SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
(Name of Registrant as Specified in Its Charter)
CHARTER BANCSHARES
(Name of Person(s) Filing Proxy Statement)
CHARTER BANCSHARES
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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/ / 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 registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
CHARTER BANCSHARES, INC.
2600 CITADEL PLAZA DRIVE
HOUSTON, TEXAS 77008
(713) 692-6121
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 1994
To the Shareholders of Charter Bancshares, Inc.:
The annual meeting of shareholders of Charter Bancshares, Inc., a
Texas corporation, will be held at 10:00 a.m., Houston time, on
Thursday, May 26, 1994, at the Galleria banking facilities of Charter
National Bank-Houston, 5433 Westheimer, Houston, Texas, for the
purpose of considering and voting upon the following matters:
1. Election of Directors - To elect nine directors to hold
office until the next annual meeting of shareholders and
until their successors shall be duly elected and qualified.
2. Other Business - To transact such other business as may
properly come before the meeting or any adjournment thereof.
As of the date of this notice, management does not know of any
such other business to be presented at the meeting.
Shareholders of record at the close of business on April 15,
1994, are entitled to notice of and to vote at the annual meeting or
any adjournment thereof. Further information concerning the meeting,
the nominees for election as directors and the other matters to be
voted upon at the meeting is set forth in the accompanying proxy
statement.
By order of the Board of Directors,
Jerry E. Finger
Chairman
Houston, Texas
May 2, 1994
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD(S) IN THE
ENVELOPE PROVIDED AT YOUR EARLIEST CONVENIENCE.
<PAGE>
CHARTER BANCSHARES, INC.
2600 CITADEL PLAZA DRIVE
HOUSTON, TEXAS 77008
(713) 692-6121
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD MAY 26, 1994
GENERAL MATTERS
The annual meeting of shareholders of Charter Bancshares,
Inc. ("Charter") will be held on May 26, 1994, at the time and place
set forth in the foregoing notice. This proxy statement is first
being mailed on or about May 2, 1994, to shareholders of record as of
the record date of April 15, 1994, accompanied by Charter's 1993
Annual Report to Shareholders for the year ended December 31, 1993.
The accompanying proxy is solicited by the Board of Directors of
Charter, and Charter will bear the cost of solicitation, including
charges of brokerage firms and others to forward this proxy material
to beneficial owners of Charter stock. All valid proxies received
will be voted as specified, but if no directions are made, the proxies
will be voted IN FAVOR of the election as directors of the persons
listed as nominees herein and at the discretion of the holders of the
proxies concerning any other matters which may properly be brought
before the meeting. Each share of Common Stock and Preferred Stock is
entitled to one vote, and each share of Special Common Stock is
entitled to 14 votes. The affirmative vote of the holders of a
majority of votes represented at the meeting voting together without
distinction as to class is required to elect directors. Proxies may
be revoked at any time prior to their exercise.
Subsidiaries of Charter include CBH, Inc., Charter National
Bank-Houston ("Charter-Houston"), Charter National Bank-Colonial
("Charter-Colonial"), University National Bank-Galveston ("University
National"), Charter Venture Group, Inc. ("Charter-Venture"), Charter-
Houston Securities, Inc. (formally known as Charter Leasing, Inc.),
and Charter-Colonial Securities, Inc. (formerly known as Bissonnet
West, Inc.). Investors Services at Charter Banks ("Investor
Services") operates as a consortium of Charter-Houston and Charter-
Colonial. Charter and its subsidiaries are from time to time
collectively referred to in this proxy statement as the "Company."
VOTING STOCK AND PRINCIPAL HOLDERS
Shareholders of record at the close of business on April 15,
1994, are entitled to notice of and to vote at the annual meeting or
any adjournment thereof. On April 15, 1994, there were outstanding
14,201 shares of Preferred Stock entitled to one vote per share,
5,498,554 shares of Common Stock entitled to one vote per share (which
amount excludes 162,168 shares of treasury stock acquired and held by
the Company in partial satisfaction of debts previously contracted
for), and 244,216 shares of Special Common Stock entitled to 14 votes
per share (representing a total of 3,419,024 votes), or an aggregate
total of 8,931,779 votes entitled to be cast together as if a single
class at the meeting.
The table set forth on the following page indicates those persons
known to management to be the beneficial owners as of April 15, 1994
of more than 5% of any class of Charter's capital stock. In addition
to Charter's Common Stock and Preferred Stock, as of April 15, 1994,
shares of Special Common Stock have been issued by Charter in two
series, designated as Class B Special Common Stock and Series C
Special Common Stock, respectively.
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT OF CLASS
<S> <C> <C> <C>
Common Stock Jerry E. Finger 1,482,482(2)(3)(4) 26.96%
Managing General Partner
Finger Interests Number One, Ltd.
2600 Citadel Plaza Drive
Houston, Texas 77008
NationsBank Corporation 2,412,019(5) 43.87%
100 N. Tryon Street
Charlotte, North Carolina 28255
Special Common Jerry E. Finger 243,517(4)(6) 99.71%
Stock Managing General Partner
Finger Interests Number One, Ltd.
2600 Citadel Plaza Drive
Houston, Texas 77008
Preferred Stock Trust for the benefit of the 1,372 9.66%
children of Jerry E. Finger
c/o Charter National Bank-Houston
P.O. Box 4525
Houston, Texas 77210-4525
Jerry E. Finger 770(4)(7) 5.42%
2600 Citadel Plaza Drive
Houston, Texas 77008
Robert L. Hilsher 732 5.15%
1105 Martin
Houston, Texas 77018
(1) Except as indicated by footnote, these shares are held of
record with sole voting and investment power.
(2) For long-term estate planning purposes and pursuant to an
agreement of limited partnership executed as of March 9, 1992,
all of the shares of Common Stock and Special Common Stock
owned by (i) Jerry E. Finger, except for 4,463 shares which had
been pledged to a personal loan, (ii) his spouse, (iii) various
trusts created for the benefit of Mr. Finger's children (the
"Finger Children's Trusts"), except for 948 shares of Common
Stock and 225 shares of Special Common Stock acquired by the
Finger Children's Trusts subsequent to March 9, 1992, (iv) a
partnership comprised of Mr. Finger and three other trusts
created for the benefit of Mr. Finger's children ("JEF
Partnership"), and (v) one of Mr. Finger's sons, together with
17,640 shares of Common Stock owned by L.R. Jalenak, Jr., an
advisory director to the Company's board of directors
(collectively, the "FFP Partners"), were contributed to Finger
Interests Number One, Ltd. (the "Finger Family Partnership").
Mr. Finger serves as managing general partner of the Finger
Family Partnership. All such shares were transferred to the
Finger Family Partnership on September 27, 1993, after the
Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") approved the application of the Finger Family
Partnership to become a bank holding company under the Bank
Holding Company Act of 1956, as amended. Pursuant to the terms
of the Finger Family Partnership's limited partnership
agreement, Mr. Finger in his capacity as managing general
partner has sole voting and dispositive power over all of the
shares of Common Stock and Special Common Stock which are owned
by the Finger Family Partnership. Under the terms of such
limited partnership agreement, Mr. Finger may resign but cannot
be removed as managing general partner. Accordingly, Mr.
Finger will make all voting and disposition decisions with
respect to the shares of Common Stock and Special Common Stock
owned
2
by the Finger Family Partnership, including the voting of such
shares at the 1994 annual meeting of shareholders.
(3) Excludes (i) 4,463 shares of Common Stock which Mr. Finger owns
directly and (ii) 4,959 shares of Common Stock which Mr. Finger
owns indirectly as co-trustee of a trust created for the
benefit of one of his brother's children, as to which he has
shared voting power (collectively referred to herein as the
"Non-Partnership Shares"). Also excludes 948 shares of Common
Stock owned directly by the Finger Children's Trusts which were
acquired subsequent to formation of the Finger Family
Partnership; the percent of such class of Mr. Finger including
such excluded shares would be 27.15%.
(4) As (i) managing general partner of the Finger Family
Partnership and (ii) the direct beneficial owner of the Non-
Partnership Shares and (B) 770 shares of Preferred Stock,
initial series, as more fully described in footnote (7) below,
Mr. Finger is the holder of record as of April 15, 1994 of
shares representing 4,901,912 votes, or 54.88% of the votes
eligible to be cast at the meeting; the percent of the votes of
Mr. Finger including 5,470 votes attributable to the shares of
Common Stock, Special Common Stock and Preferred Stock of which
the Finger Children's Trusts are the holders of record as of
April 15, 1994, is 54.94%.
(5) NationsBank Corporation, Charlotte, North Carolina
("NationsBank"), owns shares of Common Stock representing in
the aggregate 27.01% of the votes eligible to be cast at the
meeting. NationsBank operates full-service banks in throughout
the eastern, southeastern and southwestern regions of the
United States and maintains various offices throughout the
world.
(6) Excludes 225 shares of Special Common Stock owned directly by
the Finger Children's Trusts which were acquired subsequent to
formation of the Finger Family Partnership; the percent of such
class of Mr. Finger including such excluded shares would be
99.80%.
(7) Includes 298 shares of Preferred Stock owned by a corporation
of which Mr. Finger is the controlling shareholder and sole
director, but excludes 1,372 shares of Preferred Stock owned by
the Finger Children's Trusts; the percent of such class of
Mr. Finger including such excluded shares would be 15.08%.
</TABLE>
ELECTION OF DIRECTORS
Management of Charter has nominated the nine persons named below
for election to the Board of Directors of Charter. Each director
elected will hold office until the next annual meeting of shareholders
or until his successor is elected and qualified. Charter has no
reason to believe that any nominee will be unavailable at the time of
election, but if any nominee should not continue to be available for
election, discretionary authority may be exercised by the persons
named in the accompanying proxy to vote for a substitute. The
Investment Agreement dated November 6, 1987, between Charter and
NationsBank provides that management of Charter will nominate at least
one person designated by NationsBank for election to Charter's Board
of Directors for so long as NationsBank owns Charter stock
representing more than ten percent of the combined voting power of all
classes of Charter stock. Pursuant to the foregoing arrangement,
NationsBank has designated Frank L. Gentry as its nominee selection,
which selection management supports by renominating Mr. Gentry as a
nominee for election to the Board of Directors.
The nine nominees are as follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION SERVED AS
NAME OF NOMINEE(1) AND OTHER DIRECTORSHIPS(2)(3) DIRECTOR SINCE AGE
<S> <C> <C> <C>
Donald R. Collins Superintendent of Schools, Klein 1975(4) 58
Independent School District
Winston C. Davis Senior Vice President of Charter 1988 61
Vice Chairman of Charter-Houston
3
Jerry E. Finger Chairman and Chief Executive Officer 1963(5) 61
of Charter
Frank L. Gentry Executive Vice President, 1987 51
NationsBank Corporation
Mark T. Giles President of Charter 1988 39
President and Chief Executive Officer
of Charter-Houston
William M. Hatten Senior Judge, 1964(5) 80
Texas Judicial System
R. Steve Letbetter President and Chief Operating Officer, 1992 45
Houston Lighting & Power Co.
Herschel G. Maltz Chairman and CEO, 1966(5) 64
I.P.S. Systems, Inc.
W. J. Smith, Jr. Retired, former Chairman, Loan 1989(6) 72
Policy Committee, NCNB National Bank
of North Carolina
(1) Thomas C. Sooy, Chairman of Charter-Colonial and Chief Credit
Officer of Charter-Houston, has served as an advisory director
of Charter since his appointment by the Board of Directors on
January 26, 1989. L. R. Jalenak, Jr., personal investments and
management consultant, has served as an advisory director since
June 18, 1992. It is anticipated that at its next annual
organizational meeting the Board of Directors will reappoint
Messrs. Sooy and Jalenak as advisory directors for the ensuing
year.
(2) Includes last five years, except for Messrs. Gentry, Giles,
Letbetter, and Maltz. Immediately prior to being promoted to
executive vice president of NationsBank on April 1, 1993, Mr.
Gentry served as senior vice president, a position he had held
for more than the five prior years. In addition to serving as
president of Charter since January 26, 1989, Mr. Giles was
appointed to serve as president and chief executive officer, as
well as a director of Charter-Houston, on September 27, 1989.
Immediately prior to being promoted to president and chief
operating officer of Houston Lighting & Power Co. on July 1,
1993, Mr. Letbetter served as group vice president, a position
he had held for more than the five prior years. Mr. Maltz has
served as chairman and CEO of I.P.S. Systems, Inc. since its
formation in December, 1993. From October 1, 1993 to December,
1993, Mr. Maltz handled personal investments and served as a
management consultant. From May 1, 1992 to September 30, 1992,
Mr. Maltz served as president and vice chairman of Petrolon
Holdings, Inc. Mr. Maltz retired as president and chief
executive officer of Century Papers, Inc. on November 15, 1990,
a position he had held for more than the five prior years.
(3) Two nominees serve as directors of companies that are reporting
companies under the Securities Exchange Act of 1934, as
amended. Mr. Maltz serves as a director of Sterling
Electronics Corporation. Mr. Smith serves as a director of
Burroughs & Chapin Company.
(4) Includes service as a director of Charter-Colonial prior to the
organization of Charter.
(5) Includes service as a director of Charter-Houston prior to the
organization of Charter.
(6) Mr. Smith presently is president and the sole shareholder of
WJS Financial Services, Inc.; in this capacity
4
Mr. Smith acts as an independent consultant to various
financial institutions. In connection with his service on
Charter's Board of Directors as a nominee originally designated
by NationsBank, Mr. Smith is engaged by NationsBank under a
retainer arrangement pursuant to which Mr. Smith will advise
Charter management, on an ongoing basis and to the extent such
advice is sought by Charter management, with respect to various
policies and procedures either in place or contemplated by
Charter management.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of Charter has an Audit Committee, a
Compensation Committee, an Asset Quality Committee, a Stock
Appreciation Rights Committee ("SAR Committee") and a Management
Incentive Compensation Plan Committee ("MICP Committee"). Charter
does not have a standing nominating committee.
The primary functions of the Audit Committee are to review the
scope and results of audits by Charter's independent auditors and
internal auditors. This responsibility requires an ongoing
determination that adequate internal controls are in effect and a
recommendation annually of an independent accounting firm. This
committee met four times during 1993. As of May 2, 1994, the members
of the Audit Committee were Dr. Collins, Judge Hatten and Mr. Maltz,
who also serves as chairman of the committee.
The primary functions of the Asset Quality Committee are to review
the general quality of the Company's credit underwriting standards and
practices, to monitor the Company's non-performing asset portfolio,
and more generally to review current events within the Company's loan
and investment portfolios. The Asset Quality Committee met twelve
times during 1993. As of May 2, 1994, the members of the Asset
Quality Committee were Dr. Collins, Judge Hatten, Mr. Jalenak, Mr.
Letbetter, Mr. Maltz and Mr. Smith, who also serves as chairman of the
committee.
The Compensation Committee is responsible for developing a
compensation structure that will attract and retain well-trained,
productive people who are motivated to achieve Charter's corporate
objectives. The Compensation Committee reviews remuneration to
management and formulates recommendations to the Board of Directors
respecting compensation. The Compensation Committee met three times
during 1993. As of May 2, 1994, the members of the Compensation
Committee were Dr. Collins and Messrs. Gentry, Jalenak and Maltz; Mr.
Maltz also serves as chairman of such committee. Mr. Finger serves as
an ex-officio member of the Compensation Committee.
The SAR Committee is responsible for administering Charter's Stock
Appreciation Rights Plan (the "SAR Plan")(see succeeding section
entitled "Executive Compensation--Stock Appreciation Rights Plan").
The SAR Committee met two times during 1993 but took numerous
administrative actions by unanimous consent in lieu of meetings in
accordance with the bylaws of Charter. The SAR Committee is comprised
of the members of the Compensation Committee who are not eligible to
participate in the SAR Plan. As of May 2, 1994, the members of the
SAR Committee were Dr. Collins and Messrs. Gentry, Jalenak and Maltz;
Mr. Maltz also serves as chairman of such committee. Mr. Finger
serves as an ex-officio member of the SAR Committee.
The MICP Committee is responsible for administering the Management
Incentive Compensation Plan which was adopted by Charter's Board of
Directors in 1991 (see succeeding section entitled "Executive
Compensation--Management Incentive Compensation Plan"). The MICP
Committee met two times during 1993. The MICP Committee is comprised
of the members of the Compensation Committee who are not eligible to
participate in the Management Incentive Compensation Plan. As of May
2, 1994, the members of the MICP Committee were Dr. Collins and
Messrs. Gentry, Jalenak and Maltz; Mr Maltz also serves as chairman of
such committee.
During 1993, the Board of Directors held twelve meetings. All of
the nominees for director attended 75% or more of the total number of
meetings of the Board of Directors and of the committees on which they
served during 1993.
5
<PAGE>
STOCK OWNERSHIP
The following table indicates the number of shares of Common
Stock, Special Common Stock and Preferred Stock held of record as of
April 15, 1994, by Charter's director nominees and by its director
nominees and officers as a group.
<TABLE>
<CAPTION>
Amount and nature
of beneficial ownership(1)
------------------------------------------------------------------------------------------------
Percent Special Percent Percent
Common Stock of class Common Stock of class Preferred Stock of class
<S> <C> <C> <C> <C> <C> <C>
Donald R. Collins 1,632(2) Less than - - 20 Less than
1% 1%
Winston C. Davis 48,868 Less than - - 646 4.55%
1%
Jerry E. Finger 1,491,904(2)(3)(4) 27.13% 243,517(4)(5) 99.71% 770(2)(4)(6) 5.42%
Frank L. Gentry (7) (7) (7) (7) (7) (7)
Mark T. Giles 9,203(8)(9) Less than - - - -
1%
William M. Hatten 20,097(2) Less than - - 168(2) 1.18%
1%
R. Steve Letbetter - - - - - -
Herschel G. Maltz 24,787(9) Less than - - 353(9) 2.49%
1%
W. J. Smith, Jr. - - - - - -
All director nomi-
nees, advisory dir-
ectors and officers
as a group (14 per-
sons)(10)(11) 1,694,791 30.82% 243,517 99.71% 1,963 13.82%
(1) Except as indicated by footnote, these shares are held of
record with sole voting and investing power.
(2) Does not include the following shares owned by the spouses
or children of the following directors and with respect to
which such directors disclaim beneficial ownership: (i)
Dr. Collins: 44 shares of Common Stock; (ii) Mr. Finger:
4,835 shares of Common Stock and 136 shares of Preferred
Stock; (iii) Mr. Giles: 11,500 shares of Common Stock and
91 shares of Preferred Stock; and (iv) Judge Hatten: 3,586
shares of Common Stock and 16 shares of Preferred Stock.
(3) Represents shares of Common Stock of which Mr. Finger,
individually or as co-trustee, and the Finger Family
Partnership are the record holders as of April 15, 1994.
See the preceding section entitled "Voting Stock and
Principal Holders" for information regarding ownership of
shares by the Finger Family Partnership and Mr. Finger's
power to vote such shares as managing general partner of
the Finger Family Partnership.
(4) Does not include the following shares: (i) 948 shares of
Common Stock owned by the Finger Children's Trusts; the
percent of class of Mr. Finger including such shares would
be 27.15%: (ii) 225 shares of Special Common Stock owned
6
by the Finger Children's Trusts; the percent of class of
Mr. Finger including such shares would be 99.80%; and (iii)
1,372 shares of Preferred Stock owned by the Finger
Children's Trusts; the percent of series of Mr. Finger
including such shares would be 15.08%. Mr. Finger
beneficially owns shares representing 4,901,912 votes, or
54.88% of the votes eligible to be cast at the meeting; the
percent of the votes of Mr. Finger including 5,470 votes
attributable to the shares of Common Stock, Special Common
Stock and Preferred Stock of which the Finger Children's
Trusts are the holders of record as of April 15, 1994, is
54.94%. See the preceding section entitled "Voting Stock
and Principal Holders" for information regarding the
ownership of shares of Common Stock by the Finger Family
Partnership and Mr. Finger's power to vote such shares as
managing general partner of the Finger Family Partnership.
(5) Represents shares of Special Common Stock of which the
Finger Family Partnership is the record holder as of April
15, 1994. See the preceding section entitled "Voting Stock
and Principal Holders" for information regarding the
ownership of shares of Special Common Stock by the Finger
Family Partnership and Mr. Finger's power to vote such
shares as managing general partner of the Finger Family
Partnership.
(6) Includes 298 shares of Preferred Stock owned by a
corporation of which Mr. Finger is the controlling
shareholder and sole director.
(7) Mr. Gentry does not own any shares with sole voting and
investment power. Mr. Gentry, however, is employed by
NationsBank and has been designated by NationsBank as its
selection for nomination for election to the Board of
Directors of Charter. NationsBank's ownership of Charter
capital stock is described in the table and accompanying
footnotes included in the preceding section entitled
"Voting Stock and Principal Holders."
(8) Includes 5,037 shares of Common Stock which were acquired
by Mr. Giles during 1993 pursuant to a stock purchase
agreement between Mr. Giles and Mr. Finger which was
entered into in December, 1987. The 11,500 shares of
Common Stock as to which Mr. Giles disclaims beneficial
ownership under footnote (2)(iii) above were also acquired
during 1993 pursuant to the terms of such stock purchase
agreement.
(9) Excludes 1,786 shares of Common Stock and 17 shares of
Preferred Stock, which Mr. Maltz holds as custodian under
the Uniform Gift to Minors Act, with respect to which Mr.
Maltz disclaims beneficial ownership.
(10) The total shares of Common Stock, Special Common Stock and
Preferred Stock beneficially owned by all officers and
directors as a group represent 57.17% of the votes eligible
to be cast at the meeting.
(11) Footnotes 2 through 9 above are applicable to the indicated
group ownership totals.
</TABLE>
EXECUTIVE OFFICERS
Charter's executive officers are elected annually by the
Board of Directors, each to serve a one-year term or until his
successor is elected and qualified. The names, ages and the current
position(s) held with Charter are as follows:
NAME AGE POSITION
Jerry E. Finger 61 Chairman and Chief Executive Officer
Mark T. Giles 39 President
Winston C. Davis 61 Senior Vice President
William S. Shropshire, Jr. 36 Chief Financial Officer and Treasurer
Marshall R. Holman 45 Senior Operations Officer
Michael A. Roy 34 General Counsel and Secretary
7
Mr. Finger has been chairman and chief executive officer of
Charter for over five years. Prior to Mr. Giles becoming president of
Charter on January 26, 1989, Mr. Finger also had served in the
capacity of president for more than the five prior years.
Mr. Giles was employed by Charter as senior vice president,
counsel, chief financial officer and secretary in April 1986.
Immediately prior to being appointed president by the Board of
Directors on January 26, 1989, Mr. Giles served as executive vice
president, counsel, chief financial officer and secretary of Charter.
In September 1989, Mr. Giles was appointed to serve as president and
chief executive officer, as well as a director of Charter-Houston.
Mr. Davis has been principally employed as senior vice president
of Charter for over five years, with daily responsibility for managing
the Company's investment securities portfolio.
Mr. Shropshire, a certified public accountant, was employed by
Charter in November 1983 as a senior financial analyst. He was
elected treasurer of Charter in April 1986 and chief financial officer
of Charter in April 1990.
Mr. Holman, a certified public accountant, was employed by
Charter in August 1983 as vice president in charge of the audit
function, a position he held for more than five years. He was
promoted to senior vice president in August 1989 and to senior
operations officer in April 1990. On April 1, 1990, Mr. Holman was
appointed to serve as executive vice president and cashier of Charter-
Houston.
Mr. Roy was employed by Charter as general counsel and secretary
in November 1989. Prior to joining Charter, Mr. Roy practiced law
with the corporate sections of the Houston law firms of Wood,
Lucksinger & Epstein (September 1985 through July 1988) and Woodard,
Hall & Primm, P.C. (August 1988 through October 1989).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is pleased
to present this report on executive compensation. During 1993 the
Compensation Committee was comprised of Don Collins, Frank Gentry, L.
R. Jalenak and Herschel Maltz, each of whom is an outside director of
Charter, with Jerry Finger serving as an ex-officio member of the
Compensation Committee. Mr. Maltz was chairman of the committee
during 1993 and continues to hold this position as of the date of this
report. This report describes the elements of Charter's executive
officer compensation programs and the basis on which 1993 compensation
determinations were made by the Compensation Committee with respect to
the executive officers of Charter, including those officers named in
the compensation tables beginning on page 12 of this proxy statement.
COMPENSATION PHILOSOPHY AND OVERALL OBJECTIVES. The goal of
Charter's executive compensation policy is to ensure that executive
compensation is linked directly to continuous improvements in
corporate performance and increases in shareholder value, while
concurrently ensuring that key employees are motivated and retained.
The following objectives have been established by the Compensation
Committee as guidelines for compensation decisions:
- Charter must provide a competitive total compensation
package that enables Charter to attract and retain key
executives.
- All of Charter's compensation programs must be
integrated with Charter's annual and long-term business
objectives so that executives remain focused on the
fulfillment of these objectives.
- Charter's compensation package must include a variable
component that directly links compensation with the
overall performance of Charter, thereby expressly
aligning executive compensation with the interest of
shareholders.
8
ELEMENTS OF EXECUTIVE COMPENSATION. The Compensation Committee
regularly reviews Charter's compensation programs to ensure that
remuneration levels and incentive opportunities are competitive and
reflect performance. The various components of the compensation
programs for executive officers are discussed below.
(i) BASE SALARY. Base salary levels are largely determined
through comparison with banking organizations of a size similar to
Charter. Both regional and national surveys are utilized to establish
base salaries that are within the range of those persons holding
positions of comparable responsibility at other banking organizations
of a size and complexity similar to Charter. (The Compensation
Committee recently has had to rely more heavily on national survey
data due to the extreme difficulties experienced during the mid-1980's
by the banking industry in Texas and the surrounding region. Today
Charter stands virtually alone in this region in its peer group size
range. In referring to national survey data, however, the
Compensation Committee has taken into consideration the lower cost of
living prevailing in Houston compared to many other major U.S.
cities.) Actual base salaries also are intended to reflect individual
performance contributions as determined through job evaluations. In
addition to individual job performance and the above-referenced market
comparisons, other factors may be taken into consideration, such as
cost of living increases as well as an individual's perceived
potential with Charter. All executive officer base salary levels are
considered by the Compensation Committee to be competitive within a
necessary and reasonable range.
It has become the established practice of the Compensation
Committee to review and, if deemed appropriate, adjust the base
salaries of various executive officers, including Jerry Finger, Mark
Giles, Winston Davis, Marshall Holman, and Bill Shropshire, on a
biennial (every-other-year) basis. Accordingly, because the base
salaries of Messrs. Finger, Giles, Davis, Holman, and Shropshire were
reviewed and adjusted during 1992, the base salaries of these
executive officers were not adjusted during 1993 and the base salary
information for 1993 set forth in the Summary Compensation Table
appearing on page 12 of this proxy statement reflects the fully
annualized base salaries as adjusted and implemented in 1992.
(ii) MANAGEMENT INCENTIVE COMPENSATION PLAN. Charter's officers
are eligible to participate in the Management Incentive Compensation
Plan which is referred to as the "Incentive Plan" in this proxy
statement and described in detail beginning on page 13. The objective
of this plan is to create competitive levels of compensation tied
directly to the attainment of financial objectives which the
Compensation Committee believes are the primary determinants over time
of share price. More specifically, the plan is designed to foster a
systematic management focus on the corporate goal of consistent and
steady earnings growth. The members of the Compensation Committee,
all being outside directors of Charter and not eligible to participate
in the Incentive Plan, also serve as the MICP Committee which is
responsible for administering the Incentive Plan. Mr. Finger, while
an ex-officio member of the Compensation Committee, does not serve as
either a member or an ex-officio member of the MICP Committee due to
his eligibility to participate in the Incentive Plan. Potential
awards for executive officers are intended by the MICP Committee to be
consistent with incentive bonuses paid by banking companies of a size
similar to that of Charter, provided that actual bonuses remain
subject to increase or decrease on the basis of Charter's actual
audited performance and at the discretion of the MICP Committee. The
particular formula pursuant to which the incentive pool for 1993 was
determined is described more fully in this proxy statement and
reference is made to the discussion included on pages 13 and 14 of
this proxy statement. It should be noted, however, that although
Charter substantially surpassed its 1993 financial performance
objectives and the MICP Committee therefore had the authority under
the Incentive Plan to increase the incentive pool beyond the aggregate
maximum amount reflected in the previously established schedule, the
MICP Committee did not do so.
(iii) STOCK APPRECIATION RIGHTS PROGRAM. The Compensation
Committee believes that those persons who have responsibility for the
management and growth of Charter should be provided with a continuing
long-term incentive compensation component which correlates to
increases or decreases in shareholder value, thus ensuring that the
best interests of shareholders and managers of Charter remain closely
aligned. The Charter Stock Appreciation Rights Plan is referred to in
this proxy statement as the "SAR Plan" and is described in detail
beginning on page 14. The members of Compensation Committee, all
being outside directors of Charter and not eligible to participate in
the SAR Plan, also serve as the SAR Committee which is responsible for
administering the SAR Plan. Jerry Finger also serves as an ex-officio
member of the SAR Committee; he does not presently participate in the
SAR Plan. In making awards of SAR units to any individual, the SAR
Committee makes
9
judgments concerning the ability of such individual to impact the
long-term success of Charter, the past success of such individual in
advancing the long-term interests of Charter shareholders, and the
number of SAR units available under the SAR Plan. In an effort to
make the granting of SAR units more meaningful to the recipient, the
SAR Committee intends to generally make individual awards in a larger
amount on a relatively infrequent basis, rather than making smaller
awards on an annual basis; provided that in order to broadly introduce
to Charter officers the principles upon which the SAR Plan is based,
an award of SAR units also generally has been made to all Charter
officers who attain the level of vice president. No individual awards
were granted during 1993 or for performance during 1993 under the SAR
Plan. It is anticipated that awards of additional SAR units will be
considered at an upcoming meeting of the SAR Committee.
(iv) PROFIT-SHARING PLAN. All full-time employees of Charter and
its subsidiary banks, including its executive officers, are eligible
to participate in the Profit-Sharing Plan described in this proxy
statement beginning on page 14. For 1993 the employer contribution
represented approximately 3.8% of Charter's 1993 net income and
approximately 2.7% of Charter's 1993 salary and benefits. Reference
is made to the discussion of the plan in this proxy statement and to
footnote (5) beginning on page 12 of this proxy statement for the
contributions credited to the accounts of the named executive officers
included on the Summary Compensation Table.
1993 COMPENSATION OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER.
In reviewing the 1993 compensation of Jerry Finger, Charter's chairman
and chief executive officer, the Compensation Committee undertook the
same evaluation set forth above with respect to executive officers
generally, except that at this time Mr. Finger does not participate in
the SAR Plan. Mr. Finger's base salary is reviewed on an every-other-
year basis and most recently was reviewed and adjusted in October,
1992. His base salary is considered to be reasonable and competitive
based on published executive compensation surveys. His bonus for 1993
performance pursuant to the Incentive Plan was determined after the
close of 1993. MICP Committee members were provided data concerning
individual compensation history, executive compensation survey data,
and comparative information concerning performance. Mr. Finger's
bonus award was determined through reference to the same formula that
was used to determine his award last year for 1992 performance. Mr.
Finger's current bonus award was paid in recognition of the 24%
increase in Charter's primary earnings per share and the 24% increase
in Charter's net income (which was largely driven by a 19 percent
increase in pre-tax operating earnings, calculated after excluding a
non-recurring benefit from a change in accounting for income taxes
which was only partially offset by a one-time charge to earnings for
an accelerated core deposit intangible amortization). The
Compensation Committee recognized that although 1993 net earnings
included a benefit from a change in accounting for income taxes,
Charter's pre-tax operating income increased by 19% even after
excluding the major non-recurring items that impacted 1993 earnings.
This performance, which is believed to have led directly to the
substantially increased trading volume of Charter's common stock
during 1993, was considered by the MICP to have met or surpassed
expectations when compared to the performance of competitors and other
performance requirements. Since Mr. Finger does not participate in
the SAR Plan and his ability to make contributions to the 401(k)
thrift plan are limited by applicable law, in order to bring Mr.
Finger's total compensation to a level commensurate with his position
and to fully recognize his contribution to Charter's 1993 performance,
the Compensation Committee authorized a deferred compensation
contribution under Charter's executive deferred compensation plan (the
"Deferred Plan") in an amount equal to five percent of Mr. Finger's
1993 base salary. For a more information regarding the Deferred Plan
and the 1993 contribution to Mr. Finger's account, reference is made
to the discussion of the Deferred Plan appearing on page 15 of this
proxy statement.
Compensation Committee of the Board of Directors
Herschel G. Maltz, Chairman
Donald R. Collins
Jerry E. Finger (ex-officio)
Frank L. Gentry
L.R. Jalenak, Jr.
10
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The following graph compares the performance of Charter's Common
Stock for the five-year period commencing December 31, 1985, to (i)
the NASDAQ market composite index ("NASDAQ-US") and (ii) NASDAQ Bank
Stocks which are comprised of approximately 650 banks and bank holding
companies which trade on either The Nasdaq National Market System or
The Nasdaq Small-Cap Market. The graph assumes that a $100 investment
was made in Charter Common Stock and each index at December 31, 1988,
and that all dividends were reinvested. Also included are the
respective investment returns based upon the stock and index values as
of the end of each year during such five-year period.
[Linear Graph Plotted from Points in Table Below]
<TABLE>
<CAPTION>
88 89 90 91 92 93
<S> <C> <C> <C> <C> <C> <C>
Charter $100 $128.571 $100 $92.857 $390 $429.469
NASDAQ-US $100 $121.244 $102.958 $165.206 $192.104 $219.214
NASDAQ Bank Stocks $100 $111.154 $81.4 $133.571 $194.187 $221.319
</TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION. The table set forth on the
following page contains certain information for each of the fiscal
years indicated with respect to the chief executive officer and those
executive officers of Charter as to whom the total annual salary and
bonus paid or accrued during the fiscal year ended December 31, 1993,
exceeded $100,000:
11
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Annual Compensation(1) Compensation
SAR Awards LTIP All Other
Name and Principal Position Year Salary Bonus(2) (Units)(3) Payouts (4) Compensation(5)
<S> <C> <C> <C> <C> <C> <C>
Jerry E. Finger 1993 $286,488 $124,600 -0- $13,526 $12,728
Chairman and CEO 1992 267,732 112,700 -0- 4,737 13,111
1991 261,520 65,900 -0- 7,319 10,924
Mark T. Giles 1993 $170,000 $69,500 -0- $ -0- $12,308
President 1992 158,750 58,200 26,250 -0- 9,679
1991 155,000 39,700 7,717 -0- 7,909
Winston C. Davis 1993 $123,000 $27,000 -0- $ -0- $ 8,147
Senior Vice President 1992 118,584 26,900 -0- -0- 7,263
1991 117,108 25,000 6,615 5,915 4,813
Marshall R. Holman 1993 $90,000 $20,100 -0- $ -0- $ 6,131
Senior Operations Officer 1992 86,042 13,750 -0- -0- 5,178
1991 85,000 12,100 5,512 -0- 3,662
William S. Shropshire, Jr. 1993 $85,000 $20,500 -0- $ -0- $ 5,452
Chief Financial Officer 1992 81,042 19,500 2,100 -0- 4,334
and Treasurer 1991 75,163 12,700 5,512 -0- 3,206
(1) Other annual compensation, if any, provided to the named
executive officers during 1993, 1992 or 1991 did not exceed the
disclosure requirements of the rules promulgated by the SEC.
(2) Amounts indicated in this column represent incentive awards
paid to the named executive officers under the Charter
Bancshares, Inc. Management Incentive Compensation Plan (See
succeeding section entitled "Executive Compensation--Management
Incentive Compensation Plan").
(3) Amounts indicated in this column represent stock appreciation
rights units ("SAR Units") awarded to the named executive
officers under the 1991 Charter Bancshares, Inc. Stock
Appreciation Rights Plan (see succeeding section entitled
"Executive Compensation--Stock Appreciation Rights Plan").
With respect to the SAR Units awarded in 1991, the amounts
indicated in this column have been adjusted for 5% stock
dividends paid on Charter's Common Stock in August, 1992 and
September, 1993. With respect to the SAR Units awarded in
1992, the amounts indicated in this column have been adjusted
for a 5% stock dividend paid on Charter's Common Stock in
September, 1993.
(4) As used herein, the term "LTIP" means long-term incentive plan.
Amounts indicated in this column for Mr. Finger represent
earnings on existing account balances under Charter's Deferred
Plan that had been accrued as a result of the achievement of
profit objectives established under such plan but payment of
which was deferred at the election of the named executive
officer, but does not included a contribution of $14,324 which
was made to Mr. Finger's Deferred Plan account as of January 1,
1993, which is more fully discussed in the succeeding section
entitled "Executive Compensation--Executive Deferred
Compensation Plan" appearing on page 15 of this proxy
statement. The amount indicated in this column for an LTIP
payout to Mr. Davis in 1991 represents a deferred compensation
distribution made to Mr. Davis under the Deferred Plan.
(5) Amounts indicated in this column for 1993 are derived from the
following: (i) employer profit-sharing contributions and 401(k)
thrift plan matching employer contributions credited to the
respective accounts of Messrs. Finger, Giles, Davis, Holman and
Shropshire, as follows: $12,280, $11,860, $8,257, $5,746 and
$5,067, such amounts, however, (A) do not include trust
forfeitures occurring under the terms of the Profit-Sharing
Plan but do include trust forfeitures used to fund a portion of
the 401(k) thrift plan matching
12
employer contributions and (B) do not include earnings on the
undistributed balance held pursuant to the Profit-Sharing Plan
for the benefit of participants therein or earnings with
respect to any 401(k) thrift plan matching employer
contributions; and (ii) term life insurance premiums paid by
Charter for the benefit of Messrs. Finger, Giles, Davis, Holman
and Shropshire, as follows: $448, $448, $448, 385 and $385.
Amounts indicated in this column for both 1992 and 1991 are
derived from similar employer profit-sharing contributions,
401(k) thrift plan matching employer contributions and term
life insurance premiums.
</TABLE>
1993 SAR GRANTS. The SAR Committee did not grant any SAR Units to
the named executive officers for the fiscal year-ended December 31,
1993.
1993 SAR EXERCISES AND YEAR-END SAR VALUES. None of the SARs
which have been granted to the named executive officers pursuant to
the 1991 Charter Bancshares, Inc. Stock Appreciation Rights Plan have
been exercised. Moreover, since under the terms of the SAR Plan,
participants are only entitled to receive a cash settlement upon
exercise of any vested SARs based upon the fair value of Charter's
Common Stock as determined by the SAR Committee at the time of
exercise, there are no securities which underlie the unexercised SARs
and, therefore, such information is inapplicable and has been omitted.
The following table provides information on the value of unexercised
in-the-money SAR Units at December 31, 1993, for those SAR Units which
have been granted to the named executive officers pursuant to the 1991
Charter Bancshares, Inc. Stock Appreciation Rights Plan (see
succeeding section "Executive Compensation--Stock Appreciation Rights
Plan for a description of the SAR Plan). The in-the-money values for
the SAR Units which were granted to the named executive officers in
1991 and 1992 were determined based upon the difference between (i)
the exercise prices for such SAR Units of $5.57 and $6.67,
respectively, and (ii) the fully diluted book value per share of
Charter's Common Stock as of December 31, 1993.
SAR EXERCISES IN LAST FISCAL YEAR AND FY-END SAR VALUES
Value of Unexercised
In-the-Money
SAR Units at
Fiscal Year End
Name Exercisable/Unexercisable
Jerry E. Finger (1) -
Mark T. Giles $23,249/$26,000
Winston C. Davis $9,129/$6,086
Marshall R. Holman $7,606/$5,072
William S. Shropshire, Jr. $8,614/$6,710
(1) In light of his substantial stock ownership position in Charter
and his service as an ex-officio member on the Stock
Appreciation Rights Committee of the Board of Directors, Mr.
Finger is not presently eligible to receive SAR Units.
MANAGEMENT INCENTIVE COMPENSATION PLAN. On March 21, 1991, the
Board of Directors of Charter adopted the Charter Bancshares, Inc.
Management Incentive Compensation Plan (the "Incentive Plan") to
assist Charter and its subsidiary banks in attracting, rewarding and
retaining well-qualified and productive executive, management and
administrative officers. The Incentive Plan reflects the intentions
of Charter's Board of Directors to more closely align the compensation
of Charter's executive, management and administrative officers to
Charter s financial performance and to recognize their contributions
to any increases in shareholder value. The Incentive Plan became
effective for the fiscal year commencing January 1, 1991 and is
administered by the MICP Committee, the members of which are not
eligible to receive awards under the Incentive Plan. The MICP
Committee annually determines the employees who are eligible to
participate in the Incentive Plan and the amount of the incentive
awards, if any, to be made to eligible participants under the
Incentive Plan. In
13
accordance with the terms of the Incentive Plan, the eligible
participants are divided into different groups ("Participant Groups")
based upon each participant's position within the Charter
organization. These Participant Group classifications determine the
pro forma amount of each participant's base salary, if any, to be
allocated to the incentive pool. Under the terms of the Incentive
Plan, no incentive awards may be made with respect to any fiscal year
in which either (i) the return on Charter's common shareholders'
equity is less than ten percent (10%) or (ii) Charter's consolidated
net earnings are less than seventy-five percent (75%) of the
consolidated net earnings reflected in the annual consolidated budget
approved by the Board of Directors of Charter. Assuming each of
these conditions is met for a particular fiscal year, the size of the
incentive pool will be determined pursuant to a graduated schedule
approved annually by the MICP Committee and the disinterested members
of the Board of Directors, which schedule varies the PRO FORMA amount
of each participant's base salary allocated to the incentive pool
depending upon each participant's Participant Group and the return on
Charter's common shareholders' equity (the "Incentive Pool Schedule").
If the return on Charter's common shareholders' equity exceeds the
maximum amount reflected in the Incentive Pool Schedule, the MICP
Committee may increase the incentive pool, subject to approval by the
disinterested members of the Board of Directors. Pursuant to the
Incentive Pool Schedule approved by the MICP Committee for 1993 and
the 21.5% return on Charter's common shareholder's equity (which for
purposes of the Incentive Plan means consolidated net earnings for
1993, less dividends paid on the Preferred Stock in 1993), divided by
Charter's common shareholder's equity as of December 31, 1992), the
aggregate amount of the incentive pool created and awards made under
the terms of the Incentive Plan for 1993 was approximately $515,000
(the "1993 Incentive Pool"). The average percentage amount of the
combined base salaries of all participants allocated to the 1993
Incentive Pool was approximately 20%.
STOCK APPRECIATION RIGHTS PLAN. During 1991, the 1991 Charter
Bancshares, Inc. Stock Appreciation Rights Plan (the "SAR Plan") was
adopted and approved by the Board of Directors and shareholders of
Charter. The SAR Plan authorizes the issuance of up to 413,437 SAR
Units as adjusted in accordance with the terms of the SAR Plan for two
5% stock dividends paid on Charter's Common stock on August 10, 1992,
and September 30, 1993, respectively. The Board of Directors believes
that the SAR Plan offers a continuing long-term incentive to key
executive officers and managers of Charter and its subsidiaries, more
closely correlates executive compensation with increases in
shareholder value, and should enable Charter to maintain a competitive
position to attract and retain key executive and management personnel.
The SAR Plan is administered by the SAR Committee, the
responsibilities of which include determining the eligible
participants under the plan and the quantity, duration and other terms
and conditions of the SAR Units, as well as the value of the Common
Stock underlying the SAR Units both at the date of grant and the date
of exercise. On May 16, 1991 and October 1, 1992, respectively,
78,000 SAR Units (the "1991 Units") and 57,500 SAR Units (the "1992
Units") were awarded to eligible participants under the SAR Plan. The
fair value of the outstanding SAR Units has been fixed by the SAR
Committee at $5.57 for the 1991 Units and $6.67 for the 1992 Units,
such amounts representing the fully diluted book value per share of
Charter's Common Stock as of the month end preceding the respective
dates of grant. All of the outstanding SAR Units are subject to a
five-year vesting schedule with twenty percent vesting on January 1st
of each year. The SAR Units are subject to (i) automatic vesting
upon the occurrence of certain events, including death, disability, a
permitted termination of employment, a change in control event, and
liquidation of Charter, and (ii) forfeiture upon the occurrence of
certain events, including an unpermitted termination of employment.
At January 1, 1994, after giving effect to forfeitures of SAR Units
under the terms of the SAR Plan and as a result of the stock dividend
adjustments described above, there were 66,319 1991 Units outstanding,
of which approximately 39,791 1991 Units had fully vested. At
December 31, 1993, 2,140 1991 Units had been exercised by certain
participants who terminated their employment with Charter during 1993.
At January 1, 1994, after giving effect to forfeitures of SAR Units
under the terms of the SAR Plan and as a result of the stock dividend
adjustment described above, there were 59,325 1992 Units outstanding,
of which 23,730 1992 Units had fully vested and none had been
exercised. In accordance with generally accepted accounting
principles, Charter has recognized a charge to earnings for the fiscal
year ended December 31, 1993 with respect to the outstanding SAR
Units, based upon the adjusted book value per share of Charter's
Common Stock as of December 31, 1993. Charter will continue to
reflect charges and credits to earnings for fluctuations in the fair
value of Charter's Common Stock subsequent to December 31, 1993.
14
PROFIT-SHARING PLAN. Charter and its subsidiary banks participate
in a Profit-Sharing Plan ("Plan") that covers all full-time employees,
provided that they first must become eligible to participate by
serving 1,000 hours of employment within a calendar year. Each
subsidiary bank may make contributions based upon net earnings, which
amount is allocated among employees based upon salary level and length
of service. Vesting begins after three years of employment, with full
vesting occurring after seven years or upon death, retirement, or
total and permanent disability. Pursuant to an amendment of the Plan
during 1987, the foregoing vesting schedule supersedes the prior
schedule that provided vesting began after four years, with full
vesting to occur after eleven years. Outside directors do not
participate in the Plan. For the fiscal year ended December 31, 1993,
a contribution of $310,000 was made to the Plan, as compared to
$268,500 for the fiscal year ended December 31, 1992.
During 1987 Charter adopted and incorporated into the Plan a
thrift plan qualified pursuant to Section 401(k) of the Internal
Revenue Code of 1986, as amended. Under the thrift plan an employee,
after specified periods of service, may contribute up to 10% of his or
her base compensation to the thrift plan, with up to 6% of any salary
reduction contribution by the employee then being matched a minimum of
15% by Charter or such greater amount as the Board of Directors may,
in its discretion, determine. Amounts needed to fund this matching
contribution, which as of January 1, 1988 was set at 25% of the
employee's contribution, are drawn first from amounts retained in the
plan due to employee forfeitures. Accordingly, $20,185 of
approximately $59,150 in matching contributions during 1993 were
funded from forfeitures with the remaining $38,965 being charged as an
expense by Charter or the appropriate subsidiary bank. At December
31, 1993, 140 of 310 full-time employees were participating in the
thrift plan.
EXECUTIVE DEFERRED COMPENSATION PLAN. Effective January 1, 1982,
the Board of Directors of Charter established a deferred compensation
plan for members of its executive management and selected members of
senior management of its subsidiary banks. Contributions were made to
the Deferred Plan in the 1982 and 1983 plan years. Since Mr. Finger
does not participate in the SAR Plan and his ability to make
contributions to the 401(k) thrift plan are limited by applicable law,
in order to bring Mr. Finger's total compensation to a level
commensurate with his position and performance, the Compensation
Committee authorized a contribution to Mr. Finger's Deferred Plan
account of $14,324 effective as of January 1, 1993, which amount
represented five percent of Mr. Finger's 1993 base salary. Except for
1982, 1983 and 1993, no further contributions have been made to the
Deferred Plan. Employer contributions which were made under the
Deferred Plan in 1982 have been vested over a five-year period.
Contributions under the Deferred Plan for the 1983 plan year have been
vested over a four-year period beginning January 1, 1984, with
increases in the amounts contributed to be equivalent to the rate of
increase in the book value of Charter's Common Stock over such period.
Similarly, the contribution to Mr. Finger's Deferred Plan account for
the 1993 plan year will be vested over a three-year period beginning
January 1, 1994, with increases in the amounts contributed to be
equivalent to the rate of increase in the book value of Charter's
Common Stock over such period. In the event there is no increase in
the book value of Charter's Common Stock over the applicable period,
the undistributed balance held under the Deferred Plan earns at a rate
equal to Charter's current federal funds borrowing rate. Unless
deferred further by an eligible employee, the 1982 Deferred Plan
amounts were paid to eligible employees in a lump sum payment in 1988
and were deductible by Charter at that time. As of December 31,
1993, the contributions to the Deferred Plan for plan years 1982 and
1983 and earnings thereon have fully vested and have been distributed
to all employee participants, except for Mr. Finger who has elected to
defer distribution of his account balance and earnings thereon through
December 31, 1994, at which time he may elect to further defer such
payment. At December 31, 1993, Mr. Finger had an account balance of
$166,023, which includes accrued earnings of $13,526 for 1993.
DIRECTOR COMPENSATION. Each director who is not also an officer
of Charter or NationsBank, or who has been designated by NationsBank
as a nominee for election to the Board of Directors, receives
compensation for his services as a director in the amount of $500 for
each meeting of the board and $400 for any committee of the board
which he attends. Mr. Gentry is reimbursed by Charter for his actual
out-of-pocket expenses incurred in attending Charter's board meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
Except for Mr. Finger who is an ex-officio member of the Compensation
Committee (as well as the SAR Committee), no member of the
Compensation
15
Committee (or the SAR Committee or MICP Committee) was an officer or
employee of Charter or any of its subsidiaries during 1993, or was
formerly an officer of Charter or any of its subsidiaries or had any
relationship requiring disclosure by Charter pursuant to applicable
SEC rules. Mr. Finger's ex-officio status on the Compensation
Committee (and the SAR Committee) does not entitle him to vote on
matters submitted to a vote of such committees but enables him to
provide advice and consultation on compensation matters affecting
Charter and its officers and employees.
During 1993, no executive officer of Charter or any subsidiary
served as (i) a member of the compensation committee (or other board
committee performing equivalent functions) of another entity, one of
whose executive officers served on Charter's Compensation Committee,
(ii) a director of another entity, one of whose executive officers
served on Charter's Compensation Committee, or (iii) a member of the
compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served
as a director of Charter.
SHAREHOLDER PROPOSALS
No shareholder proposals were received from any of Charter s
shareholders requesting inclusion in this proxy statement. Proposals
of shareholders for presentation at the 1995 annual meeting of share-
holders must be received by Charter at the address set forth on the
cover page of this proxy statement by January 1, 1995, for
consideration for inclusion in the proxy material.
TRANSACTIONS WITH MANAGEMENT
Some of the officers and directors of Charter and their affiliates
are customers of its subsidiary banks, Investor Services and
Charter-Venture. Such directors and officers have had transactions in
the ordinary course of business with certain of these institutions,
including borrowings, all of which were on substantially the same
terms and conditions, including interest rates and collateral, as
those prevailing from time to time for comparable transactions with
unaffiliated persons and did not involve more than the normal risk of
collectibility or features unfavorable to Charter's subsidiaries.
Charter expects to continue to enter into such transactions on similar
terms and conditions in the future.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires Charter's directors and executive officers, and persons who
beneficially own more than ten percent of a registered class of equity
securities, to file reports of beneficial ownership and changes in
beneficial ownership on Forms 3, 4 and 5 (collectively, "SEC Forms")
with the SEC and the National Association of Securities Dealers, Inc.
Directors, executive officers and ten percent beneficial owners are
required under regulations promulgated by the SEC to furnish Charter
with copies of all SEC Forms which they file.
Based solely on information provided to Charter by its directors,
executive officers and ten percent beneficial owners, Charter believes
that its directors, executive officers and ten percent beneficial
owners have complied with all filing requirements applicable to them
with respect to transactions occurring during 1993.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has not yet selected an independent
certified public accounting firm to audit the consolidated financial
statements of Charter and its subsidiaries for the year ending
December 31, 1994. Deloitte & Touche has served as independent
auditors to Charter since its inception in 1978, as well as to
Charter-Houston and Charter-Colonial since 1976. Charter is advised
that no member of Deloitte & Touche has any direct financial interest
or material indirect financial interest in Charter or any of its
subsidiaries or, during the past three years, has had any connection
with Charter or its subsidiaries in the capacity of promoter,
underwriter, voting trustee, director, officer or employee. Repre-
sentatives of Deloitte & Touche are expected to be present at the
annual meeting of shareholders and will be available to respond to
appropriate questions addressed to them.
16
OTHER BUSINESS
The management of Charter does not know of any other matters that
are likely to be brought before the meeting for action. Should,
however, any other matter properly be brought before the meeting, the
persons named in the accompanying proxy will vote at their discretion
on such matters.
JERRY E. FINGER
Chairman
Houston, Texas
May 2, 1994
Charter has included as part of its 1993 Annual Report to
Shareholders enclosed with this proxy statement a copy without
exhibits of the annual report of Charter on Form 10-K for the year
ended December 31, 1993, as filed with the Securities and Exchange
Commission. Copies of the exhibits described in the Form 10-K are
available to anyone who was a shareholder of record of Charter as of
April 15, 1994, at a charge of $1.00 per page, minimum of $25.00
each. Requests should be directed to: Michael A. Roy, Secretary,
Charter Bancshares, Inc., 2600 Citadel Plaza Drive, Suite 600,
Houston, Texas 77008.
17
<PAGE>
[FRONT]
CHARTER BANCSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
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THE COMPANY FOR AN ANNUAL MEETING MAY 26, 1994
R
The undersigned hereby appoints Jerry E. Finger, Winston C. Davis and
O Mark T. Giles, or any of them, each with power of substitution, the
proxies of the undersigned, to vote the stock of the undersigned,
X whether Common, Special Common or Preferred Stock, at the annual
meeting of shareholders of Charter Bancshares, Inc. to be held May
Y 26, 1994, and at any adjournment thereof as follows:
I. DIRECTORS. To elect as directors the nominees listed below.
Donald R. Collins, Winston C. Davis, Jerry E. Finger, Frank L. Gentry,
Mark T. Giles, William M. Hatten, R. Steve Letbetter, Herschel G. Maltz,
W. J. Smith, Jr.
II. OTHER BUSINESS. To vote in their discretion with respect to any other
business that may properly come before the meeting.
(change of address)
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
[BACK]
/X/ Please mark your
votes as in this
example.
1. Election of Directors. (see reverse)
FOR / / WITHELD / /
For, except vote witheld from the following nominee(s)
2. As such proxies may in their discretion determine upon such other
matters as may properly come before the meeting.
FOR / / AGAINST / / ABSTAIN / /
Change of Address / /
Attend Meeting / /
Signature(s) Date
Signature(s) Date
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
