SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PALMETTO BANCSHARES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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>
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Palmetto Bancshares, Inc. to be held on April 18, 2000, at 3:00 p.m. at The
Palmetto Bank, Corporate Center, 301 Hillcrest Drive, Laurens, South Carolina.
The attached Notice of the Annual Meeting and Proxy Statement describe
the formal business to be transacted at the Annual Meeting. Directors and
officers of Palmetto Bancshares, Inc., as well as representatives of KPMG LLP,
our independent auditors, will be present to respond to any questions
shareholders may have.
To ensure proper representation of your shares at the Annual Meeting,
please sign, date and return the enclosed proxy card as soon as possible, even
if you currently plan to attend the Annual Meeting. This will not prevent you
from voting in person, but will ensure that your vote will be counted if you are
unable to attend.
Sincerely,
L. Leon Patterson
Chairman and
Chief Executive Officer
<PAGE>
PALMETTO BANCSHARES, INC.
301 HILLCREST DRIVE
P. O. BOX 49
LAURENS, SOUTH CAROLINA 29360
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18, 2000
To the Shareholders of Palmetto Bancshares, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Palmetto Bancshares, Inc. (the "Company") will be held on April 18, 2000, at
3:00 p.m. at The Palmetto Bank, Corporate Center, 301 Hillcrest Drive, Laurens,
South Carolina, for the following purposes:
1. To elect three Directors to hold office until their respective
terms expire or until their successors are duly elected and
qualified.
2. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
Shareholders of record at the close of business on March 3, 2000 will
be entitled to vote at the Annual Meeting.
By Order of the Board of Directors,
L. Leon Patterson
Chairman
Laurens, South Carolina
March 17, 2000
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF
YOU WISH, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR SHARES IN PERSON AT THE
ANNUAL MEETING.
<PAGE>
PALMETTO BANCSHARES, INC.
301 HILLCREST DRIVE
P. O. BOX 49
LAURENS, SOUTH CAROLINA 29360
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 18, 2000
This Notice of Annual Meeting, Proxy Statement and Proxy (these "Proxy
Materials") are being furnished to shareholders in connection with a
solicitation of proxies by the Board of Directors of Palmetto Bancshares, Inc.
(the "Company"). This solicitation is being made in connection with the Annual
Meeting of Shareholders (the "Annual Meeting") to be held on April 18, 2000, at
3:00 p.m. at The Palmetto Bank, Corporate Center, 301 Hillcrest Drive, Laurens,
South Carolina.
VOTING MATTERS
Shareholders of record as of the close of business on March 3, 2000 will be
entitled to vote at the Annual Meeting. At the close of business on March 3,
2000, there were 6,236,034 shares of the Company's $5.00 par value common stock
("Common Stock") outstanding. All share amounts set forth in this Proxy
Statement have been restated to give effect to the two-for-one stock split,
effected in the form of a 100% stock dividend, of the Company, to shareholders
of record on January 3, 2000 (the "Stock Split"). Holders of Common Stock are
entitled to one vote per share on each of the matters presented at the Annual
Meeting or any adjournments thereof. Shares may be voted in person or by proxy.
The presence, either in person or by proxy, of holders of shares representing
fifty-one percent of the outstanding shares of stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting.
REVOCABILITY OF PROXY
Shares represented by a properly executed proxy in the accompanying form
and given by a shareholder, and not revoked, will be voted in accordance with
such instructions. As stated in the Proxy, if a returned Proxy does not specify
otherwise, the shares represented thereby will be voted in favor of the
proposals set forth herein. Proxies may be revoked at any time prior to their
being voted at the Annual Meeting by oral or written notice to Palmetto
Bancshares, Inc., 301 Hillcrest Drive, P. O. Box 49, Laurens, South Carolina
29360, Attn: Teresa M. Crabtree, Corporate Secretary, (864) 984-8321, or by
execution and delivery of a subsequent proxy or by attendance and voting in
person at the Annual Meeting.
SOLICITATION OF PROXIES
This solicitation of proxies is being made by the Company, and the Company
will bear the cost of this proxy solicitation, including the cost of preparing,
handling, printing and mailing these Proxy Materials. Proxies will be solicited
principally through these Proxy Materials. Proxies may also be solicited by
telephone or through personal solicitation conducted by regular employees of the
Company. Banks, brokers and other custodians are requested to forward proxy
solicitation material to their customers where appropriate, and the Company will
reimburse such banks, brokers and custodians for their reasonable out-of-pocket
expenses in sending the proxy material to beneficial owners of the shares.
<PAGE>
ELECTION OF DIRECTORS
ITEM 1 ON THE PROXY
NOMINATIONS FOR ELECTION OF DIRECTORS
The Company's Board of Directors is currently comprised of twelve
persons. The Board of Directors is divided into three classes of Directors with
each class being elected for staggered three-year terms. Directors will be
elected by a plurality of votes cast at the Annual Meeting. Abstentions and
broker non-votes with respect to Nominees (as defined below) will not be
considered to be either affirmative or negative votes.
IDENTIFICATION OF NOMINEES
Management proposes to nominate to the Board of Directors the three
persons listed as nominees (the "Nominees") in the table below. Each of the
Nominees is currently serving as a Company Director. Each Nominee, if elected,
will serve until the expiration of his respective term and until such Nominee's
successor is duly qualified. Unless authority to vote with respect to the
election of one or more Nominees is "WITHHELD," it is the intention of the
persons named in the accompanying Proxy to vote such Proxy for the election of
these Nominees. Management believes that all such Nominees will be available and
able to serve as Directors. However, should any Nominee become unable to accept
nomination or election, it is the intention of the person named in the Proxy,
unless otherwise specifically instructed in the Proxy, to vote for the election
of such other persons as management may recommend.
The following table sets forth the names and ages of the three Nominees
for Directors* and the Directors continuing in office, the positions and offices
with the Company held by each such person, and the period that each such person
has served as a Director of the Company.
<TABLE>
<CAPTION>
POSITION OR DIRECTOR
NAME AGE OFFICE WITH THE COMPANY SINCE
- ---- --- ----------------------- -----
<S> <C> <C> <C>
NOMINEES FOR DIRECTORS
TERMS TO EXPIRE IN 2003
L. Leon Patterson 58 Director, Chairman of the Board and 1971
Chief Executive Officer
J. David Wasson, Jr. 54 Director 1979
William S. Moore 54 Director 1997
DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING IN 2001
W. Fred Davis, Jr. 56 Director 1978
David P. George, Jr. 59 Director 1973
Michael D. Glenn 59 Director 1994
Ann B. Smith 39 Director 1997
TERMS EXPIRING IN 2002
John T. Gramling, II 58 Director 1984
James M. Shoemaker, Jr. 67 Director 1984
Paul W. Stringer 56 Director, President and Chief Operating Officer 1986
Edward K. Snead 40 Director 1997
</TABLE>
* James A. Cannon is currently on the Board of Directors, but is not standing
for reelection because he has reached the mandatory retirement age for
directors.
2
<PAGE>
BUSINESS EXPERIENCE OF NOMINEES AND DIRECTORS
Mr. Patterson has served as Chairman of the Board and Chief Executive
Officer of the Company since April 1990 and as Chairman of the Board and Chief
Executive Officer of The Palmetto Bank, a wholly-owned subsidiary of the Company
("The Palmetto Bank"), since March 1986. From April 1990 to April 1994, he
served as Chairman of the Board and President of the Company, and from 1982 to
April 1990 he served as President of the Company. Mr. Patterson also served as
Chairman and President of The Palmetto Bank from January 1978 to February 1986,
and as President in 1977.
Mr. Wasson has been President and Chief Executive Officer of Laurens
Electric Cooperative, Inc. since 1975.
Mr. Moore was appointed as a Director of the Company in September 1997.
Mr. Moore, currently an investor, is the former President of Reeves Brothers,
Inc., in Spartanburg, South Carolina.
Mr. Davis was owner and President of Palmetto Spinning Corporation
("PSC"), where he was employed from 1969 to 1995. Mr. Davis sold PSC to Martin
Color-fi, Inc. in 1994 and retired in 1995.
Mr. George has been General Manager of George Motor Company in Laurens,
South Carolina, since 1964.
Mr. Glenn has been a partner with the law firm of Glenn, Haigler & Maddox
since 1992. From 1983 to 1992 he was a sole practitioner in Anderson, South
Carolina.
Ms. Smith was appointed as Director in September 1997. She has been the
Director of Annual Giving for Clemson University since 1986.
Mr. Gramling has served as Vice President and Secretary of Gramling
Brothers, Inc., a diversified orchard business, since 1965, and has been the
President of Gramling Brothers, Inc. Real Estate, a real estate sales and
development company in Gramling, South Carolina, since 1970.
Mr. Shoemaker has been a member with the law firm of Wyche, Burgess,
Freeman and Parham, P.A., in Greenville, South Carolina, since 1965. Mr.
Shoemaker also serves as a director of One Price Clothing Stores, Inc., Ryan"s
Family Steak Houses, Inc., and Span-America Medical Systems, Inc.
Mr. Stringer has served as President and Chief Operating Officer of the
Company since April 1994 and as President and Chief Operating Officer of The
Palmetto Bank, since March 1986. From April 1990 to April 1994, he served as
Executive Vice President of the Company, and from 1982 to April 1990 he served
as Vice President of the Company. Mr. Stringer also has served as Executive Vice
President of The Palmetto Bank from May 1981 to February 1986, as Senior Vice
President from July 1978 to April 1981, and as Vice President from January 1977
to June 1978. Mr. Stringer also serves as Vice Chairman of the South Carolina
Student Loan Corporation and a trustee of the South Carolina Bankers Employee
Benefit Trust. Mr. Stringer served as Chairman of the South Carolina Bankers
Association from 1996-1997, and is currently a director.
Mr. Snead was appointed as Director in September 1997. Mr. Snead is the
owner and President of Snead Builders Supply Company, Incorporated in Greenwood,
South Carolina.
3
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held eleven meetings in 1999. The Board of
Directors has an Audit and Examining Committee which reviews the audit plan, the
results of the audit engagement of the Company's accountants, the scope and
results of the Company's procedures for internal auditing and internal control,
and the internal audit reports of the Company. The Audit Committee is currently
comprised of Messrs. Davis, Wasson, and Moore. Mr. Davis serves as Chairman. The
Audit Committee formally met once during 1999.
The Board of Directors has a Compensation Committee which reviews the
Company's compensation policies and benefit plans and makes recommendations
regarding senior management compensation. Its report is set forth herein. The
Compensation Committee is currently comprised of Messrs. Cannon, Shoemaker and
Wasson. Mr. Shoemaker serves as Chairman. The Compensation Committee met three
times during 1999. No members of the Compensation Committee are officers or
employees of the Company.
The Board of Directors has a Trust Committee, which reviews the operation
of the Company's Trust Department. The Trust Committee is currently comprised of
Ms. Smith, and Messrs. Snead and George. Mr. George serves as Chairman. The
Trust Committee met eleven times during 1999.
The Board of Directors has a Credit Committee, which reviews certain loan
applications and other credit matters. The Credit Committee is currently
comprised of Messrs. Gramling, Stringer, and Glenn. Mr. Gramling serves as
Chairman. The Credit Committee met eleven times during 1999.
The Company does not have a Nominating Committee. The functions typically
performed by a Nominating Committee were performed by the entire Board of
Directors. Mr. Patterson serves ex officio on all committees.
EXECUTIVE OFFICERS
The Company's executive officers are appointed by the Board of Directors
and serve at the pleasure of the Board. The following persons serve as executive
officers of the Company.
<TABLE>
<CAPTION>
COMPANY OFFICES COMPANY
NAME AGE CURRENTLY HELD OFFICER SINCE
- ---- --- -------------- -------------
<S> <C> <C> <C>
L. Leon Patterson 58 Chief Executive Officer 1982
Paul W. Stringer 56 President and Chief Operating Officer 1982
Ralph M. Burns, III 49 Treasurer 1982
</TABLE>
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
Mr. Patterson's business experience is set forth above under "Business
Experience of Nominees and Directors."
Mr. Stringer's business experience is set forth above under "Business
Experience of Nominees and Directors."
Mr. Burns has served as Treasurer of the Company since April 1998. Mr.
Burns served as a Vice President of the Company from April 1990 until April
1998. Mr. Burns also has served as Executive Vice President of The Palmetto Bank
since September 1999. From January 1982 until September 1999, he served as
Senior Vice President and Cashier of The Palmetto Bank, and from January 1978 to
December 1981, he served as Assistant Vice President and Cashier of The Palmetto
Bank, and from January 1976 to December 1977, he served as Assistant Cashier of
The Palmetto Bank.
4
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
During 1999 directors received an annual fee of $10,700, which includes
a retainer fee of $3,500. However, if a director misses more than one directors'
meeting and such absence(s) is not excused by the Company, the Company reduces
such fee by $600 for each unexcused absence. In accordance with the preceding,
all directors received the full annual fee due to no unexcused absences. The
Company feels that these payments are an appropriate reflection of their service
as directors and the number of directors' meetings attended. SEE Election of
Directors -- Meetings and Committees of the Board of Directors.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION TO EXECUTIVE OFFICERS
The following table shows the cash compensation paid by the Company, as
well as certain other compensation paid or accrued, to the Company's Chief
Executive Officer and to the executive officers of the Company who earned in
excess of $100,000 per year in compensation (in all capacities) (collectively,
the "Named Executive Officers") for the years ending December 31, 1999, 1998 and
1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Securities
Name and Other Annual Underlying All Other
Principal Position Salary Bonus Compensation Options Compensation
during 1999 Year ($) ($) ($) Granted (#) ($)
------------------ ------- ----------- ------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
L. Leon Patterson, 1999 212,400 56,498 10,700(1) -0- 47,731 (3)
Chairman of the Board and 1998 198,500 41,685 9,000(1) 36,000 47,731
Chief Executive Officer 1997 182,000 43,698 9,000(1) -0- 67,354
Paul W. Stringer, 1999 175,000 46,550 10,700(1) -0- 34,877 (4)
Director, President and 1998 163,000 34,230 9,000(1) 30,000 34,886
Chief Operating Officer 1997 150,000 36,015 9,000(1) -0- 42,164
Ralph M. Burns, III, 1999 94,333 26,600 (2) -0- -0-
Treasurer 1998 88,400 18,564 (2) 18,000 -0-
1997 85,000 20,409 (2) -0- 10,182
</TABLE>
- -------------------------
(1) Included in other annual compensation for Mr. Patterson and Mr.
Stringer is the annual fee they received for their service as
directors.
(2) Certain amounts may have been expended by the Company which may have
had value as a personal benefit to the executive officer. However, the
total value of such benefits did not exceed the lesser of $50,000 or
10% of the annual salary and bonus of such executive officer.
(3) This amount is comprised of premiums paid by the Company on behalf of
Mr. Patterson with respect to life insurance not generally available to
all Company employees.
(4) This amount is comprised of premiums paid by the Company on behalf of
Mr. Stringer with respect to life insurance not generally available to
all Company employees.
5
<PAGE>
STOCK OPTIONS
The Company made no option grants with respect to the Common Stock of
the Company to the named Executive Officers in 1999.
OPTION EXERCISES
The following table sets forth information with respect to the
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT 1999 FISCAL MONEY OPTIONS AT 1999 FISCAL
YEAR-END (#) YEAR-END ($) (2)
------------ ----------------
SHARES VALUE
ACQUIRED ON REALIZED EXERCISABLE\ EXERCISABLE\
NAME EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ------ ------------- -------------
<S> <C> <C> <C> <C>
L. Leon Patterson 0 $ 0 14,400\21,600 $198,000\297,000
Paul W. Stringer 0 0 12,000\18,000 $165,000\247,500
Ralph M. Burns III 1,400 13,650 5,800\10,800 $79,750\148,500
</TABLE>
(1) Based on the difference between the option exercise price and the
current trading price of the Company's stock at the date of exercise.
(2) Based on the difference between the option exercise price and the
current trading price of the Company's stock at December 31, 1999.
6
<PAGE>
PENSION PLAN
The following table sets forth the estimated annual benefits (in
single-life annuity amounts) payable upon normal retirement in fiscal year 1999
to participants whose highest average five-year earnings and years of service
are as listed. The table assumes integration at the current wage base of
$72,600. At the end of 1999, the individuals named in the Summary Compensation
Table above will have had the following final average compensation credited for
purposes of the Pension Plan and number of years of service: Mr. Patterson,
$235,813, 32 years; Mr. Stringer, $193,951, 30 years; and Mr. Burns, $108,370,
24 years.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
Remuneration 5 10 20 25 30 35
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$10,000 $ 575 $ 1,150 $ 2,300 $ 2,875 $ 3,450 $ 4,025
20,000 1,150 2,300 4,600 5,750 6,900 8,050
40,000 2,526 5,051 10,102 12,628 15,153 17,679
60,000 4,326 8,651 17,302 21,628 25,953 30,279
80,000 6,126 12,251 24,502 30,628 36,753 42,879
100,000 7,926 15,851 31,702 39,628 47,553 55,479
120,000 9,726 19,451 38,902 48,628 58,353 68,079
140,000 11,526 23,051 46,102 57,628 69,153 80,679
160,000 + up 13,326 26,651 53,302 66,628 79,953 93,279
</TABLE>
The base compensation and any bonuses are covered by the Pension
Plan. There is no variation between the compensation covered by the Pension Plan
and the amounts listed in the Summary Compensation Table. The benefits of the
Pension Plan are based on straight-life annuity amounts, and are not subject to
any deduction for Social Security or other offset amounts.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions with respect to the compensation of the Company's executive
officers are made by the Compensation Committee of the Board. Each member of the
Compensation Committee is a non-employee director. All decisions of the
Compensation Committee relating to the compensation matters are reviewed by the
full Board of Directors. Set forth below is a report submitted by the
Compensation Committee which addresses the Company's compensation policies for
1999 with respect to Mr. Patterson as CEO, and Messrs. Stringer, and Burns, who
represent all executive officers of the Company who earned in excess of $100,000
during 1999.
7
<PAGE>
COMPENSATION COMMITTEE REPORT
GENERAL COMPENSATION POLICIES AND SPECIFIC GUIDELINES. The Compensation
Committee believes that compensation arrangements should be structured so as to
provide competitive levels of compensation that integrate pay with the Company's
performance goals. The Company has in place a Senior Management Incentive Plan
(the "Bonus Plan"), which establishes a point system that determines incentive
cash awards based on the extent to which the Company met certain performance
goals adopted by the Compensation Committee. The Bonus Plan provides that the
twelve members of senior management who are designated each year by the
Compensation Committee (the "Senior Executives") will receive up to 35% of their
base salary in incentive cash compensation if 100% of the performance goals were
met and exceeded by specified amounts. For 1999, the Compensation Committee
adopted seven performance goals, including return on assets, return on equity,
net interest margin, net overhead ratio, net charge-off ratio, deposit growth
and loan growth.
Base salaries were set by the Board, after recommendation by the
Compensation Committee. They were intended to reflect individual performance and
responsibility and to represent compensation believed by the Compensation
Committee to be appropriate for the Senior Executives.
RELATIONSHIP OF PERFORMANCE TO EXECUTIVE COMPENSATION. As described above,
Company performance was an integral part in determining the compensation of
Senior Executives. Assuming that 100% of the performance goals are met each
year, approximately 35% of a Senior Executive's total compensation will consist
of incentive payments made pursuant to the Bonus Plan. In 1999, five of the
seven performance goals were met or exceeded. Internal goals are the Company's
means of judging its performance.
COMPENSATION PAID DURING 1999. Compensation paid the Company's executive
officers in 1999 consisted of the following elements: base salary and bonus.
Based on Company performance, twelve executive officers, including the
Senior Executives, earned bonuses equal to 27% of their base salary at December
31, 1999, pursuant to the Bonus Plan.
OTHER COMPENSATION PLANS AND COMPENSATION. The Company has adopted certain
executive officer life insurance plans and certain broad-based employee benefit
plans in which Senior Executives participate. The value of these items is set
forth in the Summary Compensation Table above under the "All Other Compensation"
heading. Executive officers also may have received perquisites in connection
with their employment. However, such perquisites totaled less than 10% of their
cash compensation in 1999. The foregoing benefits and compensation are not
directly or indirectly tied to Company performance.
MR. PATTERSON'S 1999 COMPENSATION. Mr. Patterson's 1999 compensation consisted
of a base salary, cash bonus, split-dollar life insurance and supplemental life
insurance policies, and certain perquisites (which did not exceed 10% of his
base salary and bonus) and the various forms of other compensation set forth in
the preceding paragraph that were available generally to all employees. Mr.
Patterson's base salary was $212,400 in 1999, as recommended by the Compensation
Committee to the Board of Directors. Mr. Patterson also received $10,700 in
annual fees for his service as director, which is included in the Summary
Compensation Table above under the "Other Annual Compensation" heading. Mr.
Patterson's cash bonus was determined in accordance with the Bonus Plan and was
27% of his base salary, or $56,498, for 1999.
COMPENSATION COMMITTEE:
James M. Shoemaker, Jr., Chairman
James A. Cannon
J. David Wasson, Jr.
8
<PAGE>
[Performance Graph]
9
<PAGE>
<TABLE>
<CAPTION>
PALMETTO BANCSHARES, INC.
ANNUAL INCREASE OF $100 INVESTMENT
December 31, 1994 to December 31, 1999
Palmetto Bancshares Stock Price plus
Dividend
Initial Value Value % Investment
Investment Beginning End Increase End
---------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
12/31/94 100.00
12/31/95 100.00 5.92 6.78 14.44% 114.44
12/31/96 114.44 6.78 10.14 49.67% 164.11
12/31/97 164.11 10.14 14.19 39.94% 204.05
12/31/98 204.05 14.19 18.75 32.14% 236.19
12/31/99 236.19 18.75 22.59 20.48% 256.67
<CAPTION>
NASDAQ COMPOSITE MARKET INDEX
ANNUAL INCREASE OF $100 INVESTMENT
December 31, 1994 to December 31, 1999
NASDAQ Market Index Stock Price
Initial Price Price % Investment
Investment Beginning End Increase End
---------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
12/31/94 100.00
12/31/95 100.00 751.96 1,052.13 39.92% 139.92
12/31/96 139.92 1,052.13 1,291.03 22.71% 162.62
12/31/97 162.62 1,291.03 1,570.35 21.64% 184.26
12/31/98 184.26 1,570.35 2,192.69 39.63% 223.89
12/31/99 223.89 2,192.69 4,069.31 85.59% 309.48
<CAPTION>
NASDAQ BANK COMPOSITE INDEX
ANNUAL INCREASE OF $100 INVESTMENT
December 31, 1994 to December 31, 1999
NASDAQ Market Index Stock Price
Initial Price Price % Investment
Investment Beginning End Increase End
---------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
12/31/94 100.00
12/31/95 100.00 697.07 1,009.41 44.81% 144.81
12/31/96 144.81 1,009.41 1,273.46 26.16% 170.97
12/31/97 170.97 1,273.46 2,083.22 63.59% 234.55
12/31/98 234.55 2,083.22 1,838.00 -11.77% 222.78
12/31/99 222.78 1,838.00 1,691.29 -7.98% 214.80
</TABLE>
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company knows of no person who, or group that, owns beneficially
more than 5% of the outstanding shares of Common Stock of the Company as of
March 3, 2000, except as set forth below:
NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE OF PERCENT OF
OWNER BENEFICIAL OWNERSHIP CLASS
- ----------------------------------- ------------------------ ---------------
L. Leon Patterson 541,854 8.69%
301 Hillcrest Drive
Laurens, SC 29360
D. Smith Patterson 318,686 5.11%
831 West Main Street
Laurens, SC 29360
The information below is furnished as of March 3, 2000 as to the
Company's Common Stock owned beneficially or of record by each of the Directors
individually, by certain named executive officers and by all Directors and
executive officers of the Company as a group. Unless otherwise noted, each
person has sole voting power and sole investment power with respect to shares
listed.
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- -------------------------------- ----------------------- -----------------------
DIRECTORS
L. Leon Patterson 541,854(1) 8.69%
Paul W. Stringer 71,618(2) 1.15%
James M. Shoemaker, Jr. 16,200(6) (3)
John T. Gramling, II 14,000(6) (3)
W. Fred Davis, Jr. 50,060(7) (3)
David P. George, Jr. 6,800(6) (3)
James A. Cannon 17,028(8) (3)
J. David Wasson 9,800(6) (3)
Michael D. Glenn 10,230(6) (3)
Ann B. Smith 3,200(9) (3)
William K. Snead 14,120(4) (3)
William S. Moore 18,200(5) (3)
EXECUTIVE OFFICER
Ralph M. Burns, III 44,982(10) (3)
DIRECTORS AND EXECUTIVE 818,092 13.12%(11)
OFFICER AS A GROUP (13 persons)
(1) Mr. Patterson is Chief Executive Officer of the Company. The number of
shares shown as beneficially owned by Mr. Patterson includes 31,490
shares in the 401(k) account of Mr. Patterson, 57,964 shares owned by
Mr. Patterson's wife,
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as to which shares Mr. Patterson disclaims beneficial ownership, and
14,400 unissued shares that can be acquired by the exercise of options.
(2) Mr. Stringer is President of the Company. The number of shares shown as
beneficially owned by Mr. Stringer includes 25,858 shares in the 401(k)
account of Mr. Stringer, 12,000 unissued shares that can be acquired by
the exercise of options.
(3) Each of these persons owns less than one percent of the outstanding
shares of common stock of the Company.
(4) Mr. Snead is a Director of the Company. The number of shares shown as
beneficially owned by Mr. Snead includes 3,534 shares total in separate
trust accounts for his two sons and one daughter, as to which he acts
as Custodian. The number of shares also includes 1,410 shares owned by
Mr. Snead's wife. Mr. Snead disclaims beneficial ownership of the trust
account shares and the shares owned by his wife. Also included are
2,000 unissued shares that can be acquired by the exercise of options.
(5) Mr. Moore is a Director of the Company. The number of shares
beneficially owned by Mr. Moore includes 600 shares each in trust
accounts for the benefit of Mr. Moore's son and daughter. Mr. Moore
disclaims beneficial ownership of these shares. Also included are 1,000
unissued shares that can be acquired by the exercise of stock options.
(6) Also included are 2,000 unissued shares that can be acquired by the
exercise of options.
(7) Mr. Davis is a Director of the Company. The number of shares
beneficially owned by Mr. Davis includes 2,150 shares owned by his
wife. Mr. Davis disclaims beneficial ownership of these shares. Also
included are 2,000 unissued shares that can be acquired by the exercise
of stock options.
(8) Also included are 1,000 shares that can be acquired by the exercise of
stock options.
(9) Ms. Smith is a Director of the Company. The number of shares
beneficially owned by Ms. Smith includes 500 shares each in trust
accounts for her two sons, as to which she acts as custodian. Ms. Smith
disclaims beneficial ownership of the trust account shares. Also
included are 1,000 unissued shares that can be acquired by the exercise
of stock options.
(10) Mr. Burns is Treasurer of the Company. The number of shares shown as
beneficially owned by Mr. Burns includes 16,342 shares in the 401(k)
account of Mr. Burns, and 5,800 unissued shares that can be acquired by
the exercise of options.
(11) The beneficial ownership stated above represents sole voting and
investment power, except as indicated in the footnotes above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain of the Company's directors and officers are also customers of
the Company and have home mortgages, personal credit lines, credit cards, and
other loans with the Company. All of these loans 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 did not involve more than the normal risk
of collectibility or present other unfavorable features.
The law firm of Wyche, Burgess, Freeman & Parham, P.A. serves as
general counsel to the Company and receives legal fees from the Company. Mr.
Shoemaker, a Director of the Company and Chairman of the Compensation Committee,
is a member of such law firm. The Company believes that the terms of its
relationship with the law firm are at least as favorable as could be obtained
from a third party.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock of the Company. Executive
12
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officers, Directors and greater than ten-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
filed. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during 1999, all required Section 16(a) filings
applicable to its executive officers, Directors and greater than 10% beneficial
owners were made on a timely basis with the exception of the following. Mr.
Davis engaged in a single transaction in 1999 that should have been reported on
a Form 4, but was instead reported on a Form 5 filed timely.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of KPMG LLP, the Company's independent auditor, will be
present at the Annual Meeting with the opportunity to make a statement if they
desire to do so, and they will be available to respond to appropriate questions
from shareholders.
SHAREHOLDER PROPOSALS
Proposals by shareholders for consideration at the 2001 Annual Meeting
of Shareholders must be received at the Company's offices at 301 Hillcrest
Drive, P. O. Box 49, Laurens, South Carolina 29360, no later than November 17,
2000, if any such proposal is to be eligible for inclusion in the Company's
proxy materials for its 2001 Annual Meeting. Under the regulations of the
Securities and Exchange Commission, the Company is not required to include
shareholder proposals in its proxy materials unless certain other conditions
specified in those regulations are satisfied. Any shareholder desiring to submit
a proposal to an annual or special meeting of shareholders shall submit
information regarding the proposal, together with the proposal, to the
corporation at least 45 days prior to the shareholders meeting at which such
proposal is to be presented.
FINANCIAL INFORMATION
THE COMPANY'S 1999 ANNUAL REPORT IS BEING MAILED TO SHAREHOLDERS
CONTEMPORANEOUSLY WITH THESE PROXY MATERIALS. THE COMPANY WILL PROVIDE WITHOUT
CHARGE TO ANY SHAREHOLDER OF RECORD AS OF MARCH 3, 2000, WHO SO REQUESTS IN
WRITING, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS)
FOR THE YEAR ENDED DECEMBER 31, 1999 FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. ANY SUCH REQUEST SHOULD BE DIRECTED TO PALMETTO BANCSHARES, INC.,
POST OFFICE BOX 49, LAURENS, SOUTH CAROLINA 29360 ATTENTION: CORPORATE
SECRETARY.
OTHER MATTERS
Management is not aware of any other matter to be brought before the
Annual Meeting. If other matters are duly presented for action, it is the
intention of the persons named in the enclosed proxy to vote on such matters in
accordance with their judgment.
By order of the Board of Directors,
L. LEON PATTERSON
Chairman
March 17, 2000
Laurens, South Carolina
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P
R
O PALMETTO BANCSHARES, INC.
X ANNUAL MEETING, APRIL 18, 2000
Y
The undersigned shareholder of Palmetto Bancshares, Inc., hereby revoking all
previous proxies, hereby appoints L. Leon Patterson and Teresa M. Crabtree and
each of them, the attorneys of the undersigned, with power of substitution, to
vote all stock of Palmetto Bancshares, Inc. standing in the name of the
undersigned upon all matters at the Company's Annual Meeting to be held at The
Palmetto Bank, Corporate Center, 301 Hillcrest Drive, Laurens, South Carolina on
Tuesday, April 18, 2000 at 3:00 p.m. and at any adjournments thereof, with all
powers the undersigned would possess if personally present, and without limiting
the general authorization and power hereby given, directs said attorneys or
either of them to cast the undersigned's vote as specified below.
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS FOR THREE YEAR TERMS.
<S> <C> <C> <C>
[ ] FOR ALL NOMINEES set forth below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below [ ]): to vote for all nominees below:
L. Leon Patterson J. David Wasson, Jr. William S. Moore
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.
2. At their discretion upon such other matters as may properly come before the
meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PALMETTO
BANCSHARES, INC. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR
APPROVAL OF EACH OF THE PROPOSALS ABOVE.
Please sign this Proxy as your name or names appear hereon. If stock is held
jointly, signature should appear for both names. When signing as attorney,
administrator, trustee, guardian or agent, please indicate the capacity in which
you are acting. If stock is held by a corporation, please sign in full corporate
name by authorized officer and give title of office.
Dated this ____ day of __________________, 2000
____________________________________ _____________________________________
Print Name (and title if appropriate) Print Name (and title if appropriate)
____________________________________ _____________________________________
Signature Signature
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
