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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:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] 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)
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(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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(4) Date Filed:
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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
/s/ John E. Burns
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.
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INDEX
Page
----
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
Compensation Policy................................................ 9
Measures of Performance............................................ 9
Executive Compensation............................................. 9
Compensation of Chief Executive Officer............................ 9
Stock Performance....................................................... 11
Compensation of Management.............................................. 11
Outstanding Voting Securities and Principal Holders Thereof............. 14
Security Ownership of Directors and Executive Officers.................. 15
Option Grants in 1997................................................... 17
Option Exercises in 1997 and 1997 Year-End Option Values................ 18
Severance Agreement..................................................... 18
TRANSACTIONS WITH MANAGEMENT AND OTHERS...................................... 18
ANNUAL REPORT................................................................ 19
OTHER MATTERS................................................................ 19
STOCKHOLDER PROPOSALS........................................................ 19
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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, 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.
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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)
- --- --- ------------------------------- --------
<S> <C> <C> <C>
E. Larry Burrow (2) 63 Plant Manager of Partee Flooring Mill, Oil and Timber 1983
Investments, principally engaged in Oil and Lumber
Production
Claiborne P. Deming (3) 43 Director, President and Chief Executive Officer of 1987
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 Executive 1985
Officer of the Company
Roy E. Ledbetter 68 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 (5) 53 Partner of Mahony & Yocum, Attorneys at Law 1981
Richard H. Mason 60 President of Gibraltar Energy Company, principally 1983
engaged in Oil and Gas Exploration and Production
Jack W. McNutt 63 Retired Director, President and Chief Executive 1990
Officer of Murphy Oil Corporation, principally
engaged in Oil and Gas Exploration and Production
George F. Middlebrook, III 47 General Partner of Middlebrook Mineral Partnership 1997
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 Corporation, 1982
Managing Partner of Munoco Company, principally
engaged in Oil and Gas Exploration and Production
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, principally 1983
engaged in Oil and Other Investments
</TABLE>
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* Initial Nomination
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NOTES:
(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.
(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 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
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 19 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.
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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 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.
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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 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>
SHARES CLASS PAR VALUE 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."
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
7
<PAGE>
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.
8
<PAGE>
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 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
10
<PAGE>
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.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
- -----------------------------FISCAL YAR ENDING----------------------------------
COMPANY 1992 1993 1994 1995 1996 1997
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
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:
11
<PAGE>
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 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 Executive 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>
NOTES:
(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.
(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
12
<PAGE>
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
FINAL AVERAGE
COMPENSATION YEARS OF SERVICE
------------ -------------------------------------------------------
10 15 20 25 30
-- -- -- -- --
$ 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
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.
13
<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
NAME AND ADDRESS OF BENEFICIAL BENEFICIAL
TITLE OF CLASS OWNER OWNERSHIP PERCENT OF CLASS
-------------- ------------------------------ ---------- ----------------
<S> <C> <C> <C>
Common Stock, Par Warren A. Stephens Trust; the W.R. 1,194,763 (1) 11.63%
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>
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 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.
14
<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.
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
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%
* 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 ownership thereof except
as described in certain the company and are owned of record with beneficial
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 &
15
<PAGE>
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.
(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.
16
<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
$32.49 per share.
17
<PAGE>
OPTION EXERCISES IN 1997 AND 1997 YEAR-END VALUES
The following table shows information concerning stock option exercises in
1997 and the year-end value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT 1997 IN-THE-MONEY OPTIONS
ON VALUE YEAR-END AT 1997 YEAR-END
NAME EXERCISE (#) REALIZED ($) 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 Harwood - 0 - - 0 - 1,250 / 3,750 19,400 / 58,200
</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, 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.
18
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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 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.
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.
/s/ John E. Burns
John E. Burns
Secretary
19
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FIRST UNITED BANCSHARES, INC.
Main and Washington Streets El Dorado, Arkansas 71730
ANNUAL STOCKHOLDERS MEETING, MAY 26, 1998
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 Sock, $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
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:
-------------------------------------
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(signature)
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(signature if jointly held)
<PAGE>
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. [ ]
