<PAGE> 1
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 the 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
GREENE COUNTY BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
$125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
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<PAGE> 2
[LETTERHEAD OF GREENE COUNTY BANCSHARES GOES HERE]
April 14, 1999
Dear Shareholder:
We invite you to attend the Annual Meeting of Shareholders (the "Annual
Meeting") of Greene County Bancshares, Inc. (the "Company") to be held at the
General Morgan Inn, 111 North Main Street, Greeneville, Tennessee, on Wednesday,
April 28, 1999 at 11:00 a.m., local time.
The Annual Meeting has been called for the election of directors.
Enclosed is a proxy statement, a proxy card and the Company's Annual Report to
Shareholders for the 1998 fiscal year. Directors and officers of the Company as
well as representatives of PricewaterhouseCoopers, the Company's independent
auditors for the 1998 fiscal year, will be present to respond to any questions
shareholders may have.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. On
behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy as soon as possible, even if you currently plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend the Annual Meeting.
Thank you for your cooperation and your continuing support.
<TABLE>
<CAPTION>
Sincerely,
<S> <C>
/s/ Terry Leonard /s/ R. Stan Puckett
Terry Leonard R. Stan Puckett
Chairman of the Board President and Chief Executive Officer
</TABLE>
<PAGE> 3
GREENE COUNTY BANCSHARES, INC.
100 NORTH MAIN STREET
GREENEVILLE, TENNESSEE 37743
(423) 639-5111
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1999
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders (the
"Annual Meeting") of Greene County Bancshares, Inc. (the "Company") will be held
on Wednesday, April 28, 1999 at 11:00 a.m., local time, at the General Morgan
Inn, 111 North Main Street, Greeneville, Tennessee.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon the
following matters:
(1) to elect two directors of the Company; and
(2) to transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the
Annual Meeting on the date specified above or on any date or dates to which, by
original or later adjournments, the Annual Meeting may be adjourned.
Shareholders of record at the close of business on March 16, 1999 will be
entitled to vote at the Annual Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and choose to vote in person
at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Davis Stroud
Davis Stroud
Secretary
Greeneville, Tennessee
April 14, 1999
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE, AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE> 4
PROXY STATEMENT
OF
GREENE COUNTY BANCSHARES, INC.
100 NORTH MAIN STREET
GREENEVILLE, TENNESSEE 37743
(423) 639-5111
----------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 1999
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
This Proxy Statement is furnished to shareholders of Greene County
Bancshares, Inc. (the "Company") in connection with the solicitation of proxies
by the Company's Board of Directors to be used at the 1999 Annual Meeting of
Shareholders of the Company (the "Annual Meeting"), to be held on Wednesday,
April 28, 1999 at 11:00 a.m., local time, at the General Morgan Inn, 111 North
Main Street, Greeneville, Tennessee. The accompanying Notice of Annual Meeting
and form of proxy and this Proxy Statement are being first mailed to
shareholders on or about April 14, 1999.
- --------------------------------------------------------------------------------
VOTING AND REVOCABILITY OF PROXIES
- --------------------------------------------------------------------------------
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR ELECTION OF TWO NOMINEES AS
DIRECTORS OF THE COMPANY. The proxy confers discretionary authority on the
persons named therein to vote with respect to the election of any person or a
director where the nominee is unable to serve or for good cause will not serve,
and with respect to any other matter presented to the Annual Meeting if such
notice has not been delivered to the Company in accordance with the Company's
Bylaws. If any other matters are properly brought before the Annual Meeting as
to which proxies confer discretionary authority, the persons named in the proxy
will vote the shares represented by such proxies on such matters as determined
by a majority of the Board of Directors. Except for procedural matters incident
to the conduct of the Annual Meeting, the Company does not know of any other
matters that are to come before the Annual Meeting. Proxies marked as
abstentions and shares held in street name which have been designated by brokers
on proxies as not voted will not be counted as votes cast. Such proxies will be
counted for purposes of determining a quorum at the Annual Meeting.
Shareholders who execute proxies may revoke them at any time prior to
their exercise by filing with the Secretary of the Company a written notice of
revocation, by delivering to the Company a duly executed proxy bearing a later
date, or by attending the Annual Meeting and voting in person. Please note that
the mere presence of a shareholder at the Annual Meeting will not, by itself,
automatically revoke such shareholder's proxy.
- --------------------------------------------------------------------------------
VOTING SECURITIES
- --------------------------------------------------------------------------------
The securities that may be voted at the Annual Meeting consist of shares
of the Company's common stock, par value $10.00 per share (the "Common Stock").
Each share entitles its owner to one vote on all matters. Persons who held
shares of Common Stock on March 16, 1999 (the "Record Date") are entitled to
vote at the Annual Meeting. The number of shares of Common Stock outstanding as
of the Record Date was 1,357,948.
<PAGE> 5
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------------------------
Persons and groups beneficially owning more than 5% of the Common Stock
are required under federal securities laws to file certain reports with the
Securities and Exchange Commission ("SEC") detailing their ownership. The
following table sets forth the amount and percentage of the Common Stock
beneficially owned by any person or group of persons known to the Company to be
a beneficial owner of more than 5% of the Common Stock as of the Record Date.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Beneficial Percent of Common Stock
Beneficial Owner Ownership (a) Outstanding
------------------------------------------------------------------------------------------------
<S> <C> <C>
Phil M. Bachman
1330 E. Allen Bridge Road 139,999(b) 10.31%
Greeneville, Tennessee 37743
</TABLE>
- ----------------------
(a) For purposes of this table, an individual is considered to "beneficially
own" any share of Common Stock which he or she, directly or indirectly,
through any contract, arrangement, understanding, relationship, or
otherwise, has or shares: (1) voting power, which includes the power to
vote, or to direct the voting of, such security; and/or (2) investment
power, which includes the power to dispose, or to direct the disposition
of, such security. In addition, an individual is deemed to be the
beneficial owner of any share of Common Stock of which he has the right to
acquire voting or investment power within 60 days of the Record Date.
(b) Includes 4,670 shares of Common Stock held directly or indirectly by Mr.
Bachman's wife as to which Mr. Bachman disclaims beneficial ownership. Had
such shares not been included, Mr. Bachman's ownership percentage would
have been 9.97%.
The following table sets forth, as of the Record Date, certain
information known to the Company as to Common Stock beneficially owned by each
director and nominee for director of the Company and by all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of Common Stock
Name and Position Beneficial Ownership (a)(b) Outstanding
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Terry Leonard, Chairman of the Board 10,440 *
R. Stan Puckett, President, Chief 18,300 (c) 1.34
Executive Officer and Director
Davis Stroud, Executive Vice President 2,977 (d) *
and Secretary
Phil M. Bachman, Director 139,999 (e) 10.31
Harrison Lamons, Director 6,000 *
Ralph T. Brown, Director 17,860 1.32
James A. Emory, Director 10,018 *
W.T. Daniels, Director 1,500 *
Charles S. Brooks, Director 90 *
J.W. Douthat, Director 5,149 *
Helen Horner, Director 57,782 4.26
Jerald K. Jaynes, Director 1,650 *
All directors and executive officers as a 272,106 19.93
group (13 persons)
</TABLE>
(Footnotes on following page)
2
<PAGE> 6
- ------------------------
* Less than 1% of the outstanding Common Stock.
(a) For the definition of "beneficial ownership," see Note (a) to the above
table.
(b) Includes shares owned directly by directors and executive officers of the
Company as well as shares held by their spouses and children, trusts of
which certain directors are trustees and corporations in which certain
directors own a controlling interest. Includes shares of Common Stock
subject to outstanding options which are exercisable within 60 days of
the Record Date.
(c) Includes options to acquire 5,400 shares of Common Stock currently
exercisable by Mr. Puckett at an exercise price equal to 150% of the book
value of the Common Stock at the date of grant (a weighted average price
of approximately $55.78 per share).
(d) Includes options to acquire 1,795 shares of Common Stock currently
exercisable by Mr. Stroud at an exercise price equal to the estimated
fair market value of the Common Stock at date of grant (a weighted
average exercise price of approximately $58.83).
(e) Includes 4,670 shares of Common Stock held directly or indirectly by Mr.
Bachman's wife as to which Mr. Bachman disclaims beneficial ownership.
Had such shares not been included, Mr. Bachman's ownership percentage
would have been 9.97%.
- --------------------------------------------------------------------------------
PROPOSAL 1 -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Board of Directors is currently composed of twelve members,
ten of whom are listed in the table below and Harrison Lamons and Helen Horner,
both of whom will retire at the Annual Meeting. The Board of Directors has
unanimously approved a reduction in the size of the Board of Directors from
twelve members to ten members effective upon the retirement of Mr. Lamons and
Mrs. Horner. The Company's Amended and Restated Charter requires that directors
be divided into three classes, as nearly equal in number as possible, the
members of each class to serve for a term of three years and until their
successors are elected and qualified, with one-third of the directors elected
each year. The Board of Directors, acting in its capacity as a nominating
committee, has nominated for election as directors, J.W. Douthat and Jerald K.
Jaynes, each of whom are currently members of the Board, to serve for three
years and until his respective successor is elected and qualified. Under
Tennessee law, directors are elected by a plurality of the votes cast at an
election.
It is intended that the persons named in the proxies solicited by the
Board of Directors will vote for the election of each of the nominees. If any
nominee is unable to serve, the shares represented by all properly executed
proxies which have not been revoked will be voted for the election of a
substitute nominee as the Board of Directors may recommend. In the alternative,
the Board of Directors may, at its discretion, reduce its size to eliminate the
vacancy. At this time, the Board knows of no reason why any nominee might be
unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION AS DIRECTORS OF
ALL THE NOMINEES LISTED BELOW.
The following table sets forth certain information with respect to each
of the Company's current directors whose term of office as a director will or,
assuming re-election, is expected to continue after the Annual Meeting. Each of
the Company's directors also currently serves as a director of Greene County
Bank (the "Bank"), the wholly-owned subsidiary of the Company. There are no
arrangements or understandings between the Company and any director pursuant to
which such person has been selected as a director or nominee for director of the
Company, and no director or nominee is related to any other director, nominee or
executive officer by blood, marriage or adoption.
3
<PAGE> 7
<TABLE>
<CAPTION>
Current Term to
Name Age(a) Director Since (b) Expire Previous Five-Years Business Experience
- ---- ------ ------------------ ------ ---------------------------------------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
<S> <C> <C> <C> <C>
J.W. Douthat 68 1990 1999 Retired; former President, Tri State
Tractor & Turf
Jerald K. Jaynes 61 1992 1999 Retired; former President & CEO, Unaka
Co. Inc. (manufacturing)
<CAPTION>
DIRECTORS CONTINUING IN OFFICE
<S> <C> <C> <C> <C>
W.T. Daniels 54 1987 2000 Property management
R. Stan Puckett 42 1989 2000 President & Chief Executive Officer of
the Company and the Bank
Davis Stroud 65 1989 2000 Executive Vice President and Secretary
of the Company and the Bank
Charles S. Brooks 60 1990 2000 Chairman of the Board, McInturff,
Milligan & Brooks (insurance agency)
Phil M. Bachman 61 1968 2001 President, Bachman-Bernard Motors
(automobile dealer)
Terry Leonard 60 1975 2001 Owner/Operator, Leonard & Associates
(manufacturing)
Ralph T. Brown 66 1979 2001 Dentist; retired 1996
James A. Emory 65 1983 2001 President, J.A.E. Foods, Inc.
(restaurant management)
</TABLE>
- -------------------------------------
(a) As of December 31, 1998.
(b) Indicates year that director first served as a director of either the
Company or the Bank.
- --------------------------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
The Company conducts its business through meetings of the Board of
Directors. There are no standing committees of the Board of Directors of the
Company. The business of the Bank is conducted through its Board of Directors,
which met sixteen (16) times in 1998, twelve (12) of which were regular meetings
and four (4) of which were specially called meetings, and also held five (5)
meetings via telephone. Each member of the Board of Directors of the Company and
of the Bank attended at least 75% or more of the aggregate of (a) the total
number of meetings of the boards of directors and (b) the total number of
meetings held by all committees on which they served.
The Board of Directors of the Company acts as a nominating committee for
selecting management's nominees for election as directors. Nominations may also
be made by shareholders, provided such nominations are made in writing and
submitted to the Secretary or the President of the Company in accordance with
the Company's Amended and Restated Charter. During 1998, the Board of Directors
met once in its capacity as a nominating committee.
The Audit Committee of the Bank also serves as the audit committee for
the Company. The Audit Committee of the Bank consists of Messrs. Leonard, Brown,
Lamons and Jaynes (Chairman). For 1999, Mr. Jaynes will continue to serve as
Chairman of the Audit Committee. This committee meets quarterly to (1) monitor
the accounting and financial reporting practices of the Company, and (2)
determine whether the Company has adequate administrative, operating and
internal accounting controls. This committee met five (5) times during 1998 in
its capacity as the audit committee for the Company.
4
<PAGE> 8
The Bank's Compensation Committee also serves as the compensation
committee for the Company. The Compensation Committee consists of Messrs.
Leonard (Chairman), Brown, Bachman, Brooks, Daniels and Douthat. It meets
periodically to evaluate the compensation and fringe benefits of the directors,
officers and employees of the Bank and the Company and recommend changes to the
respective Boards of Directors. The Compensation Committee met twice during
1998.
- --------------------------------------------------------------------------------
DIRECTORS' COMPENSATION
- --------------------------------------------------------------------------------
Directors of the Company are compensated in their capacity as such at
$400 for each quarterly meeting of the Company's Board of Directors. During
1998, the Company's Board of Directors met three times.
Directors of the Company are also directors of the Bank and are
compensated by the Bank in their capacity as directors of the Bank. Directors of
the Bank receive $400 for each regular monthly Board meeting attended, plus
payment of such fee for up to two absences during a year, and $200 for each
specially called meeting attended. Each Bank director also receives an annual
retainer fee of $6,000, paid in equal quarterly amounts. Members of the
Executive Committee of the Bank's Board of Directors also receive $435 for each
twice-monthly meeting of the Committee and an annual retainer of $1,500. Members
of the Bank's Audit Committee received $200 for each quarterly meeting.
Compensation for all other committee meetings is $200.
In January 1993 the Bank established a deferred compensation plan (the
"Plan") pursuant to which directors may elect to defer receipt of a portion of
their fees by entering into deferred fee agreements with the Bank. The
agreements also provide for payment of benefits under certain events of
disability, early retirement, termination of employment or death. The Bank is
the beneficiary of life insurance acquired with respect to participating
directors for purposes of the Plan.
On February 23, 1999, the Bank revised the terms of the Plan. The
revisions allow the participation of directors that had previously elected not
to defer, increased the maximum limit of fees that may be deferred, and
increased the rate of return on deferred amounts during the period prior to
retirement from the prime rate, adjusted annually, to a fixed rate of ten
percent (10%). The Bank acquired additional life insurance with respect to these
participating directors. The Bank paid $1,594,000 in 1999 as a result of the
Plan's revision in 1999, and may be required to pay additional sums in 1999
because of the participation by additional directors. As of March 24, 1999, all
directors were participating in this Plan except for Directors Brown, Emory,
Jaynes and Brooks.
5
<PAGE> 9
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION AND OTHER BENEFITS
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE. The following table sets forth cash and
noncash compensation for each of the last three fiscal years awarded to or
earned by the Chief Executive Officer and certain named executive officers of
the Company.
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------------------------- -------
Restricted Securities
Name and Principal Other Annual Stock Underlying LTIP All Other
Position(a) Year Salary Bonus(h) Compensation(b) Award(s) Options/SARs(#) Payouts Compensation (c)
----------- ---- ------ -------- --------------- -------- --------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. Stan Puckett 1998 $176,400 $ 61,500 -- -- 1,800(d) -- $37,050
President and 1997 168,000 43,500 -- -- 1,800(d) -- 35,650
Chief Executive 1996 160,000 46,250 281,804(f) -- 1,800(d)(g) -- 33,275
Officer of the
Company and
the Bank
Davis Stroud 1998 $140,910 $31,500 -- -- 715(e) -- $34,399
Executive Vice 1997 128,000 26,500 -- -- 611(e) -- 33,264
President, 1996 122,000 22,950 -- -- 618 (e)(g) -- 32,843
Secretary of the
Company and
the Bank
</TABLE>
- ---------------------------------
(a) No other executive officer earned in excess of $100,000 in salary and
bonus in 1998.
(b) Executive officers of the Company receive indirect compensation in the
form of certain perquisites and other personal benefits. The amount of
such benefits in 1998, 1997 and 1996 received by the named executive
officers did not exceed 10% of the respective executive's annual salary
and bonus.
(c) Reflects contributions by the Company to its profit-sharing plan for the
benefit of the named officer and payments of directors' fees to such
officer. Directors' fees paid to Messrs. Puckett and Stroud were,
respectively, $13,050 and $13,050 for 1998, $11,650 and $11,450 for 1997,
and $10,775 and $10,775 for 1996. Contributions to profit-sharing plans
made by the Company on behalf of Messrs. Puckett and Stroud were,
respectively, $24,000 and $21,137 for 1998, $24,000 and $19,215 for 1997,
and $22,500 and $18,300 for 1996. A portion of such directors' fees is
deferred pursuant to agreements entered into individually with an
insurance company. In addition, includes $213, $2,599 and $3,768 paid to
Mr. Stroud in 1998, 1997 and 1996, respectively, as commissions on
insurance policy sales.
(d) Mr. Puckett is granted options each year to purchase 1,800 shares of
Common Stock with an exercise price equal to 150% of the Common Stock's
book value at the time of grant and with a term of 10 years. Such options
are granted pursuant to a 1989 stock option plan adopted by the Company
and as to which Mr. Puckett is the sole participant.
(e) Granted pursuant to the Company's 1995 Stock Option Plan as to which
options are granted with an exercise price equal to fair market value at
date of grant and are exercisable for ten years from date of grant.
(f) Reflects exercise of non-incentive stock options.
(g) Adjusted to reflect the 3-for-1 stock split effected in October 1997.
(h) Bonus amounts reflect amounts earned during the stated fiscal year, even
if paid in the subsequent fiscal year. All amounts have been restated to
reflect this presentation.
OPTION GRANTS IN FISCAL YEAR 1998. The following table contains
information concerning the grant of stock options to Mr. Puckett under a 1989
stock option plan and to Mr. Stroud under the 1995 Stock Option Plan. Neither
plan provides for the grant of stock appreciation rights.
6
<PAGE> 10
<TABLE>
<CAPTION>
Number of Securities Percent of Total
Underlying Options Granted to Exercise of Base
Options Granted Employees in Price Grant Date
Name Number of Shares Fiscal Year ($ per share) Expiration Date Present Value
---- ---------------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
R. Stan Puckett 1,800(a) 23.08% $ 61.21 12/08 $92,700(b)
Davis Stroud 715 9.17% $ 115.00 12/08 $12,455(b)
</TABLE>
- ----------------
(a) Options are granted with an exercise price equal to 150% of the book
value of the underlying stock on the date of grant.
(b) Represents the present value of the option at the date of grant as
determined using the Black-Scholes option pricing model. In calculating
the present value of the option grant, the following assumptions were
utilized: (i) the current market price of the underlying Common Stock at
the date of grant was $115.00; (ii) the continuously compounded risk-free
rate of return expressed on an annual basis was 5.0%; (iii) the risk of
the underlying Common Stock, measured by the standard deviation of the
continuously compounded annual rate of return of the Common Stock, was
9.80%; and (iv) dividends on the underlying Common Stock increased at an
annual rate of 15.0%. These assumptions are used for illustrative
purposes only. No assurance can be given that actual experience will
correspond to the assumptions utilized.
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES. The
following table sets forth information concerning the value of options held by
the named executive officers at the end of the fiscal year.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year End In-the-Money Options at
Exercisable/Unexercisable Fiscal Year End (a)
Shares Acquired on Value ------------------------- -------------------
Name Exercise (#) Realized ($) (Number of Shares) Exercisable/Unexercisable
---- ------------ ------------ ------------------ -------------------------
<S> <C> <C> <C> <C>
R. Stan Puckett -- -- 5,400/-- $319,773/$--
Davis Stroud -- -- 1,795/1,820 $100,831/$36,885
</TABLE>
- ----------------------
(a) Represents the difference between fair market value of underlying Common
Stock at year-end (based on the most recent sales price known to
management) and the exercise price. Options are in-the-money if the fair
market value of the underlying securities exceeds the exercise price of
the Option and out-of-the-money if the exercise price of unexercisable
options exceeds current fair market value.
PROFIT SHARING PLAN. The Company maintains a contributory Profit Sharing
Plan ("PSP") and a non-contributory Money Purchase Plan ("MPP") covering certain
employees with more than one year of service.
Employees participating in the PSP may contribute up to 10% of their
monthly salary, with the Company contributing 2% (3% in 1999) of participating
employees' salary (not to exceed 10% of profit before taxes). Employees of the
Bank, but not its subsidiaries, participate in the MPP, in which the Company
contributes 13% (12% in 1999) to fund the MPP. In 1998, both plans had a vesting
schedule that permitted full vesting after two years of employment. Beginning in
1999, the 3% Company contribution to the PSP vests immediately, while the 12%
Company contribution to the MPP continues to vest after two years of employment.
Contributions in the amount of $24,000 and $21,137 were made for the
accounts of Messrs. Puckett and Stroud, respectively, under the Plan in 1998.
Mr. Puckett and Mr. Stroud are fully vested under the Plan.
EMPLOYMENT CONTRACTS. The Company entered into an employment agreement
with Mr. Puckett effective January 23, 1996, without any specified term, to
serve as President and Chief Executive Officer of the Company. The agreement,
which is terminable by either party at any time, provides for a base salary plus
directors' fees, life insurance, participation in
7
<PAGE> 11
benefit plans and other fringe benefits. If Mr. Puckett's employment is not
continued by mutual agreement following a merger or acquisition involving the
Company, Mr. Puckett shall be entitled to a payment equal to two years'
compensation (defined to include his base salary plus fringe benefits and the
value of his stock options). The payment that would be made to Mr. Puckett,
assuming his termination of employment under the foregoing circumstances at
December 31, 1998, would have been approximately $992,300. This provision may
have an anti-takeover effect by making it more expensive for a potential
acquiror to obtain control of the Company.
The Bank has contracted with Mr. Stroud, Executive Vice President of the
Bank, to provide for his employment by the Bank at least until reaching the age
of 65. Pursuant to such agreement, Mr. Stroud has agreed not to compete with the
Bank after leaving the employment of the Bank. In consideration of this
agreement, the Bank has agreed to pay Mr. Stroud the sum of $16,600 per year for
10 years after his retirement at age 65 or at any time thereafter. Mr. Stroud is
currently 65 years of age. In the event Mr. Stroud dies after retirement but
prior to the expiration of the full 10-year term, the remainder of such benefits
will be paid to his beneficiaries on the same terms for the remainder of the
ten-year term. The Bank maintains a life insurance policy on Mr. Stroud's life
as to which the Bank is the beneficiary to pay or reimburse the Bank for these
benefits.
- --------------------------------------------------------------------------------
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
Decisions on compensation of the Company's executives generally are made
by a six-member Compensation Committee of the Board of Directors of the Bank.
Each member of the Compensation Committee is a non-employee director and is
appointed annually.
The Committee is responsible for developing and making recommendations to
the Board of Directors concerning compensation paid to the Chief Executive
Officer and Executive Vice President and, based upon the recommendation of the
Chief Executive Officer, all other employees. The Committee is further
responsible for administering all aspects of the Company's executive
compensation program. Executive compensation is intended to be set at levels
that the Compensation Committee believes is consistent with others in the
Company's industry, and the Committee also considers general economic conditions
and other external factors.
Base salaries for executive officers are determined initially by
evaluating the responsibilities of the position held, 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 Company and the performance of
the executive. Compensation paid during 1998 to executive officers consisted of
base salary, bonus, stock options and contributions paid with respect to the
Company's Profit Sharing Plan. It is the philosophy of the Compensation
Committee that stock options should be awarded only to the key employees of the
Company to promote long-term interests between such employees and the Company's
shareholders and to assist in the retention of such employees. For 1998, based
on the factors discussed above and a review by the Committee, Mr. Puckett and
Mr. Stroud received a 5% and 10% increase in base pay, respectively. Payments to
the Company's Profit Sharing Plan are made to certain employees on a
non-discriminatory basis.
Messrs. Puckett and Stroud receive bonus awards based upon increases in
the per-share price of the Common Stock, return on average equity of the Bank
and overall performance reviews. The bonus awarded in 1998 totaled 34.86% and
22.35%, respectively, of their base salaries for 1998.
The Committee believes that Mr. Puckett's total compensation for 1998
appropriately reflected his contribution to the Company's financial results. The
Committee believes that the Company's overall performance was indicative of a
well-managed company during a challenging business climate.
8
<PAGE> 12
COMPENSATION COMMITTEE
Terry Leonard (Chairman) Philip M. Bachman, Jr.
Ralph Brown Charles Brooks
J.W. Douthat W.T. Daniels
March 22, 1999
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- --------------------------------------------------------------------------------
The Compensation Committee consists of Messrs. Leonard, Brown, Bachman,
Brooks, Daniels and Douthat.
Except for Directors Bachman and Brooks, no member of the Compensation
Committee of the Board of Directors of the Company was (a) an officer or
employee of the Company or any of its subsidiaries during the fiscal year ended
December 31, 1998, (b) a former officer of the Company or any of its
subsidiaries, or (c) an insider (i.e., director, officer, director or officer
nominee, greater than 5% shareholder, or immediate family member of the
foregoing) of the Company or any of its subsidiaries and engaged in transactions
with the Company or any subsidiary involving more than $60,000 during the fiscal
year ended December 31, 1998, except for the transactions described below.
The Company purchases insurance coverage from McInturff, Milligan and
Brooks of which Mr. Brooks is Chairman of the Board. During 1998, premiums
totaling $162,570 were paid by the Company to McInturff, Milligan and Brooks.
Management believes the fees paid are fair and reasonable and do not exceed
those premiums that would be paid to a third party firm.
The Company purchases vehicles from Bachman-Bernard Motors, as to which
Mr. Bachman serves as President. The Company paid Bachman-Bernard Motors $14,850
during 1998, which was for a single vehicle. Management believes the price paid
was fair and reasonable and does not exceed amounts that would have otherwise
been paid in an arm's-length transaction to a third party. The Company also paid
premiums during 1998 of $57,630 to Greeneville Insurance Agency, as to which Mr.
Bachman is part owner.
9
<PAGE> 13
- --------------------------------------------------------------------------------
CUMULATIVE STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph shows the cumulative total return on the Common Stock
of the Company over the last five years, compared with (1) the Standard & Poor's
Bank Composite Index and (2) the Standard & Poor's Major Regional Bank Index.
Cumulative total return on the stock or the index equals the total increase in
value since December 31, 1993 assuming reinvestment of all dividends paid into
the stock or the index, respectively. The graph was prepared assuming that $100
was invested on December 31, 1993 in the Common Stock, and in the securities
included in the indices used for comparison purposes. There is no established
public trading market in which shares of the Common Stock are regularly traded,
nor are there any uniformly quoted prices for the shares of Common Stock.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
[CUMULATIVE TOTAL SHAREHOLDER CHART]
At December 31, 1993 through 1998
<TABLE>
<CAPTION>
Period Ending
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Index 1993 1994 1995 1996 1997 1998
- -------------------------------------------------------------------------------------------------
Greene County
Bancshares, Inc. 100.00 110.20 127.25 155.91 222.52 261.16
Standard & Poor's Bank
Composite Index 100.00 91.53 140.70 193.20 272.53 284.05
Standard & Poor's Major
Regional Bank Index 100.00 91.17 138.26 183.07 268.68 290.58
</TABLE>
10
<PAGE> 14
- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------------
The Company and its subsidiaries have had, and expect to have in the
future, transactions in the ordinary course of business with directors and
executive officers and members of their immediate families, as well as with
principal shareholders. All loans included in such transactions were made in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing for comparable transactions with
non-affiliated persons. It is the belief of management that such loans neither
involved more than the normal risk of collectability nor presented other
unfavorable features.
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Officers, directors and
greater-than-10% shareholders are required to furnish the Company with copies of
all such reports. Based solely on its review of copies of such reports received
by it, or written representations from certain reporting persons that no annual
report of change in beneficial ownership is required, the Company believes that,
during the year ended December 31, 1998, all such filing requirements were
complied with, except that Messrs. Douthat, Leonard and Stroud and Mrs. Horner
each filed one (1) Form 4 after their respective required deadlines.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors has appointed the public accounting firm of
PricewaterhouseCoopers to continue as independent auditors for the Company for
the fiscal year ending December 31, 1999. PricewaterhouseCoopers and its
predecessor, Coopers & Lybrand L.L.P., served as the Company's independent
auditors for the year ended December 31, 1998. A representative of
PricewaterhouseCoopers is expected to be present at the Annual Meeting and
available to respond to appropriate questions, and will have the opportunity to
make a statement if he so desires.
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- --------------------------------------------------------------------------------
It is expected that the Company's 2000 Annual Meeting of Stockholders
will be held on or about April 26, 2000. Any shareholder who intends to present
a proposal for action at next year's annual meeting of the shareholders and
would like a copy of the proposal included in the Company's proxy materials for
that meeting must forward a copy of the proposal or proposals to the Company's
principal executive office at 100 North Main Street, Greeneville, Tennessee
37743, and must be received by the Company not later than December 17, 1999. The
Company may use proxies to exercise discretionary voting authority with respect
to stockholder proposals that are not included in the Company's proxy statement
for the 2000 Annual Meeting and are received after the deadline determined in
accordance with the Company's Amended and Restated Charter and the Company's
Bylaws (March 17, 2000). Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to the Year
2000 annual meeting any shareholder proposal which does not meet all of the
requirements for inclusion established by the SEC in effect at the time such
proposal is received.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any other business to be presented
for action by the shareholders at the Annual Meeting other than those matters
described in this Proxy Statement and matters incident to the conduct of the
Annual Meeting. If, however, any other matters known are properly brought before
the Annual Meeting, the persons named in the accompanying proxy will vote such
proxy on such matters as determined by a majority of the Board of Directors.
11
<PAGE> 15
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone number without additional compensation.
The Company's 1998 Annual Report to Shareholders (the "Annual Report"),
including financial statements, has been mailed to all persons who were
shareholders of record as of the close of business on the Record Date. Any
shareholder who has not received a copy of the Annual Report may obtain a copy
by writing to the Secretary of the Company. The Annual Report is not to be
treated as a part of this proxy solicitation material or as having been
incorporated herein by reference.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Davis Stroud
Davis Stroud
Secretary
Greeneville, Tennessee
April 14, 1999
- --------------------------------------------------------------------------------
ANNUAL REPORT ON FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO PERSONS WHO WERE SHAREHOLDERS AS OF THE RECORD DATE
UPON WRITTEN REQUEST TO THE SECRETARY, GREENE COUNTY BANCSHARES, INC., 100 NORTH
MAIN STREET, GREENEVILLE, TENNESSEE 37743 OR BY CALLING 423-639-5111.
- --------------------------------------------------------------------------------
12
<PAGE> 16
GREENE COUNTY BANCSHARES, INC.
100 NORTH MAIN STREET
GREENEVILLE, TENNESSEE 37743
REVOCABLE PROXY FOR THE ANNUAL MEETING
OF SHAREHOLDERS
APRIL 28, 1999
The undersigned hereby constitutes and appoints Stan Puckett, William F.
Richmond and Davis Stroud, and each of them, the proxies of the undersigned,
with full power of substitution, to attend the Annual Meeting of Shareholders of
Greene County Bancshares, Inc. (the "Company") to be held at the General Morgan
Inn, 111 North Main Street, Greeneville, Tennessee on Wednesday, April 28, 1999
at 11:00 a.m., local time, and any adjournments thereof, and to vote all the
shares of stock of the Company which the undersigned may be entitled to vote,
upon the following matters.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, WILL BE
VOTED IN ACCORDANCE WITH THE INSTRUCTIONS MARKED HEREIN, AND WILL BE VOTED FOR
THE ELECTION OF DIRECTORS AND AS DETERMINED BY A MAJORITY OF THE BOARD OF
DIRECTORS AS TO OTHER MATTERS, IF NO INSTRUCTIONS TO THE CONTRARY ARE MARKED
HEREIN AND TO THE EXTENT THIS PROXY CONFERS DISCRETIONARY AUTHORITY.
1. The Election of Directors: J.W. Douthat and Jerald K. Jaynes.
<TABLE>
<S> <C>
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY to
(except as marked to the contrary below). vote for all nominees listed above.
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME BELOW.)
- --------------------------------------------------------------------------------
2. The transaction of such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The undersigned hereby acknowledges receipt of a copy of the accompanying
Notice of Annual Meeting of the Shareholders and Proxy Statement and the Annual
Report to Shareholders for the fiscal year ended December 31, 1998, and hereby
revokes any proxy heretofore given. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE
ITS EXERCISE.
Date:
---------------------------------
Signature:
----------------------------
Signature:
----------------------------
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS HEREIN AND RETURN IN THE
ENCLOSED ENVELOPE. If acting as executor, administrator, trustee, guardian, etc.
you should so indicate when signing. If the signor is a corporation, please sign
the full name by duly appointed officer. If a partnership, please sign in
partnership name by authorized person. If shares are held jointly, each
shareholder named should sign.
