FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street, Columbia, Tennessee 38402-1148
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on the 18th day of April, 2000
To the Stockholders of First Farmers and Merchants Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
First Farmers and Merchants Corporation will be held at the Memorial Building,
308 West 7th Street, Columbia, Tennessee 38401, on the 18th day of April,
2000 at 4:00 o'clock P.M., local time, for the following purposes:
1. Election of Directors: Election of sixteen (16) persons
listed in the Proxy Statement dated March 27, 2000, accompanying
the notice of said meeting.
2. Transacting such other business as may properly be brought
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on March 3, 2000, are
entitled to notice of and to vote at the meeting.
To assure that your shares are represented at the meeting, please mark,
date, sign and promptly return the enclosed proxy. The proxy is revocable
and will not affect your right to vote in person in the event you are able to
attend the meeting.
By order of the Board of Directors
/s/ Martha M. McKennon
Martha M. McKennon
Secretary
March 27, 2000
<PAGE>
FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street
Columbia, Tennessee 38402-1148
PROXY
March 27, 2000
KNOW ALL PERSONS BY THESE PRESENTS, that I, the undersigned Stockholder
of First Farmers and Merchants Corporation of Columbia, Tennessee do nominate,
constitute, and appoint Edward A. Cox, Bettye Cornwell, and C. Allan Kerley
or any of them with full power to act alone, my true and lawful representative
with respect to all shares of Common Stock of First Farmers and Merchants
Corporation which the undersigned would be entitled to vote, at the Annual
Meeting of Stockholders to be held on April 18, 2000, at 4:00 p.m., local time
at the office of the Memorial Building, 308 West 7th Street, Columbia,
Tennessee 38401, or any adjournment thereof, with all the powers the
undersigned would possess if personally present, as follows:
1. Election of the sixteen (16) persons listed below as Directors:
FOR all nominees listed below [ ] AGAINST all nominees listed below [ ]
(Except as marked to the contrary)
<TABLE>
<C> <C> <C> <C>
Kenneth A. Abercrombie H. Terry Cook, Jr. Dr. O. Rebecca Hawkins John P. Tomlinson, III
James L. Bailey, Jr. W. J. Davis, Jr. Waymon L. Hickman Dan C. Wheeler
Flavius A. Barker Tom Napier Gordon Dr. Joseph W. Remke, III David I. Wise
Hulet M. Chaney Edwin W. Halliday T. Randy Stevens W. Donald Wright
</TABLE>
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE LISTED ABOVE,
LINE THROUGH OR STRIKE OUT THE NOMINEE'S NAME.
2. At their discretion, Edward A. Cox and/or Bettye Cornwell and/or C. Allan
Kerley are authorized to vote upon such other business as may properly
come before the meeting.
Management at present knows of no other business to be presented by or
on behalf of its management at the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY
MAY BE REVOKED PRIOR TO ITS EXERCISE.
When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee, or guardian, please give full
title. If more than one trustee, all should sign. All joint owners must
sign. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership
name by authorized person.
Dated the __________ day of __________, 2000
_________________________________________
_______________________________________
(Signature of Shareholder)
No. of Shares ______________ PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY.
_________ I will attend the meeting/reception. _________ Number attending
_________ I will not attend the meeting/reception.
<PAGE>
FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street
Columbia, Tennessee 38402-1148
BALLOT
March 27, 2000
1. Election of the sixteen (16) persons listed below as Directors:
FOR all nominees listed below [ ] AGAINST all nominees listed below [ ]
(Except as marked to the contrary)
<TABLE>
<C> <C> <C> <C>
Kenneth A. Abercrombie H. Terry Cook, Jr Dr. O. Rebecca Hawkins John P. Tomlinson, III
James L. Bailey, Jr. W. J. Davis, Jr. Waymon L. Hickman Dan C. Wheeler
Flavius A. Barker Tom Napier Gordon Dr. Joseph W. Remke, III David I. Wise
Hulet M. Chaney Edwin W. Halliday T. Randy Stevens W. Donald Wright
</TABLE>
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE LISTED ABOVE,
LINE THROUGH OR STRIKE OUT THE NOMINEE'S NAME.
Dated the _________ day of ____________, 2000
______________________________________
______________________________________
(Signature of Stockholder)
No. of Shares ____________
<PAGE>
FIRST FARMERS AND MERCHANTS CORPORATION
816 South Garden Street
Columbia, Tennessee 38402-1148
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on The 18th day of April, 2000
The accompanying proxy is solicited by and on behalf of the Board
of Directors of First Farmers and Merchants Corporation (the "Corporation")
for use at the Eighteenth Annual Meeting of Stockholders to be held on the
18th day of April, 2000, and any adjournment thereof. The time and place of
the meeting are set forth in the accompanying Notice of Meeting. All
expenses of preparing, printing, and mailing the proxy and all materials
used in the solicitation thereof will be borne by the Corporation. In addition
to the use of the mails, proxies may be solicited by personal interview,
telephone and telegraph by directors, officers, and other personnel of the
Corporation or its affiliate, none of whom will receive additional compensation
for such services. The Corporation will also request custodians and nominees
to forward soliciting materials to the beneficial owners of stock held of record
by them and will pay reasonable expenses of such persons for forwarding such
material. The date on which this Proxy Statement and the accompanying proxy are
first being mailed to stockholders of the Corporation is the 27th day of March,
2000.
PURPOSES OF THE MEETING
The Annual Stockholders' Meeting will be held for the purposes of (i)
electing directors and (ii) transacting whatever business may properly be
brought before the meeting or any adjournment thereof.
QUORUM AND VOTING
At the closing of business on March 3, 2000, the Corporation had issued
and outstanding 2,920,000 shares of its common stock. Only holders of record
of Common Stock of the Corporation at the close of business on March 3, 2000,
(the "Record Date"), are entitled to notice of and to vote on matters to come
before the Annual Meeting or any adjournment thereof.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock of the Corporation entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting or any
adjournment thereof. A stockholder is entitled to one vote in person or by
proxy at the Annual Meeting for each share of Common Stock of the Corporation
held of record in his/her name.
<PAGE>
In each case where the stockholder has appropriately specified how the
proxy is to be voted, it will be voted in accordance with his/her
specifications. Stockholders may designate a person or persons other than those
named in the enclosed proxy to vote their shares at the Annual Meeting or any
adjournment thereof. As to any other matters of business which may be brought
before the Annual Meeting or any adjournment thereof, a vote may be cast
pursuant to the accompanying proxy in accordance with the judgment of the person
or persons voting the same in the best interests of the Corporation, but
management does not know of any other matter of business. Any stockholder has
the power to revoke his/her proxy at any time, insofar as it has not been
exercised, by written notice or subsequently dated proxy, received by the
Corporation, or by revocation given by the stockholder in person at the Annual
Meeting or any adjournment thereof.
PRINCIPAL HOLDERS OF VOTING SECURITIES
As of March 3, 2000, no individual or corporation owned beneficially,
directly or indirectly, more than 5% of the Corporation's voting securities.
As of March 3, 2000, the First Farmers and Merchants National Bank of Columbia
(the "Bank"), the Corporation's subsidiary, held in a fiduciary capacity as
trustee, personal representative, agent or otherwise, 297,830 shares or
approximately 10.2% of the Corporation's outstanding Common Stock, and has the
sole right to vote all of these shares. The trust shares will be voted in a
manner consistent with the best interests of the beneficiaries as determined
by the Bank as fiduciary.
The following tabulation sets forth the amount and percentage of the
Corporation Common Stock owned beneficially (as determined in accordance with
the rules and regulations of the Securities and Exchange Commission) as of March
3, 2000, by all directors and executive officers of the Corporation as a group.
For tabulation of beneficial ownership of Corporation by individual directors,
see ELECTION OF DIRECTORS.
Number of shares owned Beneficially Percentage of
by Directors and Executive Officers Common Stock
as a Group (a total of 19 persons) 2,920,000 shares
__________________________________ ________________
455,100 15.59%
ELECTION OF DIRECTORS
At the meeting, sixteen (16) nominees will be proposed for election as
directors to serve until the next Annual Meeting of Stockholders or until their
successors are qualified and elected. The Corporation's Bylaws provide in
Article III, Section 2, that there shall be at least five (5) and not more than
twenty-five (25) Directors. The Board of Directors believes it advisable that
there be sixteen (16) Directors of the Corporation at this time. Proxies cannot
be voted for a greater number than sixteen (16) nominees.
<PAGE>
The Board of Directors proposes the election of the nominees listed to
serve until the next Annual Meeting or until their successors are duly qualified
and elected. Fifteen of the nominees are presently serving as Directors. Mr.
Joe E. Lancaster, who is a present member of the Board, has attained mandatory
retirement age. The new proposed Director is Mr. John P. Tomlinson, III, Senior
Executive Vice President, First Farmers & Merchants National Bank.
Mr. Tomlinson is Executive Vice President of First Farmers & Merchants
Corporation and Senior Executive Vice President of First Farmers & Merchants
National Bank. He began his banking career with the bank in 1973 after
graduation from the University of Tennessee at Martin. Prior to that time, he
graduated from Columbia Military Academy and attended Columbia State Community
College. He continued his banking education and graduated from the Tennessee
Young Bankers School at Vanderbilt University in 1976 and Graduate School of
Banking at Louisiana State University in 1980. Mr. Tomlinson is a past
President of the Maury County Chamber of Commerce, as well as having served
as UGF Drive Chairman for Maury County, President of the Advisory Board of
Directors of Columbia Area Mental Health Center, Chairman of the Columbia,
Tennessee American Institute of Banking Study Group and numerous other civic
leadership roles. He is a former member of the Spring Hill Lions Club and a
current member of the Columbia Kiwanis Club. He and his wife, Teresa, have
two children, Jason and Zachary, and he is a member of St. Peter's Episcopal
Church.
Unless contrary instructions are received, it is intended that the shares
represented by proxies solicited by the Board of Directors will be voted in
favor of the election as Directors of all of the nominees named. If for any
reason any one of such nominees is not available for election, the persons named
in the form of proxy have advised that they will vote for such substitute
nominees as the Board of Directors of the Corporation may propose. The Board
of Directors has no reason to expect that any of these nominees will fail to be
candidates at the meeting, and, therefore, does not at this time have any
substitute nominee under consideration. The names and certain information
relating to the sixteen (16) nominees set forth below has been furnished to the
Corporation by the individuals named.
The following information is furnished with respect to the nominees on the
next two pages:
<PAGE>
<TABLE>
<CAPTION>
Position Position Business Shares
and Office and Office Director Experience Beneficially
Held with Held with of Bank During Last Owned
Name Age Corporation Bank Since Five (5) Years 3/03/00/1 % of Class
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth A. Abercrombie 57 Director Director 1988 President, Loretto 2,400 0.082%
Casket Co., Inc.
James L. Bailey, Jr. 57 Director Director 1973 Pharmacist 8,460 0.290%
Flavius A. Barker 69 Director Director 1996 President, Tennessee 518/2 0.018%
Farm Bureau
Federation
Hulet M. Chaney 55 Director Director 1997 CEO, Tennessee Farmers 6,518/3 0.223%
Insurance Companies
H. Terry Cook, Jr. 59 Director Director 1980 President, Cook 23,991/4 0.822%
Properties, Inc.
W. J. Davis, Jr. 53 Director Director 1982 Chairman and CEO, 80,676/5 2.763%
Davis Group, Inc.
Tom Napier Gordon 48 Director Director 1986 Managing Partner, 68,324/6 2.340%
Gordon Brothers
Properties
Edwin W. Halliday 67 Director Director 1974 Farmer 8,488/7 0.291%
Dr. O. Rebecca Hawkins 59 Director Director 1999 President, Columbia 400 0.014%
Columbia Community
College
Waymon L. Hickman 65 Director, Director, 1967 Chairman and CEO 71,584/8 2.452%
Chairman Chairman of the Corporation
and CEO and CEO and Bank
Joe E. Lancaster 70 Director Director 1968 CEO, Emeritus Tennessee 68,000/9 2.328%
(Retires 4/18/00) Farmers Insurance
Companies
Dr. Joseph W. Remke, III 49 Director Director 1999 Optometrist 2,600 0.089%
T. Randy Stevens 48 Director, Director, 1991 President and COO 36,800/10 1.260%
President President of the Corporation
and COO and COO and Bank
John P. Tomlinson III 49 Executive Senior - Senior Executive V.P. 13,461/11 0.461%
(Nominated to V. P. of Executive of Bank
replace retiree) Bank
Dan C. Wheeler 57 Director Director 1993 Commissioner TN 6,634/12 0.227%
Department of
Agriculture
David I. Wise 68 Director Director 1967 Senior Exec.VP/ 44,096/13 1.510%
Security/Loan
Review Retired
W. Donald Wright 60 Director Director 1992 Partner, H & S 1,016 0.034%
Pharmacies
_______ ______
443,966 15.204%
_______ ______
------- ------
</TABLE>
<PAGE>
Footnotes
_________
[FN]
<F1>
/1 Unless otherwise indicated, all shares are owned of record.
<F2>
/2 518 shares are registered to Flavius A. Barker or Naomi Barker,
Mr. Barker's wife.
<F3>
/3 4,180 shares are registered to Hulet M. Chaney and Joyce A. Chaney,
Mr. Chaney's wife.
<F4>
/4 7,154 shares are registered to Griffitha G. Cook, Mr.Cook's wife.
<F5>
/5 12,750 shares are registered to Wayne Pressnell Testamentary Trust
number one.
1,600 shares are registered to Estate of W. J. Davis, Sr..
12,750 shares are registered to Winfred J. Davis & Starling Pressnell
Davis, Co-Trustees.
16,536 shares are registered to W. J. Davis, Jr., Trustee, the Davis
Group.
640 shares are registered to Mrs. W. J. Davis.
<F6>
/6 9,060 shares are registered to Thomas Napier Gordon, Jr., minor son of
Mr. Gordon.
9,060 shares are registered to Edward Bradshaw Gordon, minor son of
Mr. Gordon.
400 shares are registered to Teri Hasenour Gordon, wife of Mr. Gordon.
<F7>
/7 7,280 shares are registered to Polly Ann Halliday, Mr. Halliday's wife.
<F8>
/8 38,044 shares are registered to Waymon L. Hickman and Carey B. Hickman,
Mr. Hickman's wife, joint tenants.
<F9>
/9 28,000 shares are registered to Betty L. Lancaster, Mr. Lancaster's wife.
20,000 shares are registered to Caney Fork Partnership, L.P..
<F10>
/10 400 shares are registered to T. Randy Stevens, custodian for Branson
James Stevens.
400 shares are registered to T. Randy Stevens, custodian for Rebecca
Lynn Stevens.
12,000 shares are registered to Leesa M. Stevens, Mr. Stevens' wife.
<F11>
/11 50 shares are registered to Teresa J. Beck, wife of Mr. Tomlinson.
10,500 shares are registered to John P. Tomlinson, III, conservator for
Frances C. Tomlinson, aunt of Mr. Tomlinson.
<F12>
/12 1,100 shares are registered to Mary Carol Wheeler, wife of Mr. Wheeler.
<F13>
/13 2,000 shares are registered to Mary Neil P. Wise, wife of Mr. Wise.
7,300 shares are registered to David I. Wise 1999 Charitable Remainder
Annuity Trust.
7,300 shares are registered to David I. Wise 1999 Charitable Lead Trust.
</FN>
<PAGE>
COMMITTEES OF THE BOARD
There are no standing committees of the Board of Directors of the
Corporation. The Board of Directors of the Corporation met four (4) times
during 1999.
The Board of Directors of the Bank has designated seven (7) standing
committees. They are as follows:
Audit/Compliance/CRA/Trust Audit Committee (5 members)
Compensation Committee (7 members)
Deferred Profit Sharing Benefit Committee (5 members)
Executive Committee (7 members)
Trust Committee (5 members)
Risk Management Committee (7 members)
Business Development Committee (11 members)
Audit/Compliance/CRA/Trust Audit Committee
Functions: The Committee recommends the certified public accounting firm to
be employed by the Corporation and the Bank for audit purposes and recommends
the areas of responsibility of the CPA firm. The Committee also meets with the
CPA firm to receive the auditors' evaluation of the conditions of the
Corporation and the Bank, and brings those reports to the Board of Directors
for their consideration. The Committee also meets with internal auditors for
periodic review of the audit program of the Corporation and the Bank. The
committee also oversees and advises Bank Management and the Board of Directors
in all areas dealing with Compliance and Community Reinvestment Act.
Number of 1999 meetings: 11
Membership: The Committee membership is made up of five (5) directors who
are not officers of the Bank. They are W. Donald Wright, Chairman, James L.
Bailey, Jr., Edwin W. Halliday, Dan C. Wheeler and Dr. O. Rebecca Hawkins.
Compensation Committee
Functions: The Committee recommends to the Board of Directors fees for
board meetings and fees for committee meetings for directors. The Committee
reviews, evaluates and recommends to the Boards of the Corporation and the Bank
officers' compensation program and deferred profit sharing contributions for
all eligible employees. See compensation committee report on executive
compensation on pages 9 through 12.
Number of 1999 meetings: 2
<PAGE>
Membership: The membership of the Committee is made up of one (1) director
who is an officer of the Corporation and of the Bank and six (6) directors who
are not officers of the Corporation or the Bank. They are Joe E. Lancaster,
Chairman, Kenneth A. Abercrombie, Hulet M. Chaney, H. Terry Cook, Jr.,
W. J. Davis, Jr., Dan C. Wheeler, and Waymon L. Hickman.
Deferred Profit Sharing Benefit Committee
Functions: The Committee determines the eligibility of employees to
participate in the Profit Sharing Plan. It supervises records pertaining to
continuity of service and acts on applications for retirement benefits,
applications for leaves of absence, and requests for distribution of
participants' accounts. The Committee is also responsible for preparing annual
reports and financial statements, disclosing benefits to participants, and
reporting to the IRS and the Department of Labor.
Number of 1999 meetings: 1
Membership: The membership of the Committee is made up of one (1) director
who is an officer of the Corporation and the Bank, two (2) directors who are not
officers of the Corporation or the Bank, one (1) advisory director who is not a
director of the Corporation or the Bank, and one (1) employee who is not a
director of the Corporation or the Bank. They are T. Randy Stevens, Chairman,
Tom Napier Gordon, Flavius A. Barker, Bobby Sands (Advisory), and Amy B. Slagle
(Employee).
Executive Committee
Functions: The Committee reviews and recommends to the Board of Directors
for its approval selected actions with regard to the general direction and
conduct of the Corporation and the Bank. The Committee acts on loan
applications and reviews overdrafts, cash items, loans, lines of credit, and
loan reviews in accordance with Bank's policies which have been approved by the
Board of Directors.
Number of 1999 meetings: 45
Membership: The membership of the Committee is made up of one (1) director
who is an officer of the Corporation and the Bank, five (5) other directors,
none of whom is an officer of the Corporation or the Bank and one (1) Honorary
Director of the Bank, who is not an officer of the Corporation or the Bank.
They are Waymon L. Hickman, Chairman, Virgil H. Moore, Jr., Honorary Chairman,
James L. Bailey, Jr., H. Terry Cook, Jr., Edwin W. Halliday, Joe E. Lancaster,
and David I. Wise.
Trust Committee
Functions: The Committee supervises the operations of the Trust Department
to ensure proper exercise of the fiduciary powers of the bank.
<PAGE>
Number of 1999 meetings: 12
Membership: The membership of the Committee is made up of two (2) directors
who are officers of the Corporation and the Bank and three (3) directors who
are not officers of the Corporation or the Bank. They are Waymon L. Hickman,
Chairman, T. Randy Stevens, Vice Chairman, Joe E. Lancaster, Tom Napier Gordon,
and Hulet M. Chaney.
Risk Management Committee
Functions: The purpose of the Committee is to study areas of risk within
the bank with emphasis on insurance coverage and bonding requirements.
Number of 1999 meetings: 1
Membership: The membership of the Committee is made up of one (1) director
who is an officer of the Corporation and the Bank, five (5) directors who are
not officers of the Corporation or the Bank and one (1) Advisory Director of the
Bank. They are T. Randy Stevens, Chairman, Flavius A. Barker, W. J. Davis, Jr.,
Dr. Joseph W. Remke, III, David I. Wise, Dan C. Wheeler and Clarence A. Powell,
(Advisory). John P. Tomlinson, III serves as Secretary of the Committee.
Business Development Committee
Functions: The purpose of the Committee is to oversee and advise bank
management in the development and execution of its marketing and business
development plans.
Number of 1999 meetings: 1
Membership: The membership of the Committee is made up of two (2)
directors who are officers of the Corporation and the Bank, five (5) directors
who are not officers of the Corporation or the Bank, and four (4) advisory
directors of the bank. They are W. J. Davis, Jr., Chairman, Kenneth
Abercrombie, Dr. O. Rebecca Hawkins, Dr. Joseph W. Remke, III, T. Randy Stevens,
W. Donald Wright, Dr. Charles A. Ball (Advisory), Dr. H. Pitts Hinson
(Advisory), and Dr. David S. Williams (Advisory). Paul T. Butts serves as
Committee Coordinator.
<PAGE>
Director Attendance
During fiscal year 1999, there were four (4) meetings of the Board of
Directors of the Corporation and twelve (12) meetings of the Board of Directors
of the Bank. Each member of the Board, attended at least 75% of the aggregate
meetings of the Boards and committees of which they were members with the
exception of one director who attended an aggregate of 57% of the Board meetings
and Committee meetings to which he was assigned.
COMPENSATION OF DIRECTORS AND OFFICERS
During the fiscal year 1999 each director and officer of the Corporation
received an annual retainer of $1,500.00 and was paid a fee of $425.00 for
each Board meeting attended up to four meetings. Each Active and Honorary Bank
Director received $400.00 for each Bank Board of Directors' meeting attended.
Each Bank Advisory Director received $250.00 for each Bank Board of Directors'
meeting attended. Each member of the Bank's Executive Committee received a
$6,250.00 annual retainer. Each Active, Honorary and Advisory Bank Director
(excluding salaried officers) received $200.00 for attendance at any scheduled
or officially called Committee meeting of any standing or specially appointed
committee. Active Corporation and Bank Directors may defer fees payable to them
under the Corporation's and Bank's Directors Deferred Compensation Plans.
During the fiscal year 1999, the Corporation and the Bank paid total cash
directors' fees of $130,800.00, and directors' fees were deferred in the amount
of $134,260.00.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
Decisions on compensation of the Bank's executives are made by the seven
member Compensation Committee of the Board. The Compensation Committee believes
that the actions of each executive officer have the potential to impact the
short-term and long-term profitability of the Corporation and the Bank.
Consequently, the Compensation Committee places considerable importance on its
task of designing and administering an executive compensation program.
The Bank has an executive compensation program that is focused on
Corporation shareholder value and the overall performance of the Corporation
and the Bank. The two main components of the executive compensation program
are base salary and bonus.
Compensation
The Compensation Committee's executive compensation program is designed
to provide competitive levels of compensation that are integrated with the
Corporation's and Bank's annual and long-term goals. Executive compensation
is reviewed by the Committee relative to peer group executive compensation
based on national and state survey information. The peer group
<PAGE>
used from the national and state surveys utilized institutions in the asset
size range from $500,000,000 to $750,000,000. The national survey also includes
data on adjoining states.
The Compensation Committee approved cash compensation opportunities for
executive officers in 1999 that are consistent with the Compensation Committee's
executive compensation program.
Base Salary
Base salary represents a fixed labor cost and is designed so that senior
management receives acceptable salaries, thereby helping the Corporation and
Bank keep the talent needed to meet the challenges in the financial service
industry. Many factors are included in determining base salaries, such as the
responsibilities borne by the executive officer, the scope of the position,
length of service with the Corporation and Bank; and individual performance;
and what companies in the Peer Group are paying for similar positions. The
Compensation Committee believes that executive officer base salaries should be
slightly above the median of a market-competitive range. Salaries are
reviewed annually.
Bonus "REAP"
The second component in the executive compensation program is the bonus
plan referred to as the Reserve for Employee Action Payments, "REAP". An
earnings per share after taxes goal is established for the Bank on an annual
basis. If that goal is achieved, eligible employees receive an end of the year
payment at the rate of 5% of the employees salary for the entire year. If the
goal is not reached, the REAP account is reduced in proportion to the shortage
in the net earnings. There is no ceiling or maximum amount that may be placed
in the REAP account; therefore, employees share proportionally in the amount
that the net earnings exceed the predetermined annual goal. During fiscal year
1999, the bank did not meet its goal and paid to 279 eligible employees $275,500
(equivalent to 4.50% of salaries for eligible employees). Executive officers
received REAP payments as follows: Waymon L. Hickman - $9,545, T. Randy
Stevens - $5,558, and John P. Tomlinson, III - $4,325 (see Summary
Compensation Table on page 12).
<PAGE>
Chief Executive Officer Compensation
The executive compensation program described above is applied in setting
Mr. Hickman's compensation. Mr. Hickman participates in the same executive
compensation program available to the other executive officers. The
Compensation Committee reviews the executive compensation program in
relationship to the performance of the Corporation's net income and stock value.
Net income for the Corporation and the Bank totaled $7,533,000 for fiscal year
1999, representing a 2.6% increase above the previous year. Stock value
increased from $46.00 per share at December 31, 1998 to $55.00 per share at
December 31, 1999 representing a $9.00 per share increase. The increase
represents an annualized gain of 19.57%, plus $.70 per share in cash dividends
declared in 1999. Based upon these and other factors the 1999 cash compensation
of Mr. Hickman was $299,368. Mr. Hickman had a base salary of $212,100 which is
slightly above the median salary in comparison to his peers in the national and
state surveys indicated above. Mr. Hickman earned a bonus (REAP) in the amount
of $9,545 that was based on the Corporation's financial results in 1999.
Conclusion
The Compensation Committee believes that this mix of market-based salaries
and bonus represents a balance that will motivate the management team to
continue to produce strong returns. The Compensation Committee further believes
this program strikes an appropriate balance between the interests and needs of
the Corporation and the Bank in operating its business.
Submitted by the Compensation Committee of the Company's Board of
Directors.
Joe E. Lancaster, Chairman
H. Terry Cook, Jr., Vice Chairman
Kenneth A. Abercrombie
Hulet M. Chaney
W. J. Davis, Jr.
Waymon L. Hickman
Dan C. Wheeler
<PAGE>
REMUNERATION OF DIRECTORS AND OFFICERS
The following table sets forth the aggregate remuneration accrued or paid
by the Corporation or the Bank during the fiscal years ending December 31, 1999,
1998, and 1997, to the highest compensated officers or directors whose aggregate
remuneration exceeds $100,000.00.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Name of Individual Other Annual All Other
and Principal Position Year Salary/1 Bonus/2 Compensation/3 Compensation/4
<S> <C> <C> <C> <C> <C>
Waymon L. Hickman, 1999 $ 212,100 $ 23,322 $ 24,000 $ 39,946
Chairman of the Board, 1998 200,100 19,762 24,000 51,530
Chief Executive Officer & 1997 193,500 23,199 24,000 46,490
Director
Corporation and Bank
T. Randy Stevens, 1999 $ 123,504 $ 6,191 $ 18,526 $ 13,214
President, Chief 1998 111,600 5,731 16,741 12,250
Operating Officer & 1997 105,600 7,603 15,840 10,874
Director of
Corporation and Bank
John P. Tomlinson, III 1999 $ 100,252 $ 4,805 $ 14,558 $ -
Executive Vice President 1998 88,500 4,402 12,827 -
of Corporation and Sr. 1997 83,500 5,810 12,105 -
Executive V. P. of Bank
<FN>
<F14>
/1 Salaries, cash corporation and bank committee fees.
<F15>
/2 Bonus includes REAP, group term replacement insurance provided, and
use of auto.
<F16>
/3 Other annual compensation is the bank's contribution to the Deferred
Profit Sharing Plan. This benefit provided by the Bank does not
discriminate in favor of officers and directors and is available
generally to all salaried employees.
<F17>
/4 Deferred Salary Continuation Plan, Deferred Corporation and Bank
Committee Fees.
</FN>
</TABLE>
Shareholder Return
Set forth below is a graph comparing the yearly change in the cumulative
total shareholder return on the Company Common Stock against the cumulative
total return of the S&P Composite-500 Stock Index and the S&P Major Regional
Bank Composite Index for the period of five years commencing December 31, 1994
and ending December 31, 1999.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
The graph displaying the contents of the table below will be
mailed to our stockholders.
<TABLE>
VALUE OF $100 INVESTED ON DECEMBER 31, 1995 AT:
<CAPTION>
1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C>
FF&M 100.00 144.45 175.76 214.66 259.92
Regional Banks 100.00 214.48 322.58 356.50 305.62
S&P 500 100.00 168.75 225.06 289.37 350.27
</TABLE>
[FN]
<F18>
* Assumes that the value of the investment in Company Common Stock and each
index was $100 on December 31, 1995 and that all dividends were reinvested.
</FN>
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Lancaster, Cook, Abercrombie, Chaney, Davis, Hickman, and Wheeler,
served as members of the Compensation Committee throughout 1999. During 1999,
the Corporation's bank subsidiary engaged in customary banking transactions and
had outstanding loans to certain of the Corporation's and Bank's directors,
including Messrs. Lancaster, Cook, Abercrombie, Chaney, Davis, and Wheeler,
and members of the immediate families of such directors and executive officers.
Messrs. Lancaster, Cook, Abercrombie, Chaney, Davis, and Wheeler, their
affiliates, families, and companies in which they hold ten percent or more
ownership had outstanding loan balances of $1,871,171 at December 31, 1999.
These loans were made in the ordinary course of business and were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with others. In the opinion
of management, these loans do not involve more than the normal risk of
collectibility or present other unfavorable features.
DEFERRED PROFIT SHARING PLAN
The Bank has a Deferred Profit Sharing Plan and Trust which has been
approved by the Internal Revenue Service for deferral of income taxation. The
plan includes all eligible employees. All employees who attain age twenty (20)
years, and who complete one (1) year of service with the Bank are eligible to
participate. Participants receive a vested percentage of 25% after two (2) years
of service and 15% each year thereafter until 100% vested at the end of seven
(7) years of participation in the plan. The Bank's contribution to the Plan and
Trust is determined by the annual performance of the Bank and is subject to
approval by the Board of Directors of the Bank annually. The aggregate amount
placed in Trust for the two hundred-twenty (220) participants during fiscal
year 1999 was $781,882.03. On December 31, 1999, the total ending value of Mr.
Waymon L. Hickman's account in the Profit Sharing Plan was $2,153,183.46. Mr.
T. Randy Stevens' account was $806,404.97, and Mr. John P. Tomlinson's account
was $752,342.81.
<TABLE>
Deferred Profit Sharing Plan
<CAPTION>
Years of Service Amount Vested
<S> <C>
1 No Participation
More than 1 but
Less than 2 0%
2 25%
3 40%
4 55%
5 70%
6 85%
7 100%
</TABLE>
<PAGE>
CERTIFIED PUBLIC ACCOUNTING FIRM
Upon the recommendation of the Audit Committee of the Bank, the firm of
Kraft Bros., Esstman, Patton & Harrell has been selected by the Board of
Directors of both the Corporation and the Bank to serve as principal
accountants for the Corporation and the Bank for the current year. The firm
of Kraft Bros., Esstman, Patton & Harrell and its predecessors has served as
principal accountants for more than 39 years. A representative of the firm
will be present at the stockholders meeting and will have the opportunity to
make a statement if he/she so desires.
OTHER MATTERS
As of the date of this Proxy Statement, the management of the Corporation
and the Bank knows of no other business that will be presented at this meeting.
ITEMS OF BUSINESS FOR 2001 ANNUAL MEETING OF STOCKHOLDERS
Any proposals by stockholders to be included in the Proxy Statement and
Proxy Form for consideration at the next Annual Meeting of Stockholders must
be received by management at 816 South Garden Street, Columbia, Tennessee
38402-1148, no later than November 30, 2000.
ANNUAL REPORTS
The annual report of the Corporation to stockholders for the calendar
year 1999 is enclosed, but is not intended to be part of this Proxy Statement.
COPIES OF THE CORPORATION'S ANNUAL REPORT TO SECURITIES AND EXCHANGE
COMMISSION (FORM 10-K) WILL BE MAILED TO STOCKHOLDERS WITHOUT CHARGE UPON
WRITTEN REQUEST MADE TO: PATRICIA N. MCCLANAHAN, TREASURER, FIRST FARMERS
AND MERCHANTS CORPORATION, P. O. BOX 1148, COLUMBIA, TENNESSEE 38402-1148.
By the order of the Board of Directors
/s/ Martha M. McKennon
Martha M. McKennon
Secretary
March 27, 2000
