SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CITY HOLDING COMPANY
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
April 12, 1999
To Our Shareholders:
On behalf of the Board of Directors and management, I cordially invite
you to attend the annual meeting of shareholders of City Holding Company to be
held at the Charleston Marriott Town Center located at 200 Lee Street East,
Charleston, West Virginia 25301, on May 10, 1999, at 3:00 p.m. We look forward
to personally greeting those of you who are able to attend the meeting.
The notice of meeting and proxy statement accompanying this letter
describe the specific business to be acted upon.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the shareholders.
It is important that your shares be represented at the meeting. Whether
or not you plan to attend in person, you are requested to vote, sign, date, and
promptly return the enclosed proxy in the postage-paid envelope provided.
City Holding thanks you for your consideration and continued support.
Sincerely,
Steven J. Day,
President and Chief Executive Officer,
City Holding Company
<PAGE>
CITY HOLDING COMPANY
25 Gatewater Road
Post Office Box 7520
Charleston, West Virginia 25356-0520
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 10, 1999
Notice is hereby given that the annual meeting of shareholders of City Holding
Company (the "Company") will be held at the Charleston Marriott Town Center
located at 200 Lee Street East, Charleston, West Virginia 25301, on May 10,
1999, at 3:00 p.m. for the following purposes:
1. To elect seven Class One (I) directors to serve for a term of one
year, eight Class Two (II) directors to serve for a term of two
years, and eight Class Three (III) directors to serve for a term of
three years. The names of the directors and their respective Classes
are set forth in the accompanying proxy statement.
2. To reserve an additional one million (1,000,000) shares of common
stock for possible future issuance under the Company's 1993 Stock
Incentive Plan.
3. To ratify the Board of Directors' appointment of Ernst & Young LLP as
independent auditors of City Holding Company for 1999.
4. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on April 9, 1999, are the only
shareholders entitled to notice of and to vote at the annual shareholders
meeting.
By Order of the Board of Directors,
Victoria A. Evans
Secretary
Dated April 12, 1999
IMPORTANT
Whether you expect to attend the meeting or not, please vote, sign, date, and
return the enclosed proxy in the enclosed self-addressed, postage-paid envelope
as promptly as possible. If you attend the meeting, you may vote your shares in
person, even though you have previously signed and returned your proxy.
<PAGE>
CITY HOLDING COMPANY
25 Gatewater Road
Post Office Box 7520
Charleston, West Virginia 25356-0520
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This statement is furnished in connection with the solicitation of
proxies to be used at the annual shareholders meeting of City Holding Company
(the "Company") to be held on May 10, 1999.
The solicitation of proxies in the enclosed form is made on behalf of
the Board of Directors of the Company.
The cost of preparing, assembling, and mailing the proxy material and of
reimbursing brokers, nominees, and fiduciaries for the out-of-pocket and
clerical expenses of transmitting copies of the proxy material to the beneficial
owners of shares held of record by such persons will be borne by the Company.
The Company does not intend to solicit proxies otherwise than by use of the
mail, but certain officers and regular employees of the Company or its
subsidiaries, without additional compensation, may use their best efforts, by
telephone or otherwise, to obtain proxies. The proxy materials are being mailed,
on or about April 12, 1999, to shareholders of record at the close of business
on April 9, 1999.
A shareholder signing and returning a proxy on the enclosed form has the
power to revoke it at any time before the shares subject to it are voted by
notifying, in writing, Victoria A. Evans, City Holding Company, P.O. Box 7520,
Charleston, West Virginia 25356-0520, by the execution of a proxy with a later
date, or by voting in person at the Annual Meeting the shares represented by the
proxy. If a shareholder specifies how the proxy is to be voted with respect to
any of the proposals for which a choice is provided, the proxy will be voted in
accordance with such specifications. If a shareholder fails to specify with
respect to such proposals, the proxy will be voted FOR proposals One, Two, and
Three.
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders' proposals intended to be presented at the 2000 annual
meeting must be received by the Company no later than December 31, 1999, for
inclusion in the Company's proxy statement and form of proxy for that meeting.
To be so included, all such submissions must comply with the requirements of
Rule 14a-8 of the Securities Exchange Act of 1934. The Board of Directors
directs the close attention of interested shareholders to that Rule.
<PAGE>
OUTSTANDING VOTING SECURITIES
Only shareholders of record at the close of business on April 9, 1999,
are entitled to vote at the annual meeting. On that day, there were issued and
outstanding 16,812,944 shares of common stock (after deducting an aggregate of
17,332 shares held in treasury). Each share has one vote. The affirmative vote
of a majority of the shares represented and entitled to vote at the Annual
Meeting is required to approve the proposal to amend the Company's 1993 Stock
Incentive Plan and to ratify the appointment of Ernst & Young LLP. Directors are
elected by a plurality of the votes cast. In all elections of directors, each
shareholder shall have the right to cast one vote for each share of stock owned
by him for as many persons as there are directors to be elected, or upon notice
to the Company, he may cumulate such votes and give one candidate as many votes
as the number of directors to be elected multiplied by the number of his shares
of stock or he may distribute them on the same principle among as many
candidates and in such manner as he shall desire. If one shareholder has given
notice that he intends to cumulate votes, all shareholders may do so. The
Proxies may cumulate their votes at their discretion.
The presence, in person or by properly executed proxy, of the holders of
a majority of the outstanding shares of the Company's Common Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. Abstentions will be counted as shares present for purposes of
determining the presence of a quorum. As a consequence, abstentions will be
counted as votes against the proposal. Because director nominees must receive a
plurality of the votes cast at the meeting, a vote withheld will not affect the
outcome of the election.
<PAGE>
OWNERSHIP OF EQUITY SECURITIES
The Company's only authorized voting equity security is its Common
Stock, par value $2.50 per share (the "Common Stock"). As discussed on the
preceding pages, the Company's Common Stock has one vote per share on all
matters except the election of Directors.
The table below presents certain information as of the Record Date
regarding beneficial ownership of shares of Common Stock by Directors, nominees
for Director, named executive officers, and all Directors and executive officers
as a group. The Company knows of no person that owns more than 5% of the
outstanding Common Stock.
<TABLE>
<CAPTION>
Aggregate
Sole Voting and Percentage
Name Investment Power Other (1) Owned
- ------------------------------ --------------------- --------------------- -------------------
<S> <C> <C> <C>
Samuel M. Bowling 24,325 57,917 0.49%
Phillip W. Cain 4,530 428 0.03%
Dr. D. K. Cales 92,152 - 0.55%
Hugh R. Clonch 19,240 91,302 0.66%
Steven J. Day 33,173 20,950 0.32%
William C. Dolin 128,262 1,413 0.77%
Robert D. Fisher 8,498 - 0.05%
Jay C. Goldman 10,483 316 0.06%
David W. Hambrick 30,327 2,790 0.20%
David E. Haden 61,106 55 0.36%
Frank S. Harkins, Jr. 16,685 222 0.10%
Carlin K. Harmon 33,769 9,104 0.25%
Tracy W. Hylton II 11,542 - 0.07%
C. Dallas Kayser 33,950 448 0.20%
Bernard C. McGinnis III 98,325 17,900 0.69%
Thomas L. McGinnis 121,926 - 0.73%
Philip L. McLaughlin 27,847 199 0.17%
Leon K. Oxley 27,815 64,968 0.55%
E. M. Payne III 4,895 51,730 0.34%
Robert T. Rogers 21,588 2,721 0.14%
Mark H. Schaul 28,988 1,676 0.18%
James E. Songer, Sr. 52,999 6,527 0.35%
Albert M. Tieche, Jr. 28,892 - 0.17%
Robert A. Henson 6,570 8,071 0.09%
John W. Alderman III 1,020 161 0.01%
David J. Vida, Jr. 795 668 0.01%
Directors and Executive
Officers as a group 945,326 362,118 7.78%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes shares (a) owned by or with certain relatives; (b) held in various
fiduciary capacities; (c) held by certain corporations; (d) held in trust by the
Company's 401(k) and Profit Sharing Plan; or (e) held in trust by the Company's
Employee Stock Ownership Plan (ESOP).
<PAGE>
PROPOSAL TO ELECT DIRECTORS (PROPOSAL 1)
As a consequence of the merger of the Company and Horizon Bancorp, Inc.,
which became effective on December 31, 1998, the Company's Board of Directors
was increased to twenty-four members. Certain directors of the Company fill
twelve seats on the enlarged Board and, as provided in the Merger Agreement with
Horizon, twelve were elected by the Company's directors from among the then
current directors of Horizon designated by Horizon to serve on the enlarged
Board. The reconstituted Board has determined to submit the election of all
directors to shareholders at the 1999 annual meeting.
Historically, the Company's Board has been divided into three classes,
with one class elected each year to a three-year term. At this year's meeting,
shareholders will elect all directors to either Class I, Class II, or Class III,
to serve one-year, two-year, or three-year terms, respectively, as set forth on
the enclosed proxy. Following the election of three classes at this year's
annual meeting, the Company will revert to its normal practice of electing one
class at each year's annual meeting. At the 2000 annual meeting only Class I
nominees will be elected to a three-year term; in 2001, Class II will stand for
election to a three-year term, and in 2002, Class III will stand for election to
a three-year term. The only director of the Board not standing for re-election
is William M. Frazier, who retired from the Board of Directors in March 1999
upon reaching the mandatory retirement age of 70. The Board of Directors has no
reason to believe that any of the nominees will be unable to serve if elected,
but in the event a nominee is unavailable, proxies will be voted for such
substitute nominee as the Board of Directors may designate.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL OCCUPATION OR EMPLOYMENT AGE FIRST BECAME A DIRECTOR
- ------------------------------------------------ ----------- ----------------------------
<S> <C> <C>
CLASS I NOMINEES:
James E. Songer, Sr. 68 January 1999
Retired,
Songer Insurance, Inc. (Insurance)
Mark H. Schaul 68 March 1996
President,
Charmar Realty Company (Real Estate)
David W. Hambrick 56 January 1999
Vice President,
City Holding Company
Frank S. Harkins, Jr. 59 January 1999
Retired,
Bank of Raleigh
Dr. D. K. Cales 69 July 1990
Dentist
Albert M. Tieche, Jr. 45 January 1999
President,
BHI, Inc. (Health Care Related)
Phillip W. Cain 46 January 1999
Executive Vice President,
City National Bank
<PAGE>
CLASS II NOMINEES:
Leon K. Oxley 50 February 1997
Partner,
Frazier & Oxley, LC (Attorney)
William C. Dolin 61 January 1999
Retired,
Dolin Supply Co. (Industrial Supplies)
Carlin K. Harmon 62 September 1988
Former President and Chief Executive Officer,
First State Bank & Trust
Steven J. Day 45 November 1988
President and Chief Executive Officer,
City Holding Company
Tracy W. Hylton, II 50 January 1999
President,
Eller, Inc. (Coal)
Thomas L. McGinnis (1) 50 January 1999
Executive Vice President,
City National Bank
C. Dallas Kayser 47 January 1995
C. Dallas Kayser, L.C. (Attorney)
E. M. Payne, III 63 January 1999
Partner,
File, Payne, Scherer & File (Attorney)
CLASS III NOMINEES:
Samuel M. Bowling 61 March 1983
President, Dougherty Company, Inc. (Mechanical
Contractor) and Vice Chairman of the Board,
City Holding Company
David E. Haden 60 January 1998
President, RMI. Ltd. (Insurance)
R. T. Rogers 65 January 1999
President and Chief Executive Officer,
R. T. Rogers Oil Co. (Petroleum Marketing)
Jay C. Goldman 55 August 1988
President,
Goldman & Associates (Real Estate)
Robert D. Fisher 46 August 1994
Partner,
Adams, Fisher & Evans (Attorney)
<PAGE>
Philip L. McLaughlin 58 January 1999
Chairman of the Board,
City Holding Company
Hugh R. Clonch 59 September 1995
President,
Clonch Industries, Inc. (Timber)
B. C. McGinnis, III (1) 56 January 1999
Vice Chairman of the Board,
City Holding Company
</TABLE>
(1) B. C. McGinnis, III and Thomas L. McGinnis are brothers.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The full Board of Directors met five times during the fiscal year ended
December 31, 1998. The Executive Committee, which consists of a majority of the
full Board of Directors, met ten times during the fiscal year ended December 31,
1998. Additionally, the Board of Directors has Audit and Compensation
committees. No director attended fewer than 75% of the meetings of the Company's
Board of Directors or Executive Committee. Each member of the Audit,
Compensation and Nominating committees, respectively, attended each meeting held
during 1998.
During 1998 the Audit Committee included Mark Schaul, Chairman, Dr. D.
K. Cales, and Jack E. Fruth, none of whom is employed by the Company. Mr. Fruth
retired from the Board of Directors, effective in December 1998, upon reaching
age 70. The Committee met four times during 1998. The Audit Committee recommends
engagement of the independent auditors, considers the scope of the audit,
reviews the activities and recommendations made by the Company's internal
auditors, and considers comments made by the independent auditors with respect
to the Company's internal control structure.
During 1998, the Compensation Committee included Dr. D. K. Cales, Jack
E. Fruth, and Jay C. Goldman, none of whom is employed by the Company. The
Compensation Committee makes recommendations to the Board with respect to the
compensation of executive officers and certain other officers who participate in
the Company's Stock Incentive Plan. The Committee met once during 1998.
Prior to December 1998, the entire Board of Directors functioned as a
nominating committee by considering nominees for election as Directors of the
Company. In December 1998, the Board of Directors formed a Nominating Committee
and, subsequent to the merger of Horizon Bancorp, Inc. into the Company,
increased the size of the Nominating Committee to ten Directors in January 1999.
The newly formed Nominating Committee, comprised of Samuel M. Bowling, Hugh R.
Clonch, William C. Dolin, Robert D. Fisher, Jay C. Goldman, Tracy W. Hylton, II,
C. Dallas Kayser, E. M. Payne, III, Robert T. Rogers, and James E. Songer, Sr.,
nominated the Directors and their respective classes, as set forth on the
enclosed proxy. Pursuant to the Company's Amended and Restated Bylaws, the
Nominating Committee will consider nominees recommended by shareholders if such
recommendations are submitted in writing and delivered or sent by first class
registered or certified mail to the President of the Company not less than 14
days and no more than 50 days prior to the date of the 2000 Annual Meeting. Such
recommendations should include the name, address, occupation and ownership of
shares of Common Stock of the nominee, and the name, address and ownership of
shares of Common Stock of the nominating shareholder.
<PAGE>
COMPENSATION OF DIRECTORS
In 1998, the Company's Directors who were members of the Executive
Committee were paid a fee of $3,500 per quarter, regardless of attendance. The
Company's Directors who were not members of the Executive Committee were paid
$1,500 per quarter, regardless of attendance. The Audit Committee and
Compensation Committee members were paid a fee of $250 for each committee
meeting attended. Directors who are also officers of the Company and its
subsidiaries receive no compensation for attendance.
EXECUTIVE OFFICERS OF CITY HOLDING COMPANY
At December 31, 1998, the executive officers of the Company were as follows:
STEVEN J. DAY, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 45 - Mr. Day has served as
President and Chief Executive Officer of City Holding Company and City National
Bank of West Virginia since April 1990.
CARLIN K. HARMON, EXECUTIVE VICE PRESIDENT, 62 - Mr. Harmon has served as
President and Chief Executive Officer of First State Bank and Trust since 1972.
Mr. Harmon has also served as Executive Vice President of City Holding Company
since 1990.
DAVID J. VIDA, JR., PRESIDENT, CITY MORTGAGE SERVICES, 32 - Mr. Vida has served
as President of City Mortgage Services, a division of City National Bank of West
Virginia, since August 1997. From July 1996 through December 1997, Mr. Vida
served as Executive Vice President - Operations of City Mortgage Services. From
1994 through July 1996, Mr. Vida was Vice President - Finance/Operations and a
member of the Executive Committee of Prime Financial Corporation, Costa Mesa,
California.
JOHN W. ALDERMAN, III, SENIOR VICE PRESIDENT AND CHIEF LEGAL COUNSEL, 34 - Mr.
Alderman joined City Holding Company in April 1997 as Vice President and Chief
Legal Officer. Prior to joining the Company, Mr. Alderman was an associate at
Steptoe & Johnson, Charleston, West Virginia.
ROBERT A. HENSON, CHIEF FINANCIAL OFFICER, 37 - Mr. Henson has served as Chief
Financial Officer of City Holding Company since May 1990.
MATTHEW B. CALL, EXECUTIVE VICE PRESIDENT, 41 - Mr. Call joined City Holding
Company in August 1994 as Senior Vice President and became Executive Vice
President of the Company in January 1998. Prior to joining City Holding Company,
he was Senior Vice President and Cashier for Bank One, West Virginia.
<PAGE>
F. ERIC NELSON, JR., TREASURER, 37 - Mr. Nelson has been Treasurer and
Investment Portfolio Manager of the Company since October 1994. He was Chief
Operations Officer and Investment Portfolio Manager from 1992 to 1994.
LARRY L. DAWSON, SENIOR VICE PRESIDENT, 52 - Mr. Dawson has been Senior Vice
President of City Holding Company since November 1997. Prior to joining the
Company, he was Chairman of the Board, President, and Chief Executive Officer of
Wesbanco-Charleston, West Virginia and Vice President of Wesbanco, Inc.
PEGGY L SCHULTZ, VICE PRESIDENT - MARKETING, 51 - Prior to becoming Vice
President - Marketing in 1997, Ms. Schultz was Business Development Officer for
the Company from 1993 to 1997.
VICTORIA A. EVANS, SENIOR VICE PRESIDENT, 38 - Prior to becoming Senior Vice
President in January 1998, Ms. Evans was Vice President of the Company from 1997
through 1998. From 1993 through 1997, Ms. Evans was an Assistant Vice President
for the Company.
DAVID E. HADEN, PRESIDENT, RMI, LTD., 60 - Mr. Haden has served as President of
RMI, ltd. since 1987. RMI, ltd. was acquired by City National Bank in December
1997 and operates as a division of City National Bank of West Virginia.
JOE L. ELLISON, PRESIDENT, OHIO VALLEY REGION-CITY NATIONAL BANK, 55 -
Mr. Ellison served as President of Peoples Bank of Pt. Pleasant from 1990
through December 1997. In 1998, Mr. Ellison became a division president of City
National Bank and is currently President of the Ohio Valley Region of City
National Bank of West Virginia.
JEFFREY D. LEGGE, SENIOR VICE PRESIDENT AND DIRECTOR OF DATA PROCESSING, 35 -
Mr. Legge served as Assistant Vice President of Data Processing for the Company
from 1993 through 1997. From 1997 to 1998, Mr. Legge was Vice President of Data
Processing. He became Senior Vice President and Director of Data Processing for
the Company in 1998.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation for the Company's
Chief Executive Officer and the four highest-paid executive officers, as well as
the total compensation paid to each individual during the Company's last three
fiscal years:
Summary Compensation Table
Annual Compensation
<TABLE>
<CAPTION>
Name and All Other
Principal Position Year Salary ($) Bonus ($) (1) Compensation(2)
- -------------------------- ---------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Steven J. Day 1998 $209,773 (3) $18,789
1997 203,663 107,691 26,485
1996 194,057 90,444 23,597
Carlin K. Harmon 1998 167,256 (3) 16,054
1997 162,384 86,053 24,021
1996 154,726 69,574 23,613
David J. Vida, Jr. 1998 128,750 (3) 17,584
1997 125,000 38,500 22,801
1996 45,018 - -
John W. Alderman, III 1998 128,750 (3) 16,331
1997 83,333 35,000 -
1996 - -
Robert A. Henson 1998 105,375 (3) 17,006
1997 102,306 55,123 24,953
1996 97,481 46,302 22,168
</TABLE>
(1) Includes bonus awards under the Company's Incentive Plan.
(2) Includes Company matching and profit-sharing contributions under the
Company's Profit-Sharing and 401(k) Plan, which was implemented January 1, 1991,
and the Company's ESOP, which was implemented January 1, 1996.
(3) For performance in 1998, no bonus awards have been granted to date under the
Company's Incentive Plan. The Compensation Committee has deferred the payment of
any bonus awards due to the costs incurred by the Company associated with the
merger and restructuring charges recorded as a result of the Company's merger
with Horizon Bancorp, Inc.
<PAGE>
STOCK OPTION GRANTS IN 1998
The following table sets forth certain information concerning stock
options granted during 1998 to the named executive officers:
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Individual Grants Appreciation for
Option Term
- ------------------------------------------------------------------- --------------------
% of
Total
Number of Options
Securities Granted Exercise
Name Underlying to Price
Options Employees per Expiration
Granted in 1998 Share Date 5% 10%
- ----------------------- ----------- ----------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven J. Day 25,900 12.38% 42.75 2/27/2003 $305,879 $675,990
Carlin K. Harmon 719 0.34% 42.75 2/27/2003 8,491 18,766
David J. Vida, Jr. 15,322 7.33% 42.75 2/27/2003 180,953 399,904
John W. Alderman, III 15,229 7.28% 42.75 2/27/2003 179,854 397,477
Robert A. Henson 15,461 7.39% 42.75 2/27/2003 182,594 403,532
</TABLE>
AGGREGATED STOCK OPTION EXERCISES IN 1998 AND FISCAL YEAR-END OPTION VALUES
The following table summarizes options exercised during 1998 and
presents the value of unexercised options held by the named executives at
December 31, 1998:
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Value at Fiscal Year-End at Fiscal Year-End
Shares Acquired Realized (#) Exercisable (E)/ ($) Exercisable (E)/
Name on Exercise (#) ($) Unexercisable (U) Unexercisable (U)
- ---------------------- ------------------ ----------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Steven J. Day - - 21,325 (E) $96,000 (E)
20,234 (U) -
Carlin K. Harmon - - 719 (E) -
David J. Vida, Jr. - - 8,462 (E) $17,500 (E)
11,680 (U) -
John W. Alderman, III - - 9,122 (E) -
13,637 (U) -
Robert A. Henson - - 11,560 (E) $58,696 (E)
11,238 (U) -
</TABLE>
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company (the
"Committee") is comprised of three outside directors, none of whom serves on the
board of any other Committee member's company or organization. The Committee has
access to both outside legal counsel and consultants.
TO THE BOARD OF DIRECTORS OF CITY HOLDING COMPANY:
The Compensation Committee of the Board of Directors of the Company
submits the following report of its deliberations with respect to compensation
of the Company executives, including the Company's Chief Executive Officer, Mr.
Day, for 1998:
City Holding executives are compensated under the Company's Incentive
Plan (the "Incentive Plan") adopted in 1992. The Incentive Plan is designed to
link executive compensation to the performance of the Company and to provide
levels of compensation adequate to attract and to retain quality management. For
1998, thirty-six members of the Company's consolidated management group,
including thirteen members of Executive Management, participated in the
Incentive Plan.
Compensation under the Incentive Plan includes base salaries with
provisions for annual increases and bonuses, including stock options, based on
individual and corporate performance. Bonuses are paid one-half in cash and
one-half in Common Stock, while stock options are awarded at the Committee's
discretion. Maximum salary increases (as a percentage of the percentage increase
in the Consumer Price Index) and bonuses, including stock options, (as a
percentage of salary) are calculated under the Incentive Plan based upon
performance as measured by annual return on average assets and return on average
equity. The Committee believes that these ratios best measure performance that
is likely to translate into increased shareholder value. The Incentive Plan may
be amended or rescinded at any time.
BASE SALARIES. Base salaries for 1998 were determined in accordance with
the formula that was adopted as part of the Incentive Plan. The average increase
in base pay for 1998 was approximately 2.2%.
ANNUAL BONUSES. For performance in 1998, no bonus awards have been
granted to date. The Committee has deferred the payment of any bonus awards due
to the costs incurred by the Company associated with merger and restructuring
charges as a result of the Company's merger with Horizon Bancorp, Inc.
Respectfully submitted,
Dr. D. K. Cales
Jack E. Fruth
Jay C. Goldman
<PAGE>
STOCK INCENTIVE PLAN
For a description of the Company's 1993 Stock Incentive Plan, see
"Proposal to Amend the Company's 1993 Stock Incentive Plan (Proposal 2)." The
class of employees eligible to participate in the 1993 Stock Incentive Plan
includes Messrs. Day, Harmon, Vida, Alderman, and Henson.
EMPLOYEE BENEFIT PLANS
Under the Company's Profit Sharing & 401(k) Plan (the "Plan"), a
deferred compensation plan under the Internal Revenue code, eligible
participants, including Messrs. Day, Harmon, Vida, Alderman, and Henson, may
contribute from 1% to 15% of pre-tax earnings to their Plan accounts.
Contributions may be invested in any of six investment options as selected by
the participant, including Company Common Stock. The Company matches, in its
Common Stock, 50% of the first 6% of earnings contributed by each participant.
Although the profit sharing features of this Plan remain intact, future profit
sharing contributions, if any, are expected to be made to the Employee Stock
Ownership Plan.
City Holding Company's Employees Stock Ownership Plan ("ESOP"), covers
all eligible employees, including Messrs. Day, Harmon, Vida, Alderman, and
Henson, who have completed one year of service and have attained the age of 21.
The ESOP plan was created January 1, 1996, and includes both a Money Purchase
and a Stock Bonus feature. Annually, the Company will contribute to the Money
Purchase account an amount equal to 9% of eligible compensation. The Stock Bonus
account contributions are discretionary and are determined annually by the
Company's Board of Directors. For the year ended December 31, 1998, ESOP
contributions for Messrs. Day, Harmon, Vida, Alderman, and Henson equaled 9% of
the 1998 maximum contribution limit as set forth by the Internal Revenue
Service. Contributions to all executive officers of the Company aggregated
$149,000, and included contributions of $14,400 each to Messrs. Day, Harmon,
Vida, Alderman, and Henson.
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth the cumulative total shareholder return
(assuming reinvestment of dividends) to City Holding Company's shareholders
during the five-year period ended December 31, 1998, as well as an overall stock
market index (The Nasdaq Stock Market Index) and the Company's Peer Group. The
Peer Group consists of publicly-traded financial institutions over $1 billion
but less than $5 billion in assets headquartered in Ohio, Pennsylvania,
Virginia, Kentucky, and Maryland.
[GRAPH]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
City Holding 100 98.84 96.12 110.48 186.61 147.25
Nasdaq - Total US 100 97.75 138.26 170.01 208.58 293.21
SNL $1B - $5B Bank
Asset-Size Index 100 105.28 141.58 183.54 306.09 305.38
Peer Group 100 98.08 121.16 139.81 230.54 233.63
</TABLE>
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into Employment Agreements with Steven J. Day
and Robert A. Henson (individually, the "named executive"). The agreements
specify terms of employment, including compensation. The contracts were entered
into on December 31, 1998 and terminate on the day next preceding the fifth and
third anniversary of the date of the contracts for Mr. Day and Mr. Henson,
respectively, except that on each monthly anniversary date, the agreements are
automatically extended for an additional month. The agreements provide that if
the named executive voluntarily terminates his employment at any time after
December 31, 1999, the named executive will be entitled to receive annually 60%
of his Termination Compensation, as defined, until the earlier of (i) five years
from the date on which the named executive voluntarily terminates employment or
(ii) the date on which the named executive reaches age 65. In the event the
named executive's employment is terminated by the Company other than for "just
cause", the named executive will receive the highest amount of annual cash
compensation received during any of the preceding five calendar years in each
year until the end of the term of the agreement. In the event of a change of
control of the Company, the named executive may voluntarily terminate employment
with the Company up until twenty-four months after the change of control and be
entitled to receive in lump sum (i) any compensation due but not yet paid
through the date of termination and (ii) an amount equal to Termination
Compensation multiplied by a factor of 2.99.
The Company has also entered into an employment agreement with John W.
Alderman, III. This agreement also specifies terms of employment, including
compensation. The contract was entered into on April 21, 1997, and terminates
forty-five months from that date. The agreement provides that the Company may
only terminate the employment of Mr. Alderman for good cause, as defined.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998, the Company and its subsidiaries had, and expect to have in
the future, banking transactions with officers and directors of the Company,
their immediate families and entities in which they are principal owners (more
than 10% interest). The transactions are in the ordinary course of business and
on substantially the same terms, including interest rates and security, as those
prevailing at the same time for comparable transactions with others and do not
involve more than the normal risk of collectibility or present other unfavorable
factors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers, directors and 10% shareholders are
required under the Securities Exchange Act of 1934 (the "Exchange Act") to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Copies of these reports must also be furnished to City Holding.
Based solely upon the review of copies of such reports furnished to the Company
through the date hereof, or written representations that no reports were
required, the Company believes that during 1998, all filing requirements
applicable to its officers, directors and 10% shareholders were met, except with
respect to two late amendments made to Form 5 filings for F. Eric Nelson, Jr.,
Treasurer, and Mr. Oxley, reporting the exchange of Horizon Bancorp, Inc. stock
for City Holding Company common stock.
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S 1993 STOCK INCENTIVE PLAN (PROPOSAL 2)
The Board of Directors unanimously has approved and recommends amending
the Company's 1993 Stock Incentive Plan (the "Stock Incentive Plan") to increase
the number of shares of Common Stock issuable under the Stock Incentive Plan
from 300,000 to 1,300,000. The Company has adopted the Stock Incentive Plan to
attract and provide incentives to key employees.
SHARES SUBJECT TO OPTION; ADMINISTRATION
The Company's Compensation Committee administers the Stock Incentive
Plan. The Committee may delegate its authority to administer the Stock Incentive
Plan to an officer of the Company. Under the Stock Incentive Plan as proposed to
be amended, a total of 1,300,000 shares of Common Stock will be available for
grant, an increase of 1,000,000 shares. This limitation can be adjusted, as the
Compensation Committee determines is appropriate, in the event of a change in
the number of outstanding shares of Common Stock by reason of a stock dividend,
stock split, combination, reclassification, recapitalization or other similar
events.
ELIGIBILITY
Key employees of the Company and its related entities and individuals
who provide services to the Company and its related entities are eligible to
participate in the Stock Incentive Plan.
PLAN BENEFITS
The Committee may, from time to time, grant stock options, stock
appreciation rights ("SARs"), or stock awards to Stock Incentive Plan
participants. Options granted under the Stock Incentive Plan may be incentive
stock options ("ISOs") or nonqualified stock options. The Committee will fix the
option price at the time the option is granted, but in the case of an ISO, the
price cannot be less than the shares' fair market value on the date of grant.
The option price may be paid in cash, or, with the Committee's consent, with
shares of Common Stock, a combination of cash and Common Stock, or in
installments.
SARs entitle the participant to receive the excess of the fair market
value of a share of Common Stock on the date of exercise over the initial value
of the SAR. The initial value of the SAR is the fair market value of a share of
Common Stock on the date of grant.
SARs may be granted in relation to option grants ("Corresponding SARs")
or independently of option grants. The difference between these two types of
SARs is that to exercise a Corresponding SAR, the participant must surrender
unexercised that portion of the stock option to which the Corresponding SAR
relates.
Participants may also be awarded shares of Common Stock pursuant to a
stock award. The Committee may prescribe that a participant's right in a stock
award shall be nontransferable or forfeitable or both unless certain conditions
are satisfied. These conditions may include, for example, a requirement that the
participant continue employment with the Company for a specified period or that
the Company or the participant achieves stated objectives.
<PAGE>
The Stock Incentive Plan provides that outstanding options and SARs will
become exercisable and outstanding stock awards will be earned in full and
nonforfeitable upon a change in control.
A maximum of 300,000 (1,300,000, as proposed to be amended) shares of
Common Stock may be issued upon the exercise of options and SARs and stock
awards. This limitation can be adjusted, as the Committee determines is
appropriate, in the event of a change in the number of outstanding shares of
Common Stock by reason of a stock dividend, stock split, combination,
reclassification, recapitalization or other similar events. The terms of
outstanding awards also may be adjusted by the Committee to reflect such
changes. Primarily due to stock dividends declared in prior years, the maximum
number of shares in the Stock Incentive Plan currently total 399,300.
DURATION OF STOCK INCENTIVE PLAN
No option, SAR or stock award may be granted under the Stock Incentive
Plan after March 8, 2003.
TERMINATION, SUSPENSION, OR AMENDMENT OF STOCK INCENTIVE PLAN
The Company's Board of Directors may, without further action by
shareholders, terminate or suspend the Stock Incentive Plan in whole or in part.
The Board of Directors may also amend the Stock Incentive Plan except that no
amendment that increases the number of shares of Common Stock that may be issued
under the Stock Incentive Plan or changes the class of individuals who may be
selected to participate in the Plan will become effective until it is approved
by shareholders.
FEDERAL INCOME TAX CONSEQUENCES
The Company has been advised by counsel regarding the federal income tax
consequences of the Stock Incentive Plan. No income is recognized by a
participant at the time an option is granted. If the option is an ISO, no income
will be recognized upon the participant's exercise of the option. Income is
recognized by a participant when he disposes of shares acquired under an ISO.
The exercise of a nonqualified stock option generally is a taxable event that
requires the participant to recognize, as ordinary income, the difference
between the shares' fair market value and the option price.
No income is recognized upon the grant of a SAR. The exercise of a SAR
generally is a taxable event. The participant generally must recognize income
equal to any cash that is paid and the fair market value of Common Stock that is
received in settlement of a SAR.
Income generally is recognized on account of a stock award on the first
day that the shares are either transferable or not subject to a substantial risk
of forfeiture. The amount of income recognized by the participant equals the
fair market value of the Common Stock received on that date.
<PAGE>
The employer (either the Company or a related entity) will be entitled
to claim a federal income tax deduction on account of the exercise of a
nonqualified option or a SAR, or the vesting of a stock award. The amount of the
deduction is equal to the ordinary income recognized by the participant. The
employer will not be entitled to a federal income tax deduction on account of
the grant or exercise of an ISO. The employer may claim a federal income tax
deduction on account of certain dispositions of Common Stock acquired upon the
exercise of an ISO.
RECOMMENDATION
The Board of Directors unanimously recommends a vote "FOR" amending the
Company's 1993 Stock Incentive Plan to increase the number of shares of Common
Stock issuable under the Stock Incentive Plan from 300,000 to 1,300,000.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS (PROPOSAL 3)
Subject to ratification by the Company's shareholders, the Company's
Board of Directors has reappointed Ernst & Young LLP as independent auditors to
audit the consolidated financial statements of the Company for the year ending
December 31, 1999.
Representatives of Ernst & Young are expected to be present at the
annual meeting and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
RECOMMENDATION
The affirmative vote of a majority of the shares represented and
entitled to vote at the annual meeting is required to ratify the appointment of
Ernst & Young LLP. The Board of Directors unanimously recommends the
shareholders vote "FOR" such ratification.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not
informed of any matters, other than those stated above, that may be brought
before the meeting. However, if any other matters are brought before the
meeting, the persons named in the enclosed form of proxy or their substitutes
will vote with respect to such matters in accordance with their best judgment.
By Order of the Board of Directors,
Victoria A. Evans
Secretary
Dated April 12, 1999
<PAGE>
CITY HOLDING COMPANY
25 GATEWATER ROAD
POST OFFICE BOX 7520
CHARLESTON, WEST VIRGINIA 25356-0520
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - MAY 10, 1999
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF CITY HOLDING COMPANY)
The undersigned shareholder of City Holding Company hereby appoints John
W. Alderman, III and Lathan M. Ewers, Jr. and each of them, with full power of
substitution, as proxies and hereby authorizes them to represent and to vote,
as designated below, all the shares of Common Stock of City Holding Company
held of record by the undersigned on April 9, 1999 at the 1999 Annual Meeting
of Shareholders to be held on May 10, 1999 or any adjournment or adjournments
thereof.
Management and the Board of Directors recommends a vote FOR Proposals 1
through 3.
(1) PROPOSAL TO ELECT SEVEN CLASS I DIRECTORS TO SERVE FOR A TERM OF ONE YEAR,
EIGHT CLASS II DIRECTORS TO SERVE FOR A TERM OF TWO YEARS AND EIGHT CLASS III
DIRECTORS TO SERVE FOR A TERM OF THREE YEARS.
FOR [ ] (except as marked to the contrary below) WITHHOLD AUTHORITY [ ]
CLASS I: James E. Songer, Sr., Mark H. Schaul, David W. Hambrick, Frank S.
Harkins, Jr., Dr. D. K. Cales, Albert M. Tieche, Jr., Phillip W.
Cain
CLASS II: Leon K. Oxley, William C. Dolin, Carlin K. Harmon, Steven J. Day,
Tracy W. Hylton, II
Thomas L. McGinnis, C. Dallas Kayser, E. M. Payne, III
CLASS III: Samuel M. Bowling, David E. Haden, R. T. Rogers, Jay C. Goldman,
Robert D. Fisher,
Philip L. McLaughlin, Hugh R. Clonch, B. C. McGinnis, III
(2) PROPOSAL TO RESERVE AN ADDITIONAL 1,000,000 SHARES OF COMMON STOCK FOR
POSSIBLE FUTURE ISSUANCE UNDER THE COMPANY'S 1993 STOCK INCENTIVE PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME ABOVE.
<PAGE>
(3) PROPOSAL TO RATIFY THE BOARD OF DIRECTORS' APPOINTMENT OF ERNST & YOUNG,
LLP AS AUDITORS FOR THE COMPANY FOR 1999
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF SHAREHOLDERS OR ANY
ADJOURNMENT OR ADJOURNMENTS THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 THROUGH 3. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO
THE TIME IT IS VOTED AT THE ANNUAL MEETING.
Dated ______________________________, 1999
------------------------------------------
Signature
------------------------------------------
Signature, if held jointly
Please date and sign exactly as name
appears hereon, If shares are held
jointly, each shareholder should sign.
Agents, executors, administrators,
guardians, trustees, etc. should use full
title, and, if more than one, all should
sign. If the shareholder is a
corporation, please sign full corporate
name by the president or another
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
MEMORANDUM
To: City Holding Company Employee Stock Ownership Plan Participants
From: Retirement Plan Committee
Date: April 12, 1999
RE: Annual Meeting of Shareholders- Proxy Voting
As a participant in City Holding Company's Employee Stock Ownership Plans
(collectively, the "ESOP"), you are entitled to vote the number of shares
indicated on the attached proxy. We are pleased to provide you with the enclosed
materials, which have also been mailed to all City Holding Company shareholders.
Our ESOP Plan recordkeeper, Benefit Concepts, Inc. has been engaged to assist us
with the confidential tabulation of votes received from our ESOP participants.
Therefore, please complete the enclosed proxy card, and return it in the blue
postage-paid envelope to Benefit Concepts, Inc., so that it is received no later
than Thursday, May 6, 1999.
Please note that if you choose to abstain, the effect will be a vote against the
proposed items. If you return the card blank, the plan sponsor will record your
shares as being voted "FOR" proposals one through three.
Under Internal Revenue Service and Department of Labor regulations, City Holding
Company, as plan sponsor, is required to pass the proxy voting rights on to
participants on both the Money Purchase ESOP and the Discretionary ESOP. The
Company stock held in the Profit Sharing/401(k) Plan, (the "Plan") will be voted
by the Trustee of the Plan, in accordance with decisions determined to be in the
best interests of all participants. Therefore, the shares indicated on the
enclosed proxy card only include the ESOP components of the retirement program.
If you have any questions or comments about the proxy voting or the retirement
plans in general, please feel free to contact Victoria Evans at (304) 769-1112.
