and participation loans that are in excess of management authority and to review
and approve any loans considered to have unusual risk or loans that management
desires to have confirmed by the Board. The Loan Committee consists of ten
outside directors and the Chief Executive Officer and met 12 times during 1998.
The Asset and Liability Committee is made up of five outside directors and the
Chief Executive Officer and is responsible for managing liquidity, interest rate
risk and the Company's investment portfolio consistent with safe and sound
operations and applicable laws and regulations. During fiscal year 1998, the
Asset and Liability Committee met three times. The Community Reinvestment Act
Committee is responsible for assisting management in determining and fulfilling
the credit and other banking needs of all segments of the community and ensuring
compliance with the Community Reinvestment Act and is made up of five board
members. During fiscal year 1998, the Community Reinvestment Act Committee met
three times. The role of the Compensation Committee is to recommend the
compensation of the Company's officers and to administer certain of the
Company's benefit plans. During fiscal year 1998, the Compensation Committee met
five times. Certain senior members of the Company's management who are not also
directors of the Company, serve on certain committees in an ex officio capacity.
The Company does not have a nominating committee of the Board of
Directors. The Board performs the functions that might be performed by such a
committee. Presently, the Board of Directors does not have a policy or procedure
restricting or limiting shareholder recommendations for nominees to the Board.
During 1998, each director attended 75% or more of the aggregate of the
Board meetings (held during the period for which the director was in office) and
Committee meetings of the Board of which the director was a member, except for
Messrs. Jones and Malone who each attended 70% of the aggregate of Board
meetings and meetings of Committees of which they are a member.
9
<PAGE>
Director Compensation
Directors who are also employees of the Company receive no compensation
in their capacities as directors. However, outside directors receive an annual
fee of $5,000 ($7,500 in the case of the Chairman of the Board), as long as they
attend at least 75% of the meetings of the Board and the Committees on which
they serve. Directors of the Company who are not also employees of the Company
are eligible, pursuant to the Company's Deferred Compensation Plan for Outside
Directors (the "Deferred Compensation Plan"), to defer receipt of any
compensation paid to them for their services as a director, including retainer
payments, if any, and amounts paid for attendance at meetings. The amount of
compensation deferred under the Deferred Compensation Plan by each participating
director is increased by 25% and credited to such director's account in the form
of shares of Common Stock based on the value per share of the Common Stock on
December 31 of each year. As of December 31, 1998, an aggregate of 24,300 shares
of Company Common Stock were allocated to the accounts of the directors in
accordance with the terms of the Deferred Compensation Plan. Upon the director's
death, disability or retirement, or upon a change in control of the Company, the
director will be entitled to withdraw the amounts in his or her account in cash
or stock in the Company's sole discretion.
Executive Compensation
The following table sets forth for 1997 (the Company's first year of
existence) and 1998 the cash and other compensation paid to, received or
deferred by the Company's Chief Executive Officer and other executive officers
whose salary and bonus in 1998 exceeded $100,000 (the "named executive
officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation
--------------------------------------------------------- ------------
No. of
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation
- ------------------ ---- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
James A. Beck, 1998 $137,751 $ 35,000 (1) 0 $ 14,301(2)
President and CEO
1997 $121,875(3) $ 50,000 (1) 25,000(4) $ 8,011(5)
Franklin G. Shell, 1998 $ 87,179 $ 15,000 (1) 5,000(6) $ 8,611(7)
Senior Vice Pres
1997 $ 39,958(3) $ 5,000 (1) 5,000(8) $ 3,512(9)
</TABLE>
- -----------------
(1) Perquisites and other personal benefits received did not exceed the lesser
of $50,000 or 10% of salary and bonus compensation.
(2) Includes $2,832 for health, dental and life insurance, $8,265 in 401(k)
contributions and $3,204 in membership dues.
(3) Does not represent a full year since the Bank began operations in 1997.
(4) On January 27, 1997, Mr. Beck was granted an option to acquire up to 25,000
shares of Common Stock at $11.00 per share, 13,000 shares of which are
currently vested, with the balance vesting in increments of 4,000 shares
per year over the next three years. Such options were granted under the
Company's Incentive Stock Option Plan.
(5) Includes $3,311 for health, dental and life insurance, $2,600 in 401(k)
contributions and $2,100 in membership dues.
10
<PAGE>
(6) On August 10, 1998, Mr. Shell was granted an option to acquire up to 5,000
shares of Common Stock at $14.00 per share, which will vest in increments
of 1,000 shares per year over the next five years. Such options were
granted under the Company's Incentive Stock Option Plan.
(7) Includes $2,600 for health, dental and life insurance, $5,231 in 401(k)
contributions and $780 in membership dues.
(8) On June 23, 1997, Mr. Shell was granted an option to acquire up to 5,000
shares of Common Stock at $11.00 per share, 1,000 of which are currently
vested, with the balance vesting in increments of 1,000 shares per year
over the next four years. Such options were granted under the Company's
Incentive Stock Option Plan.
(9) Includes $1,521 for health, dental and life insurance, $1,666 in 401(k)
contributions and $325 in membership dues.
Option Grants in Last Fiscal Year
The following table reflects the stock options granted to date by the
Company to the named executive officers pursuant to the Company's Incentive and
Nonqualified Stock Option Plans in 1998. The table sets forth the hypothetical
potential realizable values that would exist for the options at the end of their
ten-year terms, at assumed rates of stock price appreciation of 5% and 10%. The
amounts shown as potential realizable values represent the corresponding
increases in the market value of all outstanding shares of Common Stock. The
actual value of the options will depend on the market value of the Company's
Common Stock. No gain to the option holders is possible without an increase in
the stock price, which will benefit all shareholders proportionately. These
potential realizable values, based on 5% and 10% appreciation rates prescribed
by the SEC, are not intended to forecast possible future appreciation, if any,
of the Company's stock price.
<TABLE>
<CAPTION>
Potential Realizable
----------------------
Value at Assumed
Annual Rates of
Stock Price
Individual Grants Appreciation for
Option Term (1)
------------------------------------------------------------------------- ----------------------
% of Total
No. of Securities Options Granted to
Underlying Employees Exercise or Base Expiration
Name Options Granted in Fiscal Year Price Per Share Date 5% 10%
- ---- --------------- -------------- --------------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
James A. Beck 0 N/A N/A N/A ___ ___
Franklin G. Shell 5,000(2) 14% $14.00 2008 $35,000 $70,000
- --------------
</TABLE>
(1) Potential realizable value of each grant is calculated assuming that the
market price of the underlying security appreciates at annualized rates of
5% and 10%, respectively, over the ten-year term of the grant. The assumed
annual rates of appreciation of 5% and 10% would result in the value of the
Common Stock increasing to $21 and $28 per share.
(2) See footnote (5) to the Summary Compensation Table above.
11
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values (1)
The following table sets forth certain information concerning options
to purchase Common Stock held by the named executive officers during the year
ended December 31, 1998 and the value of unexercised options as of December 31,
1998.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities Underlying "In-The-Money" Options at
Unexercised Options at Fiscal Fiscal Year-End
Name Year-End (Exercisable/Unexercisable) (Exercisable/Unexercisable (2))
- ---- ------------------------------------ -------------------------------
<S> <C> <C> <C>
James A. Beck 9,000/16,000 $0
Franklin G. Shell 1,000/9,000 $0
</TABLE>
- ---------------
(1) No options were exercised by the named executive officers in the last
fiscal year.
(2) Options are "In-The-Money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The value of the
options is calculated by subtracting the exercise price from $11.00, the
closing market price of the underlying Common Stock as of December 31,
1998, and multiplying the difference by the number of securities underlying
the options.
<PAGE>
Employment Agreement
Under an employment agreement effective January 27, 1997, James A. Beck
agreed to serve as President and Chief Executive Officer of the Bank at an
annual salary of $130,000, subject to increase in an amount to be determined by
the Bank's Board of Directors. Mr. Beck received a cash bonus of $50,000 upon
signing his employment agreement. Pursuant to the terms of his employment
agreement, Mr. Beck was granted an option to acquire up to 25,000 shares of
Common Stock at $11.00 per share, 13,000 shares of which are currently vested,
with the balance vesting in increments of 4,000 shares per year over the next
three years. Mr. Beck will be eligible for performance bonuses and other
benefits available to executives of the Bank. The term of his employment is
three years, annually renewable for successive three year periods unless the
Bank furnishes 60 days prior written notice to Mr. Beck before an anniversary
date of the agreement, in which event Mr. Beck would be entitled to his salary
and bonus for the remaining term. The Bank may terminate Mr. Beck's employment
for cause, in which event the Bank would be required to pay only Mr. Beck's
compensation due at termination. Upon a change in control of the Bank, Mr. Beck
is entitled to compensation equal to three years' salary and bonus. Mr. Beck has
also agreed that during his employment and for two years (or longer in certain
cases) thereafter, he will not compete with the Bank within its then existing
areas of operation.
Board Compensation Committee Report
General. The Compensation Committee reviews and oversees the general
compensation plans and policies of the Company and approves the individual
compensation arrangements for the Company's executive officers.
Executive Compensation. The Company's policy is to pay its executives
and other employees at rates competitive with the national or local markets in
which it must recruit to enable the Company to maintain a highly competent and
productive staff. The Company competes for management personnel with much larger
and more profitable financial services companies, including banks.
Compensation of executives consists of the same components as the
compensation of other Company employees: base salary, company paid fringe
benefits (consisting principally of group health or other insurance), bonuses,
and stock options pursuant to the Company's Incentive Stock Option Plan
12
<PAGE>
and the Nonqualified Stock Option Plan. Salaries for executive positions are
established using the same process as for other positions and job levels within
the Company, that is, by systematically evaluating the position and assigning a
salary based on comparisons with pay scales for similar positions in reasonably
comparable financial services companies, including banks, using regional and
national salary surveys. Companies included in these salary surveys will vary
and are not necessarily the same as the companies used for purposes of the
performance graph included in this Proxy Statement.
Adjustments to executive salaries are generally made annually along
with adjustments to other employee salaries. The CEO is responsible for
decisions regarding the adjustment in compensation of the Company's other
executive officers and such decisions are then ratified by the Compensation
Committee of the Board.
CEO Compensation. Mr. Beck's base salary is set competitively relative
to other chief executive officers in financial service companies in the
Company's market area. Mr. Beck's compensation was reviewed and set by the full
Board of Directors without Mr. Beck's participation. In determining Mr. Beck's
base salary as well as annual performance bonus, the Board of Directors reviewed
independent compensation data and financial and operational results of the
Company for fiscal year 1998 as compared against budgets and peer businesses. As
with the Company's other executive officers, Mr. Beck's total compensation
involves certain subjective judgments and is not based solely upon any specific
objective criteria or weighting.
Stock Option Grants. Stock options are intended to enhance the
long-term proprietary interest in the Company on the part of the employees and
others who can contribute to the Company's overall success and to increase the
value of the Company to its shareholders.
All employees of the Company are eligible to receive annual stock
option grants. Guideline ranges for stock option grants increase relative to
cash compensation as position levels increase, since the Board believes that
employees at higher levels in the Company have a greater opportunity to
influence and contribute to shareholder value.
Stock options are also awarded upon hiring employees to fill certain
senior positions in the Company. The sizes of those awards are determined based
on the guidelines for annual awards for the position to be occupied by the new
employee and the competitive situation.
The process of determining amounts of stock option awards is based on
the same criteria as those used for determining adjustments to cash
compensation, although success in achieving performance goals is weighed more
heavily in determining stock option awards.
Conclusion. The Board of Directors believes that these executive
officer compensation policies and programs effectively promote the Company's
interests and enhance shareholder value.
This report is submitted by the following members of the Compensation
Committee.
William C. Burkhardt, Chairman Carolyn W. Grant
L.I. Cohen, Jr. Samuel J. Wornom, III
Robert L. Jones O.A. Keller, III
James A. Beck (ex officio)
13
<PAGE>
Comparison of Cumulative Total Return
The following graph compares the cumulative total shareholder return on
the Company's Common Stock since June 22, 1997, when the Company's Common Stock
began trading on the OTC Bulletin Board, with the cumulative return for the same
period on the Nasdaq Stock Market Index (U.S.) and The SNL Securities Bank Index
of banks with total assets of less than $250.0 million. The Company's Common
Stock became registered under the Securities Exchange Act of 1934 on November
12, 1997 and began trading on the Nasdaq SmallCap Market on December 18, 1997.
The graph assumes that at the beginning of the period indicated, $100 was
invested in the Company's Common Stock and the stock of the companies comprising
the other indices indicated and that all dividends, if any, were reinvested.
[STOCK PERFORMANCE TABLE APPEARS HERE]
<TABLE>
<CAPTION>
Period Ending
-------------
Index 7/22/97 10/31/97 3/31/98 6/30/98 9/30/98 12/31/98
- ----- ------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital Bank 100.00 107.22 129.90 138.90 105.16 90.72
NASDAQ - Total US 100.00 101.10 118.29 121.72 110.19 142.12
SNL <250M Bank Asset - Size Index 100.00 131.46 148.42 143.90 124.64 124.96
</TABLE>
14
<PAGE>
Certain Transactions
Certain of the directors and executive officers of the Company are
customers of and borrowers from the Company in the ordinary course of business.
As of December 31, 1998, loans outstanding to directors and executive officers
of the Company, and their associates as a group, equaled approximately $6.5
million and during 1998 did not exceed $7.4 million at any time. Total
individual and corporate obligations, direct and indirect, for any one director
did not exceed 10% of the equity capital of the Company at any time during
fiscal 1998. All outstanding loans and commitments included in such transactions
are made substantially on the same terms, including rate and collateral, as
those prevailing at the time in comparable transactions with other customers. In
the opinion of management, these loans do not involve more than normal risk of
collectability, or contain other unfavorable features.
The Company has had, and expects to have in the future, banking
transactions in the ordinary course of its business with directors, officers and
principal shareholders of the Company, and their associates, on the same terms
including interest rates and collateral on loans, as those prevailing at the
same time for comparable transactions with others.
O.A. Keller, III, the Chairman of the Board of the Company, is the
father-in-law of a lawyer at the law firm that serves as principal outside
counsel to the Company. In 1998, the Company paid legal fees to such firm for
services rendered in 1998 in the aggregate amount of approximately $195,000.
The Company purchased its computer network from Alphanumeric Systems,
Inc., a company owned and operated by Darleen Johns, a member of the Board of
Directors. Prior to the purchase, the Company reviewed proposals from
Alphanumeric Systems, Inc. and two other competitors and selected Alphanumeric
Systems, Inc.'s proposal based on competitive factors. Alphanumeric Systems,
Inc. also provides maintenance for the Company's computer network and the
Company anticipates purchasing on a competitive basis additional hardware and
software from time to time. The aggregate amount of all payments made by the
Company to Alphanumeric Systems in 1998 equaled approximately $176,000.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors to file reports of
ownership and changes in ownership with the SEC. In 1998, such persons were
required to file such reports with the Federal Deposit Insurance Corporation
("FDIC"). Based on a review of the report forms that were filed, the Company
believes that during 1998 all filing requirements applicable to its executive
officers and directors were complied with.
15
<PAGE>
Proposal 2: Ratification of Appointment of Independent Accountants
The Board of Directors has appointed PricewaterhouseCoopers LLP as
independent accountants for the fiscal year ending December 31, 1999. Although
the selection and appointment of independent accountants are not required to be
submitted to a vote of the shareholders, the Board of Directors deems it
advisable to obtain shareholder ratification of this appointment. If the
shareholders do not ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants, the Audit Committee of the Company will evaluate the
matter and recommend what action, if any, the Board of Directors should take in
this regard. A representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting, available to respond to appropriate questions and
afforded an opportunity to make a statement.
On August 21, 1997, the Board of Directors of the Company ratified the
actions of its executive officers appointing Coopers & Lybrand L.L.P.,
independent certified public accountants and predecessor to
PricewaterhouseCoopers LLP, to be the Company's independent accountants for the
periods ended June 30, 1997 and December 31, 1997. During its organizational
phase, and prior to its commencement of operations, the Company had appointed
Arthur Andersen, LLP, independent certified public accountants, to be its
independent accountants. On August 21, 1997, the Board of Directors of the
Company ratified the dismissal of Arthur Andersen, LLP, prior to such firm being
engaged to perform any audit services for the Company or providing any
significant consultation on any accounting or reporting matter. There were not
disagreements with Arthur Andersen, LLP on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedures
which, if not resolved to such firm's satisfaction, would have caused such firm
to make reference in connection with their audit opinion to the subject matter
of the disagreement.
Submission of Shareholder Proposals For 2000 Annual Meeting
Any proposals which shareholders intend to present for a vote at the
Company's 2000 annual meeting of shareholders, and which such shareholders
desire to have included in the Company's proxy materials relating to that
meeting, must be received by the Company on or before November 26, 1999.
Proposals received after that date will not be considered for inclusion in such
proxy materials.
In addition, if a shareholder intends to present a matter for a vote at
the 2000 annual meeting of shareholders, other than by submitting a proposal for
inclusion in the Company's proxy statement for that meeting, the shareholders
must give timely notice in accordance with the rules of the SEC. To be timely, a
shareholder's notice must be received by the Company's Corporate Secretary at
its principal office, 4400 Falls of Neuse Road, Raleigh, North Carolina 27609,
on or before February 9, 2000. It is requested that such notice set forth (a) as
to each matter the shareholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, and (b) the name and record
address of the shareholder, the class and number of shares of capital stock of
the Company that are beneficially owned by the shareholder, and any material
interest of the shareholder in such business.
Miscellaneous
As of the date hereof, the Company knows of no other business that will be
presented for consideration at the Annual Meeting. However, the enclosed proxy
confers discretionary authority to vote with respect to
16
<PAGE>
any and all of the following matters that may come before the meeting: (i)
matters for which the Company did not receive timely written notice; (ii)
approval of the minutes of a prior meeting of shareholders, if such approval
does not amount to ratification of the action taken at the meeting; (iii) the
election of any person to any office for which a bona fide nominee is named in
this Proxy Statement and such nominee is unable to serve or for good cause will
not serve; (iv) any proposal omitted from this Proxy Statement and the form of
proxy pursuant to Rule 14a-8 or Rule 14a-9 under the Securities Exchange Act of
1934; and (v) matters incidental to the conduct of the meeting. If any such
matters come before the meeting, the proxy agents named in the accompanying
proxy card will vote in accordance with their judgment.
Additional Information
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, including the financial statements and schedules
thereto, as filed with the FDIC will be furnished upon written request, without
charge to any Company shareholder. Such requests should be addressed to Allen T.
Nelson, Jr., P.O. Box 18949, Raleigh, North Carolina 27609.
All shareholders are encouraged to sign, date and return their proxy
submitted with this Proxy Statement as soon as possible in the envelope
provided. If a shareholder attends the Annual Meeting, he or she may revoke his
or her proxy and vote in person.
By Order of the Board of Directors
/s/ Allen T. Nelson, Jr.
- ------------------------
Allen T. Nelson, Jr.
Senior Vice President and Chief Financial Officer,
Secretary to the Board
April 29, 1999
<PAGE>
REVOCABLE PROXY
CAPITAL BANK CORPORATION
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
Proxy for Annual Meeting of Shareholders
Solicited by the Board of Directors
The undersigned hereby appoints James A. Beck and Allen T. Nelson, Jr., and
each of them, as attorney and proxy of the undersigned, with the full power of
substitution, to represent the undersigned and to vote all of the shares of
stock in Capital Bank Corporation which the undersigned is entitled to vote at
the Annual Meeting of Shareholders to be held at the North Raleigh Hilton, 3415
Wake Forest Road, Raleigh, North Carolina, on Thursday, June 17, 1999 at 3:00
p.m., local time and any adjournments or postponements thereof (1) as
hereinafter specified upon the proposals listed below and as more particularly
described in the Company's Proxy Statement, receipt of which is hereby
acknowledged; and (2) in their discretion upon such other matters as may
properly come before the meeting and any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE PROPOSALS LISTED BELOW.
1. Election of Class II Directors:
Edwin E. Bridges, L.I. Cohen, Jr.,
Robert L. Jones, Vernon Malone,
J. Rex Thomas, Bruce V. Wainright and Samuel J. Wornom, III
[ ] For [ ] Withhold [ ] Except
INSTRUCTION:To withhold authority to vote for any individual nominee, mark "For
All Except"and write that nominee's name in the space provided below.
2. Election of Class I Director: [ ] For [ ] Withhold
John F. Grimes
3. Ratify appointment of PricewaterhouseCoopers LLP as independent accountants
for the Company for the fiscal year ending December 31, 1999.
[ ] For [ ] Against [ ] Abstain
Discretionary authority is conferred by this proxy with respect to certain
matters, as described in the accompanying Proxy Statement.
Please be sure to sign and date
this Proxy in the box below.
________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
CAPITAL BANK CORPORATION
Please sign exactly as your name appears on this card. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
