<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
AREA BANCSHARES CORPORATION
- --------------------------------------------------------------------------------
(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
AREA BANCSHARES CORPORATION
230 Frederica Street
Owensboro, KY 42302
April 15, 1997
Dear Shareholder:
The annual meeting of shareholders will be held on May 19, 1997, at 11:00
A.M., Daylight Savings Time, at the main office of Area Bancshares Corporation,
230 Frederica Street, Owensboro, Kentucky. The meeting will be held in the board
room of The Owensboro National Bank. The formal Notice of the Meeting and Proxy
Statement appear in the pages that follow.
Details on the items of business that will be discussed and voted on at
this year's meeting are included in this Proxy Statement.
I hope that you will be able to attend the annual meeting. However, if you
cannot attend in person, please sign and date the enclosed proxy and return it
promptly in the enclosed envelope, to ensure that your shares are represented at
the annual meeting. If you later find that you may be present or for any other
reason desire to revoke your proxy, you may do so prior to the time the presence
of a quorum has been determined and declared.
On behalf of the Board of Directors and employees of Area Bancshares, let
me express our appreciation for your continued support and confidence.
Sincerely,
/s/ Thomas R. Brumley
- --------------------------------------
Thomas R. Brumley
President and Chief Executive Officer
<PAGE> 3
AREA BANCSHARES CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 19, 1997
To the Holders of Common Stock of Area Bancshares Corporation:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Area
Bancshares Corporation, ("the Corporation"), a Kentucky corporation, will be
held at the main office of Area Bancshares Corporation, 230 Frederica Street,
Owensboro, Kentucky, on May 19, 1997, at 11:00 A.M., Daylight Savings Time, in
the board room of The Owensboro National Bank, for the following purposes:
1) To elect nine directors to hold office until the next annual election and
until their successors shall be duly elected and qualified;
2) To ratify the appointment of KPMG Peat Marwick L.L.P., as corporate
auditors for the 1997 calendar year; and
3) To transact such other business as may properly come before the meeting.
Only holders of common stock of record at the close of business March 25,
1997, will be entitled to vote at the meeting or any adjournment thereof.
TO ENSURE YOUR REPRESENTATION AT THE MEETING, THE BOARD OF DIRECTORS OF THE
CORPORATION SOLICITS YOU TO MARK, SIGN, DATE, AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOUR
PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED AND, IF YOU ARE ABLE TO
ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY REVOKE OR
WITHDRAW YOUR PROXY AT ANY TIME BEFORE IT IS EXERCISED.
By Order of the Board of Directors,
/s/ Thomas R. Brumley
- --------------------------------------
Thomas R. Brumley
President and Chief Executive Officer
April 15, 1997
<PAGE> 4
AREA BANCSHARES CORPORATION
230 Frederica Street
Owensboro, KY 42302
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Area Bancshares Corporation (the "Corporation") of
proxies to be voted at the annual meeting of shareholders to be held on May 19,
1997. Any shareholder giving a proxy has the right to revoke it by a written
notice delivered to the Secretary of the Corporation, P.O. Box 786, Owensboro,
Kentucky, 42302-0786, or in person at the meeting, prior to the time the
presence of a quorum has been determined and declared. All proxies will be voted
in accordance with the directions of the shareholder and to the extent no
directions are given, will be voted "for" the nominees for directors.
This Proxy Statement and form of proxy are first being mailed to
shareholders commencing on or about April 15, 1997.
The Corporation will bear the entire cost of soliciting proxies.
Solicitation will be primarily by mail. Certain officers of the Corporation and
its subsidiaries may solicit proxies personally or by telephone or special
letter, but such persons will not be specially compensated for such services.
SHARES OUTSTANDING AND VOTING
Only shareholders of record at the close of business on March 25, 1997 are
entitled to notice of, and to vote at, the annual meeting. As of March 25, 1997,
there were issued and outstanding 11,303,048 shares of common stock. The
Corporation has no class of stock outstanding other than common stock. In order
to constitute a quorum for the Annual Meeting, the holders of 5,651,525 shares
must be present or represented by proxies. Under Kentucky law and the
Corporation's Charter and By-laws, the aggregate number of votes entitled to be
cast by all shareholders present in person or represented by proxy at the Annual
Meeting, whether those shareholders vote "for", "against" or "abstain" from
voting, and broker non-votes will be counted for purposes of determining
whether a quorum is present.
Each share of the common stock is entitled to one vote on all matters
presented to the shareholders with the exception of the election of directors.
In the election of directors, cumulative voting rules may apply. Under
cumulative voting, each shareholder is entitled to cast as many votes in the
aggregate as shall equal the number of shares of the common stock owned by him
or her multiplied by the number of directors to be elected. Each shareholder, or
his or her proxy, may cast all of his or her votes (as thus determined) for a
single nominee for director or may distribute them among two or more nominees,
at the shareholder's discretion. Shareholders desiring to vote shares
cumulatively are required to deliver written notice of such fact to the
President of the Corporation at its principal office not less than seventy-two
(72) hours prior to the time for the election, and failure of any shareholder to
give such notice shall constitute a conclusive waiver of such shareholders
right; provided, however, that if one or more shareholders shall give such
notice, all shareholders may vote cumulatively regardless of whether such
shareholder timely gave notice. As to the authority of the persons named as
proxies in the accompanying proxy card to accumulate votes, see the section
entitled "Election of Directors".
2
<PAGE> 5
As of March 25, 1997, the trust departments of subsidiaries of the
Corporation held of record 1,251,059 shares of the Corporation's common stock in
a fiduciary capacity representing approximately 11.1 percent of the
Corporation's outstanding shares of common stock. With respect to 758,139
shares (approximately 6.7 percent), the instrument creating the trust or
fiduciary relationship specifically directs the Trustee to vote the shares and
the shares will be voted "for" the proposals presented for consideration. The
remaining shares held by the trust departments will be voted at the direction
of the beneficial owners.
The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the
outstanding shares of the common stock of the Corporation as of March 25, 1997:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owners (1) Beneficial Ownership (2) Percent of Class
--------------------- ------------------------ ----------------
<S> <C> <C>
C. M. Gatton 3,698,377 32.72%
P.O. Box 1147
Bristol, TN 37620
Thomas N. Thompson 648,055 5.73%
P.O. Box 450
Owensboro, KY 42302
</TABLE>
- -------------------------------
(1) Mr. Thompson owns the listed shares directly and has voting and
investment power with respect to the shares. For ownership of shares
attributed to Mr. Gatton, see footnote 4, page 4 herein.
(2) For purposes of this table, beneficial ownership has been determined
in accordance with the provisions of Rule 13d-3 of the Securities
Exchange Act of 1934 under which, in general, a person is deemed to be
the beneficial owner of a security if he has or shares the power to
vote or direct the voting of the security or the power to dispose of
or direct the disposition of the security or if he has the right to
acquire beneficial ownership of the security within sixty days.
Under the Corporations Articles of Incorporation and Bylaws and the
Kentucky Business Corporation Act, the ratification of the selection of the
Corporation's auditors, and in the absence of a shareholder request for
cumulative voting, the election of directors, will require an affirmative vote
of a majority of the shares of common stock voted on the proposal, with shares
owned by or voted under the control of any director and related entities
excluded. Abstentions and broker non-votes are not counted in determining the
number of votes cast and in effect represent no action taken on the matter by
the shareholder, although they do reduce the number of votes required for the
approval of the proposal. If cumulative voting with respect to the election of
nine directors is requested by any shareholder, the nine nominees receiving the
most votes cast for the election of directors at the annual meeting will be
elected, which means that abstentions and broker non-votes will have no effect
on the outcome of the vote.
3
<PAGE> 6
BENEFICIAL OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS OF COMMON STOCK OF THE
CORPORATION
Set forth below is information with respect to shares of common stock of
the Corporation beneficially owned as of March 25, 1997 by the current
director-nominees, the executive officers named in the Summary Compensation
Table herein, and all director-nominees and executive officers of the
Corporation as a group. Unless otherwise noted, the named person has sole voting
and investment powers with respect to the reported shares.
<TABLE>
<CAPTION>
Name of Director or Amount and Nature of
Executive Officer Beneficial Ownership (1) Percent of Class
----------------- ------------------------ ----------------
<S> <C> <C>
Anthony G. Bittel (2) 517,918 4.58%
Thomas R. Brumley, (3) 126,802 1.12%
President and CEO
C. M. Gatton (4) 3,698,377 32.72%
Gary H. Latham (5) 351,893 3.11%
Raymond McKinney (6) 135,072 1.20%
Allan R. Rhodes (7) 35,817 *
David W. Smith Jr. (8) 144,907 1.28%
William H. Thompson (9) 172,425 1.53%
Pollard White 11,250 *
Cy M. Williamson (10) 118,614 1.05%
E. F. Johnson, (11) 5,692 *
Senior Vice President-
Operations
Timothy O. Shelburne, (12) 1,990 *
Senior Vice President-
General Counsel
Donald H. Leibee, Senior (13) 2,328 *
Vice President-Loan
Administration
John Ray, Senior Vice (14) 8,122 *
President-Chief Financial
Officer
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
Name of Director or Amount and Nature of
Executive Officer Beneficial Ownership (1) Percent of Class
----------------- ------------------------ ----------------
<S> <C> <C>
All directors and executive
officers as a group 5,331,207 47.17%
(14 persons)
</TABLE>
- ------------------------
*Represents less than 1% of the Corporation's Common Stock
(1) Each individual listed owns the shares directly and exercises sole
voting and investment power except as noted herein below.
(2) Shares represented include 192,918 shares held by the A.G. Bittel
Trust, 50,000 shares held by the M.A. Bittel Trust, 24,100 shares held
by Bittel Investments, Inc., a company of which Mr. Bittel is
President and 250,900 shares held by Bittel Family Limited
Partnership.
(3) Shares represented include 3,970 shares owned by Mr. Brumley's
Individual Retirement Account.
(4) Shares, represented include 483 shares owned individually by Mr.
Gattons wife, 20,508 shares held by The Owensboro National Bank in a
custody arrangement with Mr. Gatton, and 300,000 shares held by the
C.M. Gatton Charitable Foundation.
(5) Shares represented include 18,235 shares held by Mr. Latham's wife.
(6) Shares represented include 6,490 shares held by the Ethel H. McKinney
Testamentary Trust, and 74,272 shares held by Mr. McKinney's wife.
(7) Shares represented include 8,546 shares held by The Owensboro National
Bank pursuant to a custody arrangement with Mr. Rhodes, and 27,271
shares held by Mr. Rhodes' Individual Retirement Account.
(8) Shares represented include 1,282 shares held by Mr. Smith's wife,
13,227 shares held by Wyndalls Enterprises, Inc., a company owned by
Mr. Smith, and 5,500 shares held by Shawnee Park Center Partnership of
which Mr. Smith is a one-third owner.
(9) Shares represented include 160,500 shares held by the W. H. Thompson
Trust and 11,925 shares held by Mr. Thompson's wife.
(10) Shares represented include 26,100 shares held by Mr. Williamson's
wife, and 9,495 shares held by the Cy M. Williamson Trust.
(11) Shares represented include 630 shares held by Mr. Johnson's Individual
Retirement Account.
(12) Shares represented include 1,990 shares held by Mr. Shelburne's
Individual Retirement Account.
5
<PAGE> 8
(13) Shares represented include 2,328 shares held by Mr. Leibee's
Individual Retirement Account.
(14) Shares represented include 3,060 shares held by Mr. Ray's Individual
Retirement Account.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely on its review of the copies of such forms received by it
or representations from such persons that no Form 5's were required, the
Corporation believes that all filing requirements applicable to its officers,
directors and greater than ten percent (10%) beneficial owners were complied
with in 1996 with the following exceptions: failure to file the required Form 5
on a timely basis on behalf of Allan Rhodes covering one transaction, and on
behalf of Gary Latham covering one transaction. The preceding exceptions were
corrected as soon as they were discovered.
PROPOSAL ONE: ELECTION OF DIRECTORS
Among items to be acted upon at the annual meeting of shareholders is the
election of nine directors to the Board of Directors of the Corporation. Each of
the persons elected will serve a term in office of one year and until his
successor is duly elected and qualified. All nominees for directors are
currently directors of the Corporation.
The Corporations Charter and By-laws provide that the Board shall consist
of not less than five nor more than twelve directors. As permitted in the
By-laws, effective as of May 19, 1997, the Board has fixed the number of
directors at nine.
Absent a contrary direction by the shareholder, the enclosed proxy will be
voted for the election of the nominees for directors listed below. In the event
any nominee is unable or for good reason declines to serve as a director at the
time of the annual meeting, the proxy will be voted for such substitute nominee,
if any, as may be selected by the Board of Directors of the Corporation. The
management of the Corporation has no reason to believe that the persons named
will be unable to serve or will decline to serve if elected.
Set out on page 6 is information concerning all of the current directors
and director-nominees of the Corporation, including their positions held with
The Owensboro National Bank ("ONB:), First City Bank and Trust Company ("First
City"), Bowling Green Bank and Trust Company, N.A. ("BGB&T"), New Farmers
National Bank" ("New Farmers"), Southern Deposit Bank ("Southern"), Citizens
Deposit Bank ("Citizens"), and ABC Credit Corp. ("ABC Credit").
6
<PAGE> 9
Nominees for Election to the Board (1)
<TABLE>
<CAPTION>
Position With
Name Age the Company Service Since(2)
<S> <C> <C> <C>
Anthony G. Bittel 80 Director 1976
Thomas R. Brumley 58 President and CEO 1982
C.M. Gatton 65 Director and Chairman 1976
Gary H. Latham 65 Director 1986
Raymond McKinney 64 Director and Vice Chairman 1986
Allan R. Rhodes 73 Director 1992
David W. Smith Jr. 54 Director 1980
William H. Thompson 81 Director 1976
Pollard White 76 Director 1986
Cy M. Williamson 75 Director Emeritus 1986
</TABLE>
- ------------------------
(1) All of the Corporation's Directors except Mr. Williamson serve for a
one year term or until their successors have been elected. Mr. Williamson will
act as Director Emeritus until his resignation or death.
(2) Dates reflect service with the Corporation or one of its subsidiaries.
BUSINESS EXPERIENCE OF DIRECTORS
Anthony G. Bittel is President of Anthony Bittel Farms and Bittel
Investments, Inc., and serves as President of Big Independent Tobacco Warehouse
and General Manager of Owensboro Tobacco Warehouse Company. He also serves as a
director of ONB.
Thomas R. Brumley has served as President and Chief Executive Officer of
the Corporation since 1990. He also serves as director of ONB, First City, New
Farmers, BGB&T, Southern, Citizens and ABC Credit.
C.M. Gatton has served as Chairman of the Corporation since 1976. He also
serves as President of Bill Gatton Chevrolet-Cadillac, Director and President of
Arrowhead Acura, Inc., Chairman and President of Bill Gatton Imports, Inc.,
Chairman and President of G.W. Automotive, Inc., President and Director of
Courtesy Chevrolet-Cadillac, Inc., Chairman and President of Saturn of
Huntsville, Inc., all of which are automobile dealerships. In addition, he
serves as Chairman and President of C. Gatton, Inc., Chairman and President of
Bill Gatton, Inc., Chairman of Adnoh, Inc., President of Universal Acceptance
Corporation, which furnishes credit to automobile purchasers, and Director of
Morrison Molded Fiber Glass Company. He also serves as a director of ONB, First
City, New Farmers, BGB&T, and Southern.
Gary H. Latham is currently retired. Prior to retirement, he was Director
and CEO of Western State Hospital, a position he held from 1960 to 1991. He also
serves as a director of First City.
Raymond McKinney has been President of R.C. McKinney, Inc. since 1957.
Also he has served as Vice Chairman of the Corporation since 1986. He also
serves as director of First City.
7
<PAGE> 10
Allan R. Rhodes has served as Chairman of Allan Rhodes, Inc., a car
dealership in Paducah, Kentucky since 1984. He also serves as director of ONB,
First City, New Farmers, BGB&T, Southern, Citizens, and serves as director and
Chairman of ABC Credit.
David W. Smith has served as President of Wyndall's Enterprises, Inc., a
retail grocery chain, since 1980. He also serves as director of ONB.
William H. Thompson is a semi-retired real estate developer. He currently
serves as President of W.H. Thompson Trust Acquisitions, Inc., a real estate
development company. He also serves as director of ONB.
Pollard White has practiced law since 1947. He is a member of the law firm
of White, White, Askew and Crenshaw. He also serves as director of First City.
Cy M. Williamson has served as Chairman of Acme-Goodwill Finance, a
consumer finance company, since 1989. He was formerly Chairman of First City. He
also serves as director emeritus of First City.
The Board of Directors has no reason to believe that any of the nominees
will be unavailable to serve as director. If any nominee should become
unavailable before the Annual Meeting, the persons named in the enclosed proxy
card, or their substitutes, or a majority of them, reserve the right to vote for
a substitute nominee selected by the Board of Directors. In addition, if any
shareholder or shareholders shall vote shares cumulatively or otherwise for the
election of a director or directors other than the nominees named above, or
substitute nominees, or for less than all of them, the persons named in the
enclosed proxy card, or their substitutes, or a majority of them, shall have the
right, in their discretion, to vote cumulatively for some number less than all
of the nominees named above or any substitute nominees, and for such of the
persons nominated as they may choose.
Meetings and Committees
During 1996, the board of directors of the Corporation held eight regular
meetings and four special meetings. During 1996 the Audit Committee met three
times.
Each of the directors attended at least 75%, except for Cy M. Williamson
who attended 62.5%, of the aggregate of (a) the total number of meetings of the
Board of Directors held during the period for which he was a director, and (b)
the total number of meetings held by all committees of the Board on which he
served.
The members of the Audit Committee are Allan Rhodes, William H. Thompson,
Gary Latham, and David Smith. The Committee recommends to the Board the
engagement of independent auditors; reviews with independent auditors the scope
and results of the audit engagement; reviews the scope, frequency, and results
of internal audits and examinations; reviews the adequacy of the Corporations
system of internal accounting controls; and reviews the examination reports of
the Corporation and its subsidiaries.
The Corporation has no standing nominating committees. All nominations
for membership on the board originated with the Board of Directors.
8
<PAGE> 11
The Corporation has no standing compensation committees. All decisions
regarding executive compensation are made by the full Board of Directors, as
hereinafter discussed.
COMPENSATION OF DIRECTORS
In 1996, each non-management director of the Corporation was paid $500.00
for each board meeting and $100.00 for each committee meeting attended.
EXECUTIVE COMPENSATION
The following table contains information concerning compensation paid or
accrued by the Corporation and its subsidiaries to, or on behalf of, the
Corporation's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Corporation during 1996 whose compensation
exceeded $100,000, for the fiscal years ended December 31, 1996, 1995, and 1994.
The policies and practices of the Corporation pursuant to which the compensation
set forth in the summary compensation table was paid or awarded is described
under the section, "Report of the Board of Directors on Executive Compensation".
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
Other
Annual Restricted Securities
Compen- Stock Underlying LTIP All other
Name and Salary Bonus sation Award(s) Options/ Payouts Compen-
Principal Position Year ($) ($) ($) ($) SARs (#) ($) sation ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas R. Brumley 1996 196,000 20,000 (1) 4,750 (2)
President and CEO 1995 180,000 0 4,620 (2)
1994 178,365 0 4,500 (2)
Timothy O. Shelburne 1996 98,000 0 (1) 4,750 (2)
Senior Vice President 1995 98,000 19,000 4,095 (2)
General Counsel 1994 67,192 7,800
Donald A. Leibee 1996 96,000 0 (1) 3,360 (2)
Senior Vice President 1995 94,941 0 28,350 (3)
Loan Administration 3,323 (2)
1994 92,760 19,000 2,783 (2)
John A. Ray 1996 99,999 0 (1) 3,500 (2)
Senior Vice President 1995 98,365 730 3,468 (2)
Chief Financial Officer 1994 84,193 32,971 2,669 (2)
</TABLE>
- -----------------------
(1) The dollar value of perquisites and other personal benefits received by
executive officers did not exceed the lower of $50,000 or ten percent of the
total amount of salary and bonus for each year.
9
<PAGE> 12
(2) Represents amounts contributed to the 401(k) plan on behalf of
executive officers.
(3) Represents profit from sale of stock received upon exercise of
qualified incentive stock options held less than one year.
OPTION GRANTS IN LAST FISCAL YEAR
There were no option grants by the Corporation to named executive
officers during the 1996 calendar year.
OPTIONS EXERCISED AND OPTION HOLDINGS
Executive officers of the Corporation did not exercise any options to
purchase shares during the calendar year ended December 31, 1996. None of the
named executive officers of the Corporation held unexercised options as of
December 31, 1996.
PENSION PLAN
The Corporation maintains a non-contributory defined pension plan covering
substantially all employees who satisfy certain age and service requirements.
The benefits are generally based on years of service and average compensation,
which compensation is generally computed using the five consecutive years prior
to retirement that yield the highest average.
The following table sets forth the annual benefit payable based on
compensation and years of service:
Years of Service
<TABLE>
<CAPTION>
15 20 25 30 35
Compensation
<S> <C> <C> <C> <C> <C>
$100,000 $16,868 $23,490 $30,113 $36,735 $43,358
125,000 21,743 30,240 38,738 47,235 55,733
150,000 26,618 36,990 47,363 57,735 68,108
175,000 26,618 36,990 47,363 57,735 68,108
</TABLE>
Years of credited service, to the nearest year, and current compensation
covered by the pension plan (total salary, bonus and any other incentive
compensation) for the named executive officers are as follows:
<TABLE>
<CAPTION>
Current Compensation
Officer Years of Service Covered by the Pension Plan
------- ---------------- ---------------------------
<S> <C> <C>
Thomas R. Brumley 15 $150,000
Timothy O. Shelburne 4 98,000
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
Current Compensation
Officer Years of Service Covered by the Pension Plan
------- ---------------- ---------------------------
<S> <C> <C>
Donald A. Leibee 13 96,000
John A. Ray 14 99,999
</TABLE>
Compensation for plan purposes means total cash compensation, including
overtime pay and bonuses. A participant's annual compensation for plan purposes
is limited to $150,000 as required under Internal Revenue Code Section
401(a)(17).
The normal retirement benefit, 1/12th of which is payable monthly for the
life of the participant, is equal to the sum of the following:
* 0.65% of average earnings multiplied by the participant's years of benefit
service, plus
* 0.20% of average earnings multiplied by the participant's years of benefit
service in excess of 15 years, but not more than 35 years, plus
* 0.65% of average earnings in excess of the then current covered,
compensation for the participant, multiplied by the participants years of
benefit service not in excess of 35 years.
"Average earnings" is the average annual compensation of a participant for
the five consecutive plan years which produce the highest average out of the
final ten plan years of service. "Covered compensation" is the average of the
taxable wage bases for the 35 years ending with the year the participant attains
Social Security retirement age, rounded, as permitted by the IRS. Benefits
listed in the pension plan table are not subject to any deduction for social
security or other offset amoun
DEFINED CONTRIBUTION PLAN
The Corporation currently provides a defined contribution Profit Sharing
Trust with an Internal Revenue Code 401(k) option ("401(k) Plan"). Prior to
1995, the Corporation provided a straight profit sharing plan without 401(k)
options. Under the provisions of the 401(k) Plan, employees with one year of
service may become participants with all contributions to the plan to be 100%
vested with the employee.
Contributions to the 401(k) Plan for the benefit of the participants can be
made in two ways. First, the participant can enter into a Salary Reduction
Agreement whereby up to 15% of the employees salary will be contributed to the
401(k) Plan. Secondly, an employee contribution will be made to the plan equal
to 50% of the employees contribution to the 401(k) Plan to a maximum
contribution of 3.5% of the participants salary. For purposes of the 401(k)
Plan, salary includes regular base pay only, and does not include any other
forms of compensation such as overtime, taxable fringe benefits or executive
incentive compensation. The contributions made for the executive officers named
in the Summary Compensation Table for the years 1996, 1995 and 1994,
respectively, are as follows: Mr. Brumley, $4,750.00, $4,620.00 and $4,500.00;
Mr. Shelburne, $4,750.00, $4,095.00, and $ 0; Mr. Leibee, $3,360.00, $3,323.00
and $2,783.00; and Mr. Ray, $3,500.00, $3,468.00 and $2,669.00.
11
<PAGE> 14
COMPENSATION OF DIRECTORS
For the year ended December 31, 1996, each non-management director received
a fee of $500.00 for each board meeting attended. The board fee will remain
unchanged for 1997.
EXECUTIVE OFFICERS
Information regarding the current executive officers of the Corporation,
including their names, ages, positions with the Corporation, and a brief
description of their business experience during the past five years, is
presented below. Executive officers are elected annually by the Board of
Directors.
Thomas R. Brumley, age 58, has served as President and Chief Executive
Officer of the Corporation since 1990. Prior to that, he served as Executive
Vice President from 1983 to 1986, and President and CEO of ONB from 1983 to
1990.
Edward F. Johnson, age 61, has served as Vice President of the Corporation
in charge of operations since 1987. He also serves as First Senior Vice
President of ONB.
Donald A. Leibee, age 53, has served as Vice President of the Corporation
in charge of loan administration since 1990. Prior to that, he was First Vice
President and Chief Lending Officer of ONB since 1984.
John A. Ray, age 41, has served as Vice President and CFO of the
Corporation since June of 1994. He previously has held the following positions
with the Corporation or its subsidiaries: First Senior Vice President of Finance
for ONB from October of 1993 to June of 1994, Executive Vice President and COO
for First Federal Savings and Loan Association from March of 1992 to October of
1993 and First Senior Vice President of Finance for ONB from 1985 to 1992.
Currently he is a director of ABC Credit.
Timothy O. Shelburne, age 40, has served as General Counsel of the
Corporation since 1995. He previously held the position of Vice President and
Compliance Officer with ONB from August, 1993 to December, 1994. Prior to
joining ONB he was a partner in the law firm of Holbrook, Wible, Sullivan and
Mountjoy. Mr. Shelburne is the nephew by marriage of Thomas R. Brumley, the
Corporations President and Chief Executive Officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of the Corporation establishes the general
compensation policies of the Corporation, establishes the compensation plans and
specific compensation levels for Executive Officers and administers the
Corporations Executive Incentive Compensation Program, and awards stock-based
compensation to executive officers and employees of the Corporation. Thomas R.
Brumley, President and CEO of the Corporation, participates in compensation
discussions and decisions affecting other Executive Officers of the Corporation.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The entire Board acts as the Compensation Committee for the
Corporation's executive officers and the affiliate bank's chief executive
officers.
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<PAGE> 15
Base salaries are adjusted annually within a current four (4) percent
guideline which is augmented by an incentive bonus program for performance
beyond expected goals established for (a) net overhead (b) growth in average
assets (c) asset quality (d) net loan loss (e) return on equity-bank (f) return
on equity-Corporation.
The Incentive Bonus Program is subject to a number of limitations
enumerated as follows:
1. Corporation executive officers were excluded from participation in the 1995
Incentive Bonus Program.
2. A bonus limitation of 7 percent of net income including accrual of bonus
and 401 (k) contribution.
3. A participation limitation of:
(a) Superior - Not more than 20% of total participants.
(b) Superior and Excellent - Not more than 50% of total participants.
(c) Above Average - Not more than 40% of total participants.
(d) Average - Must have at least 10% of total participants.
4. A participation schedule limitation of:
(a) Superior - Receive 60% of pool fund or a range of 17-32% of salary,
whichever is less.
(b) Excellent - Receive 30% of pool fund or a range of 9-16% of salary,
whichever is less.
(c) Above Average - Receive 10% of pool fund or a range 3-8% of salary,
whichever is less.
(d) Average or Below - May receive $600 or 1/2 of lowest bonus in Above
Average category, whichever is less.
The Committee seeks to provide compensation opportunities that support the
ability to attract and retain competent officers that have the ability to
further the long-term goals of the Corporation. To this extent, a program of
limited stock options and stock grants is used. Stock options and stock grants
are limited to the chief executive officer of affiliate banks or subsidiaries.
The Committee determines the amount of the stock options or stock grants
according to responsibility and imp within the Corporation. All stock options
are granted at fair market values and exercisable in accordance with the terms
of the Corporations Stock Option Plan.
There were no restricted stock awards approved by the Committee during
1996.
1996 COMPENSATION FOR THE PRESIDENT & CEO
The Board reviewed the compensation package for CEOs at peer institutions
($1 billion to $2 billion in size) to establish a competitive view of executive
compensation. The Board then considered the Corporations overall performance,
record for increasing shareholder value, success in meeting strategic objectives
and leadership. These factors, in conjunction with the Corporations financial
results, determined the CEOs base salary for 1996.
Mr. Brumley's 1996 incentive compensation was based on achievement of
performance goals relative to actual earnings per share. The Board based the
incentive compensation on the increase in earnings per share from the previous
year. Future incentive compensation is determined on a sliding scale basis
directly related to the percentage of increase in earnings per share. If there
is no increase in earnings per share, no incentive compensation will be paid.
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<PAGE> 16
THE BOARD OF DIRECTORS OF AREA BANCSHARES CORPORATION:
C. M. Gatton (Chairman) Allan R. Rhodes
Anthony G. Bittel David W. Smith, Jr.
Thomas R. Brumley William H. Thompson
Gary H. Latham Pollard White
Raymond McKinney Cy M. Williamson, Director Emeritus
COMPARATIVE STOCK PERFORMANCE
The Performance Graph set forth below compares the cumulative total
shareholder return on Area Bancshares common stock from June 30, 1995 through
December 31, 1996 with the cumulative total return on the NASDAQ Market Value
Index ("Broad Market Index") and the Industry Index, as provided by the
University of Chicago Graduate School of Business, Center for Research in
Security Prices using the NASDAQ Bank Stock Index. The cumulative total
shareholder return computations set forth in the Performance Graph assume the
investment of $100 in Area Bancshares' common stock, the Broad Market Index and
the Peer Group Index on June 30, 1995 with the reinvestment of all dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN OF AREA BANCSHARES, PEER GROUP AND BROAD
MARKET INDEX
FINANCIAL PERFORMANCE
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
AREA BANCSHARES, NASDAQ MARKET INDEX, AND INDUSTRY INDEX(1)
[GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
6/95 9/95 12/95 3/96 6/96 9/96 12/96
Area Bancshares 100.0 98.1 94.0 98.4 115.3 109.1 129.3
NASDAQ 100.0 112.0 113.4 118.7 128.4 133.0 139.5
Industry Index 100.0 112.9 123.2 128.1 130.2 144.3 162.9
</TABLE>
(1) Cumulative total return assumes $100 was invested on June 30, 1995 and
dividends were reinvested. The Industry index shown is The University
of Chicago Graduate School of Business, Center for Research in
Security Prices using the NASDAQ Bank Stock Index.
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<PAGE> 17
Prior to January 2, 1996 the common stock of the Corporation was not
registered on any exchange and was not traded on the over-the-counter market.
Sporadic sales of such shares occurred from time to time. Additionally, there
was no established public market for the stock. Accordingly, the volume of
trading often times was insufficient to establish a meaningful market price.
Historical prices during 1995 represent actual transactions based upon
information furnished to the Corporation by one or more of the parties involved
in certain privately negotiated purchases and sales and may not be
representative of all trades during the time periods listed. No attempt has been
made by the Corporation to verify the accuracy of the sales information
furnished to it. As a result, any prior history of quotations does not
necessarily reflect the price that would be paid for the shares in liquid
market.
On December 7, 1995 the Corporation received approval for its common stock
to be listed on the NASDAQ National Market and commenced trading January 2,
1996. The market price used in the performance graph for dates after January 2,
1996, represents market trades on the NASDAQ market system.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Corporation has no employment or change in control agreements with
any of its executive officers.
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Corporation are at present,
as in the past, customers of subsidiaries of the Corporation and have had and
expect to have business and banking transactions with such in the ordinary
course of business. In addition, some of the executive officers and directors of
the Corporation are at present, as in the past, also officers, directors or
principal shareholders of corporations which are customers of subsidiaries of
the Corporation and which had and expect to have business and banking
transactions with the Corporation in the ordinary course of business. All such
banking transactions were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and, in
the opinion of management of the Corporation and its subsidiaries, did not
involve more than normal risk of collectibility or present other unfavorable or
unusual features.
PROPOSAL TWO: INDEPENDENT PUBLIC ACCOUNTANTS
For the fiscal year ending December 31, 1996, the accounting firm of KPMG
Peat Marwick L.L.P. served as the Corporation's independent public accountants
and auditors. A representative from the firm of KPMG Peat Marwick L.L.P. is
expected to be present at the annual meeting and will be available to make a
statement should he desire to do so, and respond to questions of shareholders.
ANNUAL REPORT
Upon written request, the Corporation will provide without charge to
each shareholder, a copy of the Corporation's Annual Report on Form 10-K which
is required to be filed with the Securities and Exchange Commission for the
year ended December 31, 1996. Address all requests to:
Secretary
Area Bancshares Corporation
P. O. Box 786
Owensboro, Kentucky 42302-0786
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<PAGE> 18
SHAREHOLDERS PROPOSALS AND OTHER MATTERS
Proposals by shareholders to be presented at the 1998 Annual Meeting of
Shareholders must be received by the President of the Corporation at its
principal office no later than November 1, 1997, for inclusion in the 1998 Proxy
Statement and form of proxy relating to that meeting.
The Board of Directors of the Corporation does not know of any matters for
action by shareholders at the Annual Meeting other than the matters described in
the notice. However, the enclosed Proxy will confer discretionary authority with
respect to any other matters which may properly come before the meeting.
It is important that proxies be returned promptly. Shareholders, whether or
not they expect to attend in person, are requested to return their Proxies in
order that a quorum may be assured. Return may be made in the enclosed envelope,
to which no postage need be affixed.
By Order of the Board of Directors
/s/ Thomas R. Brumley
---------------------------------------
Thomas R. Brumley
President and Chief Executive Officer
Owensboro, Kentucky
April 15, 1997
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<PAGE> 19
Appendix A
AREA BANCSHARES CORPORATION
230 FREDERICA STREET, OWENSBORO, KENTUCKY 42301
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 19, 1997
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
The undersigned hereby appoints Cy M. Williamson and David W. Smith, and each
of them, or their designees, each with full power of substitution, as lawful
proxies to represent and vote all of the shares of Common Stock which the
undersigned is entitled to vote at the annual meeting of the stockholders of
the Company to be held on Monday, May 19, 1997, commencing at 11:00 A.M.
Daylight Savings Time on that day, and at any adjournment or adjournments
thereof, as fully and with the same effect as the undersigned might or could do
if personally present, with respect to the following matters and, in their
discretion upon any other matters which may properly come before the meeting:
1. Election of (9) directors to serve for a term of 1 year ending in 1998. The
nominees are; Anthony G. Bittel, Thomas R. Brumley, C.M. Gatton, Gary Latham,
Raymond C. McKinney, Jr., Allan R. Rhodes, David W. Smith, Jr., William H.
Thompson and Pollard White.
[ ]FOR all nominees listed. [ ]WITHHOLD AUTHORITY to vote for all
nominees listed. [ ]FOR all nominees EXCEPT nominees written in space below.
- -------------------------------------------------------------------------------
2. Ratification of the appointment of KPMG Peat Marwick LLP as independent
accountants.
[ ] FOR [ ] AGAINST [ ]ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES IN PROPOSAL 1 AND PROPOSAL 2.
Either of said proxies present and acting at said meeting at any adjournment or
adjournments thereof shall have and may exercise all of the powers of all said
proxies. The undersigned hereby ratifies and confirms all that said proxies, or
either of them or their substitutes, may lawfully do or cause to be done by
virtue hereof, and acknowledges receipt of the notice of said meeting and the
Proxy Statement accompanying it.
Dated ____________,1997
________________________
________________________
Please insert date of
signing. Sign exactly as
name appears at left. If
signing as attorney,
administrator, executor,
trustee, or guardian,
give full title as such.
