SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Mark the appropriate item:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ANCHOR FINANCIAL CORPORATION
- ------------------------------------------------------------------------------
Tommy E. Looper
- ------------------------------------------------------------------------------
Payment of filing fee (Mark the appropriate item):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(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:
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
[ ] Mark 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 filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
-------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE>
ANCHOR FINANCIAL CORPORATION
2002 Oak Street
Myrtle Beach, South Carolina 29577
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders of Anchor
Financial Corporation will be held on Thursday, April 30, 1998 at 4:00 p.m.
local time, at the Myrtle Beach Martinique, 7100 North Ocean Boulevard, Myrtle
Beach, South Carolina 29577, for the following purposes, all of which are more
completely set forth in the accompanying proxy statement:
1. To fix the number of Directors to be elected at five and to elect five
persons as Directors;
2. To consider and vote upon amendments to the Corporations's Articles of
Incorporation (i) to increase the authorized shares of common stock to
10,000,000 shares, and (ii) to change the par value of the common stock to
no par;
3. To ratify the selection of Price Waterhouse LLP as independent public
accountants for the Corporation for the year ending December 31, 1998; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only those shareholders of common stock of record at the close of business
on March 2, 1998, shall be entitled to notice of and to vote at the meeting.
The Stock Transfer Book of the Corporation will not be closed.
A copy of the Corporation's 1997 Annual Report to Shareholders is enclosed
with this Proxy Statement.
By Order of the Board of Directors
STEPHEN L. CHRYST
President and Chief Executive Officer
Myrtle Beach, South Carolina
March 30, 1998
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY EVEN IF YOU
PLAN TO ATTEND THE ANNUAL MEETING. YOUR PROXY CAN BE REVOKED AT ANY TIME PRIOR
TO ITS EXERCISE.
<PAGE>
ANCHOR FINANCIAL CORPORATION
2002 Oak Street
Myrtle Beach, South Carolina 29577
PROXY STATEMENT
This Proxy Statement and the accompanying form of proxy are first sent to
shareholders on or about March 30, 1998.
INFORMATION CONCERNING PROXY
This solicitation of proxies for the Annual Meeting is being made by the
Board of Directors of Anchor Financial Corporation (the "Corporation") for use
at the meeting to be held on Thursday, April 30, 1998 at 4:00 p.m. local time,
at the Myrtle Beach Martinique, 7100 North Ocean Boulevard, Myrtle Beach, South
Carolina 29577, and at any adjournment(s) thereof. The entire cost of such
solicitation will be borne by the Corporation. The Corporation, through its
directors, officers, and regular employees, may solicit proxies personally or
by telephone, in addition to solicitation by mail, but without additional
compensation for such solicitation. The Corporation may request brokers and
others to send the Proxy Statement and the proxy material to the beneficial
owners of the shares and may reimburse them for their reasonable expense in
doing so.
The shares represented by the accompanying proxy will be voted if the
proxy is properly executed and received by the Corporation prior to the time of
the meeting. All proxies delivered pursuant to this solicitation are revocable
at any time prior to the exercise thereof at the option of the persons
executing them. Unless revoked, properly executed proxies will be voted in
accordance with the instructions contained therein. Proxies which contain no
instructions will be voted "FOR" the proposals.
The Corporation does not intend to present any matters for action other
than those listed in the Notice of Annual Meeting and has not been informed
that any persons intend to present any other matters for action at the meeting.
However, if any other matters are properly brought before the meeting, the
persons designated as proxies will vote in accordance with their best
discretion on such matters.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
At the close of business on March 2, 1998, the record date, the
Corporation had 7,000,000 shares of common stock authorized, $6.00 par value
per share, of which 3,886,323 shares were issued and outstanding, and 392,784
shares were subject to options. The Corporation's common stock is the only
class of stock outstanding. Only the holders of record of common stock of the
Corporation at the close of business on March 2, 1998, are entitled to notice
of and vote on the matters to come before the Annual Meeting of Shareholders or
any adjournment thereof.
Presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock of the Corporation entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Meeting or any
adjournment thereof.
1
<PAGE>
A shareholder is entitled to one (1) vote, in person or by proxy, at the
Annual Meeting for each share of common stock of the Corporation held of record
in his or her name at the close of business on the record date, March 2, 1998.
In the election of each director and in all other matters, which come
before the meeting of shareholders, each shareholder shall be entitled to one
vote for each share of stock owned by him.
As of March 2, 1998, The Anchor Bank Employee Stock Ownership Plan
beneficially owned 338,457 shares (8.71%) of the Corporation's outstanding
common stock, including 58,186 (1.50%) unallocated shares. To the knowledge of
the management of the Corporation, as of March 2, 1998, no other shareholder
owned beneficially more than five percent (5%) of the Corporation's outstanding
common stock. As of March 2, 1998, the Board of Directors of the Corporation
beneficially owned 721,472 shares (18.56%), directly and indirectly, of the
Corporation's issued and outstanding common stock. Six members of the Board of
Directors, as trustees, also have voting power as to 58,186 (1.50%) unallocated
shares owned by The Anchor Bank Employee Stock Ownership Plan.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any proposal that a shareholder intends to present at the 1999 Annual
Meeting must be received at the Corporation's Principal Offices (2002 Oak
Street, Myrtle Beach, South Carolina 29577, Attention: Corporate Secretary) not
later than November 30, 1998. Any such proposal must comply with Rule 14a-8 of
Regulation 14A of the proxy rules of the Securities and Exchange Commission.
ELECTION OF DIRECTORS
The Articles of Incorporation ("Articles") and By-Laws of the Corporation
provide that the Board of Directors shall consist of a maximum of twenty (20)
persons. The Board currently consists of sixteen directors. The Articles and
By-Laws also provide that the terms of the Board of Directors be staggered so
that approximately one-third of the directors are elected each year to
three-year terms. The Board of Directors of the Corporation have proposed that
the number of directors to be elected in 1998 to serve three-year terms be
fixed at five and that the five nominees set out in the following section be
elected for the terms indicated. All the nominees are presently serving as
directors of the Corporation.
It is not contemplated that any of the nominees will be unable or
unwilling for good cause to serve; but, if that should occur, it is the
intention of the persons named in the proxy either to vote for such other
person or persons for director as may be nominated by the Board of Directors,
or to reduce the number of directors to be elected at the meeting by the number
of such persons unable or unwilling to serve.
The Corporation recommends that you vote in favor of all the nominees
named below for election to the Board of Directors.
INFORMATION RESPECTING THE BOARD AND NOMINEES
The Board of Directors of the Corporation, which met twelve times in 1997,
has standing Executive, Audit, Loan, Long Range Planning and Compensation
Committees. The Long Range Planning Committee also serves as the nominating
committee.
2
<PAGE>
The Audit Committee, which met five times during 1997, consists of C.
Jason Ammons, Jr., C. Donald Cameron, Thomas J. Rogers, J. Roddy Swaim, Harry
A. Thomas, and Zeb M. Thomas, Sr. The Audit Committee has the responsibility
of recommending to the Board of Directors the engagement or discharge of the
independent public accountants, reviewing with the independent public
accountants the plan for and results of the audit engagement, maintaining
direct reporting responsibility and regular communication with the
Corporation's internal audit staff, reviewing the scope and results of the
internal audit procedures of the Corporation and its subsidiaries, approving
the services to be performed by the independent public accountants, reviewing
the degree of independence of the public accountants, considering the range of
audit and nonaudit fees, and reviewing the adequacy of the Corporation's system
of internal accounting controls.
The Compensation Committee met three times during 1997, and consists of C.
Donald Cameron, J. Bryan Floyd, Thomas J. Rogers, Albert A. Springs, III, J.
Roddy Swaim, and Zeb M. Thomas, Sr. The Compensation Committee makes
recommendations to the Board of Directors with respect to the Corporation's
compensation policies and compensation of the executive officers.
The Long Range Planning Committee met one time during 1997, and consists
of Stephen L. Chryst, J. Bryan Floyd, Admah Lanier, Jr., Thomas J. Rogers,
Albert A. Springs, III, J. Roddy Swaim, and Zeb M. Thomas, Sr. The Long Range
Planning Committee is responsible for long range planning issues and
identifying and screening candidates to fill vacancies on the Board of
Directors and also makes recommendations regarding the size and composition of
the Board of Directors. This committee will consider recommendations for
director nominees made by shareholders of the Corporation. Such nominations
shall be made by writing to the Chief Executive Officer of the Corporation and
providing the candidate's name, biographical data and qualifications.
All directors attended at least 75% of the meetings of the Board of
Directors of the Corporation during 1997. During 1997, Directors Bellamy and
Cameron attended less than 75% of the Executive Committee meetings, and
Directors Bellamy, Brandon and Burroughs attended less than 75% of the Loan
Committee meetings.
Under the securities laws of the United States, the Corporation's
directors, its executive officers, and any persons holding more than ten
percent of the Corporation's common stock are required to report their
ownership of the Corporation's common stock and any changes in that ownership
to the Securities and Exchange Commission. Specific due dates for these reports
have been established, and the Corporation is required to report in this Proxy
Statement any failure by such persons to file by these dates during 1997. To
the best of the Corporation's knowledge, these filing requirements were
satisfied by its directors and officers in 1997. In making these statements,
the Corporation has relied on the written representations of its directors and
officers and copies of the reports that they have filed with the Commission.
Directors of the Corporation who are also members of the Board of
Directors of The Anchor Bank (the "Bank") receive $250 per quarter and $700 per
special Board meeting (not held on a regularly scheduled meeting date) attended
for their services to the Corporation; in addition, these directors earn fees
for their services on the Bank Board. Directors of the Corporation who are not
members of the Board of Directors of the Bank receive $250 per quarter and $700
per regular or special Board meeting attended for their services to the
Corporation. All committee members receive $200 for each committee meeting
attended and payment for one excused absence, if applicable.
3
<PAGE>
The persons indicated with an asterisk (*) below are nominated for
election to serve until the annual meeting of shareholders in the year their
terms expire. It is the intention of the persons named in the proxy to vote for
the election of all nominees. The other persons listed are current directors of
the Corporation elected to serve until the year their term will expire.
<TABLE>
<CAPTION>
Served Year
as Term
Director Will Principal Occupation
Name Age Since Expire For Past Five Years
- ------------------------- ----- ---------- -------- ----------------------------------------------------------
<S> <C> <C> <C> <C>
C. Jason Ammons, Jr. 52 1987 1999 Owner -- Sea Mist Resort
Howell V. Bellamy, Jr. 61 1989 2000 Chairman of the Board -- Bellamy, Rutenberg, Copeland,
Epps, Gravely and Bowers, P.A. (Attorney)
W. Cecil Brandon, Jr. 68 1974 2000 President -- Brandon Advertising & Sales Co., Inc.
James E. Burroughs* 51 1989 2001 Chairman of the Board -- Burroughs & Chapin Company
C. Donald Cameron 69 1974 2000 President -- Inlet Development Corporation
Stephen L. Chryst* 52 1978 2001 President and Chief Executive Officer of the Corporation
J. Bryan Floyd* 62 1994 2001 Owner and Operator, Hoskins Restaurant; President,
Caro-Strand Corporation d/b/a Bay Tree Golf Plantation
Admah Lanier, Jr. 71 1994 1999 Co-owner and President, Lanwillo Development Co.;
Owner, Arvida Development Co., Inc.; Owner, Pender
Development Co., Inc.; Partner, Coastal Farms
Tommy E. Looper 50 1993 1999 Executive Vice President, Chief Financial Officer, and
Secretary of the Corporation
W. Gairy Nichols, III 46 1987 1999 Owner -- Dunes Realty, Inc.
Ruppert L. Piver* 58 1994 2001 Rural Letter Carrier for U. S. Postal Service; previously
owner of R. L. Piver Landscaping and Hauling
Thomas J. Rogers 61 1974 1999 President -- Grand Strand Broadcasting Corporation
Albert A. Springs, III* 58 1974 2001 Owner -- H. B. Springs Company (Insurance)
J. Roddy Swaim 52 1987 2000 Owner -- Dunes Realty, Inc.
Harry A. Thomas 48 1994 2000 President -- Thomas Real Estate Company
Zeb M. Thomas, Sr. 76 1979 1999 Owner -- The Dayton House, Inc. (Hotel)
- ----------
<FN>
(*) Nominee for election.
</FN>
</TABLE>
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the shares of the Corporation's common stock
owned beneficially by each director and by executive officers and directors of
the Corporation as a group as of March 2, 1998.
<TABLE>
<CAPTION>
Number of Shares Percentage of
Owned Directly Outstanding Shares of
Shareholder (Indirectly) Common Stock
- ---------------------------------------------------------------------- ------------------ ----------------------
<S> <C> <C>
C. Jason Ammons, Jr. ................................................. 96,520 2.48%
(46,560) (1.20%)
Howell V. Bellamy, Jr. ............................................... 14,349 0.37%
(100) (0.01%)
W. Cecil Brandon, Jr. ................................................ 26,104 0.67%
(745) (0.02%)
James E. Burroughs * ................................................. 320 0.01%
C. Donald Cameron .................................................... 11,745 0.30%
(700) (0.02%)
Stephen L. Chryst* ................................................... 41,499 (1) 1.07%
(1,203) (0.03%)
J. Bryan Floyd* ...................................................... 66,215 1.70%
(1,449) (0.04%)
Admah Lanier, Jr. .................................................... 13,840 0.36%
(7,549) (0.19%)
Tommy E. Looper ...................................................... 31,775 (1) 0.82%
(3,548) (0.09%)
W. Gairy Nichols, III ................................................ 49,205 1.27%
(4,704) (0.12%)
Ruppert L. Piver* .................................................... 16,219 0.42%
Thomas J. Rogers ..................................................... 24,027 0.62%
(3,012) (0.08%)
Albert A. Springs, III* .............................................. 44,012 1.13%
J. Roddy Swaim ....................................................... 23,579 0.61%
(2,822) (0.07%)
Harry A. Thomas ...................................................... 33,251 0.86%
(12,522) (0.32%)
Zeb M. Thomas, Sr. ................................................... 89,790 2.31%
(54,108) (1.39%)
All directors and executive officers as a group (18 persons) ......... 619,035(1)(2) 15.93%
(152,396) (3.92%)
- ----------
<FN>
(*) Nominee for election.
(1) Includes vested shares in The Anchor Bank Employee Stock Ownership Plan for
Messrs. Chryst and Looper of 32,880 and 19,640, respectively, and does not
include unexpired stock options that were exercisable on December 31,
1997. All directors and executive officers as a group have the right to
purchase an aggregate of 301,755 shares of common stock under existing
stock option plans, including 120,000 and 66,475 shares for Messrs. Chryst
and Looper, respectively.
(2) Six members of the Board of Directors, as trustees, also have voting power
as to 58,186 (1.50%) unallocated shares owned by The Anchor Bank Employee
Stock Ownership Plan.
</FN>
</TABLE>
5
<PAGE>
EXECUTIVE COMPENSATION
The following table discloses compensation for services in all capacities
for the three years ended December 31, 1997, which was paid by the Corporation
to those executive officers whose total annual salary and bonus exceeded
$100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
-----------------
Annual Compensation (1) Securities
---------------------- Underlying All Other
Name and Principal Position Year Salary Bonus Options (#) (2) Compensation (3)
- --------------------------------------- ------ ----------- ----------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Stephen L. Chryst 1997 $300,000 $163,000 -0- $30,390
President and Chief Executive Officer 1996 260,004 111,760 -0- 30,714
1995 240,000 92,768 60,000 33,534
Robert E. Coffee, Jr. 1997 $120,000 $ 38,900 -0- $19,803
Executive Vice President and 1996 107,500 35,608 0 16,769
Chief Administrative Officer -- 1995 98,418 27,500 33,600 16,112
The Anchor Bank
Robert R. DuRant, III 1997 $135,000 $ 52,900 -0- $13,254
Executive Vice President and 1996 113,125 45,056 -0- 10,376
Chief Credit Officer -- 1995 106,250 32,500 33,600 9,020
The Anchor Bank
Tommy E. Looper 1997 $155,000 $ 84,216 -0- $23,021
Executive Vice President and 1996 135,624 56,320 -0- 25,655
Chief Financial Officer 1995 127,082 45,000 33,600 28,139
- ----------
<FN>
(1) The aggregate amount of perquisites and other personal benefits not
reported above during 1997 for any individual named above did not exceed
the lesser of either $50,000 or 10% of the total annual salary and bonus
reported above for such named executive officer.
(2) All options have been adjusted to reflect the three-for-two stock split in
1997 which was effected in the form of a stock dividend.
(3) The amounts disclosed in this column include:
(a) The Corporation adopted an Employee Stock Ownership Plan ("ESOP")
effective January 1, 1982 covering all employees with at least one-year
of continuous service. The ESOP is administered by six members of the
Board of Directors of The Anchor Bank. Contributions to the ESOP, which
are discretionary with the Board of Directors, are used to purchase
shares of the Corporation's stock. The shares are held in trust for each
employee until retirement, death, or break in service. Each participant
is allocated a portion of the contribution in proportion to his
compensation up to $150,000 relative to the aggregate compensation of all
participants. Participants employed less than seven years will be less
than 100% vested in their account in the ESOP. Benefits are distributed
in the form of shares of the Corporation's stock. For the year 1997, the
Corporation's contribution to the ESOP was $284,769, including
contributions of $5,400, $5,400, $5,400 and $5,400 for Messrs. Chryst,
Coffee, DuRant, and Looper, respectively.
6
<PAGE>
(b) The Corporation adopted a pre-tax savings plan ("401(k) Plan") effective
June 1, 1991 covering all employees with at least three-months of
continuous service. Under the 401(k) Plan, employees are eligible to
contribute up to 15% of compensation up to the statutory limit. The
401(k) Plan allows for discretionary employer matching contributions. For
the year 1997, the Board of Directors approved a discretionary employer
matching contribution of 100% of compensation contributed by the employee
up to 3% of the employee's total compensation. The discretionary employer
matching contributions will cover all employees with at least one-year of
continuous service. Participants employed less than seven years will be
less than 100% vested in the discretionary employer matching
contributions portion of their account in the 401(k) Plan. For the year
1997, the Corporation's matching contribution to the 401(k) Plan was
$175,231, including a matching contribution of $4,800, $4,800, $4,800,
and $4,800 for Messrs. Chryst, Coffee, DuRant, and Looper, respectively.
(c) Officers that are directors and members of the committees of the Board
of Directors receive fees for attendance at such meetings in the same
manner as outside directors. For the year 1997, the Corporation paid in
director and committee fees $19,350, $9,200, $2,600, and $12,300 to
Messrs. Chryst, Coffee, DuRant, and Looper, respectively.
(d) Payment was made by the Corporation in the year 1997 of premiums of
$840, $403, $454, and $521 for group term life insurance on behalf of
Messrs. Chryst, Coffee, DuRant and Looper, respectively.
(e) On January 27, 1996, the Corporation and its subsidiary, The Anchor
Bank, entered into Salary Continuation Agreements with Stephen L. Chryst,
Robert E. Coffee, Jr., Robert R. DuRant, III, and Tommy E. Looper. These
Agreements provide for a continuation of salary payments to these
executives upon retirement, termination, death or disability. The
Agreements have a vesting schedule that requires 8 years of service after
the date of the Agreements before an executive is 100% vested. In the
event of a change in control of the Corporation or The Anchor Bank, the
vesting schedule is stepped up to 100%. The normal retirement benefit
payable to the executives each year for 15 years when each executive
retires after reaching age 65 would be $150,600, $36,900, $46,308 and
$53,300 for Messrs. Chryst, Coffee, DuRant, and Looper, respectively. The
vested termination benefits for each of the executives upon termination
prior to a normal retirement date for reasons other than death or
disability and prior to a change in control would be the vested portion
of the accrued liability for the normal retirement benefit.
</FN>
</TABLE>
7
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table sets forth the aggregated option exercises in fiscal
1997 by the named executive officers and the value of such officers'
unexercised options at December 31, 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-The-Money Options
Acquired Options At FY-End (2) (#) At FY-End (3)
On Value ------------------------------- ------------------------------
Name Exercise (2) (#) Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ------------------ ------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Stephen L. Chryst -0- $ -0- 100,000 20,000 $2,558,300 $466,660
Robert E. Coffee, Jr. 400 11,841 36,880 11,200 944,062 261,330
Robert R. DuRant, III -0- -0- 56,000 11,200 1,432,648 261,330
Tommy E. Looper 725 17,279 55,275 11,200 1,415,732 261,330
- ----------
<FN>
(1) The value is calculated by subtracting the exercise price from the market
value on the date of exercise.
(2) All options have been adjusted to reflect the three-for-two stock split in
1997 which was effected in the form of a stock dividend.
(3) The value is determined by subtracting the exercise or base price from the
market value of the underlying securities at the fiscal year-end. The
market value of the Corporation's common stock at its fiscal year-end of
December 31, 1997 was $33.00 per share.
</FN>
</TABLE>
8
<PAGE>
COMPENSATION COMMITTEE REPORT OF EXECUTIVE COMPENSATION
The Compensation Committee's executive compensation philosophy (which
includes the Chief Executive Officer) is to provide competitive levels of
compensation, integrate management's pay with the achievement of the
Corporation's annual and long-term performance goals, recognize individual
initiative and achievement, and assist the Corporation in attracting and
retaining qualified management. Management compensation is intended to be set
at levels that the Compensation Committee believes is consistent with others in
the Corporation's industry and also considers general economic conditions and
other external factors.
Base salaries for executive management are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for management
talent, including a comparison of base salaries for comparable positions at
comparable companies within the financial services industry. Annual salary
adjustments are determined by evaluating the competitive marketplace, the
performance of the Corporation, the performance of the executive, and any
increased responsibilities assumed by the executive.
Compensation paid during 1997 to executive officers consisted of base
salary, bonus, and matching contributions paid with respect to the
Corporation's 401(k) Plan and ESOP contributions. Payments to the Corporation's
401(k) Plan and ESOP are made to all employees on a non-discriminatory basis.
The Corporation adopted Salary Continuation Agreements for its executive
officers in 1996.
The Corporation has an existing executive management incentive bonus
program, which is administered by the Compensation Committee. The amounts,
which are awarded annually, are determined based upon a combination of the
level of achievement by the Corporation of its strategic and operating goals
and the level of achievement of individual objectives by participants.
Performance goals were adopted by the Board of Directors at the beginning
of 1997. Certain performance goals included earnings per share ("EPS") of
$1.40, return on average total stockholders' equity ("ROE") of 15.5%, and
internal growth of assets by 21.6%. The Corporation's EPS was $1.51 or 108% of
goal. The Corporation's ROE was 17.21% or 111% of goal, and assets grew
internally 18.6% or 86% of goal.
It is the philosophy of the Compensation Committee that stock options
should be awarded only to key employees of the Corporation on an intermittent
basis to promote long-term interests between such employees and the
Corporation's stockholders and assist in the retention of such employees. The
Corporation adopted a Non-Qualified Stock Option Plan during 1988 covering
certain of its officers. Options granted under this plan vested at 25% per
year. The exercise period for options granted under this plan is ten years from
each vesting date. During the year ended December 31, 1988, participating
officers, including certain executive officers, received options to purchase an
aggregate of 165,588 common shares at an average option price of $5.92 per
share, adjusted for the three-for-two stock split. Under this plan, all shares
were vested at December 31, 1997. No options were granted under this plan
during 1997. The Corporation adopted the Anchor Financial Corporation, The
Anchor Bank and The Anchor Bank of North Carolina Incentive Stock Option Plan
of 1994 during 1994 covering certain of its officers. Options granted under
this plan vest on a cumulative basis for one-third of the shares on each of the
first three anniversaries of the grant. During the year ended December 31,
1995, participating officers, including certain executive officers, received
options to purchase an aggregate of 225,000 common shares at an average option
price of $9.67 per share, adjusted for the three-for-two stock split. Under
this plan, 150,000 of the shares were vested at December 31, 1997. The exercise
period for options granted under this plan is ten years from the grant date. At
December 31, 1997, Messrs. Chryst, Coffee, DuRant, and Looper
9
<PAGE>
had options to purchase 120,000, 48,080, 67,200 and 66,475 common shares,
respectively, at an average price of $7.81 per share.
The Corporation has adopted certain broad based employee benefit plans
including retirement and life insurance plans in which executive officers
participate. The value of these items is set forth in the Summary Compensation
Table above under "All Other Compensation." Executive officers also may have
received perquisites in connection with their employment not set forth in any
of the tables herein. Such perquisites totaled less than 10% of their cash
compensation in 1997. The foregoing benefits and compensation generally are not
directly or indirectly tied to the Corporation's performance.
For the year 1997, based on the factors discussed above and a review by
the Compensation Committee, Messrs. Coffee, DuRant and Looper received
increases in base pay of 11.6%, 19.3% and 14.3%, respectively. Messrs. Coffee,
DuRant, and Looper were awarded a bonus of 32.4%, 39.2% and 54.3% of their base
salaries for the year 1997, respectively.
Mr. Stephen L. Chryst has been Chief Executive Officer of the Corporation
since 1982. Mr. Chryst's 1997 compensation consisted of base salary, cash
bonus, certain perquisites (which did not exceed 10% of his base salary and
bonus) and the various forms of other compensation set forth in the preceding
paragraphs. Mr. Chryst's base salary of $300,000 was set by the Compensation
Committee at the beginning of 1997 and increased 15.4% from 1996. The level of
base salary was based in part on compensation levels of chief executive
officers of comparable companies and the total assets of the Corporation. Mr.
Chryst's cash bonus was determined principally by achievement of the set
performance goals discussed above. The Corporation achieved 108% of the EPS
goal, 111% of the ROE goal, and 86% of the internal growth goal. These
performance achievements resulted in a cash bonus to Mr. Chryst of $163,000 or
54.3% of his base salary. The Compensation Committee believes that the
Corporation's strong performance during 1997 was directly related to Mr.
Chryst's leadership and that all compensation paid to him was warranted.
Periodically, independent compensation consultants are engaged to review
the total compensation of all members of executive management as compared with
peers with comparable responsibilities in other companies. Results of the study
are reported to the Compensation Committee.
Compensation Committee
C. Donald Cameron
J. Bryan Floyd
Thomas J. Rogers
Albert A. Springs, III
J. Roddy Swaim
Zeb M. Thomas, Sr.
10
<PAGE>
PERFORMANCE GRAPH
The following chart shows a five-year comparison of the cumulative total
return on the Corporation's stock, assuming reinvestment of dividends, with
that of a broad equity market index, the Dow Jones Market Equity Index, and
with that of a published industry index, the Dow Jones Regional Banks-South
Index.
The yearly percentage change in the cumulative total return on the
Corporation's stock is computed by dividing the sum of the cumulative amount of
dividends for the five year period ended December 31, 1997, assuming dividend
reinvestment, and the difference between the Corporation's share price at
December 31, 1997 and December 31, 1992 by the share price at December 31,
1992. The Dow Jones Market Equity Index and the Dow Jones Regional Banks-South
Index are constructed using this methodology for large samples of companies.
(Performance Graph appears here. See the table below for plot points.)
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Anchor Financial Corporation 100.00 149.18 161.40 237.08 397.43 614.66
Dow Jones Regional Banks-South 100.00 102.74 101.15 155.47 216.52 321.00
Dow Jones Equity Market Index 100.00 109.95 110.76 152.49 187.63 251.34
</TABLE>
11
<PAGE>
CERTAIN TRANSACTIONS WITH MANAGEMENT
The Corporation has had in the past, and expects to have in the future,
banking transactions in the ordinary course of its business with directors,
officers, principal shareholders, and their associates, on the same terms,
including interest rates and collateral on loans, as those prevailing at the
same time for comparable transactions with others, and do not involve more than
normal risks of collectibility or present other unfavorable features.
Albert A. Springs, III, director of the Corporation, is the owner of H.B.
Springs Company (Insurance Agency). During 1997, the Corporation and its
subsidiaries purchased insurance through this company. The premiums paid for
such insurance are considered reasonable in relation to those premiums that
would have been paid to a third party. Howell V. Bellamy, Jr., director of the
Corporation, is the Chairman of the Board of the law firm of Bellamy,
Rutenberg, Copeland, Epps, Gravely and Bowers, P.A. The law firm rendered legal
services to the Corporation and its subsidiaries during 1997. The fees paid for
such legal services are considered reasonable in relation to those fees that
would have been paid to a third party. Ruppert L. Piver, director of the
Corporation, leases land to The Anchor Bank on which its Hampstead, North
Carolina office is located. The lease expires on December 31, 2002, but the
Bank has the option to extend the lease for two additional ten-year periods.
The current rental rate is approximately $3,600 annually. The Corporation made
payments of approximately $3,600 in 1997. Management believes that the terms of
the lease are as favorable as would have been obtainable from a third party.
Other than these transactions, there were no material transactions with
any such persons during 1997.
PROPOSED AMENDMENTS FOR ARTICLES OF INCORPORATION
INCREASE OF AUTHORIZED SHARES OF COMMON STOCK AND ELIMINATION OF PAR
VALUE. The Board of Directors of the Corporation recommends two amendments to
Article FOURTH of the Articles of Incorporation ("Articles") of the Corporation
as set forth below. The proposed amendments must be approved by the holders of
a majority of the common stock of the Corporation.
The first proposed amendment to Article FOURTH of the Articles would
increase from 7,000,000 to 10,000,000 the number of shares of common stock the
Corporation is authorized to issue.
The second proposed amendment to Article FOURTH of the Articles would
change the par value of six dollars ($6.00) per share to no par value per
share.
The holders of the Corporation's common stock will vote on amending
Article FOURTH of the Articles to read as follows:
The aggregate number of shares which the corporation is authorized
to issue is ten million (10,000,000) of one class of common stock
with no par value per share. All stock shall be common stock of the
same class.
The holders of common stock are entitled to one vote per share. The
holders of common stock do not have preemptive rights to purchase any
securities subsequently issued by the Corporation pursuant to a provision in
the Articles of Incorporation. The holders of common stock are entitled to
receive dividends as may be declared by the Board of Directors of the
Corporation with respect to the common stock out of funds legally available
therefor. In the event of liquidation, dissolution or winding-up of the affairs
of the Corporation, the holders of outstanding shares of common stock will be
entitled to share pro rata according to their respective interests in
12
<PAGE>
the Corporation's assets and funds remaining after payment or provision for
payment of all debts and other liabilities of the Corporation.
The proposed increase of the number of shares of common stock that the
Corporation is authorized to issue from 7,000,000 to 10,000,000 is intended to
allow the Corporation greater flexibility with respect to its capitalization
and the number of shares that shall be outstanding. The Board of Directors will
have discretion in regard to the issuance of the additional authorized shares,
subject to applicable laws and regulations that may require shareholder vote.
The Corporation does not currently have any plans to issue the authorized
shares except as necessary to fulfill its obligations pursuant to the existing
Dividend Reinvestment Plan and stock option plans of the Corporation. However,
the Corporation will have the flexibility to issue such shares for sale or in
an exchange transaction in connection with a merger or acquisition or for other
appropriate corporate purposes. If additional shares are issued, the general
effect upon the rights of existing security holders will be to reduce their
percentage of ownership and, depending upon the consideration received for any
additional shares issued, may increase or decrease the value of the outstanding
shares.
The South Carolina Business Corporation Act (the "S.C. Act") makes par
value an optional provision with regard to a Corporation's shares. The Articles
of Incorporation of the Corporation must state the amount of the par value or
if shares are to be without par value. No par value stock is simply stock
without any nominal or par value. The par value indicated on a certificate of
stock does not correspond with actual value.
Prior South Carolina corporate law incorporated the concepts of par value,
stated capital (common stock for the Corporation), capital surplus and earned
surplus (retained earnings) and utilized such concepts to determine a
corporation's ability to pay dividends, redeem its stock or make other
distributions to shareholders. Amendments to the S.C. Act eliminated these
concepts. Under the S.C. Act, a corporation may make a dividend or other
distribution to shareholders if afterward the corporation will be able to pay
its debts as they become due in the ordinary course, and if the corporation's
total assets will be greater than its total liabilities.
The Corporation proposes to eliminate the par value per share to provide
greater flexibility to the Board of Directors in considering stock splits and
similar issuances of stock without having to adjust or consider the par value.
The official comment to Section 33-6-210 of the S.C. Act states:
"Since shares need not have a par value, under Section 33-6-210 there is no
minimum price at which specific shares must be issued and therefore there
can be no "watered stock" liability for issuing shares below an arbitrarily
fixed price. The price at which shares are issued is primarily a matter of
concern to other shareholders whose interests may be diluted if shares are
issued at unreasonably low prices or for overvalued property. This problem
of equality of treatment essentially involves honest and fair judgments by
directors and cannot be effectively addressed by an arbitrary doctrine
establishing a minimum price for shares such as "par value" provided under
older statutes."
The Corporation's Articles and Bylaws contain certain anti-takeover
features. The Articles and Bylaws provide for a Board of Directors which serves
staggered three-year terms. Shareholders vote only for candidates in the class
of directors whose terms expire at the time of the annual stockholders'
meeting. The staggered classification of a Board could make it more difficult
for shareholders to effect a significant change in the overall composition of
the Board, thus perpetuating the tenure of management.
13
<PAGE>
South Carolina corporate law provides that a Corporation's Articles of
Incorporation may be amended or repealed by a majority of the shareholders
entitled to vote thereon, unless applicable law or a Corporation's Articles
require a different vote to amend or repeal the Articles. The Corporation's
Articles require that certain Articles may only be amended or repealed by the
affirmative vote of holders of at least 80% of all outstanding voting shares.
These provisions render more difficult the accomplishment of a merger or
acquisition or the assumption of control by a principal stockholder and make
the removal of management more difficult. The specific Articles of the
Corporation requiring 80% approval to amend or repeal such Articles are:
1. The stock of the Corporation may be issued for valid corporate purposes
upon authorization by the Board without stockholder approval. Such
authorization by the Board may be made by a majority or other vote of
the Board as may be provided in the Bylaws of the Corporation. The
affirmative vote of the holders of not less than 80% of the outstanding
voting stock of the Corporation is required to amend or repeal the
provisions of this Article EIGHTH.
2. The affirmative vote of the holders of not less than 80% of the
outstanding voting stock of the Corporation is required in the event
that the Board does not recommend to the stockholders of the Corporation
a vote in favor of (1) a merger or consolidation of the Corporation
with, or (2) a sale, exchange or lease of all or substantially all the
assets of the Corporation to any person or entity. For purposes of this
provision, substantially all the assets shall mean assets having a fair
market value or book value, whichever is greater, of 25% or more of the
total assets as reflected on a balance sheet of the Corporation as of
a date no earlier than 45 days prior to any acquisition of such assets.
The affirmative vote of the holders of not less than 80% of the
outstanding voting stock of the Corporation is required to amend
or repeal the provisions of this Article NINTH.
3. The Board of Directors of the Corporation shall consist of a maximum of
20 persons. The affirmative vote of the holders of not less than 80% of
the outstanding voting stock of the Corporation is required to amend or
repeal the maximum number provided for in Article THIRTEENTH.
In addition to the above Articles which require 80% shareholder approval,
the Corporation's Bylaws explicitly require the Board to consider all factors
it deems relevant in evaluating any proposed tender offer, exchange offer or
other change in control for the Corporation or any subsidiary. This provision
requires the Board to evaluate whether a proposal is in the best interests of
the Corporation by considering the best interests of the stockholders, and
other relevant factors, including the social, legal and economic effects on
employees, customers and the communities served by the Corporation and its
subsidiaries. These specific standards could make it more difficult to
challenge the business judgment of the Board in deciding not to recommend a
particular transaction to the shareholders, even if the transaction is
favorable to the interests of the stockholders.
These provisions in the Articles and Bylaws could have the effect of
reducing the attractiveness of the Corporation to persons who might wish to
make a tender offer, an exchange offer or other takeover bid for the
Corporation's common stock, thereby reducing the possibility that existing
stockholders might be offered premiums over the market value of their stock, a
situation often associated with takeover bids. The provisions also may have the
overall effect of rendering more difficult the accomplishment of mergers or the
assumption of control of the Corporation, and thus make the removal of
management more difficult. These provisions could make the accomplishment of a
future transaction more difficult even if it is favorable to the interests of
the shareholders. At the present time, management of the Corporation has no
knowledge of and no reason to believe that any person or entity is considering
an offer of the type which would be affected by any of these provisions.
14
<PAGE>
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Price Waterhouse LLP has been independent public accountants for the
Corporation since 1975. The Corporation recommends that the shareholders ratify
the selection by the Board of Directors of the Corporation of Price Waterhouse
LLP as independent public accountants for the Corporation during the year
ending December 31, 1998.
It is expected that representatives of Price Waterhouse LLP will be
present at the meeting and will be available to respond to appropriate
questions. The representatives of Price Waterhouse LLP will be given an
opportunity to make a statement if they desire.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
A copy of the Corporation's Annual Report on Form 10-K, including the
financial statements and schedules thereto, which is filed with the Securities
and Exchange Commission, is available free of charge to each shareholder of
record upon written request to the Corporate Secretary, Anchor Financial
Corporation, 2002 Oak Street, Myrtle Beach, South Carolina 29577.
By Order of the Board of Directors
STEPHEN L. CHRYST
President and Chief Executive
Officer
Myrtle Beach, South Carolina
March 30, 1998
15
<PAGE>
*******************************************************************************
APPENDIX
P R O X Y ANCHOR FINANCIAL CORPORATION
2002 Oak Street
Myrtle Beach, SC 29577
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John J. Moran, W. Gairy Nichols, III and
Thomas J. Rogers, as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below, all
shares of common stock of Anchor Financial Corporation (the "Corporation") held
of record by the undersigned on March 2, 1998 at the annual meeting of
shareholders to be held on April 30, 1998 or any adjournment thereof.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except [ ] WITHHOLD AUTHORITY to vote
as marked to the contrary below) for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name below.
</TABLE>
James E. Burroughs J. Bryan Floyd Albert A. Springs, III
Stephen L. Chryst Ruppert L. Piver
2. PROPOSAL TO CONSIDER AND VOTE UPON AMENDMENTS TO THE CORPORATION'S
ARTICLES OF INCORPORATION:
(i) to increase the authorized shares of common stock to 10,000,000
shares:
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
<TABLE>
(ii) to change the par value of the common stock to no par:
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(Continued on other side.)
<PAGE>
(Continued from other side.)
3. PROPOSAL TO RATIFY SELECTION OF PRICE WATERHOUSE LLP as independent
public accountants for the Corporation for the year ending December 31,
1998.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy when properly
executed will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be voted "FOR"
Proposals 1 through 3.
Dated ---------------------------
--------------------------------
Signature
--------------------------------
Signature if held jointly
Please sign exactly as name
appears at left. When shares
are held by joint tenants, both
should sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership name
by authorized person.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
