<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
First United Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST UNITED BANCSHARES, INC.
EL DORADO, ARKANSAS 71730
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1995
To The Stockholders of First United Bancshares, Inc.:
Notice is hereby given that the Annual Meeting of the Stockholders of First
United Bancshares, Inc. ("the Company") will be held in the First National
Building, El Dorado, Arkansas, on Tuesday, May 23, 1995, at 2:00 p.m. Central
Daylight Time, for the following purposes:
(1) To elect the board of directors who will serve until the next annual
meeting of stockholders;
(2) To ratify the appointment of Arthur Andersen LLP as the independent
auditors of the Company until the next annual meeting of stockholders;
(3) 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 14, 1995
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.
Stockholders are cordially invited to attend the Annual Meeting in person.
By Order of the Board of Directors
/s/ ROBERT G. DUDLEY
ROBERT G. DUDLEY
Secretary
El Dorado, Arkansas
April 14, 1995
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT
YOUR 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> 3
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SOLICITATION OF PROXY................................................................. 1
REVOCATION OF PROXY................................................................... 1
VOTING RIGHTS OF THE COMPANY'S SECURITIES
General............................................................................. 1
Cumulative Voting for Election of Directors......................................... 1
Method of Voting.................................................................... 2
Outstanding Voting Securities and Principal Holders Thereof......................... 2
ELECTION OF DIRECTORS
General............................................................................. 3
Vote Required For Election.......................................................... 3
Nominees for Directors.............................................................. 3
Director Nomination and Qualification............................................... 6
Meetings and Committees of the Board................................................ 6
Compensation of Directors........................................................... 7
Compliance with Section 16(a) of the Securities and Exchange Act of 1934............ 7
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS................................... 7
EXECUTIVE COMPENSATION
Report of Compensation, ESOP and Benefits Committee
Compensation Policy.............................................................. 8
Measures of Performance.......................................................... 8
1994 Executive Compensation...................................................... 8
Compensation of Chief Executive Officer.......................................... 9
Stock Performance................................................................... 10
Compensation of Management.......................................................... 10
Security Ownership of Executive Officers............................................ 13
Option Grants in 1994............................................................... 14
Option Exercises in 1994 and 1994 Year-End Option Values............................ 14
Severance Agreement................................................................. 15
TRANSACTIONS WITH MANAGEMENT AND OTHERS............................................... 15
ANNUAL REPORT......................................................................... 17
OTHER MATTERS......................................................................... 17
STOCKHOLDER PROPOSALS................................................................. 17
</TABLE>
i
<PAGE> 4
FIRST UNITED BANCSHARES, INC.
MAIN AND WASHINGTON STREETS
EL DORADO, ARKANSAS 71730
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 1995
SOLICITATION OF PROXIES
Each holder of record of Common Stock of First United Bancshares, Inc.
("the Company") as of the close of business on March 14, 1995 ("Record Date"),
is entitled to vote at the Annual Meeting of Stockholders to be held in the
First National Bank Building, Main and Washington Streets, El Dorado, Arkansas
on Tuesday, May 23, 1995 at 2:00 p.m., and any adjournment thereof (the
"Meeting"). A proxy card is enclosed for use at such Meeting if you are unable
to attend in person. The persons named therein as proxies were selected by the
Board of Directors of the Company and the proxy is solicited on behalf of the
Board of Directors of the Company.
This Proxy Statement and the accompanying Proxy Card are first being mailed
to stockholders on or about April 14, 1995. Such solicitation is being made by
mail and may also be made in person or by telephone or telegraph by officers,
directors or regular employees of the Company who will not be specially
compensated for such additional solicitation, if necessary. All expenses
incurred in such solicitation, including the reimbursement of certain
fiduciaries for expenses incurred by them in forwarding the proxy solicitation
materials to the beneficial owners of the Company's Common Stock held of record
by such fiduciaries, will be borne by the Company.
REVOCATION OF PROXY
The Company encourages the personal attendance of stockholders at the
Meeting, and the giving of the Proxy does not preclude the right to vote in
person should the person giving the Proxy so desire. THE PERSON GIVING THE PROXY
HAS THE POWER TO REVOKE THE SAME BEFORE THE PROXY IS EXERCISED BY GIVING WRITTEN
NOTICE OF REVOCATION PRIOR TO THE ANNUAL STOCKHOLDERS MEETING TO ROBERT G.
DUDLEY, SECRETARY, AT FIRST UNITED BANCSHARES, INC., MAIN AND WASHINGTON
STREETS, EL DORADO, ARKANSAS 71730. FURTHERMORE, A PROXY WILL BE SUSPENDED IF
THE STOCKHOLDER WHO EXECUTED IT IS PRESENT AT THE MEETING AND ELECTS TO VOTE IN
PERSON.
VOTING RIGHTS OF THE COMPANY'S SECURITIES
GENERAL
The Common Stock of the Company is its only class of voting securities. At
the Meeting, each Stockholder will be entitled to one vote, in person or by
proxy, for each share of Common Stock owned of record as of the close of
business on March 14, 1995. On the Record Date, there were outstanding and
entitled to vote 5,158,772 shares of Common Stock. The stock transfer books of
the Company will not be closed.
CUMULATIVE VOTING FOR ELECTION OF DIRECTORS
With respect to the election of directors, every Stockholder of the Company
has cumulative voting rights. Such rights provide that every Stockholder
entitled to vote at such election should have the right to vote, in person or by
proxy, the number of shares owned by him for as many persons as there are
directors to be elected, or to cumulate his votes by giving one nominee as many
votes as the number of such directors multiplied by the number of his shares
shall equal, or by distributing such votes on the same principle among
<PAGE> 5
any number of such nominees as the Stockholder may desire. IF A STOCKHOLDER
DESIRES TO EXERCISE HIS CUMULATIVE VOTING RIGHTS, THAT STOCKHOLDER OR HIS DULY
APPOINTED REPRESENTATIVE MUST ATTEND THE MEETING AND VOTE IN PERSON.
METHOD OF VOTING
The enclosed Proxy Card provides a method for Stockholders to withhold
authority to vote for any one or more of the nominees while granting authority
to the proxies to vote for the remaining nominees. The names of all nominees are
listed on the Proxy Card. If you wish to grant the proxies authority to vote for
all nominees, check the box marked "FOR" above the names of the nominees. If you
wish to withhold authority to vote for all nominees, check the box marked
"WITHHOLD AUTHORITY" above the names of the nominees. If you wish your shares to
be voted for some nominees and not for one or more of the nominees, indicate the
name(s) of the nominee(s) for whom you are withholding the authority to vote by
drawing a line through such name(s). The Board of Directors anticipates that
this method of electing directors will make the voting process more meaningful
to the Stockholders of the Company.
The enclosed Proxy Card also provides a method for Stockholders to abstain
from voting on each matter. By abstaining, shares will not be voted for or
against such particular matter but will be counted for quorum purposes. If you
wish to abstain from voting on any matter, check the box marked "ABSTAIN". While
there may be instances in which a Stockholder will wish to abstain, 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.
OUTSTANDING VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on March 14, 1995, the record date for the
Meeting, the Company had issued and outstanding 5,158,772 shares of $1.00 Par
Value, Common Stock. Listed in the following table are those Stockholders known
to the Company's management, as of March 14, 1995, who own beneficially 5% or
more of the Company's Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
---------------------- ---------------------------- ----------------------- ----------------
<S> <C> <C> <C>
Common Stock, Warren A. Stephens Trust; 795,843(1) 15.43%
Par Value $1.00 the W.R. Stephens, Jr.
Revocable Trust; the W.R.
Stephens, Jr. Trust; the
W.R. Stephens Trust; the
Elizabeth Ann Stephens
Campbell Revocable Trust;
Jackson T. Stephens; and
Stephens Group, Inc.(1) 111
Center Street, Suite 2400
Little Rock, Arkansas 72201
</TABLE>
- ---------------
NOTE:
(1) All shares, except as described below, are held in trust and administered
by the Bank of New York. The trust was created and the shares deposited
therein upon the consummation of the merger by and between the Company and
InvestArk Bankshares, Inc. on June 14, 1994. The shares are voted, by the
trustee, in proportion to the percentage of shares of the Company's Common
Stock voted for or against any proposal brought before the Stockholders of
the Company. However, any abstention from voting the Company's Common Stock
is not counted in computing the above described percentage. The W. R.
Stephens Trust beneficially owns 207,884 shares of the Company's Common
Stock, included in the above total, which is voted separately by its
trustee and equals 3.95% of the issued and outstanding shares of the
Company's Common Stock. Also, the W. R. Stephens, Jr. Trust beneficially
owns 2,100 shares of the Company's Common Stock, included in the above
total, which is voted separately by its own trustee, and equals .04% of the
issued and outstanding shares of the Company's Common Stock.
2
<PAGE> 6
ELECTION OF DIRECTORS
GENERAL
At the Meeting, nineteen (19) directors, constituting the entire Board of
Directors of the Company, will be elected to hold office until the next Annual
Meeting of Stockholders or until their successors have been duly elected and
qualified. Should any of the nominees listed below become unavailable for
election for any reason, presently unknown, or be unable to serve, the persons
named as proxies in the enclosed Proxy Card will vote for the election of such
other person or persons as the Board of Directors may recommend.
If the enclosed Proxy Card is duly executed, dated and received in time for
the Meeting, it will be voted in accordance with the instructions of the
stockholder(s). IF NO INSTRUCTIONS ARE INDICATED, THEN IT IS THE INTENTION OF
THE PERSONS NAMED AS PROXIES TO VOTE THE SHARES REPRESENTED THEREBY TO ELECT THE
NINETEEN PERSONS NOMINATED FOR ELECTION AS DIRECTORS OF THE COMPANY.
VOTE REQUIRED FOR ELECTION
THE ELECTION OF EACH DIRECTOR WILL REQUIRE THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF
THE COMPANY REPRESENTED, EITHER IN PERSON OR BY PROXY, AT THE ANNUAL MEETING.
NOMINEES FOR DIRECTORS
The following table represents certain information with respect to each
nominee for director of the Company, naming them, and certain information as to
all nominees for director of the Company as a group, without naming them, and
beneficial ownership of the Company's Common Stock for all nominees for director
and executive officers as a group as of February 1, 1995.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND BUSINESS DIRECTOR BENEFICIAL OF
EXPERIENCE AGE SINCE(1) OWNERSHIP(2) CLASS
- ------------------------------------------------------ --- -------- ------------ -------
<S> <C> <C> <C> <C>
E. Larry Burrow(3).................................... 60 1983 20,020(4) .39%
Plant Manager of Partee Flooring Mill,
Oil and Timber Investments, principally
engaged in Oil and Gas Production
Claiborne P. Deming(5)................................ 40 1987 119,060(6) 2.31%
Director, President and Chief Executive
Officer of Murphy Oil Corporation,
principally engaged in Oil and Gas
Exploration and Production
William A. Eckert, Jr................................. 75 1983 3,480 .07%
Of Counsel to Keith, Clegg & Eckert,
Attorneys at Law
James V. Kelley....................................... 45 1985 4,766 .09%
Chairman of the Board, President and
Chief Executive Officer of the Company
Roy E. Ledbetter...................................... 65 1984 10,317(7) .20%
President and Chief Executive Officer
of Highland Industrial Park, Inc.,
A Subsidiary of Highland Resources, Inc.,
principally engaged in Industrial Development
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND BUSINESS DIRECTOR BENEFICIAL OF
EXPERIENCE AGE SINCE(1) OWNERSHIP(2) CLASS
- ------------------------------------------------------ --- -------- ------------ -------
<S> <C> <C> <C> <C>
Michael F. Mahony(8).................................. 50 1981 38,114(9)(10) .74%
Partner of Mahony & Yocum,
Attorneys at Law
Richard H. Mason...................................... 57 1983 1,054 .02%
President of Gibraltar Energy Company,
principally engaged in Oil and Gas
Exploration and Production
Jack W. McNutt........................................ 60 1990 8,000 .16%
Retired Director, President and Chief
Executive Officer of Murphy Oil Corporation,
principally engaged in Oil and Gas
Exploration and Production
William E. Morgan..................................... 68 1987 11,428(4) .22%
President of Warnock Furniture, Inc.,
principally engaged in Furniture
and Appliance Retailing
R. Madison Murphy(5).................................. 37 1989 57,478(11) 1.11%
Chairman of the Board of Murphy Oil
Corporation, principally engaged in Oil
and Gas Exploration and Production
Robert C. Nolan(5).................................... 53 1982 161,622(10)(12) 3.13%
Managing Partner of Munoco Company,
principally engaged in Oil and Gas
Exploration and Production
Paula M. O'Connor..................................... 79 1983 38,195(13) .74%
Investments
Katherine Patton Ozment............................... 71 1987 129,000(14) 2.50%
Investments
Cal Partee, Jr.(3).................................... 50 1983 13,124 .25%
Partner of Partee Flooring Mill, Oil and
Timber Investments, principally engaged
in Oil and Lumber Production
W. C. Partee(3)....................................... 85 1983 145,068 2.81%
Senior Partner of Partee Flooring Mill,
Oil and Timber Investments, principally
engaged on Oil and Lumber Production;
Chairman of the Board of First National
Bank of Magnolia
Chesley Pruet......................................... 80 1983 41,772(15) .81%
President and Chief Executive Officer of
Chesley Pruet Drilling Co., principally
engaged in Contract Drilling of Oil and
Gas Wells
John D. Trimble, Jr................................... 63 1983 28,972 .56%
Managing Partner of Trimble Properties,
principally engaged in Oil and Other
Investments
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND BUSINESS DIRECTOR BENEFICIAL OF
EXPERIENCE AGE SINCE(1) OWNERSHIP(2) CLASS
- ------------------------------------------------------ --- -------- ------------ -------
<S> <C> <C> <C> <C>
Ralph C. Weiser....................................... 70 1986 38,544 .75%
Partner of Weiser-Brown Operating Company,
principally engaged in Oil and Gas
Exploration and Production
Dr. David M. Yocum, Jr................................ 73 1982 23,260(10)(16) .45%
Managing Partner of Alice-Sidney Oil Company,
principally engaged in Oil Exploration
and Production
All Nominees for Director and Executive Officers as a
Group (22 Persons).................................. 903,680 17.52%
</TABLE>
- ---------------
NOTES:
(1) All nominees have served as directors of the Company during their current
term since May 24, 1994.
(2) All shares of Common Stock are beneficially owned with investment and
voting power, unless otherwise stated.
(3) E. Larry Burrow is the son-in-law of W. C. Partee and the brother-in-law of
Cal Partee, Jr. W. C. Partee is the father of Cal Partee, Jr. Winston
Wilson, a director of First National Bank of Magnolia, is the
brother-in-law of W. C. Partee and the uncle of Cal Partee, Jr.
(4) Share totals exclude 126,034 shares owned of record by First Land &
Investment Company. Messrs. Burrow and Morgan are directors and
stockholders of First Land & Investment Company along with seven other
directors of First Land & Investment Company, including Robert G. Dudley
who serves as Secretary of the Company and President of First National Bank
of El Dorado. Messrs. Burrow, Morgan and Dudley expressly disclaim
beneficial ownership of such shares.
(5) Claiborne P. Deming, R. Madison Murphy and Robert C. Nolan are first
cousins of each other.
(6) Claiborne P. Deming owned of record 119,060 shares; of such shares 19,724
were held by Mr. Deming as sole trustee of trusts for the benefit of his
children who all live in his household and in which he disclaims any
beneficial interest.
(7) Share total excludes 33,516 shares owned of record by Highland Industrial
Park, Inc. Roy E. Ledbetter, who is an officer of Highland Industrial Park,
Inc., expressly disclaims beneficial interest in such shares.
(8) Michael F. Mahony is the brother of Emon A. Mahony, Jr. who is a director
of The City National Bank, Ft. Smith, Arkansas.
(9) Michael F. Mahony and his wife owned either indirectly or of record 12,144
shares; 4,000 shares were held by Mr. Mahony as trustee for the benefit of
his children, in which Mr. Mahony disclaims any beneficial interest; 21,970
shares were owned by Mr. Mahony as executor of the Estate of Mabel F.
Mahony, and in which Mr. Mahony has a one-third beneficial interest.
(10) Share totals exclude 214,632 shares owned of record by First Land & Timber
Corporation. Messrs. Mahony, Nolan and Yocum are directors and stockholders
of First Land & Timber Corporation along with five other directors of First
Land & Timber Corporation , including Robert G. Dudley who serves as
Secretary of the Company and President of First National Bank of El Dorado.
Messrs. Mahony, Nolan ,Yocum and Dudley expressly disclaim beneficial
ownership of such shares.
(11) R. Madison Murphy and his wife owned either indirectly or of record 54,593
shares; of such shares 6,525 shares were held by R. Madison Murphy as
trustee of trusts for the benefit of minor children; 690 shares were held
by Mr. Murphy as trustee of trusts for the benefit of his minor nieces and
nephews; 2,205 shares were held by others as trustees of trusts for the
benefit of Mr. Murphy's minor children; 2,885 shares are owned of record by
Mr. Murphy's wife; beneficial interest in all of such shares is expressly
5
<PAGE> 9
disclaimed by Mr. Murphy. Additionally, Mr. Murphy beneficially owns 4,380
shares by virtue of a residuary interest in a trust of which he is not a
trustee.
(12) Robert C. Nolan owned of record 43,548 shares; Mr. Nolan as Trustee (with
shared voting and investment power) controlled 118,074 shares; 13,356
shares of the indicated total are owned by Mr. Nolan's adult children and
his minor grandson, beneficial interest in which is expressly disclaimed by
Mr. Nolan.
(13) Paula M. O'Connor owned of record 1,056 shares; 37,139 shares were owned of
record by Mrs. O'Connor, as trustee.
(14) Katherine Patton Ozment owned of record 408 shares; 128,592 shares that
Mrs. Ozment has the right to vote were owned by her adult children and
their children.
(15) Chesley Pruet owned of record 36,972 shares; 888 shares were owned of
record by Mr. Pruet's wife; 3,912 shares were owned by Paula Pruet James
and Ann Pruet Calhoon, Mr. Pruet's adult daughters, d/b/a Paula & Ann
Company, in which Mr. Pruet has investment and voting power.
(16) Dr. David M. Yocum, Jr. owned 22,034 shares; of such shares 3,056 shares
were held by Dr. Yocum and his wife as joint trustees for the benefit of
their son; 1,226 shares were owned of record by Dr. Yocum's wife; 6,392
shares were owned of record by Alice-Sidney Oil Company.
DIRECTOR NOMINATION AND QUALIFICATION
The Company's Bylaws currently provide that the Board of Directors may
annually designate a standing nominating committee ("Nominating Committee").
Names of all proposed nominees for election at the next annual meeting of
Stockholders are referred to the Nominating Committee for its consideration. The
Nominating 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 Nominating
Committee does not discriminate based upon the sex, race or religion of any
proposed nominee. If approved by the Board of Directors, the Nominating
Committee's recommended slate of nominees becomes the Board of Directors'
recommended slate of nominees. It is the policy of the Nominating Committee to
consider nominees recommended by Stockholders. The procedure to be followed by
any stockholder who desires to recommend a nominee for consideration by the
Nominating Committee is the same as that procedure disclosed under the caption
"Stockholders Proposals" on page 17 of this Proxy Statement.
MEETINGS AND COMMITTEES OF THE BOARD
During fiscal year 1994, the Company's Board of Directors held twelve (12)
meetings. With the exception of Director Dr. David M. Yocum, each incumbent
director attended more than 75% of the meetings of the Board or meetings of the
committees of the Board held during the periods in which they served as members
of the Company's Board of Directors.
Executive Committee. The Board of Directors has a standing Executive
Committee which is authorized to exercise all authority of the Board of
Directors in the intervals between the meetings of the Board of Directors with
respect to the business affairs of the Company. The members of the Executive
Committee are Directors Grady E. DuPriest, James V. Kelley, Roy E. Ledbetter,
Robert C. Nolan, Cal Partee, Jr., W. C. Partee, John D. Trimble, Jr., and Dr.
David M. Yocum, Jr. During fiscal year 1994, the Executive Committee met twelve
(12) times. With the exception of Dr. David M. Yocum, each Director attended
more than 75% of the meetings.
Compensation, ESOP and Benefits Committee. The Board of Directors has a
standing Compensation, ESOP and Benefits Committee which formulates policies and
procedures with respect to compensation and benefits. The members of the
Compensation, ESOP and Benefits Committee are Directors E. Larry Burrow,
Claiborne P. Deming, Richard H. Mason and Robert C. Nolan. The functions of this
Committee are (1) to review, approve and recommend to the Board salaries of all
officers of the Company and of its wholly-owned banking subsidiaries; (2) to
review, approve and recommend to the Board annually the aggregate amount to
6
<PAGE> 10
be expended as annual bonuses to executive officers of the Company and its
wholly-owned banking subsidiaries; and (3) to review, oversee and approve the
employee benefit plans of the Company. During fiscal year 1994, the Committee
met three (3) times.
Audit Committee. The Board of Directors has a standing Audit Committee
which oversees the internal and external audit functions. The members of the
Audit Committee are Directors E. Larry Burrow, Michael F. Mahony, William E.
Morgan, R. Madison Murphy, and John D. Trimble, Jr. The functions of the Audit
Committee are (1) to review and examine the internal control, compliance and
accounting operating systems of the Company and its subsidiary banks; (2) to
recommend to the Board any changes in policy deemed necessary as a result of
this review; and (3) to recommend to the Board and Stockholders the appointment
of the Company's external audit firm. During fiscal year 1994, the committee met
four (4) times.
Nominating Committee. The Board of Directors has a standing Nominating
Committee, the sole function of which is to nominate candidates to the Board of
Directors. The members of the Nominating Committee are Directors William A.
Eckert, Jr., John D. Trimble, Jr., Ralph C. Weiser, and Dr. David M. Yocum, Jr.
During fiscal year 1994, the Nominating Committee met two (2) times.
Asset-Liability Committee. The Board of Directors has a standing
Asset-Liability Committee which reviews and examines the asset-liability
sensitivity of each subsidiary bank and reports its findings to the Board. The
members of the Asset-Liability Committee are Directors James V. Kelley, Richard
H. Mason, and John D. Trimble, Jr. During fiscal year 1994, the Asset-Liability
Committee did not meet.
COMPENSATION OF DIRECTORS
All members of the Board of Directors of the Company other than executive
officers are paid a retainer of $300 per month in addition to a fee of $200 per
meeting for all regular and special meetings of the Board which they attend.
Members of the Board serving on Board committees are paid a fee of $75 for each
meeting they attend.
Directors receive no other cash or cash-equivalent forms of remuneration
solely in their capacities as directors of the Company or its subsidiaries.
Officers of the Company and its subsidiaries who also serve on the Company's
Board are not paid a fee for serving in the capacity of director. The total cost
to the Company for such fees during 1994 was $115,625.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's executive officers, directors and persons who own more than
ten percent (10%) of the Company's Common Stock must file reports of ownership
and changes of ownership in the Company with the Securities and Exchange
Commission and the National Association of Securities Dealers pursuant to
Section 16(a) of the Securities and Exchange Act of 1934 (the "Exchange Act").
Additionally, Item 405 of Regulation S-K under the Act requires the Company to
identify in its proxy statement those individuals for whom one of the above
referenced reports was not filed on a timely basis during the most recent fiscal
year or prior fiscal years. Based exclusively on information provided to the
Company by individual executive officers and directors, the Company believes
that before and during fiscal year 1994, all filing requirements applicable to
executive officers and directors have been made in compliance with Section 16(a)
and the rules promulgated thereunder.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Arthur Andersen LLP, certified public accountants, serve as the Company's
independent auditors for the fiscal year ending December 31, 1995, and the Board
of Directors has directed that such appointment be submitted to the Stockholders
at the Meeting for their ratification and approval thereof. The Company has been
advised by Arthur Andersen LLP that neither it nor any of its partners or
associates has any relationship with the Company other than the usual
relationship that exists between independent public accountants and clients. If
the foregoing appointment is rejected by the Stockholders, the Board of
Directors will appoint an independent auditor to serve for the fiscal year
ending December 31, 1995, whose appointment to serve for any
7
<PAGE> 11
period subsequent to the 1996 Annual Meeting shall be subject to Stockholders'
approval at such Annual Meeting.
Representatives of Arthur Andersen LLP will be present at the Meeting, will
have an opportunity to make a statement to the Stockholders, if desired, and
will be available to respond to appropriate questions from Stockholders.
In connection with its audit of the books and accounts of the Company for
the fiscal year ended December 31, 1994, Arthur Andersen LLP examined the
Company's annual consolidated financial statements, performed a review of its
consolidated annual and quarterly filings with the Securities Exchange
Commission, and consulted with the Company concerning other accounting and
certain tax matters.
THE BOARD OF DIRECTORS RECOMMENDS THE RATIFICATION AND APPROVAL OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION, ESOP AND BENEFITS COMMITTEE
In order to enhance disclosure of the Company's policy toward executive
compensation and to comply with the rules of the Securities and Exchange
Commission, the Compensation, ESOP and Benefits Committee ("Committee"), in
their capacity as such Committee, submits the following report addressing the
Company's policy toward executive compensation as it relates to the named
executive officers for fiscal year 1994.
Compensation Policy
The executive compensation policy of the Company is to compensate
executives in a manner where a reasonable relationship exists between the
maximization of corporate earnings and executive pay. The Company's compensation
program creates an incentive to improve overall performance relative to other
financial institutions within the Company's peer group. However, the Company
does not seek to provide executives with incentives to take undue risk and
thereby impair the Company's financial strength. The goal of the Company's
policy is to retain and motivate key employees with bonuses based upon
individual bank performance and initiatives as well as the Company's
performance. The Company's performance is primarily measured by internal goals
and performance levels compared to industry peers. If the Company achieves or
exceeds internal goals and industry performance levels, executive compensation
normally will be higher than in years where such goals and levels are not
achieved. In order to attract and retain highly qualified executives the Company
maintains an Employee Stock Ownership Plan and an Equity Participation Plan
which ensures that such executives will have a long-term stake in the success of
the Company.
Measures of Performance
The Committee measures the Company's performance by examining earnings per
share, return on assets and the level of nonperforming loans and assets. A
further analysis is done by comparing these factors with the Company's internal
goals, prior year's performance and peer group averages. The Company's revenues
in fiscal year 1994 were derived almost exclusively from the commercial banking
industry. Therefore, the Company measured its performance against a peer
industry average index comparing itself and its banks to commercial banks which
most closely resemble the Company's banks in asset size.
Executive Compensation
The Company's executive compensation program for fiscal year 1994 consisted
of (1) annual base salary, adjusted from fiscal year 1993, (2) executive bonus
based on the performance measures described above, (3) contributions to the
Company's Employee Stock Ownership Plan and (4) contributions to whole life
insurance policies for selected executives. The Committee feels that the above
named types of compensation provide an effective incentive for executives.
8
<PAGE> 12
The Company's management was focused in their pursuit of maximizing
earnings and maintaining a low level of non-performing assets which resulted in
a significantly better 1994 performance. Notwithstanding the performance-based
criterion noted in the preceding paragraph, various other factors are considered
in determining the appropriate level of executive compensation. Other factors
may include cost of living adjustments, as well as the individual's past
performance and potential with the Company.
The Committee has awarded executive compensation based upon the Company's
performance and believes that this correlation results in an enhanced synergy
between corporate goals and the interests of shareholders. As performance goals
are met or exceeded, resulting in increased value to shareholders, executives
are rewarded commensurately. The Committee believes that the level of executive
compensation in fiscal year 1994 is reflective of the foregoing compensation
policy and performance goals of the company.
Compensation of Chief Executive Officer
The Company increased Mr. Kelley's base salary to $200,000 in 1994. Mr.
Kelley's salary is considered appropriate by the Committee based upon his years
of experience in this position. Additionally, the Committee considered Mr.
Kelley's salary to be competitive when compared to other financial institutions
within the Company's peer group.
Mr. Kelley was awarded an annual bonus of $78,750 for 1994. The Committee
considered the 3% increase in market value of the Company's Common Stock during
1994 as well as the 6% increase in earnings per share, the 12.87% return on
equity and the 1.24% return on assets sufficient to merit the granting of his
bonus.
Respectfully Submitted,
Compensation, ESOP and Benefits
Committee
/s/ ROBERT C. NOLAN, Chairman
/s/ E. LARRY BURROW
/s/ RICHARD H. MASON
/s/ CLAIBORNE P. DEMING
9
<PAGE> 13
STOCK PERFORMANCE
The following graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1993, as amended, or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts. The graph
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,
1994 with the cumulative total returns on the S&P 500 Index and the NASDAQ
Financial Stocks Index. The comparison assumes $100 was invested on December 31,
1989, in the Company's Common Stock and in each of the foregoing indices with
reinvestment of the dividends.
<TABLE>
<CAPTION>
First United Dow Jones
Measurement Period Bancshares, S&P 500 Regional
(Fiscal Year Covered) Inc. Index Banks Index
--------------------- ------------- --------- -------------
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 97.33 96.88 71.02
1991 108.12 126.42 122.30
1992 215.13 136.08 164.82
1993 250.35 149.80 173.81
1994 263.04 151.78 173.27
</TABLE>
COMPENSATION OF MANAGEMENT
The Company does not directly compensate the officers and management for
serving in that capacity. Compensation is provided by First National Bank of El
Dorado, El Dorado, Arkansas ("El Dorado"), First National Bank of Magnolia,
Magnolia, Arkansas ("Magnolia"), The Merchants and Planters Bank, N.A., Camden,
Arkansas ("Camden") , The City National Bank, Ft. Smith, Arkansas ("Ft. Smith"),
Commercial Bank at Alma, Alma, Arkansas ("Alma"), First Stuttgart Bank and Trust
Co., Stuttgart, Arkansas ("Stuttgart"), and The Bank of North Arkansas,
Melbourne, Arkansas ("Melbourne") the wholly-owned banking subsidiaries of the
Company. However, the Company does reimburse each such wholly-owned or
controlled banking subsidiary for the Company's officer remuneration, which
amount of reimbursement is set by the Company's Board of Directors. The Company
does compensate its directors for serving in that capacity as discussed below.
The following information reflects compensation, remuneration and transactions
with the Company, El Dorado, Magnolia and Ft. Smith for the period beginning
January 1, 1994, and ending December 31, 1994. The following table sets forth
the compensation paid by the Company, El Dorado, Magnolia and Ft. Smith during
the fiscal year 1994 to the highest paid executive officers of the Company and
to all named executive officers of the Company:
10
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------------------------- -------------------------
OTHER RESTRICTED
FISCAL ANNUAL STOCK SECURITIES ALL OTHER
YEAR ENDED COMPENSATION AWARD(S) UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION DECEMBER 31 SALARY($) BONUS($) (1)(2)($) ($) OPTIONS(#) ($)(3)(4)
- --------------------------- ----------- --------- -------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James V. Kelley 1994 200,000 78,750 3,403 16,848(5) 4,832(6) 8,777
President, Chairman, Chief 1993 180,000 70,000 3,403 13,523
Executive Officer and 1992 170,000 50,000 3,403 12,946
Director of the Company
Robert L. Jones 1994 135,000 25,000 1,170 N/A N/A 7,781
President, Chief Executive 1993 127,350 25,600 1,170 7,310
Officer and 1992 122,000 25,600 N/A 7,892
Director of Magnolia
Robert G. Dudley 1994 99,000 11,000 8,027 N/A N/A 6,494
President and Director of 1993 94,500 13,000 8,027 6,134
El Dorado; 1992 90,500 12,650 8,027 6,442
Secretary of the Company
Jim N. Harwood 1994 135,000 30,000 N/A N/A N/A 7,832
President, Chief Executive 1993 117,200 11,900 N/A 6,134
Officer and Director 1992 85,000 11,900 N/A 5,501
of Ft. Smith
</TABLE>
- ---------------
NOTES:
(1) El Dorado provides whole life insurance policies for the benefit of Messrs.
Kelley and Dudley. For the year ended December 31, 1994 the amounts paid by
El Dorado for the policies for Messrs. Kelley and Dudley were, respectively,
$3,403 and $8,027. This compensation is included within the Other Annual
Compensation Column. Magnolia provides a cost of life insurance policy for
Mr. Jones. For the year ended December 31, 1994, the amount paid on behalf
of Mr. Jones was $1,170. This compensation is included within the Other
Annual Compensation Column.
(2) Amounts representing certain personal benefits are not included in this
table. The Company and its subsidiaries have a policy of providing country
club services and automobiles to certain officers. The key employees of
these benefits are selected by the respective subsidiaries' Boards of
Directors. In the Company's estimation, the dollar amount of such items for
the personal benefit of each named individual does not exceed ten percent
(10%) of the aggregate compensation for any individual.
(3) The Company contributed cash contributions to an employee stock ownership
plan ("ESOP") during fiscal year 1994 which is included as All Other
Compensation. The Company makes cash contributions to the ESOP for the
purchase of the Company's Common Stock for the benefit of covered employees.
All employees over 20 and one-half years of age who have six months service
with the Company and work 1,000 hours or more per year are covered by the
ESOP. Contributions to the ESOP are discretionary. The Board of Directors
determines the contribution each year up to a maximum of 15% of covered
compensation. Each covered employee is allocated the same percentage of
covered compensation. For the year ended December 31, 1994, the amount of
the Company's contribution allocated to the accounts of Messrs. Kelley,
Jones, Dudley and Harwood were, respectively $8,777, $7,781, $6,494 and
$7,832.
11
<PAGE> 15
(4) Contributions for officers to the Company's pension plan are not included in
the above table since they cannot readily be individually calculated by the
regular actuaries for the plan. However, current compensation covered by the
plan does not differ by more than ten percent (10%) from the covered
compensation set forth in the annual compensation columns of the Summary
Compensation Table for any named executive officer. Covered compensation
covers basic compensation and bonuses or incentive compensation paid to all
plan participants. The following table sets forth the annual life annuity,
payable under the qualified pension plan to participating employees in the
specified remuneration and years of service classification. The benefits
provided by the pension plan are computed on a straight life annuity basis
and are subject to a deduction for social security benefits.
PENSION PLAN TABLE
SCHEDULE OF ESTIMATED ANNUAL RETIREMENT BENEFITS
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ----------------------------------------------------
COMPENSATION 10 15 20 25 30
----------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 20,000.................... $ 2,400 $ 3,600 $ 4,800 $ 6,000 $ 7,200
$ 30,000.................... $ 3,930 $ 5,859 $ 7,860 $ 9,825 $ 11,789
$ 50,000.................... $ 7,719 $ 11,579 $ 15,438 $ 19,298 $ 23,157
$ 80,000.................... $ 13,705 $ 20,588 $ 27,410 $ 34,263 $ 41,115
$100,000.................... $ 17,705 $ 26,558 $ 35,410 $ 44,263 $ 53,115
$150,000.................... $ 27,705 $ 41,558 $ 55,410 $ 69,263 $ 83,115
</TABLE>
The final average compensation is averaged over the highest three (3)
consecutive years of employment. Benefits commence at age 65, the normal
retirement date, and continue for the lifetime of the participant, with 120
payments guaranteed. The estimated credited years of service for Mr.
Kelley, Mr. Jones, Mr. Dudley and Mr. Harwood are 10, 11, 34 and 6,
respectively.
(5) A restricted option for 537 shares of the Company's Common Stock was granted
to the indicated executive officer. Shares of the Company's Common Stock
subject to the restricted option may be acquired at no cost by the executive
officer. Restricted options vest cumulatively over a four year period,
beginning one year following the date of the grant. Vesting occurs 100% four
years after the date of the grant. The closing market price of the Company's
unrestricted Common Stock on the date of the grant was $31.375 resulting in
a dollar value of $16,848.
(6) In 1994, a non-statutory option for 4,832 shares of the Company's Common
Stock was granted to the indicated executive officer. Such grant was made at
95% of the stock's current fair value at date of grant or $28.50 per share.
Non-statutory options vest cumulatively over a four (4) year period,
beginning one year following the date of the grant. Vesting occurs
twenty-five percent (25%) per year up to one hundred percent (100%) vesting
four (4) years after the date of the grant.
12
<PAGE> 16
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS
The following table sets forth the nature and extent of ownership of the
Common Stock of the Company by the named executive officers as of February 1,
1995 and other information regarding the named executive officers of the
Company.
<TABLE>
<CAPTION>
OFFICER AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OWNER AGE SINCE(1) OF BENEFICIAL OWNERSHIP(2) OF CLASS
---------------------------------------- --- -------- -------------------------- --------
<S> <C> <C> <C> <C>
James V. Kelley......................... 45 1987 4,766(3) *
President, Chairman, Chief Executive
Officer and Director of the Company
Robert L. Jones......................... 59 1991 3,504(4) *
President, Chief Executive Officer and
Director of Magnolia
Robert G. Dudley........................ 62 1985 5,045(5) *
President and Director of El Dorado;
Secretary of the Company
Jim N. Harwood.......................... 55 1993 1,857(6) *
President, Chief Executive Officer and
Director of Ft. Smith
</TABLE>
- ---------------
* Percentage of shares of Common Stock held is less than one percent (1%) of
the issued and outstanding shares of Common Stock of the Company.
NOTES:
(1) The year indicated represents the year in which the officer commenced
service in his present position. Robert G. Dudley has served as Secretary of
the Company since 1983 and as President and Director of El Dorado since
1985. All officers of the Company have served in such capacity, as
disclosed, since May 24, 1994.
(2) All shares listed represent Common Stock held in the company and are owned
of record with beneficial ownership thereof except as described in certain
of the following notes.
(3) James V. Kelley owned of record 200 shares; 4,566 shares were owned of
record by the Company's Employee Stock Ownership Plan in which such shares
Mr. Kelley had a beneficial interest.
(4) Robert L. Jones owned of record 200 shares; 3,304 shares were owned of
record by the Company's Employee Stock Ownership Plan in which such shares
Mr. Jones had a beneficial interest.
(5) Robert G. Dudley owned of record 1,320 shares; 3,425 shares were owned of
record by the Company's Employee Stock Ownership Plan in which Mr. Dudley
had a beneficial interest; 300 shares were owned of record by Mr. Dudley's
wife, beneficial interest in such shares is expressly disclaimed by Mr.
Dudley. See footnotes (4) and (10) on page 5 of this Proxy Statement
regarding shares owned of record by First Land & Timber Corporation and
First Land & Investment Company, respectively. Mr. Dudley expressly
disclaims beneficial ownership in such shares.
(6) Jim N. Harwood owned of record 674 shares; 1,177 shares were owned of record
by the Company's Employee Stock Ownership Plan in which such shares Mr.
Harwood had a beneficial interest.
13
<PAGE> 17
OPTION GRANTS IN 1994
The following table shows information concerning stock options granted
during 1994, as noted in the Summary Compensation Table, to the Company's Chief
Executive Officer, which includes hypothetical realizable values for those
options (assuming they were exercised at the end of the ten year term) and the
hypothetical gain to all holders of Common Stock at the end of that ten year
period, in each case assuming the Common Stock had achieved accumulative
appreciation of 5% and 10% per year. None of the below described options were
eligible to be exercised during 1994.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUES AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF STOCK APPRECIATION
% OF FOR OPTION TERM(3)
TOTAL ----------------------------------------------
NUMBER OF OPTIONS
SECURITIES GRANTED 5% 10%
UNDERLYING TO EXERCISE --------------------- ----------------------
OPTIONS EMPLOYEES PRICE EXPIRATION STOCK DOLLAR STOCK DOLLAR
NAME GRANTED(#)(2) IN 1994 ($/SHARE) DATE PRICE($) GAINS($) PRICE($) GAINS($)
- ----------------------- ------------- --------- --------- ---------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James V. Kelley........ 4,832(4) 100% $ 28.50 08/15/2004 46.375 86,572 74.00 219,856
537(5) 100% -0- 08/15/2004 46.375 24,903 74.00 39,738
Dollar Gains of
All First United
Stockholders(1)...... $92,213,000 $234,724,000
</TABLE>
- ---------------
(1) Total dollar gains are based on the indicated assumed annual rates of
appreciation and calculated on the 5,158,772 shares of Common Stock
outstanding as of December 31, 1994.
(2) There were no SARs granted to the Chief Executive Officer or any other
executive officer in 1994.
(3) The potential realizable values represent future opportunity and have not
been reduced to present value in 1994 dollars. The dollar amounts included
in these columns are the result of calculations at assumed rates set by the
SEC for illustration purposes, and these rates are not intended to be a
forecast of the common stock price and are not necessarily indicative of the
values that may be realized by the named executive officer. The potential
realizable values are based on arbitrarily assumed annualized rates of stock
price appreciation of five percent and ten percent over the full 10-year
term of the options. For example, in order for the individuals named above
who received options with an exercise price of $28.50 per share to realize
the potential values set forth in the five percent and ten percent columns
in the table above, the price per share of First United Common Stock would
have to be approximately $46.375 and $74.00 respectively.
(4) In 1994, the Company granted Mr. Kelley, with regard to services for the
Company, non-statutory options to purchase 4,832 shares of the Company's
Common Stock at an exercise price of $28.50 per share, which options expire
on August 15, 2004. The potential realizable value of such options at
assumed annual rates of stock price appreciation for the option term of 5%
and 10% would be $86,572 and $219,856, respectively.
(5) In 1994, the Company granted Mr. Kelley, with regard to services for the
Company, restricted options to purchase 537 shares of the Company's Common
Stock at no cost. Such options shall not be exercisable prior to the date
five years, or after the date ten years, from the date such option was
granted. The potential realizable value of such options at assumed annual
rates of stock price appreciation for the option term of 5% and 10% would be
$24,903 and $39,738, respectively.
OPTION EXERCISES IN 1994 AND 1994 YEAR-END VALUES
The following table shows information concerning stock option exercised in
1994 and the year-end value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT 1994 IN-THE-MONEY OPTIONS
ON VALUE YEAR-END AT 1994 YEAR-END
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE($)
-------------------- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
James V. Kelley..... -0- -0- -0-/5,369 -0-/24,700
</TABLE>
14
<PAGE> 18
SEVERANCE AGREEMENT
A 1992 Severance Agreement between the Company, El Dorado and James V.
Kelley provides for severance payments to Mr. Kelley in the event his employment
terminates under certain conditions within two years of a change in control of
the Company, as defined in the Agreement. In the event of a covered termination
Mr. Kelley shall be entitled to receive total cash payments equal to twice his
annual salary plus normal bonuses. Such payments shall be payable in equal
monthly installments for twenty-four months, with an additional amount equal to
the monthly payment times an annual increase in the Urban Consumer Price Index
payable during the second twelve month period. Mr. Kelley would also be entitled
to receive in twenty-four monthly installment cash payments equal to (i) the
amount of any accrued but unvested benefits under any defined benefit or defined
contribution employee benefit plan forfeited as a result of the termination,
(ii) the increase in Mr. Kelley's accrued benefit under any defined benefit plan
during the plan year preceding termination and (iii) the average of
contributions allocated to Mr. Kelley's account under any defined contribution
plan during the two plan years preceding termination. The Company would be
obligated for twenty-four months after termination to provide insurance
coverages for Mr. Kelley and his beneficiaries equivalent to those provided by
the Company and in effect at the time of termination.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company and its subsidiaries have had, and expect to have in the
future, banking transactions in the ordinary course of business with officers of
the Company and El Dorado, Magnolia, Camden, Ft. Smith, Alma, Stuttgart and
Melbourne; directors of the Company and El Dorado, Magnolia, Camden, Ft. Smith,
Alma, Stuttgart and Melbourne; associates of such persons and principal
Stockholders. Loans made to this group, including companies in which they are
principal owners (10% or more ownership interest) amounted to approximately
$12.856 million as of December 31, 1994, which represents 12% of the Company's
equity capital. Such transactions have been on similar terms, including interest
rates and collateral on loans, as those prevailing at the same time for
comparable transactions with others not affiliated with the Company, involved no
more than the normal risk of collectibility and did not include any favorable
features.
Storeroom, a limited liability company in which Mr. William A. Eckert, Jr.
is an owner, received a loan from Magnolia in August, 1986, in the principal
amount of $101,372 at an annual interest rate of seven percent (7%). The largest
amount of outstanding indebtedness during 1994 was $105,760. On December 31,
1994, the outstanding indebtedness was $71,973. The loan was made on similar
terms, including interest rates and collateral requirements, as those prevailing
at the same time for comparable transactions with others not affiliated with the
Company, involved no more than the normal risk of collectibility and did not
include any other features favorable to Storeroom.
Michael F. Mahony is a partner in the law firm of Mahony & Yocum, El
Dorado, Arkansas. The Company retained such law firm as counsel for El Dorado
during fiscal year 1994. Such firm received legal fees from El Dorado based upon
an hourly basis at rates comparable to those prevailing in the market.
William A. Eckert is of counsel with the law firm of Keith, Clegg & Eckert.
Magnolia retained such law firm as counsel during fiscal year 1994. Such firm
received legal fees from Magnolia based upon an hourly basis at rates comparable
to those prevailing in the market.
First Land & Timber Corporation ("FLT"), of which Robert G. Dudley serves
as President and director and Michael F. Mahony, Robert C. Nolan and Dr. David
M. Yocum also serve as directors, leases certain real and personal property to
El Dorado on an annual basis composed of the parking lot at the main bank;
ground leases on real property occupied by the east and west motor bank branch
locations; and personal property leases on telephone equipment.
Paula and Ann Company, a general partnership composed of Paula Pruet James
and Ann Pruet Calhoon, adult daughters of Chesley Pruet, (a director of the
Company) made an unsecured loan to the Company on August 15, 1988 in order to
provide a portion of the funds necessary to acquire First City Corp. (which was
the holding company that owned The City National Bank of Ft. Smith). The loan
was for five million dollars ($5,000,000), at an annual interest rate equal to
three-eighths of one percent (.375%) below the
15
<PAGE> 19
Citibank, N.A. Prime Interest Rate. Interest was payable in quarterly
installments until August 15, 1994, at which time the full amount of principal
and interest was due and payable. The Company solicited, received and considered
alternative loan proposals from no less than two commercial lending
institutions. Upon comparison with other loan proposals, a disinterested Board
of Directors of the Company resolved that the loan proposal of Paula and Ann
Company was in the best interest of, and fair to, the Company. Mr. Pruet owns no
interest, direct or indirect, in Paula and Ann Company, nor did Mr. Pruet
participate in the discussion, consideration or voting pertaining to this loan.
On August 15, 1994, the loan was renewed for the full principal amount of
$5,000,000 for a term of three (3) years at an annual rate of interest that is
equal to 1.20 (120 basis points) above the 30-day LIBOR Interest Rate. Again,
upon comparison with other loan proposals, a disinterested Board of Directors of
the Company resolved that the loan renewal proposal was in the best interest of,
and fair to, the Company. Again, Mr. Pruet did not participate in the
discussion, consideration or voting pertaining to the renewal of the loan.
Highland Industrial Park, Inc. ("Highland"), of which Roy E. Ledbetter is
an officer, leases land to Camden on which its east Camden branch is located.
During fiscal year 1994, Camden paid rental to Highland of approximately $7,000.
Parsimonious, Inc., an Arkansas corporation, of which Ralph C. Weiser is a
beneficial owner of more than ten percent (10%) of the corporation's issued and
outstanding common stock received a line of credit from Magnolia on April 1,
1992 in the principal amount of six hundred thousand dollars ($600,000). The
largest amount of indebtedness outstanding during fiscal year 1994 was $660,000
at an annual interest rate of seven percent (7%). On October 14, 1994 the
outstanding indebtedness was paid in full. The line of credit was made on
similar terms, including interest rates and collateral requirements as those
prevailing at the same time for comparable transactions with others not
affiliated with the Company, involved no more than the normal risk of
collectibility and did not include any favorable features to Parsimonious, Inc.
John-Clai Company, a general partnership in which Claiborne Deming is a
general partner received a loan from El Dorado on October 29, 1987 in the
principal amount of $544,395 at a variable rate of interest tied to the First
National Bank of El Dorado Base Rate for the purpose of financing a transaction
in which John-Clai Company acquired real estate. The largest amount of
indebtedness outstanding at any time during fiscal year 1994 was $464,395 and as
of December 31, 1994 the outstanding indebtedness was $399,395. The loan was
made on similar terms, including interest rates and collateral requirements, as
those prevailing at the same time for comparable transactions with others not
affiliated with the Company, involved no more than the normal risk of
collectibility and did not include any other features favorable to John-Clai
Company.
Robert L. Jones, the chief executive officer of Magnolia, received a loan
from Magnolia for the purchase of a residence. The largest amount of
indebtedness outstanding at any time during fiscal year 1994 was $79,066 and as
of December 31. 1994, the outstanding indebtedness was $75,234. The loan was
made on similar terms, including 6.625% as the rate of interest charged thereon
and being collateralized by a first mortgage lien on Mr. Jones' residence, as
those prevailing at the same time for comparable transactions with others not
affiliated with the Company, involved no more than the normal risk of
collectibility and did not include any other features favorable to Mr. Jones.
R. Madison Murphy, a director of the Company, received a loan from El
Dorado for the purchase of a residence. The largest amount of indebtedness
outstanding at any time during fiscal year 1994 was $169,864.12 and as of
December 31, 1994, the outstanding indebtedness was $146,300.79. The loan was
made on similar terms, including a variable rate of interest tied to the First
National Bank of El Dorado Base Rate charged thereon and being collateralized by
a first mortgage lien on Mr. Murphy's residence, as those prevailing at the same
time for comparable transactions with others not affiliated with the Company,
involved no more than the normal risk of collectibility and did not include any
other features favorable to Mr. Murphy.
Stephens Inc., a registered broker-dealer owned by the Stephens family
provided brokerage services through one brokerage account to the trust
department of Ft. Smith during 1994, earning commissions on activity within that
account of approximately $62,914. Various Stephens' entities, trusts and family
members hold 15.43% of the Company's Common Stock in trust. See footnote 1 on
page 2 of this Proxy Statement.
16
<PAGE> 20
On June 21, 1994, Arkansas Oklahoma Gas Co. received a line of credit from
Ft. Smith in the principal amount of $5,000,000 at a variable rate of interest
which is calculated as 0.25% minus the New York Prime Rate (interest adjusted
and paid quarterly). The largest amount of indebtedness in 1994 was $3,800,000
and as of January 31, 1995, the outstanding indebtedness was $4,700,000. The
W.R. Stephens, Jr. Trust and Elizabeth Ann Stephens Campbell Revocable Trust
each own 33 1/3% of the shares of A.O.G. Corporation, which is a 100% owner of
Arkansas Oklahoma Gas Co. See footnote 1 on page 2 of this Proxy Statement.
ANNUAL REPORT
The Annual Report to Stockholders for the fiscal year ended December 31,
1994, including financial statements and other matters of interest to
Stockholders accompanies this Proxy Statement or has been previously mailed to
you. Stockholders are referred to such Report for financial information about
the activities of the Company, but such report is not incorporated into this
Proxy Statement and is not to be deemed a part of the proxy soliciting material.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO ANY PERSON RECEIVING A COPY OF
THIS PROXY STATEMENT, UPON ORAL OR WRITTEN REQUEST, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH A REQUEST SHOULD BE ADDRESSED TO JOHN
E. BURNS, CHIEF FINANCIAL OFFICER, FIRST UNITED BANCSHARES, INC., MAIN AND
WASHINGTON STREETS, EL DORADO, ARKANSAS 71730, TELEPHONE (501) 863-3181.
OTHER MATTERS
So far as is now known to the management of the Company, there is no
business other than that described herein to be presented to the Stockholders
for action at the Meeting. Should other business properly come before the
Meeting, votes may be cast pursuant to proxies with respect to any such business
in the best judgment of the person acting under the proxies.
STOCKHOLDER PROPOSALS
The 1996 Annual Meeting of Stockholders is presently scheduled to be held
May 21, 1996. Any stockholder of the Company who wishes to have a proposal
presented in the Company's Proxy Statement for such Meeting must deliver such
proposal in writing in accordance with Rule 14a-8 promulgated under the Exchange
Act , addressed to Mr. Robert G. Dudley, to the Company at its office at Main
and Washington Streets, El Dorado, Arkansas 71730, not later than December 29,
1995.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO SIGN,
DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE ENCLOSED ADDRESSED
ENVELOPE WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors of
FIRST UNITED BANCSHARES, INC.
/s/ ROBERT G. DUDLEY
ROBERT G. DUDLEY
Secretary
17
<PAGE> 21
FIRST UNITED BANCSHARES, INC.
MAIN AND WASHINGTON STREETS EL DORADO, ARKANSAS 71730
ANNUAL STOCKHOLDERS MEETING, MAY 23, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of FIRST UNITED BANCSHARES, INC., hereby
constitutes and appoints ROBERT G. DUDLEY and JAMES V. KELLEY, or either of
them, the true and lawful agent and attorney-in-fact for the undersigned, with
full powers of substitution, and hereby authorizes them to represent and to
vote, as designated below, all of the shares of common stock owned by the
undersigned or registered in the name of the undersigned on March 14, 1995, at
the Annual Meeting of Stockholders to be held on May 23, 1995, at 2:00 p.m., or
at any and all adjournments thereof.
1. Proposal to elect the following nominees as directors of the Company.
/ / FOR / / ABSTAIN / / WITHHOLD AUTHORITY
E. Larry Burrow, Claiborne P. Deming, William A. Eckert, Jr., James V. Kelley,
Roy E. Ledbetter, Michael F. Mahony, Richard H. Mason, Jack W. McNutt, William
E. Morgan, R. Madison Murphy, Robert C. Nolan, Paula M. O'Connor, Katherine
Patton Ozment, Cal Partee, Jr., W. C. Partee, Chesley Pruet, John D. Trimble,
Jr., Ralph C. Weiser and Dr. David M. Yocum, Jr.
THE UNDERSIGNED STOCKHOLDER(S) MAY WITHHOLD AUTHORITY TO VOTE FOR ANY SINGLE
NOMINEE BY LINING THROUGH OR OTHERWISE STRIKING OUT THE NAME OF ANY NOMINEE. IF
THIS PROXY IS EXECUTED BY THE UNDERSIGNED STOCKHOLDER(S) AS NOT TO WITHHOLD
AUTHORITY TO VOTE FOR THE ELECTION FOR ANY NOMINEE, THIS SHALL BE DEEMED TO
GRANT SUCH AUTHORITY.
2. Proposal to ratify the appointment of Arthur Andersen LLP as the independent
auditors of the Company.
/ / FOR / / AGAINST / / ABSTAIN
(Continued and to be signed on reverse side)
- -------------------------------------------------------------------------------
(Continued from other side)
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting of Stockholders or
any and all adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
Dated:
--------------------------
(signature)
--------------------------------
(signature if jointly held)
Please sign exactly as the name
appears on your stock
certificate(s). When shares are
held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please sign in full
corporate name and have signed
by the president or other duly
authorized officer. If a
partnership, please sign in
partnership name by the
authorized person.
Please mark, sign, date and return this proxy card promptly, using the enclosed
envelope.
IF YOU PLAN ON ATTENDING THE ANNUAL STOCKHOLDERS MEETING IN PERSON,
PLEASE INDICATE SO BY CHECKING THE FOLLOWING BOX. / /
