<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.
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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 27, 1997
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 27, 1997, 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 21, 1997
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 21, 1997
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
ELECTION OF DIRECTORS
General................................................... 2
Vote Required For Election................................ 2
Nominees for Directors.................................... 3
Director Nomination and Qualification..................... 3
Meetings and Committees of the Board...................... 4
Compensation of Directors................................. 4
Compliance with Section 16(a) of the Securities and
Exchange Act of 1934................................... 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS......... 5
EXECUTIVE COMPENSATION AND CERTAIN SECURITY HOLDERS
Report of Compensation, ESOP and Benefits Committee....... 5
Compensation Policy.................................... 6
Measures of Performance................................ 6
Executive Compensation................................. 6
Compensation of Chief Executive Officer................ 6
Stock Performance......................................... 7
Compensation of Management................................ 8
Outstanding Voting Securities and Principal Holders
Thereof................................................ 10
Security Ownership of Directors and Executive Officers.... 11
OPTION GRANTS IN 1996....................................... 13
OPTION EXERCISES IN 1996 AND 1996 YEAR-END OPTION VALUES.... 14
Severance Agreement....................................... 14
TRANSACTIONS WITH MANAGEMENT AND OTHERS..................... 14
ANNUAL REPORT............................................... 15
OTHER MATTERS............................................... 15
STOCKHOLDER PROPOSALS....................................... 16
</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 27, 1997
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 21, 1997 ("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 27, 1997 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 21, 1997. 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 21, 1997. On the Record Date, there were outstanding and
entitled to vote 8,246,209 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.
ELECTION OF DIRECTORS
GENERAL
At the Meeting, thirteen (13) directors, which shall constitute the entire
Board of Directors of the Company for the ensuing year, will be elected to hold
office until the next Annual Meeting of Stockholders or until their successors
have been duly elected and qualified. The following persons have been nominated
for election as directors: E. Larry Burrow, Claiborne P. Deming, Tommy Hillman,
James V. Kelley, Roy E. Ledbetter, Michael F. Mahony, Richard H. Mason, Jack W.
McNutt, R. Madison Murphey, Robert C. Nolan, Cal Partee, Jr., Carolyn Tennyson
and John D. Trimble, Jr. Should any of the nominees 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
THIRTEEN 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.
2
<PAGE> 6
NOMINEES FOR ELECTION AS DIRECTORS
The following table represents certain information with respect to each
nominee for director of the Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE BUSINESS EXPERIENCE SINCE(1)
---- --- ------------------- --------
<S> <C> <C> <C>
E. Larry Burrow(2)............. 62 Plant Manager of Partee Flooring Mill, Oil and 1983
Timber Investments, principally engaged in Oil and
Gas Production
Claiborne P. Deming(3)......... 42 Director, President and Chief Executive Officer of 1987
Murphy Oil Corporation, principally engaged in Oil
and Gas Exploration and Production
Tommy Hillman.................. 60 President of Winrock Farms, Inc. *
James V. Kelley................ 47 Chairman of the Board, President and Chief 1985
Executive Officer of the Company
Roy E. Ledbetter............... 67 President and Chief Executive Officer of Highland 1984
Industrial Park, Inc., A Subsidiary of Highland
Resources, Inc., principally engaged in Industrial
Development
Michael F. Mahony(4)........... 52 Partner of Mahony & Yocum, Attorneys at Law 1981
Richard H. Mason............... 59 President of Gibraltar Energy Company, principally 1983
engaged in Oil and Gas Exploration and Production
Jack W. McNutt................. 62 Retired Director, President and Chief Executive 1990
Officer of Murphy Oil Corporation, principally
engaged in Oil and Gas Exploration and Production
R. Madison Murphy(3)........... 39 Chairman of the Board of Murphy Oil Corporation, 1989
principally engaged in Oil and Gas Exploration and
Production
Robert C. Nolan(3)............. 55 Managing Partner of Munoco Company, principally 1982
engaged in Oil and Gas Exploration and Production
Cal Partee, Jr.(2)............. 52 Partner of Partee Flooring Mill, Oil and Timber 1983
Investments, principally engaged in Oil and Lumber
Production
Carolyn Tennyson............... 45 Timber Investments *
John D. Trimble, Jr............ 65 Managing Partner of Trimble Properties, principally 1983
engaged in Oil and Other Investments
</TABLE>
- ---------------
* Initial nomination
NOTES:
(1) All nominees, with the exception of Mr. Hillman and Ms. Tennyson, are
current directors of the Company and were elected at the last annual meeting
on May 28, 1996.
(2) E. Larry Burrow is the brother-in-law of Cal Partee, Jr.
(3) Claiborne P. Deming, R. Madison Murphy and Robert C. Nolan are first cousins
of each other.
(4) Michael F. Mahony is the brother of Emon A. Mahony, Jr. who is a director of
The City National Bank, Ft. Smith, Arkansas.
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
3
<PAGE> 7
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 18 of this Proxy Statement.
MEETINGS AND COMMITTEES OF THE BOARD
During fiscal year 1996, the Company's Board of Directors held twelve (12)
meetings. With the exception of Director Claiborne P. Deming, each incumbent
director attended 75% or more 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 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 1996, the Executive Committee met twelve (12) times. Each
member attended 75% or more 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, Roy E. Ledbetter, 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 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 1996,
the Committee met two (2) times. Each member of the committee attended 75% or
more of the meetings except Richard H. Mason.
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 1996, the Committee met
five (5) times. Each member attended 75% or more of the meetings.
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 1996, the Nominating Committee met one (1) time. The meeting
was attended by all members of the Committee except Dr. David M. Yocum, Jr.
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.
4
<PAGE> 8
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 1996 was $114,450.
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 1996, 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, 1997, 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, 1997, whose appointment to serve for any period subsequent
to the 1998 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, 1996, 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 AND CERTAIN SECURITY HOLDERS
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 1996.
5
<PAGE> 9
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 1996 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 1996 consisted
of (1) annual base salary, adjusted from fiscal year 1995, (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.
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 1996 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 1996 is reflective of the foregoing compensation
policy and performance goals of the company.
Compensation of Chief Executive Officer
The Company paid Mr. Kelley a base salary of $225,000 in 1996. The
Committee recommended that Mr. Kelley's base salary be increased from 1995;
however, Mr. Kelley's base salary was not increased at his request. 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.
6
<PAGE> 10
Mr. Kelley was awarded an annual bonus of $95,000 for 1996. The Committee
considered the 19.3% increase in market value of the Company's Common Stock
during 1996 as well as the 12.8% increase in earnings per share, the 13.08%
return on average equity and the 1.23% return on average 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/ ROY E. LEDBETTER
------------------------------------
/s/ RICHARD H. MASON
------------------------------------
/s/ CLAIBORNE P. DEMING
------------------------------------
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,
1996 with the cumulative total returns on the S&P 500 Index and the Dow Jones
Regional Bank Index (South). The comparison assumes $100 was invested on
December 31, 1991, in the Company's Common Stock and in each of the foregoing
indices with reinvestment of the dividends.
<TABLE>
<CAPTION>
DOW JONES
MEASUREMENT PERIOD FIRST UNITED S&P 500 REGIONAL BANK
(FISCAL YEAR COVERED) BANCSHARES COMPOSITE INDEX INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 198.97 107.64 134.48
1993 231.54 118.50 141.20
1994 243.28 120.06 140.53
1995 341.51 165.18 210.25
1996 416.61 203.11 289.83
</TABLE>
7
<PAGE> 11
COMPENSATION OF MANAGEMENT
The Company does not directly compensate the officers and management for
serving in that capacity. Compensation is provided by The First National Bank of
El Dorado, El Dorado, Arkansas ("El Dorado"), First National Bank of Magnolia,
Magnolia, Arkansas ("Magnolia"), Merchants and Planters Bank, N.A., Camden,
Arkansas ("Camden"), City National Bank of Fort Smith, Ft. Smith, Arkansas ("Ft.
Smith"), Commercial Bank at Alma, Alma, Arkansas ("Alma"), First United Bank,
Stuttgart, Arkansas ("Stuttgart"), The Bank of North Arkansas, Melbourne,
Arkansas ("Melbourne") FirstBank, Texarkana, Texas ("Texarkana"), Citizens Bank
& Trust , Carlisle, Arkansas ("Carlisle"), First Bank of Arkansas, Brinkley,
Arkansas ("Brinkley"), Hazen First State Bank, Hazen, Arkansas ("Hazen"), and
First United Trust Company, N.A., El Dorado, Arkansas ("Trust Company"), 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, 1996, and ending
December 31, 1996. The following table sets forth the compensation paid by the
Company, and its subsidiaries, during the fiscal year 1996 to the highest paid
executive officers of the Company and to all named executive officers of the
Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- -----------------------
FISCAL OTHER RESTRICTED
YEAR ANNUAL STOCK SECURITIES ALL OTHER
ENDED COMPENSATION AWARD(S) UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION DEC. 31 SALARY($) BONUS($) (1)(2)($) ($) OPTIONS(#) ($)(3)(4)
--------------------------- ------- --------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James V. Kelley............... 1996 225,000 95,000 3,403 297,294(5) 38,681(6) 9,000
President, Chairman, Chief 1995 225,000 82,500 3,403 15,872 4,612 8,247
Executive Officer and 1994 200,000 78,750 3,403 16,848 4,832 8,777
Director of the Company
Robert L. Jones............... 1996 143,600 27,500 1,170 N/A N/A 9,000
President, Chief Executive 1995 142,000 25,000 1,170 N/A N/A 8,247
Officer and 1994 135,000 25,000 1,170 N/A N/A 7,781
Director of Magnolia
Robert G. Dudley.............. 1996 106,000 10,000 8,027 N/A N/A 7,173
President and Director of 1995 102,000 10,000 8,027 N/A N/A 6,355
El Dorado; 1994 99,000 11,000 8,027 N/A N/A 6,494
Secretary of the Company
Jim N. Harwood................ 1996 160,000 40,000 N/A N/A 5,725(7) 9,000
President, Chief Executive 1995 149,000 32,000 N/A N/A N/A 8,247
Officer and Director 1994 135,000 30,000 N/A N/A N/A 7,832
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, 1996 the amounts paid by
El Dorado for the policies for Messrs. Kelley and Dudley were, respectively,
$3,403 and $1,170. 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, 1996, the amount paid on behalf
of Mr. Jones was $8,027. 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
8
<PAGE> 12
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 1996 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, 1996, the amount of
the Company's contribution allocated to the accounts of Messrs. Kelley,
Jones, Dudley and Harwood were, respectively $9,000, $9,000, $7,173 and
$9,000.
(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 12, 12, 36, and 8,
respectively.
(5) On January 16, 1996, a restricted stock option for 734 shares of the
Company's Common Stock was granted to the indicated executive officer the
closing market price of the Company's unrestricted Common Stock on the date
of the grant was $28.67 resulting in a dollar value of $21,044. On October
21, 1996, a second restricted option for 15,000 shares of the Company's
Common Stock was granted to the indicated executive officer. The closing
market price of the Company's unrestricted Common Stock on the date of the
second grant was $27.625 resulting in a dollar value of $276,250. Shares of
the Company's Common Stock subject to the restricted option may be acquired
at no cost by the executive officer. Vesting occurs 100% five years after
the date of the grant.
(6) On January 16, 1996, a non-statutory stock option of 6,603 shares of the
Company's Common Stock was granted to the indicated executive officer. Such
grant was made at $28.67 per share. On October 21, 1996, a second
non-statutory stock option of 20,000 shares of the Company's Common Stock
was granted to the indicated executive officer. Such grant was made at
$26.48 per share. Non-statutory options vest cumulatively over a four (4)
year period, beginning one year following the date of the grant. Vesting
9
<PAGE> 13
occurs twenty-five percent (25%) per year up to one hundred percent (100%)
vesting four (4) years after the date of the grant.
(7) In 1996, a non-statutory stock option for 5,000 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 $26.48 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.
OUTSTANDING VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on March 21, 1997 the record date for the Meeting,
the Company had issued and outstanding 8,246,209 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 21, 1997, who own beneficially 5% or more of
the Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
-------------- ------------------- ---------- ----------------
<S> <C> <C> <C>
Common Stock, Par Warren A. Stephens Trust; the W.R.
Value $1.00 Stephens, Jr. Revocable Trust; the W.R.
Stephens, Jr. Trust; the Bess C.
Stephens Trust (2); the Elizabeth Ann
Stephens Campbell Revocable Trust;
Jackson T. Stephens; and Stephens
Group, Inc............................. 1,193,763(1) 14.48%
111 Center Street, Suite 2400
Little Rock, Arkansas 72201
</TABLE>
- ---------------
NOTE:
(1) All shares, except as described below, were held in trust and administered
by the Bank of New York until December 30, 1996 when the trust terminated
and the shares were distributed to the beneficial owners. 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 Bess C. Stephens Trust beneficially owns a total of 521,932 shares or
6.33% of the Company's Common Stock, which total includes 311,826 shares
that were not part of the trust administered by the Bank of New York.
Additionally, the W. R. Stephens, Jr. Trust beneficially owns 3,150 shares
of the Company's Common Stock which were not part of the trust. The Company
expresses no opinion as to whether the beneficial owners constitute a
"group" as defined in Section 13(d)(3) of the Exchange Act.
(2) The Bess C. Stephens Trust is the successor in interest to the ownership of
the Company's Common Stock previously held by the W. R. Stephens Trust which
was liquidated on February 6, 1996.
10
<PAGE> 14
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the nature and extent of ownership of the
Common Stock of the Company by its directors, nominees for election and
directors, each of the executive officers named in the Summary Compensation
Table and all of the company's directors and officers as a group as of February
1, 1997.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------------ ------------ -------
<S> <C> <C>
E. Larry Burrow(2).......................................... 30,030 *
Claiborne P. Deming(3)...................................... 187,961 2.28%
Robert G. Dudley(2)(4)(5)................................... 7,856 *
William A. Eckert, Jr. ..................................... 5,220 *
Jim N. Harwood(6)........................................... 4,778 *
Tommy Hillman(7)............................................ 65,434 *
Robert L. Jones(8).......................................... 6,109 *
James V. Kelley(9).......................................... 8,132 *
Roy E. Ledbetter(10)........................................ 15,475 *
Michael F. Mahony(5)(11).................................... 54,171 *
Richard H. Mason............................................ 1,581 *
Jack W. McNutt.............................................. 12,000 *
William E. Morgan(2)........................................ 17,142 *
R. Madison Murphy(12)....................................... 81,888 0.99%
Robert C. Nolan(5)(13)...................................... 285,272 3.46%
Paula M. O'Connor(14)....................................... 57,352 *
Katherine Patton Ozment(15)................................. 193,500 2.35%
Cal Partee, Jr. ............................................ 19,686 *
Chesley Pruet(16)........................................... 69,858 *
Carolyn Tennyson............................................ 300 *
John D. Trimble, Jr. ....................................... 43,458 *
Ralph C. Weiser............................................. 57,816 *
Dr. David M. Yocum, Jr.(5)(17).............................. 33,390 *
All Directors, Nominees for Director and Executive Officers
as a Group (24 Persons)................................... 1,260,653 15.29%
</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) 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.
(2) Share totals exclude 189,051 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.
(3) Claiborne P. Deming owned of record 148,911 shares; of such shares 39,050
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.
(4) Robert G. Dudley owned of record 1,980 shares; 5,876 shares were owned of
record by the Company's Employee Stock Ownership Plan in which Mr. Dudley
had a beneficial interest; 450 shares were owned of record by Mr. Dudley's
wife, beneficial interest in such shares is expressly disclaimed by Mr.
Dudley.
11
<PAGE> 15
(5) Share totals exclude 321,948 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.
(6) Jim N. Harwood and his wife owned of record 2,361 shares; 2,417 shares were
owned of record by the Company's Employee Stock Ownership Plan in which
such shares Mr. Harwood had a beneficial interest.
(7) Tommy Hillman owned of record 43,679 shares; Tommy Hillman and his wife
owned of record 9,871 shares; Tommy Hillman Farms which is owned by Mr.
Hillman owned of record 7,176 shares; Mr. Hillman's wife owned of record 80
shares; A total of 4,628 shares were owned of record by Mr. Hillman's
self-directed IRA. Mr. Hillman's two (2) adult sons each own 640 shares in
which Mr. Hillman expressly disclaims beneficial interest in such shares.
(8) Robert L. Jones owned of record 300 shares; 5,809 shares were owned of
record by the Company's Employee Stock Ownership Plan in which such shares
Mr. Kelley had a beneficial interest.
(9) James V. Kelley owned of record 300 shares; 7,832 shares were owned of
record by the Company's Employee Stock Ownership Plan in which shares Mr.
Kelley had a beneficial interest.
(10) Share total excludes 50,274 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.
(11) Michael F. Mahony and his wife owned either indirectly or of record 18,216
shares; 3,000 shares were held by Mr. Mahony as trustee for the benefit of
one of his children, in which Mr. Mahony disclaims any beneficial interest;
32,955 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.
(12) R. Madison Murphy and his wife owned either indirectly or of record 81,888
shares; of such shares 9,787 shares were held by R. Madison Murphy as
trustee of trusts for the benefit of minor children; 1,035 shares were held
by Mr. Murphy as trustee of trusts for the benefit of his minor nieces and
nephews; 3,307 shares were held by others as trustees of trusts for the
benefit of Mr. Murphy's minor children; 4,327 shares are owned of record by
Mr. Murphy's wife; beneficial interest in all of such shares is expressly
disclaimed by Mr. Murphy. Additionally, Mr. Murphy beneficially owns 6,570
shares by virtue of a residuary interest in a trust of which he is not a
trustee.
(13) Robert C. Nolan owned of record 84,914 shares; Mr. Nolan as Trustee (with
shared voting and investment power) controlled 200,358 shares; 21,382
shares are owned by Mr. Nolan's adult children and his minor grandson,
beneficial interest in which is expressly disclaimed by Mr. Nolan.
(14) Paula M. O'Connor owned of record 55,768 shares; 1,584 shares were owned of
record by Mrs. O'Connor, as trustee.
(15) Katherine Patton Ozment owned of record 612 shares; 192,888 shares that
Mrs. Ozment has the right to vote were owned by her adult children and
their children.
(16) Chesley Pruet owned of record 62,658 shares; 1,332 shares were owned of
record by Mr. Pruet's wife; 5,868 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.
(17) Dr. David M. Yocum, Jr. owned 31,551 shares; of such shares 4,584 shares
were held by Dr. Yocum and his wife as joint trustees for the benefit of
their son; 1,839 shares were owned of record by Dr. Yocum's wife; 9,588
shares were owned of record by Alice-Sidney Oil Company.
12
<PAGE> 16
OPTION GRANTS IN 1996
The following table shows information concerning stock options granted
during 1996, 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 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUES AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM (3)
------------------------------------------------------------- -------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS MARKET 0% 5% 10%
OPTIONS GRANTED TO EXERCISE PRICE ON DOLLAR DOLLAR DOLLAR
GRANTED EMPLOYEES PRICE GRANT DATE EXPIRATION GAINS GAINS GAINS
NAME (#)(2) IN 1966 ($/SHARE) ($/SHARE) DATE ($) ($) ($)
---- ---------- ---------- --------- ---------- ---------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James V. Kelley...... 734(4) 1.63% 0 28.67 01/16/2006 21,044 34,278 54,582
6,603(5) 14.73% 26.28 28.67 01/16/2006 15,781 134,833 317,485
10,000(4) 22.30% 0 27.625 10/21/2006 276,250 449,982 716,521
20,000(5) 44.61% 26.48 27.625 10/21/2006 22,900 370,364 903,440
Jim Harwood.......... 5,000(6) 11.15% 26.48 27.625 10/21/2006 5,725 92,591 225,860
Dollar Gains of All
First United
Stockholders(1).... $171,140,000 $433,700,000
</TABLE>
- ---------------
(1) Total dollar gains are based on the indicated assumed annual rates of
appreciation and calculated on the 8,246,209 shares of Common Stock
outstanding and a per share price of $33.00 as of December 31, 1996.
(2) There were no SARs granted to the Chief Executive Officer or any other
executive officer in 1996.
(3) The potential realizable values represent future opportunity and have not
been reduced to present value in 1996 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 $26.48 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 $44.998 and $71.652 respectively.
(4) In 1996, the Company granted Mr. Kelley, with regard to services for the
Company, two (2) restricted stock options to purchase a total of 10,734
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.
(5) On January 16, 1996, the Company granted Mr. Kelley, with regard to services
for the Company, a non-statutory stock option to purchase 6,603 shares of
the Company's Common Stock at an exercise price of $26.28 per share. A
second non-statutory stock option was granted by the Company to Mr. Kelley
on October 21, 1996, with regard to services to purchase 20,000 shares of
the Company's Common Stock at an exercise price of $26.48 per share.
(6) In 1996, the Company granted Mr. Harwood, with regard to services for the
Company, a non-statutory stock option to purchase 5,000 shares of the
Company's Common Stock at an exercise price of $26.48 per share.
13
<PAGE> 17
OPTION EXERCISES IN 1996 AND 1996 YEAR-END VALUES
The following table shows information concerning stock option exercises in
1996 and the year-end value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT 1996 IN-THE-MONEY OPTIONS
ON VALUE YEAR-END AT 1996 YEAR-END
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
James V. Kelley...... -0- -0- 5,354/47,723 75,093/704,727
Jim Harwood.......... -0- -0- 0/5000 0/32,600
</TABLE>
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,
Texarkana, Melbourne, Carlisle, Brinkley, Hazen, and the Trust Company;
directors of the Company and El Dorado, Magnolia, Camden, Ft. Smith, Alma,
Stuttgart, Texarkana, Melbourne, Carlisle, Brinkley, Hazen, and the Trust
Company; 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 $15,794,000 as of December 31,
1996, which represents 10.56% 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.
William A. Eckert is of counsel with the law firm of Keith, Clegg & Eckert.
Magnolia retained such law firm as counsel during fiscal year 1996. Such firm
received legal fees from Magnolia based upon an hourly basis at rates comparable
to those prevailing in the market.
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 1996. Such firm received legal fees from El Dorado 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 property to El Dorado on
an annual basis composed of the parking lot at the main bank; and ground leases
on real property occupied by the east and west motor bank branch locations.
14
<PAGE> 18
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 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.
On June 21, 1996, Arkansas Oklahoma Gas Co. renewed 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 0.75% minus the New York Prime Rate (interest adjusted
and paid quarterly). The largest amount of indebtedness in 1996 was $2,400,00
and as of December 31, 1996, the outstanding indebtedness was $2,400,000. 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 11 of this Proxy Statement.
ANNUAL REPORT
The Annual Report to Stockholders for the fiscal year ended December 31,
1996, 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, 1996, 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.
15
<PAGE> 19
STOCKHOLDER PROPOSALS
The 1998 Annual Meeting of Stockholders is presently scheduled to be held
May 26, 1998. 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 31, 1997.
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
16
<PAGE> 20
- --------------------------------------------------------------------------------
FIRST UNITED BANCSHARES, INC.
MAIN AND WASHINGTON STREETS EL DORADO, ARKANSAS 71730
ANNUAL STOCKHOLDERS MEETING, MAY 27, 1997
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 21, 1997, at
the Annual Meeting of Stockholders to be held on May 27, 1997, 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 [ ] AGAINST [ ] ABSTAIN [ ] WITHHOLD AUTHORITY
E. Larry Burrow, Claiborne P. Deming, Tommy Hillman, James V. Kelley, Roy E.
Ledbetter, Michael F. Mahony, Richard H. Mason, Jack W. McNutt, R. Madison
Murphy, Robert C. Nolan, Cal Partee, Jr., Carolyn Tennyson and John D. Trimble,
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)
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<PAGE> 21
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(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. [ ]
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