<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___________)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(e)
(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SOUTHSIDE BANCSHARES CORP.
------------------------------------------------
(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 in 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
- --------------------------------------------------------------------------------
SOUTHSIDE BANCSHARES CORP.
3606 GRAVOIS AVENUE
ST. LOUIS, MISSOURI 63116
-------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1999
-------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Southside Bancshares Corp., a Missouri corporation (the "Corporation"), will be
held at South Side National Bank's Telegraph facility, which is located at 4111
Telegraph, in South St. Louis County, Missouri, beginning at 2:00 p.m., local
time, on Thursday, April 22, 1999, or at any adjournment or adjournments
thereof, for the purpose of considering and voting upon the following matters
(as more fully described in the attached Proxy Statement):
1. The election of three Class I Directors each to serve for a term of three
years.
2. The ratification of the appointment of KPMG LLP as independent certified
public accountants for the Corporation for 1999.
3. Any other business as may properly come before the Annual Meeting or any
adjournment thereof.
Only holders of Common Stock of the Corporation whose names appear of
record on the books of the Corporation at the close of business on March 8, 1999
are entitled to vote at the Annual Meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ JOANNE M. SCHNEIDER
---------------------------------------------
Joanne M. Schneider
Secretary to the Board
St. Louis, Missouri
March 25, 1999
- IMPORTANT -
YOU ARE REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY AS SOON AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. A RETURN ENVELOPE,
WHICH DOES NOT REQUIRE POSTAGE, IS ENCLOSED FOR YOUR CONVENIENCE. YOU MAY
WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE MEETING; OR IF YOU ATTEND THE
MEETING YOU MAY WITHDRAW YOUR PROXY AT THAT TIME IF YOU WISH. HOWEVER, IF YOUR
SHARES ARE NOT REGISTERED IN YOUR OWN NAME, PLEASE ADVISE THE SHAREHOLDER OF
RECORD (YOUR BANK, BROKER, ETC.) THAT YOU WISH TO ATTEND. THAT FIRM MUST PROVIDE
YOU WITH EVIDENCE OF YOUR OWNERSHIP WHICH WILL ENABLE YOU TO BE ADMITTED TO THE
MEETING.
Shareholders representing a majority of the Corporation's issued and outstanding
Common Stock must be present or represented by proxy at the Annual Meeting in
order for a quorum to be present. TO ENSURE THE PRESENCE OF A QUORUM AT THE
ANNUAL MEETING, AN EARLY RETURN OF YOUR PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS.
- --------------------------------------------------------------------------------
<PAGE> 3
SOUTHSIDE BANCSHARES CORP.
3606 GRAVOIS AVENUE
ST. LOUIS, MISSOURI 63116
(314) 776-7000
----------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1999
PURPOSE OF THE MEETING
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Southside Bancshares Corp. (the
"Corporation") for use at the Annual Meeting of Shareholders to be held at South
Side National Bank's Telegraph facility, which is located at 4111 Telegraph, in
South St. Louis County, Missouri, beginning at 2:00 p.m., local time, on
Thursday, April 22, 1999, and at any adjournment or adjournments thereof (the
"Annual Meeting"), for the purposes set forth in the attached Notice of Annual
Meeting of Shareholders and as further described herein.
PROXY SOLICITATION
PROXIES IN THE FORM ENCLOSED ARE SOLICITED BY THE BOARD OF DIRECTORS OF
THE CORPORATION. A shareholder may revoke a properly executed proxy at any time
before it is exercised by filing a written revocation or a duly executed proxy
bearing a later date with the Secretary of the Corporation either prior to or at
the Annual Meeting or by voting in person at the Annual Meeting. If a proxy is
properly executed and returned in time, the shares of Common Stock represented
thereby will be voted in accordance with the instructions specified thereon, or
if no contrary instructions are specified, the shares of Common Stock
represented thereby will be voted in favor of the election of the nominees to
the Board of Directors and in favor of the appointment of KPMG LLP as
independent certified public accountants for the Corporation for 1999. This
Proxy Statement and the related form of proxy, along with the Corporation's
Annual Report for 1998, including financial statements therein, are first being
sent to shareholders of the Corporation on or about March 25, 1999.
It is anticipated that the solicitation of proxies will be made
primarily by mail, personal interview and telephone by Directors and regular
employees of the Corporation who will not receive any additional remuneration
therefor. The Corporation will pay the total expense of the proxy solicitation.
Brokers, nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares of Common Stock and will
be reimbursed for their expenses.
As of the date of this Proxy Statement, the Board of Directors is not
aware of any matters which may come before the Annual Meeting other than those
matters which are referred to in this Proxy Statement. If any other matters
properly come before the Annual Meeting, the proxy holders will vote the shares
of Common Stock represented thereby in accordance with their best judgment.
<PAGE> 4
VOTING SECURITIES
The Corporation is authorized to issue 15,000,000 shares of Common
Stock, $1.00 par value per share (the "Common Stock"), and 1,000,000 shares of
cumulative Preferred Stock, no par value per share ("Preferred Stock"). As of
March 8, 1999, 8,638,978 shares of Common Stock were issued and outstanding,
representing all of the shares of capital stock entitled to vote at the Annual
Meeting. No shares of Preferred Stock have been issued.
RECORD DATE
In accordance with the Corporation's Bylaws and action taken by the
Board of Directors, March 8, 1999 is the record date for the determination of
the shareholders entitled to notice of and to vote at the Annual Meeting.
VOTE REQUIRED FOR APPROVAL
With respect to those matters to be acted upon at the Annual Meeting,
each shareholder of record is entitled to one vote for each share of Common
Stock that he or she holds on the record date. Cumulative voting for the
election of Directors is not available.
A majority of the outstanding shares of Common Stock entitled to vote
must be represented in person or by proxy at the Annual Meeting in order for
there to be a quorum to conduct the election of Directors and the other matter
described in this Proxy Statement. If a quorum is present at the Annual Meeting,
the three nominees for Director who receive the highest number of votes cast
will be elected. The ratification of the appointment of KPMG LLP as independent
certified public accountants for the Corporation requires the affirmative vote
of at least a majority of the shares of Common Stock entitled to vote at the
Annual Meeting.
With respect to each matter to be acted upon at the Annual Meeting,
abstentions on properly executed proxy cards and shares not voted by brokers and
other entities holding shares on behalf of beneficial owners ("broker
non-votes") will be counted for purposes of determining whether a quorum is
present at the Annual Meeting. Such abstentions and broker non-votes will,
however, not be counted in calculating voting results on those matters for which
the shareholder has abstained or the broker has not voted and will, therefore,
have the effect of a vote against any particular proposal or matter.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following tables set forth, as of March 8, 1999, the number of
shares of Common Stock, the only class of equity securities outstanding, owned
beneficially by each of the Directors of the Corporation (including nominees for
Director) and the Executive Officers named in the Summary Compensation Table, as
well as by all Directors and Executive Officers of the Corporation as a group,
and the number of shares of Common Stock held by any person who is known to the
Corporation to be the beneficial owner of more than five percent (5%) of the
outstanding shares of Common Stock.
2
<PAGE> 5
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
-------------------------------------------------------
SOLE VOTING OTHER PERCENT
AND INVESTMENT BENEFICIAL OF
POWER OWNERSHIP CLASS(2)
----------------------- ---------------------------- --------------------
<S> <C> <C> <C>
EXECUTIVE OFFICERS & DIRECTORS
Joseph W. Beetz 57,390 --- *
Howard F. Etling 180,686 1,140,511 (3) 14.81
Douglas P. Helein 397,320 --- 4.45
Earle J. Kennedy, Jr. 15,570 223,770 (4) 2.68
Norville K. McClain 423,717 --- 4.75
Joseph W. Pope 47,130(5) --- *
Daniel J. Queen 230,946 --- 2.59
Richard G. Schroeder, Sr. 90,000 --- 1.01
Thomas M. Teschner 253,071(6) 1,203,898 (3),(7) 16.33
Executive Officers and Directors
(including nominees) as a Group (9 persons) 1,695,830(8) 1,417,248 (3) 34.90
* less than 1%
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
-------------------------------------------------------
SOLE VOTING OTHER PERCENT
AND INVESTMENT BENEFICIAL OF
POWER OWNERSHIP CLASS(2)
----------------------- ---------------------------- --------------------
<S> <C> <C> <C>
NAME AND ADDRESS OF
OTHER PRINCIPAL SECURITY HOLDERS
Southside Bancshares Corp.(3) ---- 1,140,511 12.78
Employee Stock Ownership Plan
(With 401(k) Provisions)
3606 Gravois Avenue
St. Louis, Missouri 63116
1,554,060 ---- 17.42
First Banks, Inc.(9)
135 North Meramac
Clayton, Missouri 63105
</TABLE>
- ---------------
(1) The information set forth is based upon information furnished to the
Corporation by the named persons or entities. Beneficial ownership of
shares of Common Stock, as determined in accordance with the applicable
rules of the Securities and Exchange Commission, includes shares of
Common Stock as to which a person directly or indirectly has or shares
voting power or investment power or both.
(2) The percentage of the class is calculated based on the total number of
outstanding shares of Common Stock (8,638,978 shares) plus the total
number of shares of Common Stock of which beneficial ownership may be
acquired pursuant to stock options that are exercisable or that will
become exercisable within sixty days (282,000 shares) for a total of
8,920,978 shares.
(3) Includes 1,140,511 shares held by the Southside Bancshares Corp. Employee
Stock Ownership Plan With 401(k) Provisions (the "KSOP") of which Mr.
Etling and Mr. Teschner are Trustees pursuant to appointment by the Board
of Directors. Participants in the KSOP have voting power over shares of
Common Stock allocated to their accounts, and such shares of Common Stock
will be voted by the Trustees as directed by the participants. Shares of
Common Stock for which no direction has been given will be voted directly
by the Trustees. Except for 64,071 shares of
3
<PAGE> 6
Common Stock allocated to Mr. Teschner's account in the KSOP for which
Mr. Teschner has a beneficial interest, Mr. Teschner and Mr. Etling
disclaim any personal interest in all of the shares of Common Stock held
by the KSOP.
(4) Shares for which Mr. Kennedy has shared voting and investment power.
(5) Includes 10,420 shares of Common Stock allocated to Mr. Pope's account
under the KSOP and 36,000 shares of Common Stock which Mr. Pope may
acquire beneficial ownership of pursuant to stock options which are
exercisable or will become exercisable within sixty days.
(6) Includes 64,071 shares of Common Stock allocated to Mr. Teschner's
account under the KSOP and 186,000 shares of Common Stock which Mr.
Teschner may acquire beneficial ownership of pursuant to stock options
which are exercisable or will become exercisable within sixty days.
(7) Also includes 127,458 shares of Common Stock for which Mr. Teschner has
shared voting and investment power.
(8) Includes 74,491 shares of Common Stock allocated to the accounts of the
executive officers of the Corporation under the KSOP and 222,000 shares
of Common Stock of which beneficial ownership may be acquired pursuant to
stock options which are exercisable or will become exercisable within
sixty days.
(9) Not included in First Banks, Inc.'s beneficial ownership information are
16,920 shares of Common Stock owned by James F. Dierberg and 371,760
shares of Common Stock owned by Investors of America, L.P. The directors
and executive officers of First Securities America, Inc., the general
partners of Investors of America, L.P., and other members of their family
control First Banks, Inc. directly or indirectly.
To the knowledge of the Board of Directors, no change of control of the
Corporation has occurred since the beginning of the last fiscal year, and there
are no contractual arrangements, the operation of the terms of which may, at a
subsequent date, result in a change of control of the Corporation.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Three persons, each of whom are presently members of the Board of
Directors, have been nominated for election to membership on the Board of
Directors as Class I Directors, each to hold office for a term of three (3)
years until the Corporation's Annual Meeting in 2002. In each instance, a
Director is elected to serve until his successor shall have been duly elected
and qualified.
The Corporation's Articles of Incorporation and Bylaws presently
provide that the number of Directors to constitute the Board of Directors shall
consist of not less than nine (9) nor more than fifteen (15) members and that
the total number of Directors may be fixed, within the minimum and maximum
numbers, by a vote of a majority of the Directors then in office. Pursuant to
these provisions, the Board of Directors has fixed the number of Directors at
nine (9). The Board of Directors presently consists of only eight members, as
Ralph Crancer, Jr. passed away on January 22, 1999, and his seat has not yet
been filled. The Corporation's Articles of Incorporation and Bylaws also provide
that the Board of Directors shall be divided into three (3) classes, as nearly
equal as possible, with one class to be elected annually for a three (3) year
term.
Unless instructed otherwise, the proxy holders will vote for the three
nominees for Class I Directors identified herein. There is no cumulative voting
for the election of Directors. Although it is not contemplated that any nominee
will decline or be unable to serve as a Director if elected, in either such
event, the proxies will be voted for such other person as may be designated by
the Board of Directors of the Corporation.
The nominees for election to the Board of Directors are: Norville K.
McClain, Richard G. Schroeder, Sr. and Thomas M. Teschner.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES LISTED
UNDER ITEM 1 ON THE PROXY CARD.
4
<PAGE> 7
The following table indicates the principal occupation or employment
for the past five years, age, other directorships, and the year first elected as
a Director of the Corporation of each nominee to become a Director and each
other Director whose term of office will continue after the Annual Meeting.
Information with respect to the business experience of each Director has been
furnished by such Director or has been obtained from the records of the
Corporation. Each of the Directors has held the same position or another
executive position with the same employer during the past five years.
<TABLE>
<CAPTION>
DIRECTOR OF THE
CORPORATION
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIP SINCE
- ------------------------------------------------------ -----------------
NOMINEES FOR DIRECTORS -- CLASS I DIRECTORS
(Terms Expiring 2002)
<S> <C>
Norville K. McClain (69) 1988
President, Essex Contracting, Inc.
(building contractor and developer)
Director, South Side National Bank in St. Louis
Richard G. Schroeder, Sr. (58) 1994
President, St. Louis Fabrication Services, Inc.
(steel fabrication company)
Director, South Side National Bank in St. Louis
Thomas M. Teschner (42) 1992
President, Chief Executive Officer and Director, Southside
Bancshares Corp. and South Side National Bank in St. Louis
Director, Bank of St. Genevieve, The Bank of St. Charles County
and State Bank of Jefferson County (subsidiaries of the Corporation)
DIRECTORS CONTINUING IN OFFICE -- CLASS II DIRECTORS
(Terms Expiring 2000)
Joseph W. Beetz (69) 1978
President, Joseph H. Beetz Plumbing Company, Inc.
(plumbing contractor)
Director, South Side National Bank in St. Louis
Howard F. Etling (83) 1962
Publisher Emeritus, Journal Newspapers
(publishing company)
Director, South Side National Bank in St. Louis
DIRECTORS CONTINUING IN OFFICE -- CLASS III DIRECTORS
(Terms Expiring 2001)
Douglas P. Helein (47) 1992
Insurance Broker, Welsch, Flatness & Lutz, Inc.
(insurance agency)
Director, South Side National Bank in St. Louis
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C>
Earle J. Kennedy, Jr. (69) 1978
Former President, Westway Services, Inc.
(vending company)
Director, South Side National Bank in St. Louis
Daniel J. Queen (57) 1992
President, Highland Diversified, Inc.
(operates grocery stores)
Director, South Side National Bank in St. Louis
and State Bank of Jefferson County
</TABLE>
RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL NO. 2)
The Board of Directors voted to appoint, subject to ratification by the
shareholders, KPMG LLP as independent certified public accountants to audit the
accounts of the Corporation for the fiscal year ending December 31, 1999. It is
expected that representatives of KPMG LLP will be present at the Annual Meeting
to respond to appropriate questions and to make a statement if they so desire.
During 1998, KPMG LLP provided audit and tax services for the Corporation. The
audit services included examination of the consolidated financial statements of
the Corporation and its subsidiaries, including annual reports to shareholders
and the Securities and Exchange Commission, and consultation and assistance in
accounting and related matters. The Board of Directors has a standing audit
committee and does not consider the tax services performed by the independent
auditors to affect its independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG LLP, WHICH IS ITEM 2 ON THE PROXY CARD.
BOARD OF DIRECTORS AND COMMITTEES OF BOARD OF DIRECTORS
In 1998, Directors received fees of $1,000 for each regular meeting of
the Board of Directors. In addition, all Directors who also served on the Board
of Directors of South Side National Bank in St. Louis, a subsidiary of the
Corporation, received fees of $750 for each regular meeting of such Board and
$1,200 for committee meetings each month. Mr. Queen also serves on the Board of
Directors of State Bank of Jefferson County, a subsidiary of the Corporation,
and received fees of $300 for each regular meeting of such Board and $100 for
each loan committee meeting thereof. No other remuneration was paid by the
Corporation to any non-employee Director or for special assignments. Mr.
Teschner also received fees of $300 for each regular board meeting of each of
the other subsidiaries of the Corporation for which he serves as a Director and
$100 for attendance at each discount committee meeting of each such subsidiary's
Board, with the exception of the Bank of St. Charles County which pays $50 for
attendance at each of its discount committee meetings. The Directors may defer
these fees until retirement or death pursuant to the Corporation's Deferred
Compensation Plan for Directors.
In 1998, the Board of Directors held twelve regular meetings and one
special meeting. Each of the Directors attended at least eighty-five percent of
the aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees of the Board of Directors on
which such Director served.
The Corporation has a standing Audit Committee, which consists of all
of the non-employee Directors. The Audit Committee monitors the internal
accounting controls and practices of the Corporation and reports its findings to
the full Board of Directors. The Committee meets quarterly and met four times
during 1998.
6
<PAGE> 9
The Corporation does not have a standing nominating committee, and no
committee performs a similar function. Director nominations on behalf of the
Corporation are recommended by the Board of Directors. Nomination
recommendations to the Board of Directors by shareholders are not accepted.
The Corporation has a standing Compensation Committee, which consists
of all non-employee Directors. The Compensation Committee approves compensation
levels for executive officers of the Corporation. The Compensation Committee met
once during 1998.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the remuneration
paid or accrued in 1998, 1997 and 1996 for the Chief Executive Officer of the
Corporation and for the Executive Officer of the Corporation who received total
annual salary and bonuses exceeding One Hundred Thousand Dollars ($100,000)
during the fiscal year ending December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
==================================================================================================================================
ANNUAL LONG TERM
COMPENSATION COMPENSATION ALL
NAME AND PRINCIPAL POSITION ----------------------------------- ------------------- OTHER
YEAR SALARY BONUS Securities COMPENSATION
($)(1) ($)(2) Underlying Options ($)(3)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THOMAS M. TESCHNER 1998 $215,000 $100,000 -- $103,124
President, Chief Executive Officer and
Director of the Corporation and South Side 1997 $160,000 $135,000 300,000 $104,575
National Bank in St. Louis
1996 $160,000 $100,000 60,000 $182,721
- ----------------------------------------------------------------------------------------------------------------------------------
JOSEPH W. POPE 1998 $ 85,000 $ 25,000 -- $ 9,771
Senior Vice President and
Chief Financial Officer 1997 $ 78,000 $ 19,000 -- $ 11,258
of the Corporation
1996 $ 72,000 -- 30,000 $ 7,071
====================================================================================================================================
</TABLE>
(1) Includes deferred compensation contributed by Mr. Teschner and Mr. Pope
to the KSOP.
(2) Includes amounts paid in accordance with the executive compensation
program as discussed in greater detail in the Compensation Committee
Report in this Proxy Statement.
(3) Consists of the Corporation's contributions and allocations to the KSOP
($13,009 in 1998, $11,579 in 1997 and $10,930 in 1996 for Mr. Teschner,
and $8,861 in 1998, $10,444 in 1997 and $6,315 in 1996 for Mr. Pope);
Director's fees from the Corporation and its subsidiaries ($47,550 in
1998, of which $39,550 was deferred, $46,650 in 1997, of which $38,750
was deferred, and $37,800 in 1996, of which $25,650 was deferred for Mr.
Teschner); life insurance premiums ($4,438 in 1998, $3,520 in 1997 and
$3,520 in 1996 for Mr. Teschner, and $910 in 1998, $814 in 1997 and $756
in 1996 for Mr. Pope). Such amounts also reflect $38,127, $42,826 and
$130,471 paid to Mr. Teschner in 1998, 1997 and 1996, respectively, as
grants of performance stock awards under the Deferred Compensation
Agreement described in the Compensation Committee Report contained
herein. The 1998 grant represents 3,112.39 shares of performance stock.
The 1997 grant represents 3,723.96 shares of performance stock. The 1996
amount includes an initial grant of 19,554 shares of performance stock
having a value of $104,288 ($5.33 per share) on the date of the initial
grant, which was made in order to offset limitations imposed upon Mr.
Teschner's participation in the Corporation's qualified deferred
compensation plans from 1988 through 1995, and 3,452.64 shares of
performance stock having a value of $26,183 ($7.58 per share) as of
December 31, 1996 for the 1996 fiscal year.
7
<PAGE> 10
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
===================================================================================================================================
Shares Value of Unexercised
Acquired Number of Securities in-the-Money
on Exercise Value Underlying Unexercised Options/SARs at Fiscal
Name (#) Realized ($) Options/SARs at Fiscal Year End(1) Year-End($)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
(#) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Teschner -0- -0- 186,000(3) 204,000(4) $980,500 $907,000
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph W. Pope -0- -0- 36,000(5) 12,000(6) $261,000 $ 71,000
====================================================================================================================================
</TABLE>
(1) All amounts represent shares of Common Stock underlying stock
options at December 31, 1998.
(2) Pre-tax gain. The value of the Unexercised in-the-Money stock
options is based upon a December 31, 1998 closing bid price of
$12.25 for shares of Common Stock.
(3) Includes 30,000 shares of Common Stock underlying stock options
having an exercise price of $3.67 per share, 36,000 shares of
Common Stock underlying stock options having an exercise price of
$6.33 per share, and 120,000 shares of Common Stock underlying
stock options having an exercise price of $8.00 per share.
(4) Includes 24,000 shares of Common Stock underlying stock options
having an exercise price of $6.33 per share and 180,000 shares of
Common Stock underlying stock options having an exercise price of
$8.00 per share.
(5) Includes 18,000 shares of Common Stock underlying stock options
having an exercise price of $3.67 per share and 18,000 shares of
Common Stock underlying stock options having an exercise price of
$6.33 per share.
(6) The shares of Common Stock underlying such stock options have an
exercise price of $6.33 per share.
COMPENSATION COMMITTEE
A Compensation Committee of the Board of Directors comprised of all
non-employee Directors was established in 1993. The role of the Compensation
Committee is to review the general compensation structure for executive officers
of the Corporation, including those named in the Summary Compensation Table, and
to approve the specific compensation levels of such executive officers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for establishing and
administering the Corporation's executive compensation program. The program was
established to link individual compensation and the Corporation's performance
levels and to provide for both short and long-term incentive programs that align
the economic interests of management and the Corporation's shareholders. When
the program was designed in 1994, the Compensation Committee engaged an
independent third party to assist in the development of an executive
compensation program. Based upon recommendations of the independent third party,
as well as a competitive compensation analysis, the committee adopted the
Corporation's Annual Incentive Plan (the "Plan"). Information for determining
the competitive compensation levels was obtained from a bank cash compensation
survey prepared by the Bank Administrative Institute, as well as an independent
survey of financial institutions in Missouri and Illinois with total assets of
$300,000,000 to $1,000,000,000. The group surveyed for the purpose of
determining competitive compensation levels is different than those used for
comparative purposes in the performance graph on page 12 of this Proxy
Statement. The Compensation Committee believes that the survey group used for
determining executive compensation more closely represents the Corporation's
actual competition for executive talent. The basic philosophy underlying the
Plan is as follows:
8
<PAGE> 11
- Maintain base salary levels relatively close to the market median
for financial institutions in the Corporation's peer group.
- Provide for annual incentive opportunities based on the
achievement of established business plan goals. The amount of the
target opportunities would also be in line with the market median
for financial institutions in the Corporation's peer group, with
additional upside potential for performance significantly above
the predetermined goals.
The Compensation Committee reviews the program on an annual basis to
determine which changes, if any, need to be made in light of present facts and
circumstances. In 1996, the Compensation Committee updated the executive
compensation program to include a deferred compensation arrangement to
compensate executive officers for certain limitations imposed upon their
participation in the Corporation's qualified benefit plans. This arrangement is
more fully described below. The Corporation's executive compensation program
remained relatively unchanged during 1998 and was comprised of the following
components:
- Salary. For executive officers, the Compensation Committee used
competitive compensation data, and then considered the experience
levels of the incumbents in determining actual compensation
levels.
- Bonus Plan. The Compensation Committee will approve annual bonuses
for certain executive officers of the Corporation based upon the
formula provided for in the Plan. Pursuant to the Plan, officers
who substantially impact the Corporation's performance will be
eligible to receive annual incentive awards if the Corporation
achieves certain performance goals based on profitability and
asset quality compared to prior years. Measures of profitability
include return on average assets for the Corporation and its bank
subsidiaries. Measures of asset quality include total
nonperforming loans and total nonperforming assets. Actual award
opportunity levels will depend on the extent to which the
Corporation realizes established performance goals. The maximum
incentive award level pursuant to the Plan for 1998 was set at
150% of the target award level. The target award level ranges from
15% to 50% of annual salary. In order to achieve the maximum award
level, the Corporation generally should have met or exceeded 100%
of established performance goals. In the event the performance
goals are exceeded, the award level could range up to 75% of the
annual salary. However, the Compensation Committee retains the
right to further increase annual incentive awards if individual
contributions warrant.
- The Plan itself does not provide for issuance of stock based
awards; however, the overall executive compensation program does
address stock options. The Southside Bancshares Corp. 1993
Non-Qualified Stock Option Plan and the Southside Bancshares Corp.
1998 Stock Option Plan allow the Compensation Committee to
periodically grant options to key executives of the Corporation.
There were no stock options granted in 1998.
- As indicated previously, in 1996, the Compensation Committee
established a deferred compensation arrangement to compensate
certain executive officers for certain limitations imposed upon
their participation in the Corporation's qualified benefit plans.
Under this arrangement, the executives and the Corporation enter
into a deferred compensation agreement ("Agreement"). Under the
Agreement, the executives are granted an award of performance
stock each year based on the sum of the following:
9
<PAGE> 12
a. An amount determined by multiplying the executive's "Excess
401(k) Amount," as defined in the Agreement, by the sum of the
highest federal and applicable state income tax rates in effect
for the year in question; plus
b. An amount equal to (i) the employer matching contribution
percentage under the KSOP for such year multiplied by the
executive's gross annual compensation (determined without regard
to the Agreement), less (ii) the employer matching contributions
actually made to the KSOP for the benefit of the executive; plus
c. An amount determined by (i) multiplying the Corporation's total
discretionary basic and optional contributions to the KSOP, plus
forfeitures, by a fraction, the numerator of which is the
executive's gross annual compensation for such year (determined
without regard to the Agreement), and the denominator of which is
total compensation of all KSOP participants, less (ii) the amount
actually contributed to the KSOP by the corporation's plus
forfeitures allocated, for the benefit of the executive.
The award is converted to performance shares based on the closing
bid price of the Corporation's common stock on the last business
day of each such year in the case of items a. and b. above, and
$5.33 per share in the case of item c. above. The performance
shares issued under this Agreement are deemed to be the equivalent
of one share of the Corporation's Common Stock. The performance
shares constitute a potential right to receive payment and do not
confer any dividend rights, voting rights or any other rights of a
shareholder with respect to Corporation's Common Stock. The
executives are entitled to receive payment under the Agreement
upon the occurrence of one of several events including: a change
in control, termination of employment, retirement, death or total
disability. The amount to be paid upon the occurrence of one of
these events is the number of performance shares credited to the
executive's account multiplied by the midpoint of the bid and ask
price of the Corporation's Common Stock as of the close of
business on the date of payment.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The President and Chief Executive Officer's compensation for 1998
consisted of:
- Base salary of $215,000.
- Bonus of $100,000. The bonus paid during 1998 related to the 1997
Bonus Plan. Because the Plan requires performance bonuses to be
based on actual results, it is not feasible to pay bonuses during
the fiscal year to which the bonus applies. The bonus amount was
computed in accordance with the Plan, although the Committee
exercised its discretion to further increase the award based on
the merits of the accomplishments achieved during 1997, including
record-setting core net earnings for the fourth consecutive year,
maintenance of acceptable asset quality levels and the Public
Service Bank, fsb acquisition. Core net earnings increased by 2%
in 1997 and were 100% of the target amount included in the Plan.
10
<PAGE> 13
- Deferred Compensation Amounts. As described above, the Committee
established a deferred compensation arrangement to compensate
executive officers for certain limitations imposed upon their
participation in the Corporation's qualified benefit plans and
pursuant thereto entered into a Deferred Compensation Agreement
with Mr. Teschner dated April 25, 1996, as amended on August 27,
1998. Pursuant to that agreement, a grant of 3,112.39 shares of
Performance Stock, having a value on the date of grant of $38,127
($12.25 per share) was credited to Mr. Teschner's Performance
Stock Account as of December 31, 1998 for 1998.
- Stock Option Awards. There were no stock options granted during
1998.
- Other Compensation. All other compensation paid to Mr. Teschner is
described in the Summary Compensation Table as required.
The Compensation Committee
--------------------------
Joseph W. Beetz Norville K. McClain
Howard F. Etling Earle J. Kennedy, Jr.
Douglas P. Helein Richard G. Schroeder, Sr.
Daniel J. Queen
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above, the Compensation Committee has general responsibility
for establishing and administering the executive compensation program for the
Corporation. During 1998, the members of the Compensation Committee were Joseph
W. Beetz, Ralph Crancer, Jr., Howard F. Etling, Norville K. McClain, Douglas P.
Helein, Earle J. Kennedy, Jr., Daniel J. Queen and Richard G. Schroeder, Sr.
During 1998, no member of the Compensation Committee was an officer or employee
of the Corporation or any of its subsidiaries, and no member of the Compensation
Committee was formerly an officer of the Corporation or any of its subsidiaries.
11
<PAGE> 14
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
SOUTHSIDE BANCSHARES CORP., S&P 500 INDEX AND NASDAQ BANKS INDEX
The following graph summarizes cumulative returns experienced by the
Corporation's shareholders over the years 1994 through 1998, compared to the S&P
500 Index and the NASDAQ Banks Index.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
YEAR S&P 500 NASDAQ BANKS SOUTHSIDE
- ---- -------- ------------ ---------
<S> <C> <C> <C>
1993 100 100 100
1994 98.46 101.11 101.09
1995 132.05 146.42 103.19
1996 158.80 184.71 150.23
1997 208.05 302.17 232.87
1998 263.53 266.60 274.57
</TABLE>
- ---------------------------
*Assumes $100 invested on December 31, 1993 in the Corporation's Common
Stock, the S&P 500 Index, and the NASDAQ Banks Index. Total return assumes
reinvestment of dividends.
12
<PAGE> 15
EMPLOYMENT CONTRACTS
MR. TESCHNER'S EMPLOYMENT CONTRACT
The Corporation and South Side National Bank in St. Louis (the "Bank")
have entered into an employment agreement, dated April 27, 1995, as amended on
April 1, 1997, with Thomas M. Teschner, President and Chief Executive Officer of
the Corporation and the Bank (the "President's Employment Agreement"). The
President's Employment Agreement has an initial term of three years and
automatically renews for a new three year term unless notice not to renew is
delivered on or before either the first anniversary date of the President's
Employment Agreement or any successive yearly anniversary thereafter.
The President's Employment Agreement provides, among other things, that
the Corporation or the Bank may terminate the employment of Mr. Teschner at any
time for "cause" or disability. Cause is defined as willful misconduct resulting
in indictment for an alleged felony, violation of any material provision of the
President's Employment Agreement or any willful failure to substantially perform
any reasonable directions of the Corporation's or the Bank's Board of Directors
within 60 days after written demand. In addition, termination for "cause"
requires the affirmative votes of at least two-thirds of each of the
Corporation's and the Bank's Board of Directors. A disability, to constitute an
event of termination of the President's Employment Agreement, must continue for
a period of six months. Upon such termination for cause or disability, Mr.
Teschner is entitled to receive a severance payment equal to the greater of (a)
one-third of his current annual base salary or (b) a severance payment computed
in accordance with the Corporation's or the Bank's then existing severance
policy. Upon Mr. Teschner's death during the term of the President's Employment
Agreement, his beneficiary or estate is entitled to the benefits payable under
the accidental death, life insurance and similar plans for employees of the
Corporation and the Bank. In the event that such death benefit plans are amended
to reduce or terminate benefits, Mr. Teschner's beneficiary or estate is
entitled to a lump sum payment equal to the difference between the sum which
would have been payable under the death benefit plans as of the date of the
President's Employment Agreement, and the sum payable under the amended plans.
The President's Employment Agreement provides that, after termination
of employment for cause or if Mr. Teschner improperly terminates his own
employment, Mr. Teschner will not, for a period of six months after termination,
solicit customers or clients of the Corporation, the Bank or any of their
subsidiaries without the prior approval of the Board of Directors.
The President's Employment Agreement further provides that, upon a
change of control of the Corporation or the Bank, if Mr. Teschner's employment
is terminated by the Corporation and the Bank other than for cause, death or
disability within six months prior to or within three years following a change
in control, or if Mr. Teschner voluntary terminates his employment within two
years following a change of control, Mr. Teschner is entitled in lieu of all
other benefits to the following severance benefits: (i) an amount equal to three
times his highest annual salary in effect at any time during the term of the
President's Employment Agreement, (ii) an amount equal to three times his
highest annual bonus prior to the termination, (iii) an amount equal to his
unpaid annual salary and accrued vacation, and (iv) a continuation of his
welfare benefits of health and medical insurance for three full years, provided,
however, that such welfare benefits will be discontinued prior to the end of
three years in the event that Mr. Teschner has available substantially similar
welfare benefits from a subsequent employer. In addition, the President's
Employment Agreement provides that in the event that the Corporation's legal
counsel determines that any of the severance benefits received by Mr. Teschner
under the President's Employment Agreement constitute a "parachute payment"
subject to an excise tax under the Internal Revenue Code, Mr. Teschner will be
entitled to receive from the Corporation and the Bank a lump sum cash payment
sufficient to place Mr. Teschner in the same net after tax position that he
would have been in had such payment not been subject to such excise tax.
13
<PAGE> 16
PENSION PLAN AND RETIREMENT TRUST
The Corporation maintained a Pension Plan and Retirement Trust (the
"Pension Plan") for officers and employees. On February 26, 1997, the Board of
Directors voted to terminate the Pension Plan effective May 31, 1997. The
benefits accumulated under the Pension Plan were frozen as of March 31, 1997. On
March 27, 1998, the Corporation received a favorable determination letter from
the Internal Revenue Service approving termination of the Pension Plan. The
Pension Plan assets were distributed during 1998. As of December 31, 1998, all
Pension Plan assets have been allocated to the participants. The amounts
distributed to Messrs. Teschner and Pope were $27,416 and $2,275, respectively.
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
The Corporation and its subsidiary banks have had, and expect to have
in the future, loans and other banking transactions in the ordinary course of
business with a number of its officers and Directors and their associates. Such
transactions were made, and will be made, in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not, and will not, involve more than normal risk of collectibility or present
other unfavorable features.
During the previous fiscal year, the subsidiaries of the Corporation
have had commercial transactions in the ordinary course of business with
companies with which certain of the Corporation's Directors are affiliated. No
significant business or personal relationships with the subsidiaries of the
Corporation existed by virtue of a person's position in the Corporation or in
subsidiaries of the Corporation, or ownership interest in the Corporation.
SHAREHOLDER PROPOSALS
It is presently anticipated that the 2000 Annual Meeting of
Shareholders will be held on April 27, 2000. If any shareholder of the
Corporation intends to submit a proposal for inclusion in the proxy statement to
be delivered in connection with the 2000 Annual Meeting of Shareholders, such
shareholder's proposal and supporting statement, if any, must meet the
requirements established by the Securities and Exchange Commission for
shareholder proposals and must be received by the Corporation at its principal
executive offices no later than November 25, 1999. It is suggested that any such
proposals, together with any supporting statement, be submitted by Certified
Mail, Return Receipt Requested and be directed to the attention of the Secretary
of the Corporation. Under the Corporation's Bylaws, other proposals that are not
included in the proxy statement for the 2000 Annual Meeting of Shareholders will
be considered untimely and will not be considered at that meeting unless they
are received by the Secretary of the Corporation prior to February 12, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Corporation's executive officers, Directors and persons who own
beneficially more than ten percent (10%) of the Corporation's stock are required
under Section 16(a) of the Securities Exchange Act of 1934 to file certain
reports of ownership, and changes in ownership, of the Corporation's stock with
the Securities and Exchange Commission. Copies of such reports must be furnished
to the Corporation. Based solely on a review of the copies of such forms
furnished to the Corporation, and on written representations from the
Corporation's executive officers and Directors, the Corporation believes that
all Section 16(a) filing requirements applicable to its executive officers,
Directors and greater than ten percent (10%) beneficial owners have been
complied with.
14
<PAGE> 17
ANNUAL REPORT
Copies of the Annual Report for the fiscal year ended December 31,
1998, including financial statements certified by the Corporation's independent
accountants, have been mailed on March 25, 1999 to all stockholders entitled to
vote at the Annual Meeting. Additional copies of this Annual Report are
available on request.
SHAREHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY.
BY ORDER OF THE
BOARD OF DIRECTORS
/s/ JOANNE M. SCHNEIDER
-----------------------------------------
March 25, 1999 Joanne M. Schneider
St. Louis, Missouri Secretary to the Board
15
<PAGE> 18
SOUTHSIDE BANCSHARES CORP.
3606 GRAVOIS AVENUE
ST. LOUIS, MISSOURI 63116
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph W. Pope and Laurie A. Pennycook,
and each of them, with or without the other, attorneys and proxies, with full
power of substitution, to vote all of the shares of common stock of Southside
Bancshares Corp. which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of said Corporation to be held at South Side National Bank's
Telegraph facility, which is located at 4111 Telegraph, South St. Louis County,
Missouri, on Thursday, April 22, 1999, at 2:00 p.m., local time, and at any
adjournments thereof: (1) as hereinafter specified upon the proposals listed
below and as more particularly described in the Corporation's proxy statement,
receipt of which is hereby acknowledged; and (2) in their discretion upon such
other matters as may properly come before the Annual Meeting of Shareholders.
A VOTE FOR THE FOLLOWING PROPOSALS (AS DESCRIBED IN GREATER DETAIL IN THE PROXY
STATEMENT) IS RECOMMENDED BY THE BOARD OF DIRECTORS.
1. Election of directors: Norville K. McClain, Richard G. Schroeder,
Sr. and Thomas M. Teschner
[ ] FOR all nominees listed.
[ ] FOR all nominees listed except ___________________________.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed.
2. The ratification of the appointment of KPMG LLP as independent
certified public accountants for 1999.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. On any other matter that may be submitted to a vote of
shareholders.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, the proxy will
be voted FOR Proposals 1 and 2. If any other business is presented at the
meeting, this proxy will be voted in accordance with the recommendation of
management.
(YOU ARE REQUESTED TO COMPLETE, SIGN, AND RETURN THIS PROXY PROMPTLY)
Dated , 1999
---------------------------------------
----------------------------------------------------
----------------------------------------------------
IMPORTANT: Please date this proxy and sign exactly
as your name(s) appears thereon. If stock is held
jointly, signature should include both names.
Executors, administrators, trustees, guardians,
corporate officers and others signing in a
representative capacity should so indicate.
PROXY MUST BE RETURNED BY APRIL 22, 1999
[ ] Please check box if you plan to attend the
Annual Meeting
SOUTHSIDE SHAREHOLDERS
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE SIGN,
DATE AND PROMPTLY RETURN THIS SOUTHSIDE PROXY CARD IN THE ENVELOPE PROVIDED. IF
YOU PLAN TO ATTEND THE ANNUAL MEETING AND ARE A SHAREHOLDER OF RECORD, PLEASE
MARK THE PROXY CARD APPROPRIATELY AND RETURN IT. HOWEVER, IF YOUR SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, PLEASE ADVISE THE SHAREHOLDER OF RECORD (YOUR BANK,
BROKER, ETC.) THAT YOU WISH TO ATTEND. THAT FIRM MUST PROVIDE YOU WITH EVIDENCE
OF YOUR OWNERSHIP WHICH WILL ENABLE YOU TO GAIN ADMITTANCE TO THE ANNUAL
MEETING.
