<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
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:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:
------------------------------------------------------------------------
<PAGE>
WORTHEN BANKING CORPORATION
200 WEST CAPITOL AVENUE
LITTLE ROCK, ARKANSAS 72201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1994
To the Stockholders of Worthen Banking Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of Worthen
Banking Corporation, an Arkansas corporation, will be held in the William H.
Kennedy, Jr. Memorial Auditorium, Fourth Floor, Worthen Bank Building, 200 West
Capitol Avenue, Little Rock, Arkansas, on Tuesday, April 26, 1994, at 1:00 p.m.
local time for the following purposes:
(1) To fix the number of directors for the ensuing year at 15 and to
elect 15 directors;
(2) To amend the Worthen Banking Corporation 1993 Stock Option Plan
to increase the number of shares of Common Stock reserved for issuance
under the plan and to establish a maximum annual grant of options or stock
appreciation rights per employee; and
(3) To ratify the appointment of KPMG Peat Marwick as independent
auditors of the Company for the fiscal year ending December 31, 1994;
(4) To transact such other business as may properly come before the
annual meeting or any adjournments thereof.
Only stockholders of record as of the close of business on March 16, 1994,
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. The Company's stock transfer books will not be closed. The
Company's 1993 Annual Report, which contains financial and other information of
interest to stockholders, accompanies this notice or has previously been mailed
to you. Stockholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors:
Curtis F. Bradbury, Jr.
CHAIRMAN
Little Rock, Arkansas
March 29, 1994
YOUR VOTE IS IMPORTANT. YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, SO THAT
YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER TO ASSURE
THE PRESENCE OF A QUORUM. THE GIVING OF SUCH PROXY DOES NOT AFFECT THE RIGHT TO
REVOKE IT LATER OR VOTE YOUR SHARES IN PERSON IN THE EVENT YOU SHOULD ATTEND THE
ANNUAL MEETING. THE PROMPT RETURN OF YOUR SIGNED PROXY, REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING THE EXPENSE OF
ADDITIONAL PROXY SOLICITATION.
<PAGE>
INDEX
Page
----
SOLICITATION OF PROXY AND EXPENSES . . . . . . . . . . . . . . . . . . . . . 1
REVOCATION OF PROXY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
OUTSTANDING STOCK AND VOTING RIGHTS. . . . . . . . . . . . . . . . . . . . . 2
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Method of Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Discretionary Authority . . . . . . . . . . . . . . . . . . . . . . . . 2
ELECTION OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Director Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Director Nomination and Qualification . . . . . . . . . . . . . . . . . 5
Director Committees and Attendance. . . . . . . . . . . . . . . . . . . 6
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PROPOSAL TO APPROVE AMENDMENTS TO 1993 STOCK OPTION PLAN . . . . . . . . . . 7
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . 10
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . 11
SECURITY OWNERSHIP OF MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 12
Compensation Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Fiscal 1993 Compensation. . . . . . . . . . . . . . . . . . . . . . . . 16
Base Salary/Bonus. . . . . . . . . . . . . . . . . . . . . . . . . 16
Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
CEO Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Compensation Committee Interlocks and Insider Participation . . . . . . 18
Summary Compensation Table. . . . . . . . . . . . . . . . . . . . . . . 18
Compensation Pursuant to Plans. . . . . . . . . . . . . . . . . . . . . 21
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . 22
Stock Performance Chart . . . . . . . . . . . . . . . . . . . . . . . . 22
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
AVAILABILITY OF REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PROPOSALS OF STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . 26
GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
i
<PAGE>
WORTHEN BANKING CORPORATION
200 WEST CAPITOL AVENUE
LITTLE ROCK, ARKANSAS 72201
PROXY STATEMENT
THE ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1994
SOLICITATION OF PROXY AND EXPENSES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Worthen Banking Corporation ("WBC" or the
"Company") to be voted at the Annual Meeting of stockholders on April 26, 1994
to be held at 1:00 p.m., at the principal offices of the Company, in the
William H. Kennedy, Jr. Memorial Auditorium, Fourth Floor, Worthen Bank
Building, Little Rock, Arkansas, and at any and all adjournments thereof. This
Annual Meeting will be held for the purposes set forth in the Notice on the
cover page hereof. A proxy is enclosed for use at such meeting if you are
unable to attend in person. The persons named therein were selected by the
Board of Directors of the Company.
The principal executive offices of WBC are located in the Worthen Bank
Building, 200 West Capitol Avenue, Little Rock, Arkansas 72201, with a mailing
address of P.O. Box 1681, Little Rock, Arkansas 72203-1681, and its telephone
number is (501) 378-1521. This Proxy Statement, the form of proxy and WBC's
1993 Annual Report are first being mailed to stockholders on or about March 29,
1994. Proxies will be solicited by mail. If necessary, they may also be
solicited by directors, officers and regular employees of WBC, personally or by
telephone or telecopy, who will not be specially compensated. Agents may also
be engaged to solicit proxies on behalf of WBC. All expenses of solicitation,
including reimbursement of certain fiduciaries for reasonable expenses incurred
by them in forwarding materials to beneficial owners, will be paid by the
Company. Corporate Investor Communications, Inc. is the sole agent soliciting
proxies on behalf of WBC. The anticipated cost for such solicitation is between
$7,000 and $10,000.
REVOCATION OF PROXY
Stockholders who execute and return proxies which are solicited hereby
retain the right and power to revoke them at any time prior to exercise of the
proxy when voted at the meeting. Revocation of a proxy may be made effective by
any of the following means: (1) delivery of written notice of revocation to the
Secretary of the Company at the address provided above at or prior to the
meeting; (2) execution and delivery of a later dated proxy; or (3) withdrawing
the proxy and voting the shares in person at the meeting. A PROXY, WHEN
PROPERLY EXECUTED AND NOT SO REVOKED, WILL BE VOTED IN ACCORDANCE WITH THE
AUTHORIZATIONS CONTAINED THEREIN. UNLESS A STOCKHOLDER SPECIFIES OTHERWISE ON
THE PROXY, ALL SHARES REPRESENTED THEREBY WILL BE VOTED FOR EACH OF THE DIRECTOR
NOMINEES AND IN FAVOR OF THE PROPOSALS OF THE BOARD OF DIRECTORS DISCUSSED
HEREIN.
<PAGE>
OUTSTANDING STOCK AND VOTING RIGHTS
GENERAL
The outstanding shares of stock of WBC, as of the close of business on
March 16, 1994, the record date for determining stockholders entitled to notice
of and to vote at the Annual Meeting and any adjournments thereof, total
17,005,430 shares of common stock, $1.00 par value ("Common Stock"), the only
class of voting securities that has been issued by WBC as of the date of this
Proxy Statement. At the meeting, each stockholder will be entitled to one vote,
in person or by proxy, for each share of Common Stock held of record at the
close of business on March 16, 1994. With respect to each proposal subject to a
stockholder vote other than the election of directors, approval requires that
the votes cast for the proposal exceed the votes cast against it.
The Company's stock transfer books will not be closed. The stockholders of
WBC do not have preemptive rights to acquire authorized but unissued common or
preferred shares of WBC capital stock.
METHOD OF VOTING
An affirmative vote of a majority of the votes present, in person or by
proxy, is required to pass each of the items listed on the Proxy to be voted
upon except for the election of directors or the selection of auditors. The
election of directors will be approved if each director nominee receives a
plurality of the votes cast. All proxies submitted will be tabulated by
Chemical Bank. Those shareholders choosing to vote in person will have the
opportunity to change their proxy or to vote at the meeting by casting a ballot
with the election judge at the stockholders' meeting.
With respect to the election of directors, a stockholder may withhold
authority to vote for all nominees by checking the box "withhold authority" on
the enclosed proxy or may withhold authority to vote for any nominee by writing
the name of such nominee or nominees on the line indicated on the enclosed
proxy. The enclosed proxy also provides a method for stockholders to abstain
from voting on each other matter presented. By abstaining, shares will not be
voted either for or against the subject proposals, but will be counted for
quorum purposes. While there may be instances in which a stockholder may wish
to abstain from voting on any particular matter, the Board of Directors
encourages all stockholders to vote their shares in their best judgment and to
participate in the voting process to the fullest extent possible.
An abstention or a broker non-vote, (i.e., when a stockholder does not
grant his or her broker authority to vote his or her shares on non-routine
matters) will have no effect on any item to be voted upon by the stockholders.
DISCRETIONARY AUTHORITY
On the date of the mailing of this Proxy Statement, the Board of Directors
has no knowledge of any other matter which will come before the meeting.
However, if any such matter is properly presented at the meeting which may be
acted upon without special notice under Arkansas law, the proxy solicited hereby
confers discretionary authority to the named proxies to vote in their sole
discretion with respect to such matters, as well as other matters incident to
the conduct of the meeting.
2
<PAGE>
ELECTION OF DIRECTORS
GENERAL
The first item to be acted upon at the April 26, 1994 Annual Meeting is the
election of nominees to serve as members of the Board of Directors, each to hold
office for a term of one year and until his successor shall have been duly
elected and qualified. The Company's Amended and Restated Articles of
Incorporation and Bylaws currently provide that the number of directors to
constitute the Board of Directors shall be determined by the stockholders at
each annual meeting or at any special meeting, and the number of directors so
determined shall be applicable until the next stockholders' meeting at which
directors are elected and a new number of directors determined. The Company's
Amended and Restated Bylaws also provide that the directors who are elected by
stockholders may, by a majority vote, increase the number of directors by not
more than 30% of the total of the number of directors most recently approved by
the stockholders and may, by a majority vote, elect directors to fill the
additional memberships who shall serve until the next stockholders' meeting at
which the number of directors is fixed by the stockholders and until their
successors have been duly elected and qualified.
DIRECTOR NOMINEES
Pursuant to those provisions, the Board of Directors recommends to the
stockholders that the number of directors which shall be authorized to manage
the affairs of WBC for the ensuing year be established at fifteen directors.
The Board of Directors respectfully submits the following slate of fifteen
nominees for election at the 1994 Annual Meeting.
All of the nominees are current members of the Board of Directors of WBC.
The Board of Directors has no reason to believe that any nominee will be
unable or unwilling to serve if elected. However, should any nominee named
herein be unable or unwilling to accept nomination and/or election, all proxies
will be voted for the election of a qualified substitute nominated by the Board
of Directors.
<TABLE>
<CAPTION>
Principal Occupation During Last 5 Years; Year First
Offices with WBC; Elected
Name Age Other Public Directorship(s) Director
---- --- ----------------------------------------- ----------
<S> <C> <C> <C>
James H. Atkins 62 President of Marsh & McLennan of Arkansas, 1983
Inc., a multiple-line general insurance brokerage
company; President of Atkins Development
Company
Gus M. Blass, II 70 General Partner of Capital Properties, Ltd., 1988
involved in real estate investments and
developments; Director of Marsam Properties
Curtis F. Bradbury, Jr.(1) 44 Chairman, President and Chief Executive Officer 1986
of WBC; Director of Beverly Enterprises, Inc.
Fred I. Brown, Jr. 71 Vice Chairman of AFCO Steel, Inc., a steel 1984
fabricator
Alex Dillard 44 Executive Vice President and Director of Dillard 1993
Department Stores, Inc.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation During Last 5 Years; Year First
Offices with WBC; Elected
Name Age Other Public Directorship(s) Director
---- --- ----------------------------------------- ----------
<S> <C> <C>
Mike Flynn 45 President, Arkansas Division of Southwestern Bell 1993
Telephone Company; former Vice President,
Network-Texas of Southwestern Bell Telephone
Company
Kaneaster Hodges, Jr.(2) 55 Kaneaster Hodges, Attorney-at-Law and real 1979
estate and commercial developer; Director of
Entergy Corporation; Director of Arkansas Power
& Light Company
T. Milton Honea 61 Chairman and Chief Executive Officer of Arkla, 1993
Inc.
George C. Kell 71 Telecaster for Detroit Baseball Company 1986
Herbert H. McAdams, II(3) 78 Former Chief Executive Officer and Chairman of 1993
The Union of Arkansas Corporation; Chairman
and CEO of Citizens Bancshares, Inc.; Chairman
and CEO of Craighead Investment Co., Inc.;
Chairman and CEO of General American
Enterprises, Inc.
Raymond P. Miller, Sr., M.D. 57 Physician, Little Rock Internal Medicine Clinic; 1992
Director of Arkansas Power & Light Company
A. Dan Phillips 65 Chairman and CEO of M.M.C. Management Co., 1969
involved in real estate and investments; former
Chairman and CEO of The M.M. Cohn Company
Winthrop P. Rockefeller 45 Chairman of the Board and CEO of Winrock 1993
Farms, Inc.; Director of Arrow Automotive
Industries, Inc.
David Solomon 77 David Solomon, P.A., Attorney 1986
Leland E. Tollett 57 Chief Executive Officer and former Chief
Operating Officer of Tyson Foods, Inc.; Director
of Tyson Foods, Inc. 1988
<FN>
(1) Mr. Bradbury was elected Executive Vice President and Assistant to the President of WBC in April 1985. In March 1986 he became
President and Chief Operating Officer of WBC and in January 1987 he was elected President and Chief Executive Officer of WBC.
He was elected to the position of Chairman of the Board in July 1988. Mr. Bradbury also serves as Chairman of the Board and
Chief Executive Officer of Worthen National Bank of Arkansas, a wholly-owned subsidiary of WBC. Prior to his employment with
WBC, he was employed as a Vice President of Stephens Inc., an Arkansas-based investment banking firm.
(2) Kaneaster Hodges, Jr. is a director of Newport Federal Savings & Loan Association, a savings and loan association in Newport,
Arkansas, that is not affiliated with WBC. Since a WBC subsidiary operates a branch bank in Newport, some degree of
competition is likely to exist between Newport Federal Savings & Loan Association and WBC's subsidiary branch bank. However,
WBC believes that this competition is de minimis in amount as well as attenuated. The Board considers the possibility of a
conflict of interest arising because of Mr. Hodges membership on other boards of directors as remote.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
<FN>
(3) Herbert M. McAdams, II is the chairman, chief executive officer, and beneficial owner of all of the outstanding stock of
Citizens Bancshares, Inc. Citizens Bancshares, Inc. is a single bank holding company which owns approximately 91% of Citizens
Bank of Jonesboro. A banking subsidiary of WBC also owns and operates a branch bank in Jonesboro, Arkansas which is in
competition with Citizens Bank of Jonesboro for banking business in the Jonesboro market area.
The Board expects Messrs. Hodges and McAdams to abstain from voting as WBC Directors on any issue that might involve a conflict
between their fiduciary duties as a Director of WBC and their duties and interests as a director, officer and owner of Newport
Federal Savings & Loan Association and Citizens Bancshares, Inc., respectively.
</TABLE>
DIRECTOR NOMINATION AND QUALIFICATION
WBC's Amended and Restated Bylaws currently provide that the Chairman of
the Board of Directors may annually designate a standing Human Resources and
Compensation Committee ("HRC Committee"). Names of all proposed nominees for
election at the next annual meeting of stockholders are referred to the HRC
Committee for its consideration. The HRC Committee makes such inquiry into the
qualification of proposed nominees as it deems appropriate and annually reports
its findings to the Board of Directors concerning the qualifications of proposed
nominees and submits its recommended slate of nominees. In making such
recommendations, the HRC Committee may not discriminate based upon the sex, race
or religion of any proposed nominee. If approved by the Board of Directors, the
HRC Committee's recommended slate of nominees becomes the Board of Directors'
recommended slate of nominees.
Stockholder nominations must be made not more than 75 days nor less than 45
days prior to the date when the election is to be conducted. Nominations may be
made by giving written notice thereof to the Chairman of the Board, President or
Secretary of WBC. Such nominations should contain sufficient information
concerning the proposed nominee so that the HRC Committee may make an
appropriate inquiry to determine whether or not the proposed nominee meets
certain eligibility requirements as set forth in WBC's Amended and Restated
Bylaws. Nominations shall not be deemed to have been delivered until actually
received by the Chairman of the Board, President or Secretary of WBC.
Under the Amended and Restated Bylaws of WBC, the Board may, by a majority
vote, enlarge its membership by not more than 30% of the number of directors
most recently approved by the stockholders and may, by a majority vote, elect
directors to fill the new Board positions. Such additional directors would
serve until the next annual meeting of WBC stockholders at which time the number
of directors would be fixed and a new slate of directors elected by WBC
stockholders. Pursuant to these provisions, the Board voted to increase its
membership from 10 to 12 directors and selected Mr. Flynn (effective
February 23, 1993) and Mr. Honea (effective March 23, 1993) to fill the two
vacant positions. At the annual meeting of stockholders on June 22, 1993, the
stockholders of WBC voted to expand the Board to fifteen members. As of the
date of this Proxy Statement, no other commitments have been made for the
enlargement of the Board of Directors or for the election of any persons to the
Board of Directors other than the slate of nominees named herein.
Certain WBC directors and director nominees have interests in entities
which may be deemed to be in competition with WBC. However, the HRC Committee
of WBC's Board of Directors has been notified of these potential competing
interests and has determined that the existing or potential competing interests
do not significantly impair the ability of any director or nominee to fully
serve as WBC director.
5
<PAGE>
DIRECTOR COMMITTEES AND ATTENDANCE
The WBC Board has standing Executive, Audit and HRC Committees. The
membership of such committees is as follows:
<TABLE>
<CAPTION>
EXECUTIVE AUDIT HRC
--------- ----- ---
<S> <C> <C>
Fred I. Brown, Jr., Chairman Leland E. Tollett, Chairman Kaneaster Hodges, Jr., Chairman
Curtis F. Bradbury, Jr. James H. Atkins Dr. Raymond P. Miller, Sr., M.D.
A. Dan Phillips Gus M. Blass, II David Solomon
Raymond P. Miller, Sr., M.D. Leland E. Tollett
Alex Dillard
</TABLE>
The Executive Committee is authorized to exercise many of the powers of the
Board of Directors between meetings of the Board of Directors, but may not
exercise any of the following powers: elect officers of WBC; declare dividends,
authorize the issuance, sale, redemption or retirement of WBC stock or create a
series within any class of WBC stock; call WBC stockholders' meetings; amend
WBC's Amended and Restated Articles of Incorporation or Bylaws; fill vacancies
in director and Executive Committee positions; or make any fundamental changes
in the operations or business of WBC. All members of the Executive Committee
are also members of the Board of Directors and serve on the Executive Committee
at the pleasure of and subject to the control and discretion of the Board of
Directors.
WBC's Audit Committee monitors the activities of independent and internal
auditors and internal loan review. The Audit Committee meets with
representatives of the independent auditors during the year to review the
conduct of the annual audit and to discuss recommendations with respect to WBC's
internal control policies and procedures.
The HRC Committee reviews and determines compensation to be paid to all WBC
officers and the chief executive officers of all WBC affiliates. The HRC
Committee determines whether nominees for WBC's Board of Directors possess
requisite qualifications established by the Amended and Restated Bylaws of WBC
and annually recommends to the Board of Directors a proposed slate of nominees.
It also considers stockholder nominations for director. SEE "Election of
Directors -- Director Nomination and Qualification."
During 1993, the Executive Committee had no meetings, the Audit Committee
had four meetings, and the HRC Committee had nine meetings. In 1993 the full
Board of Directors had 15 special or regular meetings. In 1993, each incumbent
director nominee, except for Messrs. Dillard, Honea, McAdams and Rockefeller,
attended more than 75% of the aggregate of (i) the total number of meetings of
the Board of Directors held during the period for which each was a director and
(ii) the total number of meetings held by all committees of the Board of
Directors on which each served for such period of the year he was a committee
member.
LEGAL PROCEEDINGS
In January of 1993, the Company, its directors, and certain of its officers
and shareholders were sued in the United States District Court for the Southern
District of New York, in WINICKI V. WORTHEN BANKING CORPORATION, et al., 93-CIV-
0135. The complaint alleged that the defendants violated Section 14(a) of the
Securities Exchange Act of 1934 ("Exchange Act"), Rule 14a-9 of the Securities
and Exchange Commission ("SEC" or "Commission"), and certain state law
provisions relating to fiduciary duties in connection with the matters disclosed
in the Company's Proxy Statement distributed in December of 1992. The complaint
was filed as a class action and sought an injunction to prevent the Company from
holding a special meeting or from consummating certain transactions which were
the subject of the proxy statement, and unspecified monetary damages.
6
<PAGE>
The Company has denied all material allegations in the complaint and in
January 1993, the parties entered into a Memorandum of Understanding ("MOU")
under which the Company agreed to distribute revised disclosure material to its
shareholders, and not to oppose an application by plaintiff's counsel for fees
in an agreed amount.
On January 21, 1994, the Court provisionally certified a class for purposes
of the settlement. The settlement remains subject to Court approval following a
fairness hearing at which class members may raise any objections to the
settlement. Notice of the settlement was sent to class members beginning on
February 9, 1994, and a fairness hearing is scheduled for April 5, 1994.
On March 31, 1993, the Board of Governors of the Federal Reserve System
("FED") advised WBC that the Company's application to merge The Union of
Arkansas Corporation with a subsidiary of WBC had been approved. The FED
approved the merger, in part, in reliance upon representations and commitments
made to the FED by the Company, by Stephens Group, Inc. and by certain Stephens
family members. These included a representation that Stephens Group, Inc. does
not and will not exert control over the management and policies of WBC and that
Stephens Group, Inc. and its subsidiaries will comply with the restrictions
imposed by Sections 23A and 23B of the Federal Reserve Act. Management believes
that such representations and commitments will not materially affect the
Company's general business policies, financial condition, or results of
operations. The Company has also been advised that the FED has made a
determination that Stephens Group, Inc., and its affiliates, are affiliates of
the Company, as that term is defined in Sections 23A and 23B of the Federal
Reserve Act.
The Board of Governors also notified the Company on March 31, 1993 that the
Board of Governors had ordered an investigation to review the ownership and
control of the Company for compliance with the Bank Holding Company Act and the
Change in Bank Control Act, including the nature and extent of the relationships
between the Company and Stephens Group, Inc. and its subsidiaries. The Company
is not aware of any assertion by the Board of Governors that the Company is not
in compliance with the Bank Holding Company Act or the Change in Bank Control
Act. In the event the Board of Governors determines that there has been a
violation of the Bank Holding Company Act, it is authorized to initiate certain
administrative enforcement actions against the Company and its institution-
affiliated parties. These actions could include, among other things, the
issuance of an order to cease and desist or the assessment of monetary penalties
against the Company or its institution-affiliated parties. The amount of such
monetary penalties, if any, would be determined by the Board of Governors on the
basis of the facts and circumstances surrounding the alleged violations and
might or might not have a material adverse effect upon the Company's financial
condition or results of operations. In addition, under regulations promulgated
by the Board of Governors, in the event it determines that an impermissible
control relationship exists, it would have discretion to order termination of
the impermissible control relationship or the filing of an application seeking
the approval of such control relationship or to pursue other remedial actions.
However, the Company cannot now predict the results or the final outcome of the
investigation. The Company intends to continue to cooperate with the Board of
Governors in this investigation. See "Certain Transactions," page __.
PROPOSAL TO APPROVE AMENDMENTS TO
1993 STOCK OPTION PLAN
The Company's 1993 Stock Option Plan (the "1993 Plan") was adopted by the
Board of Directors on April 27, 1993, and approved by stockholders on June 22,
1993. The 1993 Plan was adopted for the purpose of providing key employees the
opportunity to acquire a proprietary interest in the Company, thereby increasing
their commonality of interest with stockholders by creating a greater concern
for the Company's welfare.
At this year's Annual Meeting, stockholders will be requested to approve
the following amendments to the 1993 Plan (the "Option Plan Proposal"): 1) an
increase in the number of shares reserved for issuance by 220,000 shares, and 2)
the establishment of 15% of the total shares authorized under the 1993 Plan as
the maximum number of shares with respect to which stock options or stock
appreciation rights ("SARs"), respectively, may be granted
7
<PAGE>
to an employee during any calendar year. The Option Plan Proposal was approved,
subject to stockholder approval, by the HRC Committee and the full Board of
Directors on March 22, 1994. Except for the changes described above, no other
changes are being made to the 1993 Plan.
The 1993 Plan was adopted with the intention of replacing (for purposes of
future grants) the Company's 1984 Stock Option Plan (the "1984 Plan"). The 1984
Plan terminates (for purposes of future grants) on October 23, 1994. The
Company does not currently intend to effect future option grants under the 1984
Plan prior to its termination. Thus, approximately 220,000 of the shares
previously authorized by stockholders for issuance under the 1984 Plan will not
be utilized. The purpose of the Option Plan Proposal, therefore, is simply to
reallocate the 220,000 shares that remain available for grant under the 1984
Plan into the 1993 Plan.
The 1993 Plan originally authorized the granting of stock options and SARs
to purchase or acquire up to 500,000 shares of Common Stock. As of March 1,
1994, 297,400 shares of Common Stock were available for issuance under the 1993
Plan. The Option Plan Proposal would increase the maximum amount of shares
available for grant to 517,400.
In August 1993, Congress enacted the 1993 Omnibus Budget Reconciliation Act
("OBRA"). Section 162(m) thereof provides that publicly-held companies may be
limited as to income tax deductions for covered executive officers to the extent
that their total remuneration (including certain stock option and SAR exercises)
exceeds $1 million in any one year. Although no final regulations interpreting
OBRA have been issued by the Internal Revenue Service ("IRS"), the IRS's initial
proposals provide that stock options and SARs will be exempt under OBRA where
such instruments are granted by a compensation committee comprised of two or
more outside directors and the grants are made pursuant to a plan which has been
approved by stockholders.
While the 1993 Plan satisfies these requirements, an additional condition
to exemption has also been proposed by the IRS requiring that option plans set
forth a maximum number of stock options or SARs that may be awarded to executive
officers in any one year. Thus, in order to comply with OBRA and avoid the
possible loss of future federal income tax deductions attributable to stock
options and SARs, the board has approved an amendment to the 1993 Plan that
would establish 15% of the total shares authorized for issuance under the 1993
Plan as the maximum number of shares that may be subject to any stock options or
SARs, respectively, granted to an employee during any calendar year. The 15
percent limit would apply separately to grants of stock options and SARs, so
that an employee could receive in a calendar year separate grants of stock
options and SARs equaling 15% each, and 30% in the aggregate, of the total
authorized shares under the 1993 Plan.
Under the 1993 Plan, the HRC Committee may in its discretion grant either
incentive stock options ("Incentive Options") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code") or options that do
not meet the requirements for Incentive Options ("Nonqualified Options"). No
options may be granted under the 1993 Plan later than April 27, 2003. Any
options granted must have an exercise period of no more than ten years.
Additionally, the exercise price per share for each option may not be less than
the fair market value of the underlying shares on the date of grant. Options
may be exercised upon notice to the Company and payment of the option exercise
price in cash. Additionally, if approved by the HRC Committee in the grant
document pursuant to which the options were issued, the exercise price for an
option may also be satisfied by either (i) delivery of already owned shares of
WBC Common Stock, valued at its fair market value as of the time of exercise or
(ii) through a cashless exercise procedure that permits the Company to retain a
number of shares of WBC Common Stock having a fair market value (as of the time
of exercise) equal to the exercise price.
In addition to options, the 1993 Plan also provides for the grant of SARs
which may be granted either (i) alone, (ii) simultaneously with the grant of an
option (either Incentive or Nonqualified) and in conjunction therewith or in the
alternative thereto, or (iii) subsequent to a Nonqualified option or in
conjunction therewith or in the alternative thereto. An SAR entitles the
holder, upon exercise of such SAR, to receive from the Company, shares of Common
Stock, cash or any combination of the two as specified in the exercise request
(but subject to
8
<PAGE>
the approval of the Compensation Committee with respect to any cash payment)
having an aggregate value equal to the product of (i) the excess of the fair
market value on the date of exercise over the exercise price per share specified
in such SAR or its related option, multiplied by (ii) the number of shares for
which such SAR shall be exercised.
Under currently applicable provisions of the Code, as amended, an optionee
will not be deemed to receive any income for federal income tax purposes upon
the grant of any option or SAR under the 1993 Plan, nor will the Company be
entitled to a tax deduction at that time. Upon the exercise of a Nonqualified
Option or SAR, the optionee will be deemed to have received ordinary income in
an amount equal to the difference between the exercise price and the market
price of the shares on the exercise date. The Company will be allowed an income
tax deduction equal to the excess of market value of the shares on the date of
exercise over the cost of such shares to the optionee. Upon the exercise of an
Incentive Option, there is no income recognized by the optionee at the time of
exercise. If the stock is held at least one year following the exercise date
and at least two years from the date of grant of the option, the optionee will
realize a capital gain or loss upon sale, measured as the difference between the
exercise price and the sale price. If both of these holding period requirements
are not satisfied, ordinary income tax treatment will apply to the amount of
gain at sale or exercise, whichever is less. If the actual gain exceeds the
amount of ordinary income, the excess will be considered short-term or long-term
capital gain depending on how long the shares are actually held. No income tax
deduction will be allowed by the Company with respect to shares purchased by an
optionee upon the exercise of an Incentive Option, provided such shares are held
for the required periods as described above.
No determination has been made with respect to future recipients of options
or SARs under the 1993 Plan and it is not possible to specify the names or
positions of persons to whom options or SARs may be granted, or the number of
shares, within the limitations of the 1993 Plan as amended, to be covered by
such options or SARs. However, as required by Securities and Exchange
Commission rules, the following table shows the number and dollar value benefit
of all options granted during 1993 under the 1993 Plan to (i) the Chief
Executive Officer, (ii) each of the four most highly compensated executive
officers (iii) all current executive officers as a group, (iv) all non-executive
directors as a group and (v) all non-executive officers and employees as a
group:
NEW PLAN BENEFITS
1993 STOCK OPTION PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE(2) NUMBER OF OPTIONS(3)
----------------- --------------- --------------------
<S> <C> <C>
Curtis F. Bradbury, Jr. $0 22,500
Chairman, President and Chief Executive Officer of
Worthen Banking Corporation
John I. Fleischauer, Jr. $0 15,000
President and Chief Operating Officer of Worthen
National Bank of Arkansas
Andrew T. Melton $0 20,000
Executive Vice President and Chief Financial Officer of
Worthen Banking Corporation
James C. Patridge $0 20,000
Executive Vice President of Worthen Banking Corporation
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE(2) NUMBER OF OPTIONS(3)
----------------- --------------- --------------------
<S> <C> <C>
James F. Stobaugh $0 10,000
Chairman and Chief Executive Officer of Worthen
National Bank of Northwest Arkansas
Executive Group $0 148,500
Non-Executive Director Group(1) N/A N/A
Non-Executive Officer Employee Group $0 62,350
<FN>
- -------------------------
(1) Non-executive directors are not eligible to participate under the 1993
Plan.
(2) These options were granted at an exercise price of $24.25 per share which
was the fair market value of the underlying shares on the date of grant.
Based upon the closing price of the Company's Common Stock on March 22,
1994, there is no dollar value attributable to these options.
(3) Represents 1993 Option grants.
</TABLE>
On March 22, 1994, the closing price of the Company's Common Stock, as
listed on the American Stock Exchange was $22.00 per share.
Approval of the Option Plan Proposal will require the affirmative vote of
the holders of a majority of the shares present, in person or by proxy, at the
Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE OPTION PLAN
PROPOSAL.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Management of the Company has designated KPMG Peat Marwick as the
accounting firm to provide the independent audit of the accounts, books and
records of the Company and its subsidiaries for the year 1994 and recommends the
selection and appointment of KPMG Peat Marwick to serve as the Company's
independent auditors for the fiscal year ending December 31, 1994. KPMG Peat
Marwick has served as the independent auditors of the Company since the fiscal
year ended December 31, 1986. The designation of KPMG Peat Marwick to serve as
the independent auditors for the Company for 1994 as set forth above will be
submitted to stockholders at the meeting for their ratification. The Company
has not been advised that any member of that firm has any interest, financial or
otherwise, direct or indirect, in the Company or in any of its subsidiaries. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
Representatives of KPMG Peat Marwick will be present at the meeting, will
have an opportunity to make a statement to stockholders, if desired, and will be
available to respond to appropriate questions from stockholders.
10
<PAGE>
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
Set forth below, is information as of December 31, 1993, concerning all
stockholders known by management to have beneficial ownership of 5% or more of
the outstanding shares of the Company's Common Stock, the only class of equity
securities of WBC which has been issued as of the date of this Proxy Statement.
THE DEFINITION OF "BENEFICIAL OWNERSHIP" UNDER SECURITIES AND EXCHANGE
COMMISSION RULES REQUIRES SOME SHARES OF THE COMPANY'S COMMON STOCK TO BE
REPORTED AS OWNED BY MORE THAN ONE PERSON. FOR EXAMPLE, THE 1,679,876 SHARES
OWNED BY THE W. R. STEPHENS TRUST IS ALSO REPORTED AS BEING OWNED BY VERNON
GISS, BESS C. STEPHENS AND JACKSON T. STEPHENS BECAUSE THESE INDIVIDUALS ARE
TRUSTEES OF THAT TRUST. LIKEWISE, JACKSON T. STEPHENS MUST REPORT BENEFICIAL
OWNERSHIP OF 1,333,206 SHARES BECAUSE HE IS THE BENEFICIARY OF THAT TRUST WHICH
OWNS THOSE SHARES, AND WARREN A. STEPHENS MUST REPORT BENEFICIAL OWNERSHIP OF
1,587,026 SHARES BECAUSE HE IS EITHER A TRUSTEE OR BENEFICIARY OF TRUSTS WHICH
OWN THOSE SHARES. SUCH DUPLICATE REPORTING IS EXPLAINED FULLY IN THE FOOTNOTES
TO THE FOLLOWING TABLE.
<TABLE>
<CAPTION>
Name and Address Amount Amount Percentage
of Beneficial Owner Directly Owned Beneficially Owned Ownership(1)
------------------- -------------- ------------------ ------------
<S> <C> <C> <C>
Robert C. Conner 922,004 922,004 5.42%
31 Hickory Hills Circle
Little Rock, Arkansas
Walter A. DeRoeck 890,000 921,013(2) 5.42%
2805 Scenic Drive
Austin, Texas 78703
Vernon Giss -0- 1,679,876(3) 9.88%
111 Center Street
Little Rock, Arkansas
H. Hall McAdams, III 995,064 995,064(7) 5.85%
4124 Crestwood Drive
Little Rock, Arkansas
Herbert H. McAdams, II 1,701,450 1,701,450 10.01%
Number One Union National Plaza
124 West Capitol Avenue
Little Rock, Arkansas 72201
Bess C. Stephens 199,570 1,879,446(4) 11.05%
111 Center Street
Little Rock, Arkansas
Jackson T. Stephens -0- 3,013,082(5) 17.71%
111 Center Street
Little Rock, Arkansas
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount Amount Percentage
of Beneficial Owner Directly Owned Beneficially Owned Ownership(1)
------------------- -------------- ------------------ ------------
<S> <C> <C> <C>
Warren A. Stephens 947,162 2,549,368(6) 13.52%
111 Center Street
Little Rock, Arkansas
W.R. Stephens Trust 1,679,876 1,679,876 9.88%
111 Center Street
Little Rock, Arkansas
J.T. Stephens Trust One 1,333,206 1,333,206 7.83%
111 Center Street
Little Rock, Arkansas
<FN>
- -------------------------
(1) On March 16, 1994, WBC had 17,005,430 shares of its Common Stock issued and
outstanding. The percentages set forth in this table are based upon the
number of shares beneficially owned by each person and 17,005,430 shares
outstanding.
(2) Includes 31,013 shares held by members of Mr. DeRoeck's family.
(3) As a trustee of the W.R. Stephens Trust, Mr. Giss is considered to be the
beneficial owner of the 1,679,876 shares owned by that trust.
(4) Bess C. Stephens individually owns 199,570 shares of the Company and, as a
trustee of the W.R. Stephens Trust, is considered to be the beneficial
owner of the 1,679,876 shares owned by that trust.
(5) Jackson T. Stephens does not own any shares of the Company individually,
but he is the beneficiary of a trust owning 1,333,206 shares. In addition,
he is a trustee of the W.R. Stephens Trust and is considered to be the
beneficial owner of the 1,679,876 shares owned by that trust.
(6) Warren A. Stephens individually owns 947,162 shares and is the beneficiary
of a trust owning 250,000 shares. In addition, beneficial ownership of
19,000 shares is attributed to Mr. Stephens as a result of serving as
trustee for various trusts of his children and shares owned by his spouse.
He is also trustee for the J.T. Stephens Trust One (1,333,206 shares).
Warren Stephens is the son of Jackson T. Stephens and is the president and
chief executive officer of Stephens Group, Inc.
(7) H. Hall McAdams, III, is the son of Herbert H. McAdams, II.
</TABLE>
- -------------------------
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the amount and percentage of WBC Common
Stock beneficially owned, as of March 16, 1994, by all current directors,
nominees for election as a director of WBC and named executive officers, and by
all current directors, nominees and executive officers of WBC as a group.
Additional information regarding the beneficial ownership of each of the named
executive officers may be found in the Summary Compensation Table.
12
<PAGE>
<TABLE>
<CAPTION>
Amount
Beneficially Percentage
Title of Class Name Owned(1) Ownership (1)
-------------- ---- ------------ -------------
<S> <C> <C> <C>
Common Stock,
$1.00 Par Value James H. Atkins(3) 20,620 *
Gus M. Blass, II(3) 110,000 1.20%
Curtis F. Bradbury, Jr.(4) 208,471 *
Fred I. Brown, Jr.(3) 18,250 *
Alex Dillard 551 *
John I. Fleischauer, Jr.(5) 32,364 *
Mike Flynn 540 *
Kaneaster Hodges, Jr. 500 *
T. Milton Honea 1,300 *
George C. Kell(3) 3,500 *
Herbert H. McAdams, II 1,701,450 10.01%
Andrew T. Melton(6) 13,829 *
Raymond P. Miller, Sr., M.D. 500 *
James C. Patridge(7) 19,661 *
A. Dan Phillips(3) 9,969 *
Winthrop Paul Rockefeller 551 *
David Solomon 500 *
James F. Stobaugh(8) 30,173 *
Leland E. Tollett(3) 10,500 *
All Directors, Nominees for
Director and Executive
Officers as a Group (33
persons)(3)(9) 2,362,627 13.63%
The Company has determined, based upon a review of the Form 4 filings for
fiscal 1993, that Messrs. Flynn and Taylor filed a Form 4, Statement of
Change in Beneficial Ownership, later than the time required by Section 16(a) of
the Securities Exchange Act of 1934. In addition, Messrs. Dillard, Honea and
Rockefeller filed late reports on Form 3, Statement of Beneficial Ownership of
Securities, during fiscal 1993.
<FN>
- -------------------------
* Indicates beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
(1) Includes directors' qualifying shares of 500 shares for each WBC director.
(2) On March 16, 1994, 17,005,430 shares of Common Stock were outstanding.
However, for purposes of calculating the beneficial ownership of any
individual, it was assumed that such individual had exercised all options
to acquire Common Stock exercisable by that individual within the following
60 days. The group total similarly assumes that all directors and officers
have exercised their options to acquire Common Stock.
(3) Includes certain shares in respect of the foregoing directors, nominees and
officers owned by (a) their spouses; (b) their minor children or members of
their households; or (c) corporations, trusts or foundations with respect
to which they own in excess of 10% of any equity interest or which they
exercise a controlling interest. The respective directors, nominees and
officers may disclaim beneficial interest in some of the listed shares.
Specifically includes 2,280 shares owned by family members of Mr. Atkins,
70,000 shares held in trust or by family members and attributable to
Mr. Blass, 10,000 shares owned by Industrial Realty Corporation, in which
Mr. Brown is a principal stockholder, 3,000 shares held in trust and
attributed to
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Mr. Kell, 5,000 shares attributed to Mr. Phillips, and 10,000
shares owned by Tollett Farms, Inc., in which Mr. Tollett is a principal
stockholder.
(4) Includes 135,397 shares of Common Stock subject to options previously
granted to Mr. Bradbury pursuant to the WBC 1984 Amended and Substituted
Stock Option Plan which are either vested and currently exercisable or will
become vested and exercisable within 60 days following the date of this
proxy statement. No options have been exercised by Mr. Bradbury as of the
date of this proxy statement. Also includes 474 shares of Common Stock
held for the benefit of Mr. Bradbury in the Company's 401(k) Plan.
(5) Includes 25,688 shares of Common Stock subject to options previously
granted to Mr. Fleischauer pursuant to the WBC 1984 Amended and Substituted
Stock Option Plan which are either vested and currently exercisable or will
become vested and exercisable within 60 days following the date of this
proxy statement. No options have been exercised by Mr. Fleischauer as of
the date of this proxy statement. Also includes 5,910 shares of Common
Stock held for the benefit of Mr. Fleischauer in the Company's 401(k) Plan
and 33 shares of Common Stock held for the benefit of Mr. Fleischauer in
the Company's Employee Stock Purchase Plan.
(6) Includes 11,443 shares of Common Stock subject to options previously
granted to Mr. Melton pursuant to the WBC 1984 Amended and Substituted
Stock Option Plan which are either vested and currently exercisable or will
become vested and exercisable within 60 days following the date of this
proxy statement. Also includes 17,000 shares purchased by Mr. Melton upon
the exercise of stock options in fiscal 1993, 2,258 shares of Common Stock
held for the benefit of Mr. Melton in the Company's 401(k) Plan and 28
shares of Common Stock held for the benefit of Mr. Melton in the Company's
Employee Stock Purchase Plan.
(7) Includes 19,443 shares of Common Stock subject to options previously
granted to Mr. Patridge pursuant to the WBC 1984 Amended and Substituted
Stock Option Plan which are either vested and currently exercisable or will
become vested and exercisable within 60 days following the date of this
proxy statement. Also includes 780 shares of Common Stock held for the
benefit of Mr. Patridge in the Company's 401(k) Plan.
(8) Includes 24,666 shares of Common Stock subject to options previously
granted to Mr. Stobaugh pursuant to the WBC 1984 Amended and Substituted
Stock Option Plan which are either vested and currently exercisable or will
become vested and exercisable within 60 days following the date of this
proxy statement. No options have been exercised by Mr. Stobaugh as of the
date of this proxy statement. Also includes 5,407 shares of Common Stock
held for the benefit of Mr. Stobaugh in the Company's 401(k) Plan.
(9) Includes 326,632 shares of Common Stock subject to options previously
granted to members of the group pursuant to the WBC 1984 Amended and
Substituted Stock Option Plan which are either vested and currently
exercisable by those persons or will become vested and exercisable within
60 days following the date of this proxy statement. Also includes 37,568
shares of Common Stock held for the benefit of members of the group in the
Company's 401(k) Plan and 690 shares of Common Stock held for the benefit
of members of the group in the Company's Employee Stock Purchase Plan.
</TABLE>
14
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF HUMAN RESOURCES AND COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
The Human Resources and Compensation Committee (the "HRC Committee") of the
Worthen Banking Corporation ("WBC" or the "Company") Board of Directors, which
is composed of five outside directors, is charged with oversight of the
Company's Executive Compensation Program. Following review and approval by the
HRC Committee, executive compensation matters are reviewed by the full Board of
Directors.
COMPENSATION POLICY
WBC's policy is for executive officers to receive market compensation
adjusted for both corporate and individual performance. Executive compensation
includes cash and non-cash components, with a focus on both short- and long-term
planning.
Since 1992, Management Solutions, Inc. ("MSI"), an independent third party
with expertise in compensation/salary administration, has reviewed the Company's
compensation practices, comparing benchmark assigned salary ranges with
comparable positions in the external market. The companies used by MSI in
comparing compensation were selected based upon (1) a nationwide Cole Survey of
banks with comparable asset size and job position; (2) a South Central United
States Cole Survey based upon comparable asset size and job position; and (3) a
specific list comprised of certain competitors based upon location, asset size
and job position. The sample companies reviewed by MSI in comparing
compensation do not specifically correspond to the group of companies used in
the published industry index included in this Proxy Statement.
Measurement of corporate performance is based upon a number of factors,
including earnings; capital; earnings per share; non-interest income revenue
sources; interest rate margin management, management response to economic,
regulatory and competitive challenges; market share; taxes; return on assets;
return on equity; net overhead; loan performance; acquisitions; disposition of
assets; capital ratios; and leverage ratios. In addition to overall corporate
performance, the HRC Committee may also take into account specific subsidiary
performance (for subsidiary employees) and division performance (for division
employees).
Finally, individual performance is based upon different factors, which
include, initiative, scope of responsibility, performance of managed assets or
divisions and attainment of management stated goals.
Although the corporate and individual performance factors are subjectively
considered by the HRC Committee each year, certain factors may be deemed more
important by the Committee in a given year. The factors considered most
important in determining the components of 1993 compensation are discussed in
more detail below.
The short-term cash compensation component for an executive is designed to
provide a base salary and bonus. The bonus component allows for additional cash
compensation beyond base salary in amounts subjectively determined by the HRC
Committee based upon the performance of the individual and the Company. In
addition to short-term cash compensation, the Company provides compensation in
the form of deferred and stock-based compensation. Long-term deferred
compensation consists of fixed matching contributions under the Company's 401(k)
Savings and Profit Sharing Plan, while stock-based compensation consists of
stock options and fixed matching contributions under the Company's broad-based
Stock Purchase Plan which are fixed as a percentage of employee participant
contributions. The HRC Committee believes that the granting of stock options
allows an executive to acquire a proprietary interest in the Company through
ownership of common stock which strongly enhances his/her sense of ownership and
strengthens the executive officers' commonality of interest with stockholders.
Since no benefit is derived unless the Company's stock price increases, stock
option grants are designed to provide an
15
<PAGE>
incentive for executive officers to contribute to the improvement of long-term
corporate performance which positively impacts stockholder value. Additionally,
depending upon the vesting schedule, stock options also provide an incentive for
long-term employment with the Company.
In August 1993 Congress enacted the 1993 Omnibus Budget Reconciliation Act
("OBRA"). Section 162(m) thereof provides that publicly-held companies may be
limited as to income tax deductions for certain covered executive officers to
the extent that their total remuneration exceeds $1 million in any one year. The
adoption of OBRA is not expected to have an impact or result in the loss of
deduction for the Company's cash compensation programs. Additionally, the
Company is proposing an amendment to its 1993 Stock Option Plan to take
advantage of an exemption from OBRA for stock option and stock appreciation
right grants. See "Proposal to Approve Amendments to 1993 Stock Option Plan"
contained elsewhere in the Company's Proxy Statement.
FISCAL 1993 COMPENSATION
For Fiscal 1993, the Company's Executive Compensation Program consisted of
(1) base salary, adjusted, if warranted, from the prior year (and including,
where appropriate, directors fees for serving on WBC or affiliate bank boards);
(2) a cash bonus, subjectively determined after considering individual and
corporate performance; (3) car allowance and club dues (4) stock option grants,
where appropriate and (5) fixed matching contributions under the Company's
401(k) and Stock Purchase Plans.
BASE SALARY/BONUS
The HRC Committee believes that an appropriate relationship should exist
between base salary and bonus. With the assistance of MSI, the HRC Committee
has determined that the goal of this relationship or mix is to establish and/or
maintain base salaries at a range between the midpoint (50th percentile) and the
third quartile (75th percentile) of the assigned salary range for a particular
salary grade. The HRC Committee believes that this established range
approximates the median level derived from comparative industry salary survey
data. Although certain base salary increases were given in 1993 to reflect
increased responsibility attributable to the acquisition of The Union of
Arkansas Corporation, base salaries generally remained in the established range
during 1993. As a result of these established levels, the Company's Executive
Compensation Program places significant emphasis on cash bonuses which offer
reward opportunities based upon individual and corporate performance. Thus,
historically, when the Company has experienced extraordinary success, the
contribution of its executive officers has been appropriately recognized and
rewarded through larger bonuses. Conversely, in less profitable years, the
bonuses awarded to executive officers has also been appropriately impacted. As
noted above, annual bonuses are subjectively determined by the HRC Committee
upon the recommendation of management. In 1993, the Company was faced with
significant challenges as a result of its growth strategy which involved the
acquisition and absorption of a number of targets including The Union of
Arkansas Corporation. While the Company's executives and employees have
performed well in responding to these challenges, the increased costs associated
with these acquisitions resulted in decreased earnings for 1993 as compared to
1992. As a result, although individual bonus amounts varied based upon
individual performance, executive bonuses as a whole were down an average of
approximately 40% from their 1992 levels. The HRC Committee believes that the
1993 bonuses reflect the Company's overall philosophy that executive pay should
be aligned with the enhancement of stockholder value.
STOCK OPTIONS
As noted above, the HRC Committee supports non-cash compensation in the
form of stock option grants with a view towards more closely aligning the
interests of executives with the interests of stockholders. Individual stock
option grants are subjectively determined by the HRC Committee after reviewing a
number of factors, including individual performance and contribution to the
Company, overall corporate performance, a review of prior grants and the
relative mix of cash and non-cash compensation in a particular year. During
Fiscal 1993, the HRC Committee granted options to purchase a total of 148,500
shares of common stock to executive officers at an
16
<PAGE>
average exercise price of $24.25, the fair market value of the stock on the date
of grant. In light of the reduced cash compensation awarded in 1993, these
grants reflect the Committee's determination to provide executives with
additional compensation in the form of non-cash incentives intended to align
their interests with that of stockholders.
CEO COMPENSATION
Mr. Curtis F. Bradbury has been Chairman, President, and Chief Executive
Officer of the Company since 1986. Consistent with the other executive
officers, the structure of Mr. Bradbury's compensation package reflects the
philosophy of "total compensation and pay for performance" and includes cash and
non-cash components intended to link compensation to both short- and long-term
Company performance. The components of Mr. Bradbury's compensation package are
reviewed annually by the HRC Committee and MSI and are compared against the
assigned salary range for comparable positions of Chairman, President and Chief
Executive Officer in the marketplace. The HRC Committee believes that Mr.
Bradbury's total compensation falls within the median level of compensation for
comparable companies.
Because of Mr. Bradbury's position as Chairman, President and Chief
Executive Officer, he is in a unique position to impact both the direction and
long-term success of the Company. Accordingly, a larger portion of his
compensation is geared towards a bonus based on individual and corporate
performance. Mr. Bradbury's 1993 base salary is between the second quartile
(25%) and the midpoint (50%) of the 1993 assigned salary range for comparable
positions of Chairman, President, and Chief Executive Officer in the
marketplace. The 1993 base salary reflects an increase of approximately 10%
from its 1992 level primarily due to his increased level of responsibility as a
result of the Union acquisition.
Mr. Bradbury's annual cash bonus was subjectively determined by the HRC
Committee after examining individual and corporate performance. The HRC
Committee evaluates Mr. Bradbury's performance in much the same fashion as for
the other executive officers of WBC. Performance, as evidenced by the
performance indicators mentioned above, was measured against WBC's past
performance and the compensation packages of the executive management group,
including CEOs, of comparable banks. While specific performance targets are not
fixed and evaluated, the HRC Committee pays special attention to Mr. Bradbury's
position as Chairman, Chief Executive Officer and President of WBC and the
strategic decisions of the Company.
As with other executives of the Company, Mr. Bradbury's 1993 bonus was
below its 1992 level primarily as a result of decreased corporate performance
attributable to the costs relating to the Company's acquisitions. In
determining Mr. Bradbury's actual bonus amount, however, the Committee did
consider Mr. Bradbury's individual performance and dedication in guiding the
Company through a challenging transitional year. Mr. Bradbury's leadership and
vision in consummating the Company's acquisitions, including the Union
acquisition, contributed to the overall enhancement of the Company's long-term
value and prospects. Mr. Bradbury's 1993 performance bonus comprised
approximately 24% of his 1993 total salary (excluding directors fees), compared
to approximately 38% of his total salary in 1992.
Finally, in 1993, Mr. Bradbury was granted stock options to purchase 22,500
shares of the Company's Common Stock. In determining the scope of this Grant,
the Human Resources and Compensation HRC Committee subjectively reviewed a
number of factors, including Mr. Bradbury's level and scope of responsibility,
contributions to performance of the Company, prior grants, the tax consequences
of the 1993 grant and the extent to which Mr. Bradbury received cash
compensation.
CONCLUSION
The Human Resources and Compensation HRC Committee believes that the
executive compensation philosophy and practices previously described support the
interests of our stockholders, in particular the relationship between base
salary and bonus. In addition, the HRC Committee believes that the Program
rewards effective
17
<PAGE>
management and profitability. The WBC Executive Compensation Program design and
practices are reviewed at minimum, on an annual basis to ensure cost-effective
market competitiveness and ongoing sensitivity to stockholders' interests. The
HRC Committee expects to continue to utilize salary surveys and reviews of
independent compensation consultants to assist in analyzing the Corporation's
executive compensation structure.
WBC HUMAN RESOURCES AND COMPENSATION COMMITTEE
Kaneaster Hodges, Jr., Chairman
Dr. Raymond P. Miller, Sr., M.D.
David Solomon
Leland E. Tollett
Alex Dillard
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's HRC Committee is comprised of Kaneaster Hodges, Jr.
(Chairman), Dr. Raymond P. Miller, Sr., M.D., David Solomon, Leland E. Tollett
and Alex Dillard.
During 1993, a Company banking subsidiary had outstanding to Kaneaster
Hodges, Jr. two secured term loans in the maximum aggregate principal amount of
approximately $147,000. As of December 31, 1993, approximately $10,000 remained
outstanding on one of these loans, at an interest rate of 10.5% per annum, and
approximately $127,000 remained on the other loan at an interest rate of 8.0%
per annum. No other member of the HRC Committee received any loans from the
Company or its affiliates.
In addition to the transaction with Mr. Hodges described above, certain
banking and other lending subsidiaries of the Company have had, and expect to
have in the future, banking transactions in the ordinary course of business with
directors, including HRC Committee members, or their affiliates. Such
transactions have been and will be on substantially similar terms, including
interest rates and collateral on loans, as those prevailing at the same time for
comparable transactions with other persons and do not or will not involve more
than the normal risk of collectibility or other unfavorable features.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the years ended December 31, 1993, 1992
and 1991, the cash compensation paid, as well as other compensation paid or
accrued during these years, to the Chief Executive Officer and each of the four
(4) most highly compensated executive officers of WBC.
18
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARD
---------------------------------------------- -------------- ---------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPENSATION OPTIONS/SARS COMPENSATION
POSITION YEAR SALARY($)(2) BONUS($)(3) ($) (SHARES) ($)(5)
- --------------------------------------------------------------------------------------- -------------- ---------------
- --------------------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CURTIS F. BRADBURY, JR.(1) 1993 $ 295,934 $ 95,000 $ N/A 22,500 $ 6,306
Chairman, President and 1992 272,500 170,000 N/A 20,000 7,239
Chief Executive Officer 1991 272,600 1,330,000 N/A 15,000 6,832
of Worthen Banking
Corporation
JOHN I. FLEISCHAUER, JR. 1993 $ 195,600 $ 50,000 $ N/A 15,000 $ 6,240
President and Chief 1992 181,400 60,000 N/A 12,000 6,758
Operating Officer of 1991 145,959 30,000 20,848(4) 10,000 6,191
Worthen National Bank
of Arkansas
ANDREW T. MELTON 1993 $ 160,750 $ 45,000 $ N/A 20,000 $ 6,111
Executive Vice President 1992 148,750 70,000 N/A 15,000 6,540
and Chief Financial 1991 133,893 30,000 N/A 10,000 6,136
Officer of Worthen
Banking Corporation
JAMES C. PATRIDGE 1993 $ 160,750 $ 45,000 $ N/A 20,000 $ 6,014
Executive Vice President 1992 148,750 60,000 N/A 15,000 6,539
of Worthen Banking 1991 134,230 30,000 N/A 10,000 6,140
Corporation 1993
JAMES F. STOBAUGH 1993 $ 157,550 $ 25,000 $ N/A 10,000 $ 5,128
Chairman and Chief 1992 153,033 50,000 32,587(4) 11,000 6,536
Executive Officer of 1991 135,950 25,000 N/A 10,000 4,177
Worthen National Bank
of Northwest Arkansas
<FN>
- -------------------------
(1) Mr. Bradbury also holds the position of Chairman of the Board of Worthen
National Bank of Arkansas, in addition to his duties with WBC. The bonus
amount shown as earned by Mr. Bradbury in 1991 includes both (a) a normal
1991 bonus of $80,000 and (b) 1,250,000 of deferred compensation granted to
Mr. Bradbury by the Board of Directors pursuant to the 1991 Deferred
Compensation Plan under which Mr. Bradbury is entitled to receive payments
of $250,000 on the first business day of 1992, 1993, 1994, 1995 and 1996.
This 1991 Deferred Compensation Plan was approved by the Board of Directors
on January 22, 1991, principally in recognition of Mr. Bradbury's
performance in managing the financial rehabilitation of the Company during
1985 through 1990.
(2) Salary includes directors' fees for WBC and/or its affiliate banks for
Messrs. Bradbury, Fleischauer, and Stobaugh which are composed of:
quarterly retainer, meeting fees, and committee fees, if applicable. Also
included are participant contributions under the WBC 401(k) Plan and/or to
the Directors' Deferred Compensation Plan.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(3) The amounts include the portion of the bonus that was paid into the
recipient's 401(k) Plan.
(4) Mr. Stobaugh's stated "Other Annual Compensation" for 1992 includes the
following perquisites: club dues, Executive Long-Term Disability Policy
premiums paid by WBC, $9,600 in car allowance and $18,118 in relocation
expenses.
Mr. Fleischauer's stated "Other Annual Compensation" for 1991 includes the
following perquisites: club dues, Executive Long-Term Disability Policy
premiums paid by WBC, $8,100 in car allowance and $8,397 in relocation
expenses.
Except as indicated Messrs. Stobaugh and Fleischauer for 1992 and 1991,
respectively, the dollar value of the above-referenced perquisites were
not, in the aggregate, greater than the lesser of $50,000 or 10% of total
annual salary and bonus.
(5) Includes for the five named executives the Company's (i) matching
contribution and profit sharing contribution under the 401(k) Plan and (ii)
matching contribution under the Employee Stock Purchase Plan as follows:
In 1993, the Company's matching contribution under the 401(k) Plan was
$5,396 for Messrs. Bradbury, Melton, Patridge and Fleischauer and $4,539
for Mr. Stobaugh, while the profit sharing contribution was $910 for Mr.
Bradbury, $729 for Mr. Fleischauer, $617 for Messrs. Melton and Patridge
and $589 for Mr. Stobaugh. In addition, the Company's matching
contribution under the Employee Stock Purchase Plan (which was adopted
September 1, 1993) was $114 for Mr. Fleischauer and $97 for Mr. Melton.
In 1992, the Company's matching contribution pursuant to the 401(k) Plan
was $5,237 for each named executive, while the profit sharing contribution
was $2,002 for Mr. Bradbury, $1,521 for Mr. Fleischauer, $1,303 for Mr.
Melton, $1,302 for Mr. Patridge and $1,299 for Mr. Stobaugh.
In 1991, the Company's matching contribution under the 401(k) Plan was
$5,085 for Messrs. Bradbury, Melton, Patridge and Fleischauer and $3,155
for Mr. Stobaugh, while the profit sharing contribution was $1,747 for Mr.
Bradbury, $1,106 for Mr. Fleischauer, $1,051 for Mr. Melton, $1,055 for Mr.
Patridge and $1,022 for Mr. Stobaugh.
</TABLE>
20
<PAGE>
COMPENSATION PURSUANT TO PLANS
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(4)
- ----------------------------------------------------------------------------------------------------- -----------------------------
% OF TOTAL
OPTIONS/SARS
GRANTED TO EXERCISE OR
OPTIONS/SARs EMPLOYEES IN BASE PRICE
NAME GRANTED (#)(1) FISCAL YEAR(1) ($/SH)(3) EXPIRATION DATE 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------- -----------------------------
- ----------------------------------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Curtis F. Bradbury, Jr. 22,500(2) 10.67% $24.25 July 26, 2003 $343,125 $869,400
John I. Fleischauer, Jr. 15,000(2) 7.11% $24.25 July 26, 2003 $228,750 $579,600
Andrew T. Melton 20,000(2) 9.49% $24.25 July 26, 2003 $305,000 $772,800
James C. Patridge 20,000(2) 9.49% $24.25 July 26, 2003 $305,000 $772,800
James F. Stobaugh 10,000 4.74% $24.25 July 26, 2003 $153,000 $386,900
<FN>
- -------------------------
(1) There were no Stock Appreciation Rights granted during 1993. A total of
140,350 incentive stock options and 70,500 non-qualified options
(collectively the "1993 Options") were granted to seventy-two (72)
employees during 1993. Except as described in footnote 2 below for certain
incentive stock option grants to named executives, the 1993 Options, which
have a term of ten (10) years, are not exercisable during the first year of
such term but become exercisable at 33 1/3% for each of the next three (3)
years thereafter. Upon termination of employment, no additional vesting of
options will occur; however, an optionee may exercise 1993 vested options
within three (3) months following such date of termination. An exception
is granted if termination occurs due to death or disability, as vested
options may be exercised within one (1) year following such date of death
or disability. Each option provides for accelerated vesting upon change of
control, as defined in the option grant document.
(2) These executives received a combination of incentive and non-qualified
options as follows: Mr. Bradbury, 2,306 incentive, 20,194 non-qualified;
Mr. Fleischauer, 3,996 incentive, 11,004 non-qualified; and Messrs. Melton
and Patridge, 2,267 incentive, 17,733 non-qualified. All such options were
granted on the same terms as described in footnote 1 above, except that the
vesting schedule for the incentive options granted to these executives was
altered as follows so as to take maximum advantage (after taking into
account prior year's grants) of incentive option tax treatment: Mr.
Bradbury (Yr.1 - 0, Yr.2 - 2,306); Mr. Fleischauer (Yr.1 - 1,688, Yr.2 -
1,154, Yr.3 - 1,154); and Messrs. Melton and Patridge (Yr.1 - 1,443, Yr.2
- 0, Yr.3 - 412, Yr.4 - 412).
(3) All options granted during 1993 were at fair market value. Currently, the
exercise price may be paid in cash, or by the delivery or withholding of
shares of the Company's Common Stock having a fair market value on the date
of exercise to the aggregate option price. Any obligation to pay federal
or state withholding taxes must be paid in cash.
(4) As required by Securities and Exchange Commission rules and regulations,
potential values states are based on the assumption that the Company's
Common Stock will appreciate in value from the date of grant to the end of
the option term (ten years from the date of grant) at compounded annualized
rates of 5% and 10%,
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
<FN>
respectively, and therefore are not intended to forecast possible future
appreciation, if any, in the price of the Company Common Stock.
</TABLE>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARs AT
VALUE REALIZED OPTIONS/SARs AT FY-END (#) FY-END($)(2)
# SHARES (MARKET PRICE AT --------------------------------------------------------------
ACQUIRED ON EXERCISE LESS
NAME EXERCISE EXERCISE PRICE) EXECISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Curtis F. Bradbury, Jr. - - 124,981(1) 43,944 $1,607,028 $121,406
John I. Fleischauer, Jr. - - 19,188 27,812 $ 180,362 $ 75,437
Andrew T. Melton 17,000 $247,250 3,943 36,057 $ 25,937 $ 87,812
James C. Patridge - - 11,943 36,057 $ 108,562 $ 87,812
James F. Stobaugh - - 18,500 23,500 $ 190,562 $ 71,312
<FN>
- -------------------------
(1) Includes 100,000 non-qualified options which were granted in tandem with
115,000 Stock Appreciation Rights ("SARs"). The options and related SARs
terminate on the same date. Further, to the extent the options are
exercised, a like number of the SARs will be canceled.
(2) Amounts represent the market value ($22.125 per share) over the exercise
price for all exercisable and unexercisable shares as of December 31, 1993.
</TABLE>
COMPENSATION OF DIRECTORS
During 1993, WBC paid its directors $750 per Board meeting actually
attended, a quarterly retainer fee of $2,500, and $500 per Board committee
meeting (for outside directors only) actually attended. In addition, WBC
reimbursed its directors for expenses incurred in attending Board or Board
committee meetings. Members of the Board of Directors receive no other
remuneration solely in their capacities as directors of WBC. The total cost to
WBC for such fees and expenses during 1993 was approximately $301,140.
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five fiscal
years ended December 31, 1993, with the cumulative total returns on the S&P 500
Index and the S&P Financial Index. The comparison assumes $100 was invested on
December 31, 1988, in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends.
22
<PAGE>
PROFORMANCE GRAPH WORKSHEET
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Corporate Performance
Worthen Banking Corporation - 100.00 147.69 141.54 235.38 320.59 276.42
Stock Index
S&P 500 - 100.00 131.69 127.60 166.47 179.15 197.21
Peer Group Index
S&P Financial Index - 100.00 132.11 103.80 156.46 193.03 214.45
</TABLE>
23
<PAGE>
CERTAIN TRANSACTIONS
Worthen Investments, Inc. ("WII") a wholly-owned subsidiary of a Company
banking subsidiary, conducts business with Stephens, Inc. ("Stephens") a
subsidiary of Stephens Group, Inc. Various divisions of Stephens provide
services for WII and Company banking subsidiaries including serving as clearing
broker, providing certain investment research and related support services, and
providing certain investment services to Stephens customers through the use of
computer facilities located in certain banking subsidiaries of the Company which
are linked to Stephens' data sources. Pursuant to these arrangements, Stephens
paid an aggregate of approximately $6,652,000 to Company subsidiaries, and
Stephens retained approximately $2,585,000 in commissions during 1993.
In 1991, the Company engaged Stephens to act as its exclusive financial
advisor in connection with the proposed acquisition by the Company of The Union
of Arkansas Corporation. The Company paid Stephens a fee in the amount of
$650,000 and reimbursement for expenses totaling $7,171 when the transaction was
consummated. The Company also agreed to indemnify Stephens against certain
actions, claims or legal proceedings that might arise out of Stephens'
engagement in connection with this transaction. The Company or its subsidiaries
also paid Stephens Group, Inc. or its subsidiaries approximately $113,000 for
certain marketing fees and other services during fiscal 1993.
Stephens Diversified Leasing ("SD Leasing"), a company affiliated with the
principal stockholders of WBC, leases facilities from Worthen National Bank of
Arkansas. During 1993, the Company's banking subsidiary received approximately
$102,000 in rental income from SD Leasing. SD Leasing rents office space from
WNBA on terms and conditions substantially similar to other office space rented
by WNBA.
In 1992, a Company banking subsidiary purchased a participation interest of
approximately $2.5 million in a revolving line of credit loan extended to SD
Leasing by a bank ("the originating bank"), not affiliated with the Company.
The revolving line of credit loan was unsecured and bore interest at a rate
agreed upon between SD Leasing and the originating bank. During 1993, the
highest amount outstanding to the Company's banking subsidiary was approximately
1.9 million. The outstanding debt was repaid and the loan was closed in April
1993. S.D. Leasing is a Nevada corporation the majority ownership of which is
indirectly held by Stephens family members and trusts which are also principal
shareholders of WBC. See "Voting Securities and Principal Stockholders."
Investark Bancshares, Inc. ("Investark") is a bank holding company in which
members of the Stephens family own a controlling interest, and which company
owns two unrelated banks, the First National Bank of Stuttgart, Arkansas and
Bank of North Arkansas, Melbourne, Arkansas. In 1989, a Company banking
subsidiary loaned $1.5 million to Investark, which loan bore interest at the
rate equal to the Chase Manhattan Prime rate and was secured by bank stock.
During 1993, the largest amount outstanding on this loan was approximately
$500,000. The outstanding debt was repaid and the loan was closed in June 1993.
Messrs. Jackson T. Stephens and Warren A. Stephens are principal stockholders of
the Company.
In 1986, a Company banking subsidiary extended a $2,000,000 revolving line
of credit loan to First National Bank of Stuttgart, which is owned by Investark.
The loan is secured and bears interest at the current Fed Funds market rate when
funds are advanced. As of December 31, 1993, no funds have been advanced on
this loan.
During 1993, a Company banking subsidiary issued an officer's guidance
line of $10,000,000 to Stephens Inc. The line is to be secured by securities
issued or guaranteed by the United States and bears interest at a rate equal
to the Chase Manhattan Prime rate. The line expires June 15, 1994. As of
December 31, 1993 no funds were advanced.
The Company and its subsidiaries also had outstanding during 1993 loans
in the aggregate amount of approximately $591,500 which were guaranteed by
Stephens family members (who are beneficial owners of more than 5% of
the outstanding stock of the Company) or companies substantially owned by
such Stephens family members. See "Voting Securities and Principal
Stockholders."
In 1993, the Company purchased the residence of Frank Oldham, Chairman and
Chief Executive Officer of the Northeast Division of Worthen National Bank of
Arkansas, a subsidiary of the Company, for approximately
24
<PAGE>
$299,000, the appraised value of the property, in accordance with the Company's
executive relocation policy. The Company sold the residence in 1993, and no
material gain or loss was realized relative to the Company's financial position
on a consolidated basis.
In 1993, a Company banking subsidiary assumed a $200,000 revolving line of
credit to H. Hall McAdams, originally extended in 1991 by a Union banking
subsidiary. The line is unsecured and bears interest at a variable rate of 8%,
based on WNBA prime. During 1993, the highest amount outstanding was
approximately $160,000, which was the principal outstanding as of December 31,
1993.
Marsh & McLennan of Arkansas, Inc., a multiple-line general insurance
brokerage company of which James H. Atkins, a WBC director, is President,
provides various types of insurance coverage to the Company, its subsidiaries
and affiliates. During 1993, WBC, its subsidiaries and affiliates paid
approximately $1,157,000 in insurance premiums to Marsh & McLennan of Arkansas,
Inc. In November 1981, a Company banking subsidiary issued two standby letters
of credit in favor of Atkins Development Company Limited Partnership
(the "Partnership") of which James H. Atkins, a WBC director, serves as
general partner. The standby letters of credit were issued in connection with
an issue of industrial revenue bonds originated by the Metrocenter Improvement
District of the City of Little Rock (the "Atkins Series "A" Bonds"). The
proceeds of the bond issue, together with other funds of the Partnership, were
used to finance the construction and development of the Atkins Building in
Little Rock, Arkansas. Repayment of the Bonds was personally guaranteed by
Mr. Atkins. The Bonds were tendered to the Trustee by the Bondholders and,
pursuant to the provisions of the Bonds and the Letters of Credit, funds in the
amount of $1,570,000 were advanced by Worthen on or about October 1, 1993, to
purchase the Bonds. Worthen now owns 100% of the Series "A" Bonds. In addition,
two Company subsidiaries hold 66.66% (or $1,070,000) of the principal amount of
a second series of Metrocenter Bonds issued simultaneously with the Atkins
Series "A" Bonds in 1981 to finance a portion of the development costs
associated with the Atkins building (the "Atkins Series "B" Bonds"). The
Partnership is also the obligor on the Atkins Series "B" Bonds, and the Atkins
Series "B" Bonds are also guaranteed by Mr. Atkins. The Company subsidiary has
no further liability under either letter of credit.
The Company and a company banking subsidiary lease facilities from Harvard
Land Company, a partnership owned by certain principal stockholders of WBC.
During 1993, the Company paid rental in an aggregate amount of approximately
$455,000 to Harvard Land Company. The Company's leases with Harvard Land
Company are on terms and conditions similar to other leases entered into by the
Company and its subsidiaries.
In connection with the Company's acquisition of The Union of Arkansas
Corporation, Herbert H. McAdams, II, purchased an airplane from the Company for
$975,000. Based on independent valuations of the airplane, the Company believes
that the purchase price, which Mr. McAdams paid in cash to the Company, was
within the range of market value for the airplane.
During 1993, a Company banking subsidiary had outstanding to Kaneaster
Hodges, Jr., a WBC director, two secured term loans in the maximum aggregate
principal amount of approximately $147,000. As of December 31, 1993,
approximately $10,000 remained outstanding on one of these loans, at an interest
rate of 10.5% per annum, and approximately $127,000 remained outstanding on the
other loan at an interest rate of 8.0% per annum.
A Company banking subsidiary has periodically extended loans to Dale E.
Cole, President and Chief Executive Officer of Worthen National Bank of
Batesville and Worthen National Bank of Newark, for the purchase of residential
real estate and other personal purposes. Such loans have been made both on a
secured and an unsecured basis, and bear interest at a fixed rate of 10% per
annum. The initial amount of these loans totaled $40,000 in the aggregate.
During 1991, the Company also extended a loan to Mr. Cole for $85,000. The loan
is unsecured and bears interest at a fixed rate of 10% per annum. During 1993,
the highest amount outstanding on such loans was approximately $114,000; as of
December 31, 1993, approximately $96,000 in principal remained outstanding.
In 1992, the Company extended a loan for approximately $95,000 to Andrew T.
Melton, Chief Financial Officer and Executive Vice President of Worthen Banking
Corporation, for personal purposes, which Mr. Melton repaid in 1993. During
1993, the Company extended a loan for $272,000 to Mr. Melton. The loan is
unsecured
25
<PAGE>
and bears interest at a fixed rate of 8% per annum. During 1993, the highest
amount outstanding on the loan was approximately $272,000, which was the
principal remaining outstanding as of December 31, 1993.
All the transactions listed under this heading "Certain Transactions" are
on terms no less favorable to the Company than could be obtained with
nonaffiliated persons.
Including the credit transactions described above, the Company's
subsidiaries have had, and expect to have in the future, banking, leasing, and
similar transactions in the ordinary course of business, with officers,
directors and principal stockholders of the Company, its subsidiaries and
affiliates and with persons associated or otherwise affiliated with such persons
or entities. Such transactions have been and will be on substantially similar
terms, including interest rates and collateral on loans, as those prevailing at
the same time for comparable transactions, involve no more than the normal risk
of collectibility and generally do not include any features unfavorable to the
Company. During 1993, the Company and its subsidiaries made new loans to
related parties in the aggregate principal amount of approximately $108,273,000
and received payments in the aggregate amount of approximately $102,519,000 on
outstanding loans to related parties. The aggregate principal dollar amount
outstanding of these loans was approximately $73,079,000 at December 31, 1993.
With respect to executive officers, directors and director nominees of WBC,
during 1993 approximately $9,126,000 of new loans were made, repayments totaled
approximately $15,632,000 and the aggregate principal dollar amount outstanding
on these loans was approximately $8,396,000 at December 31, 1993.
AVAILABILITY OF REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1993, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WILL BE FURNISHED WITHOUT CHARGE TO EACH PERSON SOLICITED WHO SUBMITS A WRITTEN
REQUEST ADDRESSED AND MAILED TO SUSAN F. SMITH, VICE PRESIDENT AND MANAGER OF
CORPORATE ACCOUNTING, WORTHEN BANKING CORPORATION, POST OFFICE BOX 1681, LITTLE
ROCK, ARKANSAS 72203-1681.
PROPOSALS OF STOCKHOLDERS
Stockholders wishing to submit proposals to be considered for inclusion in
the Company's proxy statement and form of proxy for the 1994 Annual Meeting must
submit them in writing, in conformance with the requirements of Regulation 14A
under the Securities Exchange Act of 1934, on or before December 29, 1994. The
Company recommends that any such proposals be submitted by certified mail,
return receipt requested, addressed to the Company's principal executive offices
at 200 West Capitol Avenue, Little Rock, Arkansas 72201, attention: Secretary.
GENERAL
Proxies duly exercised and returned by a stockholder, and not revoked prior
to or at the meeting, will be voted in accordance with the instructions thereon.
If no direction is made, the proxy will be voted for each of the director
nominees and in favor of the proposal submitted by the Board of Directors.
So far as is now known to management of WBC, there is no other business to
be presented to the stockholders for action at the Annual Meeting other than
described in this Proxy Statement, but it is intended that
26
<PAGE>
as to any such other business that may properly be presented, votes may be cast
pursuant to proxies in the best judgment of the persons acting thereunder.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, IF YOU DO NOT PLAN TO ATTEND
THE ANNUAL MEETING IN PERSON, THE BOARD OF DIRECTORS REQUESTS THAT YOU COMPLETE,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE AS
PROMPTLY AS POSSIBLE. THIS WILL ASSIST THE COMPANY IN REDUCING THE EXPENSE OF
ADDITIONAL PROXY SOLICITATION AND ASSURE THE PRESENCE OF A QUORUM AT THE ANNUAL
MEETING.
By Order of the Board of Directors
March 29, 1994 ---------------------------------------------
CURTIS F. BRADBURY, JR.
CHAIRMAN
<PAGE>
WORTHEN BANKING CORPORATION
1993 STOCK OPTION PLAN
("WORTHEN 1993 STOCK OPTION PLAN")
ADOPTED: APRIL 27, 1993
AMENDED AND RESTATED: MARCH 22, 1994
<PAGE>
WORTHEN STOCK OPTION PLAN
ARTICLE PAGE
- ------- ----
I. Purposes.............................................................1
II. Shares Subject to the Plan...........................................2
III. Administration.......................................................3
IV. Eligibility..........................................................6
V. Maximum Allotment of Incentive Options...............................7
VI. Option Price and Payment.............................................8
VII. Fair Market Value....................................................9
VIII. Use of Proceeds.....................................................11
IX. Term of Options and Limitations on
the Right of Exercise...............................................11
X. Exercise of Options.................................................12
XI. Stock Appreciation Rights...........................................12
XII. Nontransferability of Options and
Stock Appreciation Rights...........................................15
XIII. Termination of Employment...........................................16
XIV. Adjustment of Shares; Effect of
Certain Transactions...........................................17
XV. Change of Control...................................................18
XVI. Loans or Guarantee of Loans.........................................19
XVII. Reload Options......................................................19
XVIII. Right to Terminate Employment.......................................20
XIX. Purchase for Investment.............................................20
XX. Issuance of Certificates;
Legends; Payment of Expenses........................................21
XXI. Withholding Taxes...................................................22
i
<PAGE>
ARTICLE PAGE
- ------- ----
XXII. Listing of Shares and Related Matters...............................23
XXIII. Amendment of the Plan...............................................23
XXIV. Termination or Suspension of the Plan...............................24
XXV. Governing Law.......................................................24
XXVI. Effective Date......................................................25
ii
<PAGE>
WORTHEN STOCK OPTION PLAN
I. PURPOSES
Worthen Banking Corporation ("Worthen"), desires to afford certain of its
key employees and key employees of any subsidiary corporation or parent
corporation now existing or hereafter formed or acquired who are responsible for
the continued growth of Worthen an opportunity to acquire a proprietary interest
in Worthen, and thus to create in such key employees an increased interest in
and a greater concern for the welfare of Worthen.
The stock options ("Options") and stock appreciation rights ("Rights")
offered pursuant to this Worthen 1993 Stock Option Plan (the "Plan") are a
matter of separate inducement and are not in lieu of any salary or other
compensation for the services of any key employee.
Worthen, by means of the Plan, seeks to retain the services of persons now
holding key positions and to secure the services of persons capable of filling
such positions.
The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as it may from time to time be amended (the
"Code"), or options that do not meet the requirements for Incentive Options
("Nonqualified Options"), but Worthen makes no warranty as to the qualification
of any Option as an Incentive Option.
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II. SHARES SUBJECT TO THE PLAN
The total number of common shares of Worthen which either may be purchased
pursuant to the exercise of Options granted under the Plan or acquired pursuant
to the exercise of Rights granted under the Plan (the "Total Plan Shares") shall
not exceed, in the aggregate, seven hundred twenty thousand (720,000) of the
presently authorized common shares, $1.00 par value per share, of Worthen (the
"Shares"). Accordingly, the sum of (a) the number of Shares subject at any one
time to Options or Rights granted under the Plan and (b) the number of Shares
then outstanding pursuant to exercises of Options or Rights granted under the
Plan, shall not exceed seven hundred twenty thousand (720,000) Shares. The term
"Shares" shall include any securities, cash or other property into which Shares
may be changed through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, split-up, split-off, spin-off, combination of
Shares, exchange of Shares, issuance of rights to subscribe or change in capital
structure. Shares which are subject to Rights and related Options shall be
counted only once in determining whether the maximum number of Shares which may
be purchased or acquired under the Plan has been exceeded.
Shares which may be acquired under the Plan may be either authorized but
unissued Shares, Shares of issued stock held in Worthen's treasury, or both, at
the discretion of Worthen. If and to the extent that Options granted under the
Plan expire or terminate without having been exercised, new Options or Rights
may be granted with respect to the shares covered by such expired or terminated
Options or Rights, provided that the grant and the terms
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of such new Options or Rights shall in all respects comply with the provisions
of the Plan.
Except as provided in Article XXII, Worthen may, from time to time during
the period beginning April 27, 1993 (the "Effective Date") and ending April 26,
2003 (the "Termination Date"), grant to certain key employees of Worthen, or of
any subsidiary corporation or parent corporation of Worthen now existing or
hereafter formed or acquired, Options, Rights or both Options and Rights, under
the terms hereinafter set forth.
Provisions of the Plan which pertain to Options or Rights granted to an
employee shall apply to Options, Rights or a combination thereof.
As used in the Plan, the terms "subsidiary corporation" and "parent
corporation" shall mean, respectively, a corporation coming within the
definition of such terms contained in Sections 424(f) and 424(e) of the Code.
III. ADMINISTRATION
The Board of Directors of Worthen (the "Board of Directors") hereby
designates the Worthen Human Resources and Compensation Committee (the
"Committee") as the Committee of the Board of Directors authorized to administer
the Plan. The Committee shall consist of no fewer than three members of the
Board of Directors, each of whom shall be a "disinterested person" within the
meaning of Rule 16b-3 (or any successor rule or regulation) promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). A
majority of the members of the Committee shall constitute a quorum, and the act
of a majority of the members of
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the Committee shall be the act of the Committee. Any member of the Committee
may be removed at any time either with or without cause by resolution adopted by
the Board of Directors, and any vacancy on the Committee may at any time be
filled by resolution adopted by the Board of Directors.
Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine the employees to whom Options or
Rights shall be granted, the time when such Options or Rights shall be granted
to employees, the number of Shares which shall be subject to each Option or
Right, the purchase price of each Share which shall be subject to each Option or
Right, the period(s) during which such Options or Rights shall be exercisable
(whether in whole or in part), and such other terms and provisions thereof;
including, but not limited to, any provisions relating to the effect upon
exercisability of the death or termination of employment of the employee, the
extension of any loan to the employee to finance the exercise of the Option
under Article XVI, any change in the vesting of options on a change of control
under Article XV and any provision for an automatic regrant of options under
Article XVII. In determining the employees to whom Options or Rights shall be
granted, the Committee shall consider the length of service, the amount of
earnings and the responsibilities and duties of such employees.
Subject to the express provisions of the Plan, the Committee also shall
have authority to construe the Plan and Options and Rights granted thereunder,
to amend the Plan and Options and Rights granted thereunder, to prescribe, amend
and rescind rules and
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regulations relating to the Plan, to determine the terms and provisions of the
respective Options and Rights (which need not be identical) and to make all
other determinations necessary or advisable for administering the Plan. The
Committee also shall have the authority to require, in its discretion, that the
employee agree, promptly after the grant of an Option or Right, (i) not to sell
or otherwise dispose of Shares acquired pursuant to the exercise of an Option or
Right granted under the Plan for a period of six (6) months following the date
of acquisition; and (ii) that in the event of termination of employment of such
employee, such employee will not, for a period to be fixed at the time of the
grant of the Option or Right, enter into any other employment, or participate
directly or indirectly in any other business or enterprise, which is competitive
with the business of Worthen or any subsidiary corporation or parent corporation
of Worthen, or enter into any employment in which such employee will be called
upon to utilize special knowledge and information obtained through employment
with Worthen or any subsidiary corporation or parent corporation thereof. The
determination of the Committee on matters referred to in this Article III shall
be conclusive.
Whether or not a Committee is separately designated by the Board of
Directors, any or all powers and functions of the Committee may at any time and
from time to time be exercised by the Board of Directors; provided, however,
that such powers and functions of the Committee may be exercised by the Board of
Directors only if, at the time of such exercise, each of the members of the
Board of Directors are "disinterested persons"
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within the meaning of Rule 16b-3 (or any successor rule or regulation)
promulgated under the Exchange Act.
The Committee may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Board of
Directors or the Committee in the engagement of such counsel, consultant or
agent shall be paid by Worthen. No member or former member of the Committee or
of the Board of Directors shall be liable for any action or determination made
in good faith with respect to the Plan or any Option or Right granted hereunder.
IV. ELIGIBILITY
Options and Rights may be granted only to salaried key employees of Worthen
or of any subsidiary corporation or parent corporation of Worthen, except
members of the Committee and except as hereinafter provided, and shall not be
granted to any officer or director who is not also a salaried key employee. Any
person who shall have retired from the active employment by Worthen, although
such person shall have entered into a consulting contract with Worthen, shall
not be eligible to receive an Option or a Right.
An Incentive Option shall not be granted to any person who, at the time
such Option is granted, owns shares of Worthen or any subsidiary corporation or
parent corporation of Worthen who possesses more than ten percent (10%) of the
total combined voting power of all classes of shares of Worthen or of any
subsidiary corporation or parent corporation of Worthen, unless (i) the
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exercise price per share is not less than one hundred and ten percent (110%) of
the fair market value per share on the date such Option is granted and (ii) such
Option by its terms is not exercisable after the expiration of five (5) years
from the date such Option is granted. In determining share ownership of an
employee, the rules of Section 424(d) of the Code shall be applied, and the
Committee may rely on representations of fact made to it by the employee and
believed by it to be true.
Notwithstanding any other provision contained herein, grants under the Plan
to an individual employee during any calendar year shall be limited as follows:
(a) the number of Shares with respect to which Options may be granted
shall not exceed fifteen percent (15%) of Total Plan Shares;
(b) the number of Shares with respect to which Rights may be granted
shall not exceed fifteen percent (15%) of Total Plan Shares; and
(c) the aggregate number of Shares with respect to which Options and
Rights may be granted shall not exceed thirty percent (30%) of
Total Plan Shares.
V. MAXIMUM ALLOTMENT OF INCENTIVE OPTIONS
To the extent that the aggregate fair market value of shares as to which
Incentive Options (determined without regard to this Article V) are exercisable
for the first time by an employee during any calendar year exceeds $100,000,
such options shall be treated as Nonqualified Options.
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VI. OPTION PRICE AND PAYMENT
The price for each Share purchasable under any Option granted hereunder
shall be not less than (i) one hundred percent (100%) of the fair market value
per Share with respect to Incentive Options, and (ii) one hundred percent (100%)
of the fair market value per Share with respect to Nonqualified Options, at the
date any such Option is granted; provided, however, that, in the case of an
Incentive Option granted to a person who, at the time such Option is granted,
owns shares of Worthen who possesses more than ten percent (10%) of the total
combined voting power of all classes of shares of Worthen, the purchase price
for each share shall be such amount as the Committee, in its best judgment,
shall determine to be not less than one hundred and ten percent (110%) of the
fair market value per Share at the date the Option is granted.
Worthen shall cause such Share certificates to be issued only when it shall
have received the full purchase price for the Shares in cash; provided, however,
that in lieu of cash, the holder of an Option may, if the terms of such Option
so provide in the discretion of the Committee and to the extent permitted by
applicable law, exercise his Option, in whole or in part (i) by delivering to
Worthen common shares of Worthen (in proper form for transfer and accompanied by
all requisite stock transfer tax stamps or cash in lieu thereof) owned by such
holder having a fair market value equal to the cash exercise price applicable to
that portion of the Option being exercised by the delivery of such shares, or
(ii) permitting Worthen to retain from the Option being exercised a number of
shares that have a fair market value equal to the total
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exercise price for all the shares of the Option being exercised; the fair market
value of the shares so delivered or retained to be determined on the exercise
date in the same manner as provided for the determination of the fair market
value on the date of grant, or as may be required in order to comply with or to
conform to the requirements of any applicable laws or regulations. For this
provision, the exercise date is the date on which shares are received pursuant
to the Option and payment is made therefor.
By way of example of the exercise of options under clause (ii) above:
Assume Employee has an option to purchase 1000 shares at $10.00 per share (the
"Option"). Assume that Employee gives proper notice and elects to exercise the
Option on January 5, 1995, at which date the fair market value of the shares is
$20.00 per share. Assuming that Employee's grant permits Employee to use clause
(ii) for the payment of shares, and that the Stock Option Committee, in its
discretion, approves of that method, then, on January 5, 1995, Worthen will
retain 500 shares of the Option being exercised (i.e., shares having an
aggregate fair market value of $10,000, which is the total exercise price for
the 1,000 shares of the Option being exercised) and Employee will receive 500
shares. Employee will have no further shares available under the Option.
VII. FAIR MARKET VALUE
For purposes of this Plan, fair market value shall be defined as follows:
If the Shares of Worthen are listed on a national securities exchange in
the United States, the fair market value per Share shall be deemed to be the
average of the high and low sale prices
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per share of such Shares of Worthen on such national securities exchange in the
United States on such date, but if the Shares of Worthen are not traded on such
date or such national securities exchange is not open for business on such date,
the fair market value per Share shall be the average of such high and low sale
prices on the last preceding date on which such exchange shall have been open
for business and the Shares of Worthen were traded. If the Shares of Worthen
are listed on more than one national securities exchange in the United States on
the date any such Option is granted, the Committee shall determine which
national securities exchange shall be used for the purpose of determining the
fair market value per Share.
If at the date any Option is granted a public market exists for the Shares
of Worthen but such Shares are not listed on a national securities exchange in
the United States, the fair market value per Share shall be deemed to be the
mean between the closing bid and asked quotations in the over-the-counter market
for such Shares of Worthen in the United States on the date such Option is
granted. If there are no bid and asked quotations for such Shares on such date,
the fair market value per Share shall be deemed to be the mean between the
closing bid and asked quotations in the over-the-counter market in the United
States for such Shares of Worthen on the closest date preceding the date such
Option is granted, for which such quotations are available.
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VIII. USE OF PROCEEDS
Any cash proceeds of the sale of Shares subject to the Options granted
hereunder are to be added to the general funds of Worthen and used for its
general corporate purposes as the Board of Directors shall determine. Shares
received or retained by Worthen as payment, in whole or in part, for the
exercise of any Option may, in the discretion of the Board of Directors, be
retained as treasury shares or returned and cancelled.
IX. TERM OF OPTIONS AND LIMITATIONS
ON THE RIGHT OF EXERCISE
Unless the Committee shall determine otherwise (in which event, the
instrument evidencing the Option granted hereunder shall so specify), and
subject to the provisions of Article IV, any Incentive Option granted hereunder
shall be exercisable during a period of not more than ten (10) years from the
date of grant of such Option at such times and in such amounts as the Committee
shall determine at such date of grant.
Any Nonqualified Option granted hereunder shall be exercisable at such
times, in such amounts and during such period or periods as the Committee, with
the Board of Directors approval, shall determine at the date of the grant of
such Option.
The Committee shall have the right to accelerate, in whole or in part, from
time to time, conditionally or unconditionally, rights to exercise any Option
granted hereunder.
To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part. If any Option granted hereunder shall
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terminate prior to the Termination Date, the Committee shall have the right to
use the Shares as to which such Option shall not have been exercised to grant
one or more additional Options to any eligible employee, but any such grant of
an additional Option shall be made prior to the close of business on the
Termination Date.
In no event shall an Option granted hereunder be exercised for a fraction
of a share.
X. EXERCISE OF OPTIONS
Options granted under the Plan shall be exercised by the optionee as to all
or part of the Shares covered thereby by the giving of written notice of the
exercise thereof to the Corporate Secretary of Worthen at the principal business
office of Worthen, specifying the number of Shares to be purchased and
accompanied by payment of the purchase price.
XI. STOCK APPRECIATION RIGHTS
In the discretion of the Committee and subject to Board of Directors
approval, a Right may be granted (i) alone, (ii) simultaneously with the grant
of an Option (either Incentive or Nonqualified) and in conjunction therewith or
in the alternative thereto or (iii) subsequent to the grant of a Nonqualified
Option and in conjunction therewith or in the alternative thereto.
The exercise price of a Right granted alone shall be determined by the
Committee, but shall not be less than one hundred percent (100%) of the fair
market value of one Share on the date of grant of such Right. A Right granted
simultaneously with or subsequent to the grant of an Option and in conjunction
therewith
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or in the alternative thereto shall have the same exercise price as the related
Option, shall be transferable only upon the same terms and conditions as the
related Option, and shall be exercisable only to the same extent as the related
Option; provided, however, that a Right, by its terms, shall be exercisable only
when the fair market value of the Shares subject to the Right and related Option
exceeds the exercise price thereof.
Upon exercise of a Right granted simultaneously with or subsequent to an
Option and in the alternative thereto, the number of Shares for which the
related Option shall be exercisable shall be reduced by the number of Shares for
which the Right shall have been exercised. The number of Shares for which a
Right shall be exercisable shall be reduced upon any exercise of the related
Option by the number of Shares for which such Option shall have been exercised.
Any Right shall be exercisable upon such additional terms and conditions as
may from time to time be prescribed by the Committee.
A Right shall entitle the holder to receive from Worthen, upon a written
request filed with the Corporate Secretary of Worthen at its principal offices
(the "Request"), a number of Shares as specified in the Request (with or without
restrictions as to substantial risk of forfeiture and transferability, as
determined by the Committee in its sole discretion), an amount of cash, or any
combination of Shares and cash, as set forth in the Request (but subject to the
approval of the Committee, in its sole discretion, at any time up to and
including the time of payment, as to the making of any cash payment), having an
aggregate value equal to the
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product of (i) the excess of the fair market value on the day of such Request of
one Share over the exercise price per Share specified in such Right or its
related Option, multiplied by (ii) the number of Shares for which such Right
shall be exercised; provided, however, that the Committee, in its discretion,
may impose a maximum limitation on the amount of cash, the fair market value of
Shares, or a combination thereof, which may be received by a holder upon
exercise of a Right.
Any election by a holder of a Right to receive cash in full or partial
settlement of such Right, and any exercise of such Right for cash, may be made
only by a Request filed with the Corporate Secretary of Worthen during the
period beginning on the third business day following the date of release for
publication by Worthen of quarterly or annual summary statements of earnings and
profits and ending on the twelfth business day following such date. Within
sixty (60) days of the receipt by Worthen of a Request to receive cash in full
or partial settlement of a Right or to exercise such Right for cash, the
Committee shall, in its sole discretion, either consent to or disapprove, in
whole or in part, such Request.
If the Committee disapproves in whole or in part any election by a holder
to receive cash in full or partial settlement of a Right or to exercise such
Right for cash, such disapproval shall not affect such holder's right to
exercise such Right at a later date, to the extent that such Right shall be
otherwise exercisable, or to elect the form of payment at a later date, provided
that an election to receive cash upon such later exercise shall be subject
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to the approval of the Committee. Additionally, such disapproval shall not
affect such holder's right to exercise any related Option or Options granted to
such holder under the Plan.
A holder of a Right shall not receive cash or Shares of Worthen Banking
Corporation stock in full or partial settlement of such Right, or upon the full
or partial exercise of such Right, if such Right or the related Option shall
have been exercised during the first six (6) months of its respective term;
provided, however, that such prohibition shall not apply if the holder of such
Right dies or becomes disabled (within the meaning of Section 105(d)(4) of the
Code) prior to the expiration of such six-month period, or if such holder is not
a director, officer or a beneficial owner of more than 10% of any class of
equity security of Worthen as described in Section 16(a) of the Exchange Act.
A Right shall be deemed exercised on the last day of its term, if not
otherwise exercised by the holder thereof, provided that the fair market value
of the Shares subject to the Right exceeds the exercise price thereof on such
date.
XII. NONTRANSFERABILITY OF OPTIONS
AND STOCK APPRECIATION RIGHTS
Neither an Option nor a Right granted hereunder shall be transferable
otherwise than by will or the laws of descent and distribution, and any Option
or Right granted hereunder shall be exercisable, during the lifetime of the
holder, only by such holder.
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XIII. TERMINATION OF EMPLOYMENT
Upon termination of employment of any employee with Worthen and all
subsidiary corporations and parent corporations, any Option or Right previously
granted to the employee, unless otherwise specified by the Committee in the
Option or Right, shall, to the extent not theretofore exercised, terminate and
become null and void.
In no event, however, shall any person be entitled to exercise any Option
or Right after the expiration of the period of exercisability of such Option or
Right as specified therein.
If applicable to an Option or Right granted hereunder, whenever such Option
or Right shall be exercised by the legal representative of a deceased employee
or former employee, or by a person who acquired an Option or Right granted
hereunder by bequest or inheritance or by reason of the death of any employee or
former employee, written notice of such exercise shall be accompanied by a
certified copy of letters testamentary or equivalent proof of the right of such
legal representative or other person to exercise such Option or Right.
For the purposes of the Plan, an employment relationship shall be deemed to
exist between an individual and a corporation if, at the time of the
termination, the individual was an "employee" of such corporation for purposes
of Section 422(a) of the Code. If an individual is on leave of absence taken
with the consent of the corporation by which such individual was employed, or is
on active military service, and is determined to be an "employee" for purposes
of the exercise of an Option or Right, such individual
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shall not be entitled to exercise such Option or Right during such period and
while the employment relationship is treated as continuing intact unless such
individual shall have obtained the prior written consent of such corporation,
which consent shall be signed by the Chairman of the Board, the President, a
Senior Vice-President or other duly authorized officer of such corporation.
A termination of employment shall not be deemed to occur by reason of (i)
the transfer of an employee from employment by Worthen to employment by a
subsidiary corporation or a parent corporation of Worthen or (ii) the transfer
of an employee from employment by a subsidiary corporation or a parent
corporation of Worthen to employment by Worthen or by another subsidiary
corporation or parent corporation of Worthen.
XIV. ADJUSTMENT OF SHARES; EFFECT
OF CERTAIN TRANSACTIONS
Notwithstanding any other provision contained herein, in the event of any
change in the Shares subject to the Plan or to any Option or Right granted under
the Plan (through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, split-up, split-off, spin-off, combination of shares,
exchange of shares, issuance of rights to subscribe, or change in capital
structure) appropriate adjustments shall be made by the Committee as to the
maximum number of Shares subject to the Plan, the maximum number of Shares for
which Options or Rights may be granted to any one employee and the number of
Shares and price per Share subject to outstanding Options or Rights which may be
granted
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to any one employee, and the number of Shares and price per Share subject to
outstanding Options or Rights as shall be equitable to prevent dilution or
enlargement of rights under Options or Rights, and the determination of the
Committee as to these matters shall be conclusive; provided, however, that (i)
any such adjustment with respect to an Incentive Option and any related Right
shall comply with the rules of Section 424(a) of the Code, and (ii) in no event
shall any adjustment be made which would render any Incentive Option granted
hereunder other than an Incentive Option for purposes of Section 422 of the
Code.
XV. CHANGE OF CONTROL
In the discretion of the Committee, the Option or Right may contain a
provision to accelerate the exercisability of any Option or Right on a change of
control as may be defined by the Committee. In addition, the Committee, in its
discretion, may determine that, upon the occurrence of a change of control as
defined, each Option or Right outstanding hereunder shall terminate within a
specified number of days after notice to the holder, and such holder shall
receive, with respect to each Share subject to such Option or Right, an amount
equal to the excess of the fair market value of the Shares immediately prior to
the occurrence of such transaction over the exercise price of such Option or
Right; such amount shall be payable in cash, in one or more of the kinds of
property payable in such transaction, or in a combination thereof, as the
Committee in its discretion shall determine. The provisions contained in the
preceding sentence shall be inapplicable to any Option or Right granted within
six (6) months before the occurrence of a
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transaction described above if the holder of such Option or Right is a director,
officer or a beneficial owner of more than 10% of any class of equity security
of Worthen as described in Section 16(a) of the Exchange Act, unless such holder
dies or becomes disabled (within the meaning of Section 105(d)(4) of the Code)
prior to the expiration of such six-month period.
XVI. LOANS OR GUARANTEE OF LOANS
The Committee may authorize the extension of a loan to an employee by
Worthen (or the guarantee by Worthen of a loan obtained by an employee from a
third party) in order to assist an employee to exercise an Option under the
Plan. The terms of any loans or guarantees, including the interest rate, if
any, and terms of repayment, will be subject to the discretion of the Committee.
Loans and guarantees may be granted with or without security, the maximum credit
available being the exercise price of the Option sought to be exercised plus any
tax liability incurred upon exercise of the Option.
XVII. RELOAD OPTIONS
The Committee may provide in any Option for the automatic regrant of any
option for all or a portion of the number of shares which were acquired by the
exercise of the Option; provided, however, that no such reload option shall be
effective unless separately ratified by the Committee within ninety (90) days of
the exercise of the Option and no Option shall provide for more than two
regrants of options upon its exercise. Any such regrant shall be in accordance
with the provisions of the Option except the
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purchase price of the Shares shall be the fair market value as of the date of
ratification by the Committee.
XVIII. RIGHT TO TERMINATE EMPLOYMENT
The Plan shall not impose any obligation on Worthen or on any subsidiary
corporation or parent corporation thereof to continue the employment of any
holder of an Option or Right; it shall not impose any obligation on the part of
any holder of an Option or Right to remain in the employ of Worthen or of any
subsidiary corporation or parent corporation thereof.
XIX. PURCHASE FOR INVESTMENT
Except as hereafter provided, the holder of an Option or Right granted
hereunder shall, upon any exercise hereof, execute and deliver to Worthen a
written statement, in form satisfactory to Worthen, in which such holder
represents and warrants that such holder is purchasing or acquiring the Shares
acquired thereunder for such holder's own account, for investment only and not
with a view to the resale or distribution of any of such Shares. Any resale or
distribution of such Shares shall be made only pursuant to either (a) a
Registration Statement on an appropriate form under the Securities Act of 1933,
as amended (the "Securities Act"), which Registration Statement shall have
become effective and is then current with regard to the Shares being sold, or
(b) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption the holder shall, prior to any offer of sale
or sale of such Shares, obtain a prior favorable written opinion, in form and
substance satisfactory to
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Worthen, from counsel for or approved by Worthen, as to the application of such
exemption thereto. The foregoing restriction shall not apply to (i) issuances
by Worthen so long as the Shares being issued are registered under the
Securities Act and a prospectus in respect thereof is current or (ii)
reofferings of Shares by affiliates of Worthen (as defined in Rule 405 or any
successor rule or regulation promulgated under the Securities Act) if the Shares
being reoffered are registered under the Securities Act and a prospectus in
respect thereof is current.
XX. ISSUANCE OF CERTIFICATES;
LEGENDS; PAYMENT OF EXPENSES
Upon any exercise of an Option or Right which may be granted hereunder and,
in the case of an Option, payment of the purchase price, a certificate or
certificates for the Shares as to which the Option or Right has been exercised
shall be issued by Worthen in the name of the person exercising the Option or
Right and shall be delivered to or upon the order of such person or persons, as
permitted by state or federal securities law.
Worthen may place such legend or legends upon the certificates for Shares
issued upon exercise of an Option or Right granted hereunder, and the Committee
may issue such "stop transfer" instructions to its transfer agent in respect of
such Shares, as the Committee, in its discretion, determines to be necessary or
appropriate to (i) prevent a violation of, or to perfect an exemption from, the
registration requirements of the Securities Act, (ii) implement the provisions
of any agreement between Worthen and the optionee or grantee with respect to
such Shares, or (iii)
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permit Worthen to determine the occurrence of a disqualifying disposition, as
described in Section 421(b) of the Code, of Shares transferred upon exercise of
an Incentive Option granted under the Plan.
Worthen shall pay all issue or transfer taxes with respect to the issuance
or transfer of shares, as well as all fees and expenses necessarily incurred by
Worthen in connection with such issuance or transfer, except fees and expenses
which may be necessitated by the filing or amending of a Registration Statement
under the Securities Act, which fees and expenses shall be borne by the
recipient of the Shares unless such Registration Statement has been filed by
Worthen for its own corporate purposes (and Worthen so states) in which event
the recipient of the Shares shall bear only such fees and expenses as are
attributable solely to the inclusion of such Shares in the Registration
Statement.
All Shares issued as provided herein shall be fully paid and non-assessable
to the extent permitted by law.
XXI. WITHHOLDING TAXES
Worthen may require an employee exercising a Right or a Nonqualified Option
granted hereunder to reimburse the corporation which employs such employee for
any taxes required by any government to be withheld or otherwise deducted and
paid by such corporation in respect of the issuance of Shares. In lieu thereof,
the corporation which employs such employee shall have the right to withhold the
amount of such taxes from any other sums due or to become due from such
corporation to the employee upon such terms and conditions as the Committee
shall prescribe.
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XXII. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board of Directors shall determine in its discretion
that the listing, registration or qualification of the Shares covered by the
Plan upon any national securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
Shares under the Plan, no Shares shall be delivered unless and until such
listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board of Directors.
XXIII. AMENDMENT OF THE PLAN
The Board of Directors may, from time to time, amend the Plan, provided
that no amendment shall be made, without the approval of the stockholders of
Worthen, if such approval is necessary to (i) maintain qualification of the Plan
under Rule 16b-3 (or any successor rule or regulation) of the Securities
Exchange Act of 1934, (ii) comply with the provisions of the Code, or (iii)
comply with the rules and negotiations of any applicable stock exchange or self-
regulatory organization. The Committee shall be authorized to amend the Plan
and the Options granted thereunder to permit the Options granted thereunder to
qualify as incentive stock options under Section 422 of the Code and the
Treasury regulations promulgated thereunder and, to the extent permitted under
applicable laws, rules, and regulations, to include the cashless exercise
provision of Article VI. The rights and obligations under any Option or Right
granted before amendment of the Plan or any
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unexercised portion of such Option or Right shall not be adversely affected by
amendment of the Plan or the Option or Right without the consent of the holder
of the Option or Right.
XXIV. TERMINATION OR SUSPENSION OF THE PLAN
The Board of Directors may at any time suspend or terminate the Plan. The
Plan, unless sooner terminated under Article XXII or by action of the Board of
Directors, shall terminate at the close of business on the Termination Date. An
Option or Right may not be granted while the Plan is suspended or after it is
terminated; provided, however, that options or rights previously issued and
unexpired shall continue to exist and may be validly exercised, pursuant to the
provisions of the Plan, until each option and/or right individually expires.
Rights and obligations under any Option or Right granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except upon the consent of the person to whom the Option or Right was
granted. The power of the Committee to construe and administer any Options or
Rights granted prior to the termination or suspension of the Plan under Article
III shall nevertheless continue after such termination or during such
suspension.
XXV. GOVERNING LAW
The Plan, such Options and Rights as may be granted thereunder and all
related matters shall be governed by, and construed and enforced in accordance
with, the laws of the State of Arkansas from time to time obtaining.
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XXVI. EFFECTIVE DATE
The Plan shall become effective at 2:00 p.m., Central Standard time, on the
Effective Date, the date on which the Plan was adopted by the Board or
Directors.
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CERTIFICATE
I, William B. Keisler, Secretary of Worthen Banking Corporation, certify
that the foregoing is a true and correct copy of the Worthen Banking Corporation
1993 Stock Option Plan as adopted by the board of directors of the corporation
March 22, 1994, and authorized by its shareholders ______________, 1994.
________________________________
William B. Keisler
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