SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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
THE PEOPLES HOLDING COMPANY
---------------------------------------------------
(Name of Registrant as Specified In Its Charter)
<PAGE>
THE PEOPLES HOLDING COMPANY
P. O. BOX 709
TUPELO, MISSISSIPPI 38802
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 8, 1997
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of The Peoples
Holding Company (the "Company") will be held at the principal office of The
Peoples Bank & Trust Company at 209 Troy Street, Tupelo, Mississippi, on April
8, 1997, at 2:00 o'clock p.m. for the purpose of considering and voting on the
following matters:
(1) Authority to elect as members of the board of directors
for the terms specified the six (6) nominees presented in the
proxy material.
(2) To ratify the appointment of Ernst and Young LLP of
Memphis, Tennessee, as independent auditors for the Company
for the current year.
(3) To exercise its discretion on any other matters which
properly come before said meeting.
Information regarding the matters to be acted upon at the meeting is contained
in the Proxy Statement accompanying this Notice.
BY ORDER OF THE BOARD OF DIRECTORS
March 17, 1997 /s/ John W. Smith
-----------------
John W. Smith, President
IMPORTANT
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK,
SIGN, DATE, AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED. IT REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
<PAGE>
THE PEOPLES HOLDING COMPANY
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 8, 1997
INTRODUCTION
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of The Peoples Holding Company (the "Company") for use at the Annual
Meeting of Stockholders to be held on April 8, 1997, and any adjournments
thereof. The time and place of the meeting is 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 Company. In
addition to the use of the mails, proxies may be solicited by personal interview
and telephone by directors, officers and other employees of the Company, none of
whom will receive additional compensation for their services. The date on which
this Proxy Statement and the accompanying Proxy are first being sent or given to
Stockholders of the Company is March 17, 1997.
PURPOSE OF THE MEETING
The annual meeting will be held for the purpose of:
1. Electing six members of Board of Directors of the Company for
terms specified;
2. Voting on independent auditors for the Company for the current
year;
3. Transacting such other matters as may properly come before
the meeting.
VOTES REQUIRED FOR APPROVALS
The Company has issued and outstanding 3,906,675 shares of Common Stock, par
value of $5.00 per share, which is the only class of stock outstanding. Only the
holders of record of Common Stock of the Company at the close of business on
March 14, 1997, are entitled to notice of and vote on the matters to come before
the Annual Meeting of Stockholders or any adjournment thereof.
Presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock of the Company entitled to vote at the Annual
Meeting is necessary to constitute a quorum at the Meeting or any adjournment
thereof.
A stockholder is entitled to one (1) vote, in person or by proxy, at the
Annual Meeting for each share of Common Stock of the Company held of record in
his or her name at the close of business on the record date, March 14, 1997.
<PAGE>
Affirmative vote of a majority of the outstanding shares of Common Stock of
the Company is required to elect directors. Each shareholder shall have the
right to vote, allocable to the number of shares owned by him, for as many
persons as there are directors to be elected, or to cumulate such votes and give
one candidate as many votes as the number of directors multiplied by the number
of votes allocable to his share equal, or to distribute such votes, on the same
principle, among as many candidates as he shall see fit, without any conditions
precedent to such action.
Affirmative vote of a majority of outstanding shares of Common Stock of the
Company is required to approve auditors.
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 matter or business which may be brought before the
Annual Meeting or any adjournment thereof, a vote may be cast pursuant to the
accompany ing Proxy in accordance with the judgment of the person or persons
voting the same, but the management and Board of the Company do not know of any
other matters or business to come before the meeting. Any stockholder has the
power to vote his or her Proxy at any time, insofar as it has not been
exercised, by written notice or subsequently dated Proxy, received by the
Company, or by oral revocation given by the stockholder in person at the Annual
Meeting or any adjournment thereof.
PRINCIPAL HOLDERS OF VOTING SECURITY
The Company has only Common Stock outstanding and as of January 31, 1997, the
Company had 2544 stockholders of record. To the knowledge of management of the
Company, no stockholder owns beneficially more than five (5) percent of the
Company's outstanding Common Stock. As of January 31, 1997, policy making
officers and directors as a group beneficially owned, directly and indirectly, a
total of two hundred and two thousand nine hundred and forty-nine (202,949)
shares, or five and nineteen hundreths percent(5.19%) of total shares of Common
Stock outstanding.
ELECTION OF DIRECTORS
The charter of incorporation and bylaws of the Company provide for a board of
not less than seven nor more than twenty members to be determined annually by
the affirmative vote of a majority of the entire Board of Directors of the
Company. The number of directors is currently fixed at fourteen, and the Board
of Directors has voted to fix the number of members at fourteen for the ensuing
year. The Board of Directors is divided into three classes having staggered
terms. Four of the directors whose terms end in 1997 have been nominated for
re-election to another term, and Larry Michael has been nominated for election
to succeed David P. Searcy, who is retiring from the Board. Dr. Walter L.
Bourland is
<PAGE>
also retiring from the Board, and John M. Creekmore has been nominat
ed to fill his unexpired one-year term.
The six persons named below will be nominated for election to serve terms for
the period indicated below and until their succes sors are duly elected and
qualified. It is the intention of the persons named in the proxy to vote for the
election of the six nominees. The following table sets forth the name, age,
principal occupation or position, periods of service as a director, number of
shares of company stock beneficially owned, and certain other information as to
said directors and nominees:
[CAPTION]
NAME; AGE; SHARES OF COMPANY STOCK
POSITION; and OWNED DIRECTLY and
PRINCIPAL DIRECTOR (INDIRECTLY) and
OCCUPATION SINCE(1) PERCENTAGE OF TOTAL (2)
NOMINEES FOR THREE-YEAR TERMS ENDING IN 2000:
[S] [C] [C] [C]
George H. Booth, II; 43; 1994 1,144 *
Secretary, Tupelo (0)
Hardware Company (whole-
sale and retail hardware)
Frank B. Brooks; 53; 1989 8,763 *
farmer (866)
Robert C. Leake; 64; 1973 13,066 *
President, Leake & (6,015)
Goodlett, Inc. (building
supplies and contractors)
Chairman, Board of Directors
of The Peoples Holding Company
and The Peoples Bank and
Trust Company
Larry Michael; 51; 771 *
President, Transport Trailer (0)
Service, Inc., Rent-A-Box, Inc.,
and Precision Machine and Metal
Fabrication, Inc.
J. Heywood Washburn; 66; 1982 10,420 *
self-employed, investor (11,069)
NOMINEE FOR ONE-YEAR TERM ENDING IN 1998:
John M. Creekmore; 41; 40 *
attorney (245)
<PAGE>
DIRECTORS WITH TERMS ENDING IN 1998:
John W. Smith; 61; 1978 5,847 *
President, The Peoples (2,496)
Holding Company and
The Peoples Bank and
Trust Company
Jimmy S. Threldkeld; 64; 1974 15,493 *
President, JCO, Inc., (0)
real estate development
Robert H. Weaver; 65; 1980 49,356 1.45%
attorney; Watkins, (7,413) (3)
Ludlam & Stennis
J. Larry Young; 58; 1982 1,885 *
pharmacist and partner, (175)
Ramsey-Young Pharmacy
DIRECTORS WITH TERMS ENDING IN 1999:
William M. Beasley; 45; 1989 18,307 *
attorney, Mitchell, Voge, (7,820)
Beasley and Corban
Marshall H. Dickerson; 47; 150 *
owner and manager, (0)
Dickerson Furniture Company
A. M. Edwards, Jr.; 70; 1983 3,841 *
attorney, Edwards, Storey, (3,841)
Marshall & Helveston
Eugene B. Gifford, Jr.; 62; 1987 24,780 *
attorney; Gifford and (9,146)
Allred
(1) The Company was formed in 1982. Dates stated for years prior to 1982
indicate the first year of service as a director of The Peoples Bank and Trust
Company. Persons who were serving as directors of The Peoples Bank and Trust
Company in 1982 also became directors of the Company at that time.
(2) Less than 1% ownership is marked with an asterisk (*).
(3) Excludes 7,248 shares owned by his wife for which Mr.
Weaver disclaims beneficial ownership.
<PAGE>
All of the directors and nominees for the terms listed above, except Larry
Michael and John M. Creekmore, presently serve on both the Board of Directors of
the Company and of The Peoples Bank and Trust Company. All shares of the Bank
are owned by the Company.
COMPENSATION, MEETINGS, AND COMMITTEES OF
THE BOARD OF DIRECTORS
Compensation of Directors. Directors who are officers of the Company receive
no additional compensation for their service as directors. The Board of
Directors fixes the compensation for outside directors and currently, outside
directors are paid a monthly fee of $200.00 plus an additional monthly fee of
$200.00 for each regular board meeting they attend. Directors are also paid an
additional fee of $200.00 for each committee meeting or special called board
meeting which they attend. The Chairman of the Board is paid $1,666.67 per month
plus a fee of $200.00 for each committee meeting which he attends.
Meetings and Attendance. The Board of Directors of the Company met seven
times during 1996. No director attended less than 75% of the aggregate of the
total number of meetings held by the Board of Directors and the total number of
meetings held by all committees of the board on which they served. The Board of
Directors of the Bank met thirteen times during 1996.
Executive Committee. The Executive Committee has charge over all matters under
the direction and control of the Board of Directors which may require attention
between regular meetings of the Board of Directors. The members of the Executive
Committee are Robert C. Leake, Chairman, Dr. Walter L. Bourland, A. M. Edwards,
Jr., David P. Searcy, John W. Smith and Jimmy S. Threldkeld. The committee met
nine times during 1996 with no member attending less than 75% of the meetings.
The Board of Directors of the Company performs the functions of the Compensation
Committee, the Personnel Committee and the Nominating Committee. Mr. Smith does
not attend or participate in board meetings when executive salaries and other
executive benefits are discussed and approved. The members of the board that
make up the Compensation Committee and the Personnel Committee are: William M.
Beasley, George H. Booth, II, Frank B. Brooks, Dr. Walter L. Bourland, Marshall
H. Dickerson, A. M. Edwards, Jr., Eugene B. Gifford, Jr., Robert C. Leake, David
P. Searcy, John W. Smith, Jimmy S. Threldkeld, J. Heywood Washburn, Robert H.
Weaver and J. Larry Young.
<PAGE>
Compensation Committee Interlocks and Insider Participation. John W. Smith
serves on the board which acts as the Compensation Committee. He does not attend
or participate in any board meetings when executive salaries or other executive
benefits are discussed and approved.
Audit Committee. The Audit Committee of the Board of Directors of the Bank also
functions as the Audit Committee of the Company and is composed of the following
directors: J. Larry Young, Chairman, George H. Booth, II., Dr. Walter L.
Bourland, Frank B. Brooks,and J. Heywood Washburn. The Audit Committee is an
independent committee made up entirely of outside directors who are independent
of management of the Company. The Audit Committee meets with the internal
auditors and with the independent public accountant and reports regularly to the
Board of Directors. The Audit Committee met twelve times during 1996.
EXECUTIVE OFFICERS
All executive officers of the Company are elected by the Board of Directors
and hold office for a term of one year and thereafter until their successors are
elected and qualified. The following information with respect to executive
officers of the Company is provided:
[CAPTION]
NAME AGE POSITION HELD AND YEAR FIRST ELECTED
[S] [C] [C]
John W. Smith 61 Director and Executive Vice President
of the Company from July, 1983, until
July, 1993, and Director and President
since August, 1993.
Director and Executive Vice President
of the Bank from 1978 and 1976,
respectively, until August, 1993, and
Director and President since August,
1993.
The Administrative Committee of the Employee Stock Ownership Plan is
composed of three participants of the Plan, none of whom are in the executive
management of the Company.
<PAGE>
[CAPTION]
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
NAME OTHER ALL
AND ANNUAL OTHER
PRINCIPAL COMPEN- COMPEN-
POSITIONS YEAR SALARY(1) BONUS(1) SATION SATION
[S] [C] [C] [C] [C] [C]
John W. Smith 1996 $215,000 $28,566 (2) (3)
President and 1995 $190,000 $35,087 (2) (3)
CEO since 1994 $180,000 $10,588 (2) (3)
August, 1993
All Policy 1996 $363,200 $28,566 (3)
Making Officers 1995 $337,000 $35,087 (3)
and Directors 1994 $334,197 $10,588 (3)
as a Group (14)
Compensation for the executive officers was set based on the evaluation of the
salary records of the peer group of bank holding companies in the state and in
the region and on the performance of the Company.
(1) Salary and bonus forms of compensation are composed of salary and
directors' fees paid currently and salary and directors' fees the payment of
which was deferred under either the Directors' Deferred Fee Plan or the
Executive Deferred Compensation Plan.
(2) No disclosure is necessary of the aggregate amount of personal benefits
if less than the lesser of $50,000.00 or 10% of the cash compensation disclosed
in the cash compensation table. Officers and employees use their personal
automobiles for bank business and are reimbursed at a rate of $.31 per mile.
(3) See pages regarding, Directors' Deferred Fee Plan and
Executive Deferred Compensation Plan.
COMPENSATION COMMITTEE
The Board of Directors of the Company performs the function of the Compensation
Committee. Mr. Smith does not attend the board meeting when the executive
salaries and other executive benefits are discussed and approved. The members of
the board that make up the Compensation Committee are: Robert C. Leake,
Chairman, William M. Beasley, George H. Booth, II, Frank B. Brooks, Dr. Walter
L. Bourland, Marshall H. Dickerson, A. M. Edwards, Jr., Eugene B. Gifford, Jr.,
David P. Searcy, John W. Smith, Jimmy S. Threldkeld, J. Heywood Washburn, Robert
H. Weaver, and J. Larry Young.
<PAGE>
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
The Bank adopted an Employee Stock Ownership Plan effective as of January 1,
1981, and the Company adopted said plan effective as of November 1, 1983. The
plan has subsequently been amended to comply with all law changes. This plan
covers all employees who have attained the age of twenty-one and have at least
one year of continuous service. The non-officer directors of the Company do not
participate in the Plan. The Bank set aside $325,000 in 1996 for this Plan. The
amount set aside is used to purchase shares of the Company stock and other stock
which is held in trust for the employees until retirement, death, or break in
service. The Plan presently owns 248,902 shares of the common stock of the
Company or 6.37% of the total outstanding shares. These shares are voted by the
employees participating in the Plan. Eligible employees participate in the Plan
based on their salary compared to total eligible salaries for the year. Benefits
are distributed in the form of shares held for the employee's account.
At the beginning of 1996, the Plan held 156,016 shares of common stock of the
Company. Between January 1, 1996, and December 31, 1996, 14,423 additional
shares were purchased less 2,094 shares distributed to retired and terminated
participants, and in addition, 80,557 shares were received as a result of a
fifty percent stock dividend issued by the Bank; bringing the total at the end
of 1996 to 248,902 shares. All Company stock purchased for the Plan was either
purchased on the open market or from terminated ESOP participants. John W. Smith
participated in the contribution to the Employee Stock Ownership Plan, and his
share of the contribution for 1996 was approximately $3,840.
PENSION PLAN
The Pension Plan of the Bank has been adopted by the Company. Listed in the
table below are the Retirement Benefits estimated to be paid to participants in
the Company's Pension Plan at normal retirement date, age 65. The Non-Officer
Directors of the Company do not participate in the Plan. The Plan allows early
and delayed retirement. The Company elected to adopt Financial Accounting
Standards Board Statements (FASB) No. 87 and No. 88 in 1986. The Pension expense
since 1986 has been computed under those statements, resulting in an expense
under FASB Statement No. 87 of $618,999 in 1996. In 1996, the Company offered a
voluntary early retirement window and curtailed the Pension Plan. These two
occurrences resulted in net income of $276,891 under FASB Statement No. 88. The
Company's funding policy is to contribute annually an amount that falls within
the minimum and maximum amount determined by consulting actuaries in accordance
with the Employee Retirement Income Security Act of 1974. The Company's
contribution to the Plan for 1996 was $1,053,300. Said evaluation is based on
data concerning all employees participating in the Plan as a group. The actuary
does
<PAGE>
not compute and assign any part of a total contribution as the current cost of
retirement benefits for a specific employee.
During 1996, the Pension Plan was curtailed, freezing
participant accruals under the plan as of December 31, 1996. Effective January
1, 1997, a money purchase pension plan and a 401(K) plan were established to
take the place of the Defined Benefit Plan.
The table below shows the estimated maximum current benefits payable under
the curtailed Pension Plan assuming retirement at age 65 of persons in the
specified remuneration and years of service classification.
[CAPTION]
ESTIMATED CURRENT ANNUAL PENSION
FINAL AVERAGE BENEFITS FOR REPRESENTATIVE YEARS
ANNUAL COMPENSATION OF SERVICE
----------------------------------
15 20 25
[S] [C] [C] [C] [C]
10,000 2,100 2,800 3,500
20,000 4,200 5,600 7,000
30,000 7,110 9,480 11,850
40,000 10,110 13,480 16,850
50,000 13,110 17,480 21,850
60,000 16,110 21,480 26,850
80,000 22,110 29,480 36,850
100,000 28,110 37,480 46,850
120,000 34,110 45,480 56,850
140,000 40,110 53,480 66,850
160,000 46,110 61,480 76,850
180,000 52,110 69,480 86,850
200,000 58,110 77,480 96,850
220,000 64,110 85,480 104,055
Assumption--Age 65, no survivor annuity, straight life, 10 year certain, annual
Covered Compensation of $21,000.
The estimated credited years of service and the compensation covered by the
Plan, where required, for each of the individuals named in the Cash Compensation
Table are as follows: John Smith, 29 ($238,779.79). (For Plan years beginning
after December 31, 1993, certain limitations on compensation will apply if still
applicable at the retirement of the participant. Currently the maximum
compensation amount is $150,000.00.)
John Smith has a three-year employment contract with the Company. This
employment contract shall not be effective unless there is a final consummation
of a takeover transaction which is not recommended by the affirmative vote of a
majority of the Board of Directors. The annual compensation to be paid during
the term of
<PAGE>
the contract shall be the same amount as the officer's salary as of his final
date of employment immediately preceding the effective date of the employment
contract, together with all Pension Plan, Employee Stock Ownership Plan,
Executive Deferred Compensation Plan and other fringe benefits to which the
officer is entitled.
BENEFIT RESTORATION PLAN
Effective May 1, 1991, The Peoples Bank and Trust Company established a
Benefit Restoration Plan. Due to subsequent changes in the federal tax laws
governing the integration of social security benefits into the pension plan
formula, The Peoples Bank & Trust Company again amended The Peoples Bank & Trust
Company Pension Plan, and on December 13, 1994, restated the Benefit Restoration
Plan effective January 1, 1994. This plan is an unfunded non-qualified deferred
compensation plan maintained solely for the purpose of restoring certain
benefits for employees covered under The Peoples Bank and Trust Company Pension
Plan who experienced a decrease of $50 or more in the present value of their
pension benefits and had a $100 or more decrease in the projected amount of
their future benefits resulting from an amendment to the Plan which revised the
plan's Social Security integration formula in order to comply with recent IRS
regulations. The plan will pay the eligible employees a benefit equal to the
difference in what their benefit is under the revised plan and what their
benefit would have been under the plan prior to its amendment.
The normal retirement age under the Benefit Restoration Plan is age 65 and
the employee is eligible for early retirement upon reaching the age of 55,
provided the employee has 15 years of service with the bank. A death benefit
equal to a 50% joint and survivor annuity will be payable to the employee's
spouse in the event of his or her death. During 1996, the bank contributed
$53,328 to this plan. Due to the curtailment of The Peoples Bank & Trust Company
Pension Plan, this plan was amended in 1996 in order to freeze accruals under
this plan as of December 31, 1995.
INCENTIVE COMPENSATION PLAN
The Board of Directors of the Bank adopted an Incentive
Compensation Plan to be effective January 1, 1988, and this plan was
subsequently revised and amended effective January 1, 1993. Incentive benefits
will be paid to eligible officers and employees after the end of each calendar
year and shall be based upon performance of the Bank during each such calendar
year. The funds available for cash distribution under this plan shall be
determined (a) by setting aside one percent (1%) of the average assets of the
Bank after taxes, after allocation of annual contribution to Employee Stock
Ownership Plan and after incentive pay as determined by this formula; (b) by
subtracting from the annual net income of
<PAGE>
the Bank prior to taxes, Employee Stock Ownership Plan contribution and
incentive pay computed under this plan, the amount determined to be one percent
(1%) of average assets after taxes, after Employee Stock Ownership Plan
contribution and after incentive pay as determined by this formula; (c) by
appropriating thirty percent (30%) of any excess of net income over one percent
(1%) of average assets as computed above for distribution among eligible
officers and employees under this plan.
Said funds as above computed and appropriated shall be
distributed among the eligible officers and employees of the Bank according to
the relationship that each individual's earnings has to the total earnings of
all eligible employees of the plan. Provided, however, that the president of the
Bank shall not be eligible to participate in this plan. Provided, further,
however, that any officer or employee whose score on their latest annual
personal employee evaluation is not sufficient to merit an increase in salary
shall not be eligible for participation in this plan. Payment shall be made to
all eligible bank officers and employees who were officers or employees of the
Bank on January 1 and have continued in employment through December 31 of the
year for which payments are being made. Provided, however, that prorata benefits
will be paid upon the earnings of any otherwise eligible officers or employees
separated from service during such year for which benefits are being paid
through death, retirement or long term disability.
Prior service with a bank acquired by or merged into The
Peoples Bank and Trust Company shall not be treated as credible service under
this plan.
During 1996, the bank contributed $518,262 to this plan.
EXECUTIVE INCENTIVE COMPENSATION PLAN
The President of the Bank is covered under this plan which is
based upon a broader criteria of bank performance. Compensation is determined
under a formula based upon the return on assets (ROA) of the Company and the
criticized assets (CA) of the Bank.
Return on assets will be computed upon net profits after taxes
and payment of Executive Incentive Compensation and all other bonuses payable to
officers and employees.
Criticized assets will be a total of substandard loans,
doubtful loans, loss loans, other real estate, repossessed assets, substandard
securities and fifty percent of OAEM. The percentage ratio of the above total of
criticized assets to year-end equity plus loan loss reserves will then be
determined.
<PAGE>
[CAPTION]
The scores from the calculations of return on assets and
criticized assets will be applied to the following plan formula:
ROA SCORE CA SCORE
[S] [C] [C] [C]
.99 0% 50% 0%
l.075 10% 47% 10%
l.l50 20% 44% 20%
l.225 30% 41% 30%
l.300 40% 38% 40%
l.375 50% 35% 50%
l.450 60% 32% 60%
l.525 70% 29% 70%
l.600 80% 26% 80%
l.675 90% 23% 90%
l.750 l00% 0-20% 100%
Interpolation will be used to determine the score for ratios falling between the
parameters listed above. The calculation will be made using the above scores and
the Incentive Compensation will be awarded based on the equation as follows: ROA
Score x CA Score x Base Salary=Executive's Incentive Compensation.
The Board of Directors approved the sum of $28,566 to fund the plan for 1996.
No other remuneration payments are proposed in the future to officers directly
or indirectly pursuant to any existing plan or arrangement.
DIRECTORS' DEFERRED FEE PLAN AND
EXECUTIVE DEFERRED COMPENSATION PLAN
(3) On November 12, 1985, the Board of Directors adopted the Directors'
Deferred Fee Plan and the Executive Deferred Compensation Plan, hereinafter
referred to as Part A, and effective January 1, 1989, eligible directors and
employees were given the opportunity to defer additional compensation under Part
B of these Plans. Under the terms of the Plans, non-employee directors and
eligible employees may elect to defer, respectively, up to 100% of directors'
fees and retainers and up to 10% of salary, as approved from time to time by the
Administrative Committee of the Plans. Amounts deferred under Part A of the
Plans accrue interest annually at 130% of the Moody's Average Corporate Bond
Rate for the month of October preceding December 31 of each preceding year, and
amounts deferred under Part B of the Plans accrue interest annually at the
Moody's Average Corporate Bond Rate for the month of October preceding December
31 of each preceding year. If a Participant remains an employee or director
until his or her normal retirement date and
<PAGE>
shall then retire, the Company is obligated to pay to the Partici pant an amount
equal to the amount originally deferred under Part A as annually compounded by
130% of the Moody's Average Corporate Bond Rate and at the Moody's Average
Corporate Bond Rate for the amount originally deferred under Part B until the
Participant's normal retirement date. That result will then continue to be
annually compounded by the appropriate percentage (130% in the case of Part A
and 100% in the case of Part B) of the Moody's Average Corporate Bond Rate being
used at the time of normal retirement until the time the total retirement
benefit, which will generally be paid monthly over a fifteen-year period, is
completed. If a Participant terminates his or her employment prior to normal
retirement, he or she will receive a termination benefit upon the earlier of (i)
the Parti-cipant's death or (ii) attainment of his or her early retirement date
or (iii) at the time said Participant ceases his or her employment if such date
is later than his or her early retire ment date. This benefit shall be
determined by improving the Participant's deferrals under Part A by the Moody's
Average Corporate Bond Rate and under Part B by 75% of the Moody's Average
Corporate Bond Rate, each as compounded on an annual basis if said Participant
has been an employee or a director for less than ten years or if employment is
discontinued for cause and by 130% and 100%, respec tively, of the Moody's
Average Corporate Bond Rate as compounded on an annual basis if said Participant
has been an employee or director for ten or more years with such amount being
computed from the date of entry to the termination date of the Participant. This
benefit will normally be paid monthly over a fifteen-year period.
If a Participant shall die after he or she begins receiving a benefit but
before receiving 180 installments of his or her benefit, the amount will be
continued to the Participant's beneficiary until the balance of 180 monthly
payments have been made. If a Partici pant dies prior to the time he or she
begins receiving a benefit, his or her beneficiary is entitled to the higher of
the Pre- Retirement Death Benefit or the Participant's Accrued Benefit under the
Plan. This benefit will normally be paid monthly over a fifteen-year period.
The Plans are administered by an Administrative Committee which is appointed
by the Board, and the Committee has the authority to amend the Plans or extend
them for additional years, subject to the right of the Board to terminate the
Plans. The committee has approved deferrals under the Plans for 1996 at the
rates provided for under the terms of the Plans. The Plans are unfunded, and it
is anticipated that they will result in no cost to the Company over the term of
the Plans because life insurance policies on the lives of the Participants have
been purchased in amounts estimated to be sufficient to pay benefits under the
Plans. The Company is both the owner and beneficiary of all the insurance
policies. On December 31, 1996, there were seven directors and fifteen officers
partici pating in Part A of the Plan and ten directors and thirty-six
<PAGE>
officers participating in Part B of the Plan. During 1996, $3,603.96 was paid
from the Directors' Deferred Fee Plan as widows' benefits of deceased directors
and $13,051.97 was paid in benefits to retired directors. In addition $20,365.65
was paid in benefits to retired non-executive officers, and $45,691.20 was paid
to the widow of a deceased non-executive officer. Amounts deferred during 1996
by the individuals in the groups specified in the cash compensation table are
included in the totals disclosed in the table. Amounts accrued during 1996,
including deferrals, were as follows: Mr. Smith, $3,930.73 in Part A and
$7,855.35 in Part B; all executives and directors, including retired executives
and directors as a group, $113,271.42 in Part A and $275,838.85 in Part B.
OTHER BENEFITS
The company has adopted certain broad-based employee benefit plans in which
executive officers participate and certain other retire ment, life and health
insurance plans providing customary personal benefits. The benefits under these
plans are not tied to company performance. The executive officer named in the
Summary Compensa tion Table participates in the other benefits described above.
This graph sets forth the cumulative total shareholder return (assuming
reinvestment of dividends) to The Peoples Holding Company's shareholders during
the five-year period ended December 31, 1996, as well as the NASDAQ market index
and an industry group of 35 South Central Region Banks.
[CAPTION]
PERFORMANCE GRAPH
December 31
------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
[S] [C] [C] [C] [C] [C]
The Peoples Holding Co. 143.51 174.80 193.10 240.21 290.68
South Central
Region Banks 103.72 109.63 110.09 147.93 191.11
NASDAQ Market Index 100.98 121.13 127.17 164.96 204.98
Note to graph above: Assume $100 invested on January 1, 1992, in The Peoples
Holding Company stock, and an identical amount in the NASDAQ market index - The
peer group of bank holding companies The South Central Region Banks Industry
Index.
There can be no assurance that the Company's stock performance will continue
into the future with the same or similar trends depicted in the graph above. The
Company will not make nor endorse any predictions as to future stock
performance.
<PAGE>
TRANSACTIONS WITH MANAGEMENT
The Bank has had in the past, and expects to have in the future, banking
transactions in the ordinary course of its busi ness with directors, officers,
stockholders of the Company and their associates, on the same terms, including
interest rates and collateral on loans, as those prevailing at the same time for
comparable transactions with others, and do not involve more than normal risks
of collectibility or present other unfavorable features. Other than these
transactions, there were no material transactions with this group during 1996.
SHAREHOLDERS' PROPOSALS
Proposals of security holders intended to be presented at the next meeting
must be received by the Company for inclusion in the Company's Proxy Statement
and form of Proxy relating to that meeting by December 8, 1996.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Ernst & Young LLP, Certified
Public Accountants, as independent auditors of the Company. In this capacity the
firm will audit the books and records of The Peoples Holding Company and provide
written opinions on the financial statements of the Company. The firm has
served in this capacity since the Company's formation. A represen tative of this
firm will attend the annual stockholders meeting and will be available to
respond to appropriate questions. Ernst & Young LLP prepared the Federal and
State Income Tax Returns for the years 1980 through 1995, which were approved by
the Board of Directors. Cost of preparing the tax returns was included in the
total bill and the actual cost is not readily determinable.
RELATIONSHIP WITH LEGAL COUNSEL
The Company and its subsidiary have retained the law firm of Mitchell, Voge,
Beasley and Corban as general counsel. W. P. Mitchell is a partner in said law
firm and is Chairman Emeritus of the Board of Directors of the Bank. William M.
Beasley is also a partner in said law firm. The Company and its subsidiary paid
this firm fees and expenses totaling $138,174 during 1996.
During 1996, the Bank retained the firm of Edwards, Storey, Marshall and
Helveston as local counsel for the branch bank at West Point, Mississippi. A. M.
Edwards, Jr. is a partner in said law firm. During 1996, the bank retained the
firm of Gifford and Allred as local counsel for the branch bank at Booneville,
Missis sippi. Eugene B. Gifford, Jr. is a partner in that law firm.
<PAGE>
FINANCIAL STATEMENTS
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO EACH STOCKHOLDER REQUESTING SUCH
A COPY OF ITS ANNUAL REPORT ON FORM 10-K, INCLUD ING THE FINANCIAL STATEMENTS
AND THE SCHEDULES THEREOF REQUIRED TO BE FILED WITH THE COMMISSION PURSUANT TO
RULE 13 a-1 UNDER THE ACT FOR THE COMPANY'S MOST RECENT FISCAL YEAR, TO A
BENEFICIAL OWNER OF ITS SECURITIES UPON RECEIPT OF A WRITTEN REQUEST FROM SUCH
PERSON. EACH REQUEST MUST SET FORTH A GOOD FAITH REPRESENTATION THAT, AS OF THE
RECORD DATE FOR THE ANNUAL MEETING OF THE COM PANY'S SECURITY HOLDERS, THE
PERSON MAKING THE REQUEST WAS A BENEFICIAL OWNER OF SECURITIES ENTITLED TO VOTE
AT SUCH MEETING. REQUEST FOR THE ABOVE INFORMATION SHOULD BE DIRECTED TO: THE
PEOPLES BANK & TRUST COMPANY, P. O. BOX 709, TUPELO, MISSISSIPPI 38802,
ATTENTION: JEFFREY G. HUNTINGTON, ASSISTANT VICE PRESIDENT.
OTHER BUSINESS
Management at present knows of no other business to be brought before the
meeting. If further business is properly brought before the meeting or an
adjournment thereof, it is the intention of management to vote the accompanying
proxies in accordance with management's judgment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John W. Smith
-----------------
John W. Smith, President
<PAGE>
APPENDIX A:
THE PEOPLES HOLDING COMPANY PROXY
P. O. Box 709 THIS PROXY IS SOLICITED ON BEHALF OF
Tupelo, Mississippi 38802 THE BOARD OF DIRECTORS
The undersigned hereby appoints William M. Beasley,
A.M. Edwards, Jr., Eugene B. Gifford, Jr., David P.
Searcy, and J. Larry Young as proxies,
each with the power to appoint his or her subtitute and
hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of The
Peoples Holding Company held on record by the
undersigned on March 14, 1997, at the annual meeting of
shareholders to be held on April 8, 1997, or any
adjournment thereof.
(1) Election of Directors.
NOMINEES:
FOR THREE-YEAR TERM ENDING IN 2000: George H. Booth, II; Frank B.
Brooks; Robert C. Leake; Larry Michael; J. Heywood Washburn.
FOR A ONE-YEAR TERM ENDING IN 1998: John M. Creekmore.
VOTE FOR all nominees listed VOTE WITHHELD for all
(except as written to the nominees listed [_______]
contrary below) [_______]
(Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
- --------------------------------------------------------
(2) To ratify the appointment of Ernst & Young LLP of Memphis, Tennessee, as
independent auditors for the Company for the current year.
FOR[___] AGAINST[___] ABSTAIN[___]
(3) In their discretion, the Proxies are authorized to vote such other business
as may properly come before 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 PROPOSALS 1 and 2.
Please sign below exactly as name appears on back of proxy card. When shares are
held by joint tenants, both should 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 ____________________, 1997 __________________________________
Signature
----------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
