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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 Section 240.14a-11(c) or Section 240.14a-12
FIRST UNITED BANCSHARES, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
FIRST UNITED BANCSHARES, INC.
EL DORADO, ARKANSAS 71730
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 26, 1998
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 26, 1998, 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 consider and vote upon a proposed amendment to the Articles of
Incorporation to increase the number of authorized shares of common stock,
$1.00 par value, from 24,000,000 shares to 50,000,000 shares;
(4) To consider and vote upon a proposed amendment to the Articles of
Incorporation to allow the Board of Directors to approve certain
acquisition transactions without a stockholder vote; and
(5) 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 18, 1998
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. Proposals 3 and 4 above require the affirmative vote of
two-thirds of the shares entitled to vote for approval. Stockholders are
cordially invited to attend the Annual Meeting in person.
By Order of the Board of Directors
LOGO
John E. Burns
Secretary
El Dorado, Arkansas
April 20, 1998
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>
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................................... 4
Meetings and Committees of the Board.................................... 4
Compensation of Directors............................................... 5
Compliance with Section 16(a) of the Securities and Exchange Act of
1934................................................................... 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS....................... 5
PROPOSED AMENDMENTS TO THE COMPANY'S ARTICLES OF INCORPORATION
Proposals Independent of Each Other..................................... 6
Vote Required........................................................... 6
Proposed Amendment to Article Fourth and Reasons for Proposed Amendment. 6
Proposed Article Fourth................................................. 7
Proposed Amendment to Article Seventh and Reasons for the Proposed
Amendment.............................................................. 7
Article Seventh Presently in Effect..................................... 8
Proposed Article Seventh................................................ 8
EXECUTIVE COMPENSATION AND CERTAIN SECURITY HOLDERS
Report of Compensation, ESOP and Benefits Committee..................... 8
Compensation Policy................................................... 9
Measures of Performance............................................... 9
Executive Compensation................................................ 9
Compensation of Chief Executive Officer............................... 9
Stock Performance....................................................... 10
Compensation of Management.............................................. 11
Outstanding Voting Securities and Principal Holders Thereof............. 13
Security Ownership of Directors and Executive Officers.................. 14
Option Grants in 1997................................................... 16
Option Exercises in 1997 and 1997 Year-End Option Values................ 16
Severance Agreement..................................................... 17
TRANSACTIONS WITH MANAGEMENT AND OTHERS................................... 17
ANNUAL REPORT............................................................. 18
OTHER MATTERS............................................................. 18
STOCKHOLDER PROPOSALS..................................................... 18
</TABLE>
<PAGE>
FIRST UNITED BANCSHARES, INC.
MAIN AND WASHINGTON STREETS
EL DORADO, ARKANSAS 71730
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 26, 1998
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 18, 1998 ("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 26, 1998 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 20, 1998. 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 JOHN
E. BURNS, 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 18, 1998. On the Record Date, there were outstanding and
entitled to vote 10,276,772 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,
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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 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, fifteen (15) 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, Al Graves, Jr., Tommy Hillman, James V. Kelley, Roy E. Ledbetter,
Michael F. Mahony, Richard H. Mason, Jack W. McNutt, George F. Middlebrook,
III, R. Madison Murphy, 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 FIFTEEN 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.
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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)
---- --- ------------------- --------
<C> <C> <S> <C>
E. Larry Burrow (2) 63 Plant Manager of Partee Flooring Mill, Oil and 1983
Timber Investments, principally engaged in Oil
and Lumber
Production
Claiborne P. Deming (3) 43 Director, President and Chief Executive Officer 1987
of Murphy Oil Corporation, principally engaged
in Oil and Gas
Exploration and Production
Al Graves, Jr. (4) 61 Partner of Graves & Graves, Attorneys at Law *
Tommy Hillman 61 President of Winrock Farms, Inc. 1997
James V. Kelley 48 Chairman of the Board, President and Chief Ex- 1985
ecutive
Officer of the Company
Roy E. Ledbetter 68 President and Chief Executive Officer of High- 1984
land
Industrial Park, Inc., A Subsidiary of Highland
Resources, Inc., principally engaged in Indus-
trial
Development
Michael F. Mahony (5) 53 Partner of Mahony & Yocum, Attorneys at Law 1981
Richard H. Mason 60 President of Gibraltar Energy Company, princi- 1983
pally
engaged in Oil and Gas Exploration and Produc-
tion
Jack W. McNutt 63 Retired Director, President and Chief Executive 1990
Officer of Murphy Oil Corporation, principally
engaged in Oil and Gas Exploration and Produc-
tion
George F. Middlebrook, III 47 General Partner of Middlebrook Mineral Partner- 1997
ship LLP, principally engaged in management of
Oil and Gas
Properties
R. Madison Murphy (3) 40 Chairman of the Board of Murphy Oil Corporation, 1989
principally engaged in Oil and Gas Exploration
and
Production
Robert C. Nolan (3) 56 Chairman of the Board of Deltic Timber Corpora- 1982
tion,
Managing Partner of Munoco Company, principally
engaged in Oil and Gas Exploration and Produc-
tion
Cal Partee, Jr. (2) 53 Partner of Partee Flooring Mill, Oil and Timber 1983
Investments, principally engaged in Oil and
Lumber
Production
Carolyn Tennyson 46 Timber Investments 1997
John D. Trimble, Jr. 66 Managing Partner of Trimble Properties, princi- 1983
pally
engaged in Oil and Other Investments
</TABLE>
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* Initial Nomination
(1) All nominees, except Al Graves, Jr., are current directors of the Company.
All current directors were elected at the last annual meeting on May 27,
1997, except George F. Middlebrook, III who was elected at the Board of
Directors meeting on September 15, 1997.
(2) E. Larry Burrow is the brother-in-law of Cal Partee, Jr.
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(3) Claiborne P. Deming, R. Madison Murphy and Robert C. Nolan are first
cousins of each other.
(4) Al Graves, Jr. is the son of Albert Graves who is a director of The
Citizens National Bank of Hope, Hope, Arkansas ("CNB"), which was acquired
by the Company on March 30, 1998, and the brother of John Robert Graves
who is a director, chief executive officer and president of CNB and as of
April 1, 1998 is the South Arkansas Regional Chairman of the Company.
(5) 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 Board of Directors has a standing 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 18 of this Proxy Statement.
MEETINGS AND COMMITTEES OF THE BOARD
During fiscal year 1997, the Company's Board of Directors held thirteen (13)
meetings. With the exception of Directors Claiborne P. Deming and R. Madison
Murphy, 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. and John D. Trimble, Jr. During fiscal year 1997, 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 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 1997, the Committee
met two (2) times. Each member of the committee attended 75% or more of the
meetings except Claiborne P. Deming and 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, Tommy Hillman, 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
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audit firm. During fiscal year 1997, the Committee met four (4) 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 E. Larry
Burrow, John D. Trimble, Jr., Jack W. McNutt, and Carolyn Tennyson. During
fiscal year 1997, the Nominating Committee met one (1) time. The meeting was
attended by all members of the committee.
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 $400
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
$100 for each committee meeting they attend and committee chairmen receive an
additional $50 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 1997 was $117,850.
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. Except as described below, to the Company's
knowledge, based exclusively on a review of the copies of the reports provided
to the Company and on information and written representations provided to the
Company by individual executive officers and directors, the Company believes
during fiscal year 1997, all filing requirements applicable to executive
officers and directors have been made in compliance with Section 16(a) and the
rules promulgated thereunder. Directors Tommy Hillman, George F. Middlebrook,
III, and Carolyn Tennyson, all of whom were elected as directors during 1997,
filed a late report on Form 3 reporting their respective initial beneficial
ownership of Company securities.
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, 1998, 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, 1998, whose appointment to serve for any period
subsequent to the 1999 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, 1997, Arthur Andersen LLP examined the
Company's annual consolidated financial statements, performed a
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<PAGE>
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.
PROPOSED AMENDMENTS TO COMPANY'S ARTICLES OF INCORPORATION
PROPOSALS INDEPENDENT OF EACH OTHER
The Board of Directors believes it would be in the best interest of the
Company to amend Article Fourth and Article Seventh of the Company's Articles
of Incorporation. The adoption or rejection of the proposed amendments is not
related and approval or disapproval of one amendment will not have any effect
on the other proposed amendment.
VOTE REQUIRED
EACH PROPOSED AMENDMENT MUST BE APPROVED BY THE AFFIRMATIVE VOTE OF TWO-
THIRDS OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY TO BECOME
EFFECTIVE.
PROPOSED AMENDMENT TO ARTICLE FOURTH AND REASONS FOR THE PROPOSED AMENDMENT
The Board of Directors has determined that it is in the best interest of the
Company to amend the Company's Articles of Incorporation ("Articles") to
increase the number of authorized shares of Company common stock, $1.00 par
value ("Common Stock"), from 24,000,000 shares to 50,000,000 shares. There
will be no change in the par value of each share of common stock and the
amendment will not affect the number of shares of preferred stock authorized,
which is 500,000 shares. The full text of the proposed amendment to Article
Fourth is set forth below under the heading "Proposed Article Fourth".
On March 18, 1998, the Company had 10,276,772 shares of its authorized
Common Stock issued and outstanding. As a result of the Company's March 30,
1998 merger acquisitions of Citizens National Bancshares of Hope, Inc., Hope,
Arkansas and First Republic Bancshares, Inc., Rayville, Louisiana, 12,646,523
shares of Common Stock are currently issued and outstanding. The Common Stock
is traded on the National Association Securities Dealers Automated Quotations-
National Market System ("NASDAQ") under the symbol of "UNTD".
If the proposed amendment is approved, the newly authorized but unissued
shares will be available for issuance from time to time at the discretion of
the Board of Directors for such purposes and consideration as the Board may
approve. Generally, no shareholder approval is required for the issuance of
authorized but unissued shares of Common Stock, except as provided by the
rules of NASDAQ, the Arkansas Business Corporation Act of 1987, as amended,
and Article Seventh of the Company's Articles as discussed below. Unissued
shares of Common Stock will be available at the discretion of the Board of
Directors for, among other things, future stock splits, stock dividends,
acquisitions, or issuance upon exercise of stock options or to raise
additional capital in public or private sales. The Board of Directors has
authorized the issuance of shares for such purposes in the past and,
specifically, the Company has acquired additional banks and bank holding
companies and given Common Stock in consideration therefor, and may use a
portion of the newly authorized shares to pursue future acquisitions. The
Company has no present plans or proposals to issue shares that would be
authorized by the proposed amendment, although it may consider a stock split
that could not be made if the amendment is not approved. Unless otherwise
required, the Company does not intend to seek additional shareholder
authorization to issue the shares of Common Stock authorized by this proposal.
6
<PAGE>
Shareholders have no preemptive rights to acquire shares issued by the
Company under its existing Articles, and shareholders would not acquire any
such rights with respect to such additional shares under the proposed
amendment to the Company's Articles. Under some circumstances, issuance of
additional shares of Common Stock could dilute the voting rights and equity
and earnings per share of existing shareholders. This increase in authorized
but unissued Common Stock could be considered an anti-takeover measure because
the additional authorized but unissued shares of Common Stock could be used by
the Board of Directors to make a change in control of the Company more
difficult. The Board of Directors' purpose in recommending this proposal is
not as an anti-takeover measure, but for the reasons discussed above.
PROPOSED ARTICLE FOURTH
FOURTH: The total number of shares of authorized capital stock which the
corporation shall have the authority to issue shall be as follows:
<TABLE>
<CAPTION>
PAR VALUE
SHARES CLASS PER SHARE
------ ----- ---------
<S> <C> <C>
50,000,000 Common $1.00
500,000 Preferred $1.00
</TABLE>
The Board of Directors may determine, in whole or in part, the preferences,
limitations, and relative rights of any class of stock, or one (1) or more
series within a class, before the issuance of such class or series,
respectively, and may amend the Articles of Incorporation to set forth such
preferences, limitation, and relative rights without shareholders' approval or
action.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO ARTICLE FOURTH OF THE ARTICLES OF INCORPORATION.
PROPOSED AMENDMENT TO ARTICLE SEVENTH AND REASONS FOR THE PROPOSED AMENDMENT
The Board of Directors anticipates that the Company may in the future
acquire additional subsidiaries in exchange for Common Stock. The proposed
amendment would provide for a more efficient assimilation of new subsidiaries
into the First United system through such acquisitions. At the present time
the Company must hold special shareholders meetings for certain transactions
that Arkansas law and the rules of NASDAQ would allow it to complete without
holding such meetings. It is estimated that the cost of such a special
shareholders meeting is $50,000. The Board of Directors believes that the
interests of the shareholders would be better served by allowing such
transactions when the number of shares being issued in any one transaction
does not equal or exceed twenty percent (20%) of the Company's previously
outstanding Common Stock.
During 1997 the Company entered into four separate agreements to acquire
additional banks in exchange for common stock of the Company. Under the
present Articles special shareholders meetings were necessary to approve three
of the acquisitions. Less than twenty percent (20%) of the Company's
previously outstanding common stock was issued in each of the transactions.
The full text of Article Seventh presently in effect is set forth under the
heading "Article Seventh Presently in Effect."
The proposed amendment to Article Seventh conforms with Arkansas law and the
rules of NASDAQ and would allow the Board of Directors to approve such
transactions without a shareholders vote if the number of shares to be issued
in any one transaction does not equal or exceed twenty percent (20%) of the
number of shares issued and outstanding immediately prior to consummation. The
proposed amendment would eliminate the present requirement that shareholder
approval be obtained for any transaction if it would cause the total number of
shares issued during any consecutive twelve month period in connection with
such transactions to exceed twenty percent (20%) of the number of shares of
common stock outstanding immediately prior to consummation of the transaction.
The full text of the proposed amendment is set forth under the heading
"Proposed Article Seventh."
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<PAGE>
The proposed amendment would retain the present requirement of shareholder
approval by two-thirds of all shares issued and outstanding and entitled to
vote for (i) any transaction pursuant to which a purchaser would acquire
control of the Company, (ii) any transaction in which the number of shares of
Common Stock to be issued exceeds the levels described above, (iii) any sale,
exchange, lease or other disposition of all or substantially all of the
Company's assets and property other than in the usual and regular course of
business, (iv) any dissolution or liquidation of the Company or (v) any
amendment to the Articles of Incorporation.
ARTICLE SEVENTH PRESENTLY IN EFFECT
SEVENTH: Except upon the approval of two-thirds ( 2/3) of all shares issued
and outstanding that are entitled to vote at a duly called shareholders
meeting, the corporation shall not:
(i) effect any transaction pursuant to which a purchaser would acquire
control of the corporation, whether by merger, consolidation, purchase of
stock or otherwise,
(ii) effect a merger or share exchange with another entity pursuant to
which the corporation would issue shares of common stock in an amount
greater than twenty percent (20%) of the number of shares of common stock
issued and outstanding immediately prior to consummation of the
transaction,
(iii) effect a merger or share exchange with another entity pursuant to
which the corporation would issue shares of common stock in an amount that
would cause the total number of shares issued during any consecutive twelve
month period in connection with such transactions to exceed twenty percent
(20%) of the number of shares of common stock issued and outstanding
immediately prior to consummation of the transaction,
(iv) sell, exchange, lease or otherwise dispose of all or substantially
all of the corporation's assets and property other than in the usual and
regular course of business of the corporation,
(v) effect a dissolution or liquidation of the corporation, or
(vi) amend these Articles of Incorporation.
PROPOSED ARTICLE SEVENTH
SEVENTH: Except upon the approval of two-thirds ( 2/3) of all shares issued
and outstanding that are entitled to vote at a duly called shareholders
meeting, the corporation shall not:
(i) effect any transaction pursuant to which a purchaser would acquire
control of the corporation, whether by merger, consolidation, purchase of
stock or otherwise,
(ii) effect a plan or arrangement to acquire another entity pursuant to
which the corporation would issue shares of common stock in an amount equal
to or greater than twenty percent (20%) of the number of shares of common
stock issued and outstanding immediately prior to consummation of the
transaction,
(iii) sell, exchange, lease or otherwise dispose of all or substantially
all of the corporation's assets and property other than in the usual and
regular course of business of the corporation,
(iv) effect a dissolution or liquidation of the corporation, or
(v) amend these Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO ARTICLE SEVENTH TO THE ARTICLES OF INCORPORATION.
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
8
<PAGE>
("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 1997.
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 1997 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 1997 consisted
of (1) annual base salary, adjusted from fiscal year 1996, (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 1997 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 1997 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 $260,000 in 1997. 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.
9
<PAGE>
Mr. Kelley was awarded an annual bonus of $105,000 for 1997. The Committee
considered the 27.3% increase in market value of the Company's Common Stock
during 1997 as well as the 6.61% increase in earnings per share, the 13.94%
return on average equity and the 1.37% 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/ 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, 1997 with the cumulative total returns on the S&P 500 Index
and the Dow Jones Regional Bank Index. The comparison assumes $100 was
invested on December 31, 1992, in the Company's Common Stock and in each of
the foregoing indices with reinvestment of the dividends.
LOGO
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
First United Bancshares................. 100 116.37 122.27 171.63 209.38 271.71
Industry Index.......................... 100 105.14 104.50 156.68 216.25 329.20
Broad Market............................ 100 110.08 111.54 153.45 188.69 251.64
</TABLE>
10
<PAGE>
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"), Fredonia State Bank, Nacogdoches, Texas ("Nacogdoches"), City
Bank & Trust of Shreveport, Shreveport, Louisiana ("Shreveport"), and First
United Trust Company, N.A., El Dorado, Arkansas ("Trust Company"), the wholly-
owned 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 previously discussed. The following information reflects
compensation, remuneration and transactions with the Company, El Dorado,
Magnolia and Ft. Smith for the period beginning January 1, 1997, and ending
December 31, 1997. The following table sets forth the compensation paid by the
Company, and its subsidiaries, during the fiscal year 1997 to the highest paid
executive officers of the Company and to all named executive officers of the
Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------- --------------------------------------
FISCAL RESTRICTED
YEAR OTHER ANNUAL STOCK SECURITIES ALL OTHER
NAME AND PRINCIPAL ENDED COMPENSATION AWARD(S) UNDERLYING COMPENSATION
POSITION DEC. 31 SALARY ($) BONUS ($) (1)(2) ($) ($) OPTIONS (#) ($) (3)(4)
- ------------------ ------- ---------- --------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James V. Kelley 1997 260,000 105,000 3,403 24,886(5) 19,869(6) 8,981
President, Chairman,
Chief 1996 225,000 95,000 3,403 297,294 38,681 9,000
Executive Officer and 1995 225,000 82,500 3,403 15,872 4,612 8,247
Director of the Company
Robert G. Dudley (7) 1997 110,000 10,000 8,027 N/A N/A 6,933
President and Director
of 1996 106,000 10,000 8,027 N/A N/A 7,173
El Dorado; 1995 102,000 10,000 8,027 N/A N/A 6,355
Secretary of the Company
John E. Burns (7) 1997 94,000 15,000 N/A N/A N/A 5,258
Senior Vice President
and 1996 80,000 4,500 N/A N/A 2,863 5,045
Chief Financial Officer 1995 75,000 N/A N/A N/A 4,055
of the Company
Jim N. Harwood 1997 170,000 50,000 N/A N/A N/A 8,981
President, Chief Execu-
tive 1996 160,000 40,000 N/A N/A 5,725 9,000
Officer and Director 1995 149,000 32,000 N/A N/A N/A 8,247
of Ft. Smith
</TABLE>
- --------
(1) El Dorado provides whole life insurance policies for the benefit of
Messrs. Kelley and Dudley. For the year ended December 31, 1997 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.
(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.
11
<PAGE>
(3) The Company contributed cash contributions to an employee stock ownership
plan ("ESOP") during fiscal year 1997 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,
1997, the amount of the Company's contribution allocated to the accounts
of Messrs. Kelley, Dudley, Burns and Harwood were, respectively $8,981,
$6,933, $5,258 and $8,981.
(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>
FINAL
AVERAGE
COMPENSATION YEARS OF SERVICE
------------ ------------------------------------------------------------------
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. Dudley, Mr. Burns and Mr. Harwood are 13, 37, 14, and 9,
respectively.
(5) On January 21, 1997, a restricted stock option for 701 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 $35.50 resulting in a dollar value of $24,885.
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.
(6) On January 21, 1997, 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 $32.49 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.
(7) Robert G. Dudley retired on January 31, 1998 and was succeeded as
Secretary of the Company by John E. Burns.
12
<PAGE>
OUTSTANDING VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on March 18, 1998 the record date for the Meeting,
the Company had issued and outstanding 10,276,772 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 18, 1998, who own beneficially 5% or
more of the Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ------------------------------------ ---------- --------
<S> <C> <C> <C>
Common Stock, Warren A. Stephens Trust; the W.R. 1,194,763(1) 11.63%
Par 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;
Craig Campbell Revocable Trust;
Jackson T. Stephens; and Stephens
Group, Inc.
111 Center Street, Suite 2400
Little Rock, Arkansas 72201
</TABLE>
- --------
(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 5.08% 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 and the Craig Campbell
Revocable Trust beneficiary owns 1,000 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.
13
<PAGE>
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, 1998.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- ------------------------ ------------ -------
<S> <C> <C>
John E. Burns (2)(16)..................................... 3,090 *
E. Larry Burrow (3)....................................... 30,117 *
Claiborne P. Deming (4)................................... 213,961 2.08%
Robert G. Dudley (3)(5)(6)................................ 8,680 *
Al Graves, Jr. (7)........................................ 60,739 *
Jim N. Harwood (8)(16).................................... 6,959 *
Tommy Hillman (9)......................................... 65,434 *
James V. Kelley (10)(16).................................. 27,541 *
Roy E. Ledbetter (11)..................................... 15,475 *
Michael F. Mahony (6)(12)................................. 29,201 *
Richard H. Mason.......................................... 1,581 *
Jack W. McNutt............................................ 12,000 *
George F. Middlebrook, III (13)........................... 82,375 *
R. Madison Murphy (14).................................... 80,724 *
Robert C. Nolan (6)(15)................................... 288,472 2.81%
Cal Partee, Jr............................................ 19,773 *
Carolyn Tennyson.......................................... 300 *
John D. Trimble, Jr....................................... 43,458 *
All Directors, Nominee for Director and Executive Officers
as a Group (18 Persons).................................. 989,880 9.63%
</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.
(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) A total of 2,465 shares listed were owned of record by the Company's
Employee Stock Ownership Plan in which John E. Burns has a beneficial
interest.
(3) Share totals exclude 189,051 shares owned of record by First Land &
Investment Company. Mr. Burrow is a director and stockholder of First
Land & Investment Company along with seven other directors of First Land
& Investment Company, including Robert G. Dudley who served as Secretary
of the Company and President of First National Bank of El Dorado. Messrs.
Burrow and Dudley expressly disclaim beneficial ownership of such shares.
(4) Claiborne P. Deming owned of record 148,911 shares; 65,050 shares 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.
14
<PAGE>
(5) Robert G. Dudley owned of record 1,980 shares; 6,250 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 spouse, beneficial interest in such shares is expressly
disclaimed by Mr. Dudley.
(6) Share totals exclude 321,948 shares owned of record by First Land &
Timber Corporation. Messrs. Mahony and Nolan are directors and
stockholders of First Land & Timber Corporation along with five other
directors of First Land & Timber Corporation, including Robert G. Dudley
who served as Secretary of the Company and President of First National
Bank of El Dorado. Messrs. Mahony, Nolan and Dudley expressly disclaim
beneficial ownership of such shares.
(7) As of February 1, 1998 Al Graves, Jr. did not own any shares of Company
Common Stock. However, the share total reflects the ownership of shares
of Company Common Stock on March 30, 1998 as a result of the merger
acquisition of Citizens National Bancshares of Hope, Inc. by the Company
as follows: Mr. Graves owned of record 46,987; Mr. Graves and his spouse
owned of record 1,765 shares; Mr. Graves' spouse owned of record 1,381
shares, beneficial interest in such shares is expressly disclaimed by Mr.
Graves; and Mr. Graves' spouse and stepdaughter owned of record 1,847
shares, beneficial interest in such shares is expressly disclaimed by Mr.
Graves. In addition, on March 30, 1998, Mr. Graves beneficially owned
8,759 shares by virtue of his proportionate partnership interest in the
Graves Family Partnership.
(8) Jim N. Harwood and his wife owned of record 2,861 shares; 2,848 shares
were owned of record by the Company's Employee Stock Ownership Plan in
which such shares Mr. Harwood had a beneficial interest.
(9) 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.
(10) James V. Kelley owned of record 300 shares; 8,314 shares were owned of
record by the Company's Employee Stock Ownership Plan in which shares Mr.
Kelley had a beneficial interest.
(11) 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.
(12) Michael F. Mahony owned of record 27,701 shares; 1,500 shares were owned
of record by Mr. Mahony's spouse, beneficial interest in such shares is
expressly disclaimed by Mr. Mahony.
(13) George Middlebrook, III and his spouse owned of record 55,816 shares; Mr.
Middlebrook's spouse owned of record 4,813 shares; 6,686 shares were
owned of record by Mr. Middlebrook as custodial for his minor son; 15,060
shares were owned of record by Mr. Middlebrook as custodian for his minor
niece and nephews.
(14) R. Madison Murphy and his wife owned either indirectly or of record
80,724 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 spouse; beneficial interest in all of
such shares is expressly disclaimed by Mr. Murphy. Additionally, Mr.
Murphy beneficially owns 7,200 shares by virtue of a residuary interest
in a trust of which he is not a trustee.
(15) Robert C. Nolan owned of record 81,064 shares; 1,000 shares were owned of
record by Mr. Nolan's spouse; Mr. Nolan as Trustee (with shared voting
and investment power) controlled 207,408 shares; 22,232 shares are owned
by Mr. Nolan's adult children and his minor grandsons, beneficial
interest in which is expressly disclaimed by Mr. Nolan.
(16) Share totals include shares issuable upon the exercise of options within
a period of sixty (60) days from March 18, 1998, as follows: Mr. Burns--
625 shares; Mr. Harwood--1,250 shares; and Mr. Kelley--18,927.
15
<PAGE>
OPTION GRANTS IN 1997
The following table shows information concerning stock options granted
during 1997, 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 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUES AT ASSUMED
ANNUAL RATES OF
STOCK APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (3)
----------------------------------------------------- --------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE MARKET 0% 5% 10%
GRANTED EMPLOYEES PRICE PRICE EXPIRATION DOLLAR GAINS DOLLAR GAINS DOLLAR GAINS
NAME (#)(2) IN 1997 ($/SHARE) ($/SHARE) DATE ($) ($) ($)
---- ---------- ---------- --------- --------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James V. Kelley 701(4) 9.6% -0- 35.50 01/21/2007 24,886 40,538 64,548
6,603(5) 90.4% 32.49 35.50 01/21/2007 19,875 167,320 393,473
Dollar Gains of All
First United
Stockholders(1) $229,480,000 $581,460,000
</TABLE>
- --------
(1) Total dollar gains are based on the indicated assumed annual rates of
appreciation and calculated on the 10,276,772 shares of Common Stock
outstanding as of December 31, 1997.
(2) There were no SARs granted to the Chief Executive Officer or any other
executive officer in 1997.
(3) The potential realizable values represent future opportunity and have not
been reduced to present value in 1997 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
$32.49 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 $57.83 and $92.08
respectively.
(4) In 1997, the Company granted Mr. Kelley, with regard to services for the
Company, a restricted stock option to purchase a total of 701 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 21, 1997, 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 $32.49 per
share.
OPTION EXERCISES IN 1997 AND 1997 YEAR-END VALUES
The following table shows information concerning stock option exercises in
1997 and the year-end value of unexercised options.
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES
ACQUIRED UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ON VALUE OPTIONS AT 1997 IN-THE-MONEY OPTIONS
EXERCISE REALIZED YEAR-END AT 1997 YEAR-END
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE($)
---- -------- -------- ------------------------- ---------------------------
<S> <C> <C> <C> <C>
James V.
Kelley -0- -0- 15,546/44,834 308,775/1,043,217
John E.
Burns -0- -0- 625/ 1,875 9,700/ 29,100
Jim Har-
wood -0- -0- 1,250/ 3,750 19,400/ 58,200
</TABLE>
16
<PAGE>
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, Nacogdoches, Shreveport, and the Trust Company;
directors of the Company and El Dorado, Magnolia, Camden, Ft. Smith, Alma,
Stuttgart, Texarkana, Nacogdoches, Melbourne, Shreveport, 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 $22,993,000 as of December
31, 1997, which represents 11.67% of the Company's equity capital. Such
transactions have been made in the ordinary course of business on
substantially the same 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, and did not involve more than the
normal risk of collectibility or present other unfavorable features.
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 1997. 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 and Robert C. Nolan 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.
During 1997, Arkansas Oklahoma Gas Co. had a line of credit from Ft. Smith
in the principal amount of $6,000,000 at a variable rate of interest which is
calculated as National Prime Rate minus 0.75% (interest adjusted and paid
quarterly). The largest amount of indebtedness in 1997 was $4,700,000 and as
of December 31, 1997, the outstanding indebtedness was $4,400,000. 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 13 of this Proxy Statement.
El Dorado, Magnolia, Camden, Ft. Smith, Stuttgart, Texarkana, Melbourne and
the Trust Company maintained brokerage accounts with Stephens Inc. in 1997 in
which the total commissions earned by Stephens Inc. was $165,900. The
Company's Defined Benefit Plan and Trust maintained an account with Stephens
Capital Management ("SCM"), the investment advisor division of Stephens Inc.,
during 1997 in which earnings by SCM totaled $93,598. Magnolia had a
securities clearing agreement with Stephens Inc. In 1997 under the terms
thereof Magnolia was paid approximately $60,000 in commissions. Stephens Inc.
is a subsidiary of Stephens Group, Inc. See footnote 1 on page 13 of this
Proxy Statement.
17
<PAGE>
ANNUAL REPORT
The Annual Report to Stockholders for the fiscal year ended December 31,
1997, 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, 1997, 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 (870) 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 1999 Annual Meeting of Stockholders is presently scheduled to be held
May 25, 1999. 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. John E. Burns, to the Company at its office at
Main and Washington Streets, El Dorado, Arkansas 71730, not later than
December 31, 1998.
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.
LOGO
John E. Burns
Secretary
18
<PAGE>
FIRST UNITED BANCSHARES, INC.
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of FIRST UNITED BANCSHARES, INC., hereby
constitutes and appoints JAMES V. KELLEY and JOHN E. BURNS, 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 18, 1998, at the Annual
Meeting of Stockholders to be held on May 26, 1998, 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, Al Graves, Jr., Tommy Hillman, James V.
Kelley, Roy E. Ledbetter, Michael F. Mahony, Richard H. Mason, Jack W.
McNutt, George F. Middlebrook, III, 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
3. Proposal to amend Article Fourth of the Articles of Incorporation to
increase the number of authorized shares of Common Stock, $1.00 par value,
from 24,000,000 shares to 50,000,000 shares.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Proposal to amend Article Seventh of the Articles of Incorporation to allow
the Company's Board of Directors to approve certain acquisition transactions
without a stockholders vote.
[_] FOR [_] AGAINST [_] ABSTAIN
(Continued and to be signed on other side)
5. 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, 2, 3, AND 4. PROPOSALS 3 AND 4 REQUIRE THE AFFIRMATIVE
VOTE OF TWO-THIRDS OF ISSUED AND OUTSTANDING SHARES FOR APPROVAL. A COPY OF THE
PROXY STATEMENT HAS BEEN RECEIVED BY THE UNDERSIGNED.
Dated:
---------------------------
---------------------------------
(signature)
---------------------------------
(signature if jointly held)
Please sign exactly as the name
appears on your stock certifi-
cate(s). When shares are held by
joint tenants, both should sign.
When signing as attorney, execu-
tor, administrator, trustee or
guardian, please sign in full
corporate name and have signed
by the president or other duly
authorized officer. If a part-
nership, please sign in partner-
ship name by the authorized per-
son.
Please mark, sign, date and re-
turn 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. [_]
