<PAGE> 1
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 [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
EAGLE 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.
[ ] 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:
<PAGE> 2
EAGLE BANCSHARES, INC.
4305 LYNBURN DRIVE
TUCKER, GEORGIA 30084
(770) 908-6690
July 17, 1998
DEAR FELLOW SHAREHOLDER:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders of Eagle Bancshares, Inc. (the "Company" or "Eagle"), which will be
held at the Marriott Century Center Hotel, 2000 Century Boulevard, Atlanta,
Georgia, on Thursday, August 27, 1998 at 10:30 a.m., local time (the "Annual
Meeting").
The following Proxy Statement outlines the business to be conducted at
the Annual Meeting, which includes proposals to elect three directors for a term
of three years and until their successors are elected and qualified, to act upon
a shareholder proposal, and to ratify the appointment of Arthur Andersen LLP, as
independent public accountants.
Enclosed are the Notice of Meeting, Proxy Statement, form(s) of proxy
card and the 1998 Annual Report. WE HOPE YOU CAN ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, IT IS IMPORTANT
FOR YOU TO COMPLETE THE ENCLOSED PROXY CARD(S) AND RETURN THE PROXY CARD(S) IN
THE ENCLOSED POSTAGE-PAID ENVELOPE AS PROMPTLY AS POSSIBLE.
If you have any questions about the Proxy Statement or the 1998 Annual
Report, please let us hear from you.
Sincerely,
C. Jere Sechler, Jr.
Chairman of the Board
<PAGE> 3
EAGLE BANCSHARES, INC.
4305 LYNBURN DRIVE
TUCKER, GEORGIA 30084
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 27, 1998
NOTICE HEREBY IS GIVEN that the 1998 Annual Meeting of Shareholders of
Eagle Bancshares, Inc. (the "Company" or "Eagle") will be held at the Marriott
Century Center Hotel, 2000 Century Boulevard, Atlanta, Georgia, on Thursday,
August 27, 1998, at 10:30 a.m., local time (the "Annual Meeting").
(1) To elect three directors to serve for a term of three years and
until their successors have been duly elected and qualified.
(2) To act upon a shareholder proposal which is opposed by the Board of
Directors.
(3) To ratify the appointment of Arthur Andersen LLP, as independent
public accountants for the Company for the fiscal year ending March 31, 1999.
(4) Such other matters as properly may come before the Annual Meeting
or any adjournments thereof. The Board of Directors is not aware of any other
business to be presented for a vote of the shareholders at the Annual Meeting.
Information relating to the above matters is set forth in the attached
Proxy Statement. Shareholders of record at the close of business on July 10,
1998 will be entitled to receive notice of and to vote at the Annual Meeting and
any adjournments thereof.
By Order Of The Board of Directors.
Richard B. Inman, Jr.
Secretary
Tucker, Georgia
July 17, 1998
PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN PROMPTLY COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. IF
YOU ATTEND THE ANNUAL MEETING AND SO DESIRE, YOU MAY REVOKE THE PROXY CARD AND
VOTE IN PERSON THOSE SHARES OF STOCK HELD BY YOU OTHER THAN SHARES OF COMMON
STOCK ALLOCATED TO AN ACCOUNT FOR YOU PURSUANT TO THE TUCKER FEDERAL SAVINGS &
LOAN ASSOCIATION EMPLOYEE STOCK OWNERSHIP PLAN.
<PAGE> 4
EAGLE BANCSHARES, INC.
4305 LYNBURN DRIVE
TUCKER, GEORGIA 30084
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 27, 1998
This Proxy Statement is furnished to the shareholders of Eagle
Bancshares, Inc. (the "Company" or "Eagle") in connection with the solicitation
of proxies by the Board of Directors of the Company to be voted at the 1998
Annual Meeting of Shareholders of the Company and at any adjournments thereof
(the "Annual Meeting"). The Annual Meeting will be held at the Marriott Century
Center Hotel, 2000 Century Boulevard, Atlanta, Georgia, on Thursday, August 27,
1998, at 10:30 a.m., local time.
The approximate date on which this Proxy Statement and the accompanying
proxy card(s) are first being sent or given to shareholders is July 17, 1998.
All references to numbers of shares of Common Stock of the Company,
$1.00 par value per share (the "Common Stock"), contained in this Proxy
Statement have been adjusted as a result of a two-for-one stock split in the
form of a 100% stock dividend that occurred on December 21, 1995.
VOTING
GENERAL
The securities that can be voted at the Annual Meeting consist of
Common Stock of the Company, with each share entitling its owner to one vote on
each matter submitted to the shareholders. The record date for determining the
holders of Common Stock who are entitled to notice of and to vote at the Annual
Meeting is July 10, 1998. On the record date, 5,814,764 shares of Common Stock
were outstanding and eligible to be voted at the Annual Meeting.
QUORUM AND VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting. In counting the votes to determine whether a quorum exists at the
Annual Meeting, the proposal receiving the greatest total number of votes cast
"for" or "against" and abstentions (including instructions to withhold authority
to vote) will be used.
In voting for the proposal to elect directors (Proposal 1),
shareholders may vote in favor of all nominees, withhold their votes as to all
nominees or withhold their votes as to specific nominees. The vote required to
approve Proposal 1 is governed by Georgia law and is a plurality of the votes
cast by the holders of shares entitled to vote, provided a quorum is present. As
a result, in accordance with Georgia law, votes that are withheld will not be
counted and will have no effect.
<PAGE> 5
In voting on the shareholder proposal set forth on pages 21 and 22
herein (Proposal 2), shareholders may vote in favor of the proposal or against
the proposal or may abstain from voting. The vote required to approve Proposal 2
is governed by Georgia law, and the votes cast favoring such proposal must
exceed the votes cast opposing such proposal, provided a quorum is present. As a
result, in accordance with Georgia law, abstentions will not be counted and will
have no effect.
In voting for the proposal to ratify the Board of Directors'
appointment of independent accountants for the Company (Proposal 3),
shareholders may vote in favor of the proposal or against the proposal or may
abstain from voting. The vote required to approve Proposal 3 is governed by
Georgia law, and the votes cast favoring such proposal must exceed the votes
cast opposing such proposal, provided a quorum is present. As a result, in
accordance with Georgia law, abstentions will not be counted and will have no
effect.
Under the rules of the New York Stock Exchange and the American Stock
Exchange (the "Exchanges") that govern most domestic stock brokerage firms,
member brokerage firms that hold shares in street name for beneficial owners
may, to the extent that such beneficial owners do not furnish voting
instructions with respect to any or all proposals submitted for shareholder
action, vote in their discretion upon proposals which are considered
"discretionary" proposals under the rules of the Exchanges. Member brokerage
firms that have received no instructions from their clients as to
"non-discretionary" proposals do not have discretion to vote on these proposals.
Such "broker non-votes" will not be considered in determining whether a quorum
exists at the Annual Meeting and will not be considered as votes cast in
determining the outcome of any proposal.
HOLDERS OF COMMON STOCK
Proxy cards are being transmitted with this Proxy Statement to all
holders of Common Stock of the Company. All properly executed proxy cards
delivered by shareholders to the Company in time to be voted at the Annual
Meeting and not revoked will be voted at the Annual Meeting in accordance with
the directions given. Shareholders should specify their choices on the
accompanying proxy card(s). IF NO SPECIFIC INSTRUCTIONS ARE GIVEN WITH REGARD TO
THE MATTERS TO BE VOTED UPON, THE SHARES REPRESENTED BY A SIGNED PROXY CARD WILL
BE VOTED "FOR" THE NOMINEES FOR DIRECTOR IDENTIFIED ON PAGE 4 AND THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 1999 AND
"AGAINST" THE SHAREHOLDER PROPOSAL DESCRIBED ON PAGES 21 AND 22 HEREIN. The
Board of Directors of the Company does not know of any other business to be
brought before the Annual Meeting, but it is intended that, if any other matters
properly come before the Annual Meeting, the persons named as proxies will vote
upon such matters according to their judgment. All proxy cards delivered
pursuant to this solicitation are revocable at any time before they are voted at
the option of the persons executing them by giving written notice to the
Secretary of the Company, by delivering a later dated proxy card or by voting in
person at the Annual Meeting.
PARTICIPANTS IN THE 401(K) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
Separate proxy cards are being transmitted to all persons who have
shares of Common Stock allocated to their accounts as participants or
beneficiaries under the Tucker Federal Savings & Loan Association 401(k) Savings
and Employee Stock Ownership Plan (the "Plan"). These proxy cards appoint
Richard B. Inman, Jr., Zelma B. Martin and Conrad J. Sechler, Jr., who act as
Trustees for the Plan, to vote the shares held for the accounts of the
participants or their beneficiaries in the Plan in accordance with the
instructions noted thereon. IN THE EVENT NO PROXY CARD IS RECEIVED FROM A
PARTICIPANT OR BENEFICIARY OR A PROXY CARD IS RECEIVED WITHOUT INSTRUCTIONS, OR
IN THE EVENT SHARES ARE NOT YET ALLOCATED TO ANY PARTICIPANT'S ACCOUNT, THE
TRUSTEES WILL VOTE THE SHARES OF STOCK OF THE PARTICIPANT AND ANY UNALLOCATED
SHARES "FOR" THE NOMINEES FOR DIRECTOR IDENTIFIED ON PAGE 4 AND THE RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR
THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 1999 AND "AGAINST" THE
SHAREHOLDER PROPOSAL DESCRIBED ON PAGES 21 AND 22 HEREIN. The Trustees do not
know of any other business to be brought before the Annual Meeting but it is
intended that, if
-2-
<PAGE> 6
any other matters properly come before the Annual Meeting, the Trustees as
proxies will vote upon such matters according to their judgment.
Any Plan participant or beneficiary who executes and delivers a proxy
card to the Trustees may revoke it at any time prior to its use by executing and
delivering to the Trustees a duly executed proxy card bearing a later date or by
giving written notice to the Trustees at the following address: Tucker Federal
Savings & Loan Association 401(k) Savings and Employee Stock Ownership Plan,
2355 Main Street, Tucker, Georgia 30084. Under the terms of the Plan, only the
Trustees of the Plan can vote the shares allocated to the accounts of
participants, even if such participants or their beneficiaries attend the Annual
Meeting in person.
COSTS OF SOLICITATION
In addition to soliciting proxies through the mail, the Company may
solicit proxies through its directors, officers and employees in person and by
telephone. Brokerage firms, nominees, custodians and fiduciaries also may be
requested to forward proxy materials to the beneficial owners of shares of
Common Stock held by them. All expenses incurred in connection with the
solicitation of proxies will be borne by the Company. The Company has engaged
the services of Corporate Investors Communications, Inc., a proxy solicitation
firm, to assist in soliciting proxies from beneficial owners of shares of the
Company's Common Stock held by banks, brokerage houses and other custodians,
nominees and fiduciaries. The Company anticipates that such assistance will cost
approximately $12,000, plus certain out-of-pocket expenses.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 31, 1998
regarding the ownership of the Company's Common Stock by each person known to
the Company to be the beneficial owner of more than 5% of the Company's Common
Stock and by all directors and executive officers of the Company as a group,
based on data furnished to the Company by such persons. Information regarding
the beneficial ownership of Common Stock by directors and director nominees is
included under "Proposal 1 - Election of Directors" and by executive officers
named in the Summary Compensation Table is included under "Executive Officers of
the Company."
<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED(1) PERCENT OF CLASS
- ---------------- --------------- ----------------
<S> <C> <C>
Dimensional Fund Advisors Inc. 291,250(2) 5.08%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Tucker Federal Savings & 303,685(3) 5.30%
Loan Association 401(k) Savings and
Employee Stock Ownership Plan
2355 Main Street
Tucker, Georgia 30084
All directors and 711,814(4) 12.41%
executive officers
as a group (9 persons)
</TABLE>
- ---------------------------
(1) The stock ownership information shown above has been furnished to the
Company by the named persons and members of the group or obtained from
information filed with the Securities and Exchange Commission (the
-3-
<PAGE> 7
"Commission"). Beneficial ownership of the Company's principal shareholders as
reported in this table has been determined in accordance with regulations of the
Commission and includes shares of Common Stock which may be acquired within 60
days. Except as otherwise indicated, the named persons and members of the group
have sole voting and investment power with regard to the shares shown as owned
by them.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 291,250 shares of
Common Stock as of March 31, 1998, all of which shares are held in portfolios of
DFA Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional serves as investment
manager. Dimensional disclaims beneficial ownership of all such shares.
(3) The Plan is a tax qualified employee benefit plan covering eligible
employees of the Company and its subsidiaries, including Tucker Federal Bank
("Tucker Federal"), Eagle Service Corporation and Prime Eagle Mortgage
Corporation. Richard B. Inman, Jr., Zelma B. Martin and Conrad J. Sechler, Jr.
are the Trustees of the Plan. The Trustees may vote only unallocated shares and
allocated shares with respect to which the Trustees do not receive timely voting
instructions from participants or their beneficiaries. As of March 31, 1998,
303,685 shares held by the Plan were allocated to participants' accounts and no
shares held by the Plan were unallocated. The Trustees disclaim beneficial
ownership of shares held by the Plan that are voted by participants.
(4) Includes 41,507 shares of Common Stock held by the Plan and allocated
to the accounts of the executive officers of the Company and 15,036 shares held
of record by certain family members of the above-referenced group as to which
the respective members of the group disclaim beneficial ownership.
PROPOSAL 1 - ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company, as amended, provide that the Board of
Directors shall consist of seven members, and the Restated Articles of
Incorporation of the Company, as amended, provide that the directors shall be
divided into three classes as nearly equal in number as possible. Directors are
elected by shareholders for a term of three years and until their successors are
elected and qualified. The term of office of one of the classes of directors
expires each year, and a new class of directors is elected annually for a term
of three years at the Annual Meeting of Shareholders.
The Board of Directors, acting in its capacity as the Nominating
Committee, has nominated C. Jere Sechler, Jr., Weldon A. Nash, Jr. and William F
Waldrop, Jr. to stand for election as directors at the Annual Meeting. Mr.
Sechler has been a director of the Company since 1995, Mr. Nash has been a
director of the Company since 1991, and Mr. Waldrop was a founding director of
Southern Crescent Bank since 1990 and became a director of Tucker Federal in
1997. If elected by the shareholders, the nominees will serve a three year term
until the 2001 Annual Meeting of Shareholders or until their successors are duly
elected and qualified. Information regarding the three nominees is set forth
below.
Each of the nominees has consented to serve if elected. If any of the
nominees should be unavailable for any reason (which is not anticipated), the
Board of Directors may designate a substitute nominee or nominees (in which case
the persons named as proxies on the enclosed proxy card(s) will vote all valid
proxy cards for the election of such substitute nominee or nominees), allow the
vacancy or vacancies to remain open until a suitable candidate or candidates are
located, or by resolution provide for a lesser number of directors.
-4-
<PAGE> 8
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSAL TO ELECT C. JERE SECHLER, JR, WELDON A. NASH, JR. AND WILLIAM
F. WALDROP, JR. AS DIRECTORS OF THE COMPANY TO HOLD OFFICE FOR A TERM OF THREE
YEARS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following table sets forth certain information as of June 9, 1998
regarding the three nominees for director and all current directors whose terms
of office will continue after the Annual Meeting.
DIRECTORS NOMINATED FOR ELECTION TO SERVE UNTIL THE
2001 MEETING OF SHAREHOLDERS
<TABLE>
<CAPTION>
Shares
Beneficially
Owned
(Percent
Name Business Information of Class)(1)
- ---- -------------------- ------------
<S> <C> <C>
Weldon A. Nash, Jr. Mr. Nash has served as President and Chief Executive 89,910(2)
Officer of Weldon, Inc., a company based in Stone Mountain, (1.57%)
Georgia which designs, builds and develops residential and
commercial properties since January 1, 1975. Mr. Nash, 55,
was first elected as a director in March 1991.
C. Jere Sechler, Jr. Mr. Sechler was first elected as a director in April 234,564(3)
1995 and was elected Chairman of the Board in May 1996. (4.09%)
Mr. Sechler was elected President of the Company in May
1996 and has served as President of Eagle Service Corporation,
a wholly owned subsidiary of Tucker Federal since 1991 and as
Chairman of the Board of Eagle Real Estate Advisors, Inc., a
wholly owned subsidiary of the Company ("EREA"), since 1991.
He has been a director of Tucker Federal since 1985 and Chairman
of the Board since May 1996. Mr. Sechler is 52.
William F. Waldrop, Jr. Mr. Waldrop was a partner in and the General Sales Manager 35,321(4)
for Elevator Specialists, Inc. in Atlanta, Georgia for 20 years (*)
until his retirement in 1996. He remains the Secretary Treasurer
and a Director of that Company. He is currently a partner in
Noel Shuman Homes, Inc., a home building Company. He was
first elected a Director of Southern Crescent Financial Corporation
("SCFC") in 1990 and subsequently was elected to the Tucker Federal
Board in 1997 after the Company's acquisition of Southern Crescent
Financial Corp. Mr. Waldrop is 54.
</TABLE>
-5-
<PAGE> 9
DIRECTORS TO SERVE UNTIL THE
2000 ANNUAL MEETING OF SHAREHOLDERS
<TABLE>
<CAPTION>
Shares
Beneficially
Owned
(Percent
Name Business Information of Class)(1)
- ---- -------------------- ------------
<S> <C> <C>
George G. Thompson, V Mr. Thompson was the Superintendent of Gwinnett County 7,736(5)
Public Schools from 1990 until December 1994. (*)
He is currently employed by The Center for
Leadership in School Reform, a non-profit
corporation headquartered in Louisville, Kentucky
as a Vice President. Mr. Thompson is 52 and has
served as a director since 1993.
Richard J. Burrell Mr. Burrell retired in 1994 after 40 years of service with 42,088(6)
Household International, Inc., a financial services company. (*)
During his employment with Household International, Inc.,
Mr. Burrell served as Governmental Relations Director
from 1962 until 1994. Mr. Burrell previously has served
as president of the Alabama and Florida Financial Services
Associations and the Georgia Equity Lenders Association.
Mr. Burrell is currently serving as a consultant to the Georgia
Financial Services Association and is a director of the Stone
Mountain Memorial Association and the Young Harris College
Alumni Foundation. Mr. Burrell is 70 and was first elected as
a director in 1994.
</TABLE>
DIRECTORS TO SERVE UNTIL THE
1999 ANNUAL MEETING OF SHAREHOLDERS
<TABLE>
<CAPTION>
Shares
Beneficially
Owned
(Percent
Name Business Information of Class)(1)
- ---- -------------------- ------------
<S> <C> <C>
Walter C. Alford Mr. Alford has been an attorney practicing in Tucker, 31,286 (7)
Georgia since 1974 and has served as General Counsel (*)
to Tucker Federal since 1995. Mr. Alford, 48, has been a
director of the Company and Tucker Federal since April 1995.
Richard B. Inman, Jr. Mr. Inman has served as President and Chief Executive 148,399(8)
Officer of Tucker Federal since October 1990 and as a (2.59%)
director of Tucker Federal since 1988. Mr. Inman
also has acted as Treasurer of the Company since
May 1993. From 1975 until October 1990, Mr. Inman
was a commercial and investment banker for
Citibank, Merrill Lynch, White, Weld & Co., Paine
Webber and Wells Fargo, and owned and operated two
food companies. Mr. Inman is 46.
</TABLE>
-6-
<PAGE> 10
- -------------------
* Less than one percent.
(1) The stock ownership information shown above has been furnished to the
Company by the named persons or obtained from information filed with the
Commission. Beneficial ownership as reported in this table has been determined
in accordance with regulations of the Commission and includes shares of Common
Stock which may be acquired within 60 days. Except as otherwise indicated, the
named persons have sole voting and investment power with regard to the shares
shown as owned by them.
(2) With regard to Mr. Nash, the shares shown include (i) 13,332 shares which
are held of record as joint tenants by the spouse and mother-in-law of Mr. Nash
as to which he disclaims beneficial ownership, (ii) 4,500 shares which may be
acquired by Mr. Nash upon the exercise of stock options granted pursuant to the
1994 Eagle Bancshares, Inc. Directors Stock Option Incentive Plan (the "DSOP"),
and (iii) 56,928 shares over which Mr. Nash holds shared voting power as the
Executor of the estate of his step-father.
(3) With regard to Mr. Sechler, the shares shown include (i) 48,000 shares
which may be acquired by Mr. Sechler upon exercise of stock options granted in
accordance with Mr. Sechler's 1994 employment agreement with Eagle Service
Corporation, a wholly-owned subsidiary of Tucker Federal, his 1997 employment
agreement with the Company and pursuant to the DSOP; (ii) a total of 12,808
shares held for the account of Mr. Sechler as a participant in the Plan; and
(iii) 113,000 shares owned by unaffiliated companies in which Mr. Sechler has
controlling interests. See "Compensation of Executive Officers - Compensation
Committee Report."
(4) With regard to Mr. Waldrop, the shares shown include (i) 3,500 shares
which may be acquired by Mr. Waldrop upon the exercise of stock options granted
pursuant to the DSOP and (ii) 13,421 shares which may be acquired upon the
exercise of stock options granted upon the conversion of SCFC warrants as a
result of the acquisition of SCFC by the Company in 1997.
(5) With regard to Mr. Thompson, the shares shown include 5,500 shares which
may be acquired by Mr. Thompson upon the exercise of stock options granted
pursuant to the DSOP.
(6) With regard to Mr. Burrell, the shares shown include 3,500 shares which
may be acquired by Mr. Burrell upon the exercise of stock options granted
pursuant to the DSOP.
(7) With regard to Mr. Alford, the shares shown include (i) 1,704 shares held
of record by his spouse and as to which he disclaims beneficial ownership and
(ii) 4,000 shares which may be acquired by Mr. Alford upon the exercise of stock
options granted pursuant to the DSOP. Mr. Alford received legal fees from Tucker
Federal in the amount of $255,745 during the fiscal year ended March 31, 1998.
The legal fees were paid for services rendered by Mr. Alford's law firm on
behalf of Tucker Federal for matters involving litigation, title examinations,
foreclosure proceedings and the closing of loan transactions, including mortgage
title insurance premiums paid to the title insurance company. The fees paid were
comparable to fees which could have been obtained in arms-length negotiated
transactions with unaffiliated third parties. In addition, in May 1994, Mr.
Alford was appointed General Counsel to Tucker Federal and received a retainer
from Tucker Federal in the amount of $28,000 during the fiscal year ended March
31, 1998. The portion of the retainer paid for such fiscal year is included in
the total amount paid to Mr. Alford above.
(8) With regard to Mr. Inman, the shares shown include (i) 24,000 shares
which may be acquired by Mr. Inman upon the exercise of stock options granted in
accordance with Mr. Inman's 1993 employment agreement with Tucker Federal and
pursuant to the DSOP; (ii) 11,666 shares which may be acquired by Mr. Inman upon
the exercise of stock options granted in accordance with Mr. Inman's 1997
employment agreement with Tucker Federal; (iii) 30,000 shares
-7-
<PAGE> 11
of restricted stock for which Mr. Inman has voting power; and (iv) a total of
12,355 shares held for the account of Mr. Inman as a participant in the Plan.
See "Compensation of Executive Officers - Compensation Committee Report" and
"Compensation of Executive Officers - Executive Employment Agreements."
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the
full Board and through committees. The Board of Directors has standing
committees consisting of the Executive Committee, Stock Option Plan Committee,
Audit Committee, Compensation Committee, Administrative Committee of the DSOP,
and the Strategic Growth Committee. During the fiscal year ended March 31, 1998,
the Board of Directors held six meetings. No director of the Company attended
fewer than 75% of all meetings of the full Board and of each committee on which
such director served during this period.
The Executive Committee, composed of Messrs. Sechler (Chairman),
Burrell, Alford and Inman meets in the interim when the full Board is not in
session and may exercise the authority of the Board of Directors except to the
extent that such authority shall be limited by the Articles of Incorporation,
the Bylaws, any resolution of the full Board or by Georgia Law. The Executive
Committee met two times during the fiscal year ended March 31, 1998.
The Stock Option Plan Committee, composed of Messrs. Thompson
(Chairman), Burrell and Nash administers the Eagle Bancshares, Inc. 1995
Employees Stock Incentive Plan (the "1995 ESIP") and the Eagle Bancshares, Inc.
1986 Stock Option and Incentive Plan (the"Stock Option Plan") and has exclusive
power to determine, within the provisions of the plans, persons eligible to
participate in the plans and to grant options to eligible employees thereunder.
The Stock Option Plan Committee also has the power to interpret and construe any
provision of the Stock Option Plan and to make policy consistent with the Stock
Option Plan. The Stock Option Plan Committee met three times during the fiscal
year ended March 31, 1998.
The Audit Committee of the Company, composed of Messrs. Nash
(Chairman), Burrell and Thompson, as well as Inman and Sechler, Ex-Officio, also
acts as the Audit Committee of the Board of Directors of Tucker Federal. In the
capacity as Audit Committee for the Company, it selects the firm to be engaged
as independent accountants for the Company for the next fiscal year, reviews the
plan for the audit engagement, financial statements, plans and results of
internal auditing, and generally reviews financial reporting procedures and
reports for regulatory authorities. The Audit Committee met six times during the
fiscal year ended March 31, 1998.
The Compensation Committee, composed of Messrs. Burrell (Chairman),
Alford, Thompson and Nash has the responsibility of reviewing and approving the
compensation of all executive officers of the Company and all officers or
employees of Tucker Federal whose total compensation exceeds $100,000 per year
and determining the factors and other issues regarding incentive compensation
arrangements. The Compensation Committee met six times during the fiscal year
ended March 31, 1998.
The Administrative Committee of the DSOP, composed of Messrs. Inman
(Chairman), Nash and Thompson administers the DSOP and has the power to effect
the granting of options and interpret the incentive plan pursuant only to the
terms and provisions of the plan. The DSOP Administrative Committee met two
times during the fiscal year ended March 31, 1998.
The Strategic Growth Committee was formed in September 1995 to assist
management in creating, coordinating and overseeing strategic growth
initiatives. These include identifying acquisition targets, developing
acquisition plans for whole institutions and for branches, developing
transaction structures, and evaluating methods of raising additional equity when
necessary. The Committee is composed of Messrs. Sechler (Chairman), Burrell and
Inman and did not meet during the fiscal year ended March 31, 1997.
-8-
<PAGE> 12
In addition to the standing committees of the Company, the Board of
Directors acted in its capacity as the Nominating Committee and met one time
during the fiscal year ended March 31, 1998. While the Board acting as
Nominating Committee will consider nominees recommended by the shareholders, it
has not actively solicited recommendations from the shareholders for nominees.
Article X of the Company's Restated Articles of Incorporation, as
amended, sets forth the procedures for shareholder nominations and proposals.
Article X states that nominations for the election of directors and proposals
for any new business to be taken up at any annual or special meeting of
shareholders may be made by the Board of Directors or by any shareholder
entitled to vote generally in the election of directors. In order for a
shareholder to make any such nomination and/or proposal, he or she must give
notice thereof in writing, delivered or mailed by first class United States
mail, postage prepaid, to the Secretary of the Company not less than ten days
nor more than sixty days prior to any such meeting. However, if less than 17
days notice of the meeting is given to shareholders, such written notice must be
delivered or mailed, as prescribed, to the Secretary of the Company not later
than the close of the seventh day following the day on which notice of the
meeting was mailed to shareholders. Each such notice given by a shareholder with
respect to nominations for the election of directors must set forth (i) the
name, age, business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of each
such nominee, and (iii) the number of shares of Common Stock beneficially owned
by each such nominee.
The Board of Directors of Tucker Federal has the following standing
committees in addition to the Audit Committee described above: the Executive
Committee, and the Finance and Investment Committee. Such committees are
composed of both inside and outside directors of Tucker Federal and perform
those duties customarily performed by committees of such designations in other
financial institutions. The Audit Committee meets quarterly with Tucker
Federal's Internal Auditor.
DIRECTOR COMPENSATION
Members of the Board of Directors of the Company receive $300 for each
full Board and $200 for each committee meeting attended for their services as
directors of the Company. Directors of Tucker Federal receive an annual fee of
$5,000, payable quarterly, in addition to $400 for each Board meeting attended.
Executive Committee members of Tucker Federal receive a fee of $200 for each
such committee meeting attended and members of all other Tucker Federal
committees receive a fee of $300 for each committee meeting attended. In
addition certain members of the Board of the Company also serve on the Board of
Directors of EREA and on the Board of Directors of Eagle Service Corporation.
Directors of EREA receive $200 for each Board meeting attended, and Directors of
Eagle Service Corporation receive $300 for each quarterly Board meeting
attended.
EAGLE BANCSHARES, INC. 1994 DIRECTORS STOCK OPTION INCENTIVE PLAN. On
February 10, 1994, the Board of Directors of the Company approved and adopted
the DSOP. Generally, the DSOP provides for grants of nonqualified stock options
to be made to directors of the Company or Tucker Federal on and after February
10, 1994, as follows:
(a) Upon the adoption of the plan for then current directors or
upon initially becoming a director of the Company or Tucker
Federal, thereafter, an individual receives an option to
purchase 2,000 shares of Common Stock, which is exercisable on
the date of grant; and
(b) Upon beginning any term as a director of the Company or Tucker
Federal, if the individual is not already a member of the
Company's Board, an individual receives an option to purchase
1,500 shares of Common Stock which vests at the rate of 500
shares per full year of service as a director thereafter.
-9-
<PAGE> 13
All options granted under the DSOP expire no later than the date immediately
following the 10th anniversary of the date of grant, and may expire sooner in
the event of the disability or death of the optionee, or if the optionee ceases
to serve as a director. All options granted under the DSOP may not be assigned
or transferred except upon death, and the exercise price of all options issued
under the DSOP is the fair market value of the Common Stock on the date that the
option is granted.
During the fiscal year ended March 31, 1998, options to purchase 3,500
shares of Common Stock were granted to Mr. Waldrop, options to purchase 1,500
shares were granted to Mr. Burrell, and options to purchase 1,500 shares were
granted to Mr. Thompson under the DSOP.
TUCKER FEDERAL SAVINGS AND LOAN ASSOCIATION DIRECTOR'S RETIREMENT PLAN.
Participants under the Tucker Federal Savings and Loan Association Director's
Retirement Plan (the "Director's Retirement Plan") will receive a benefit in the
form of a monthly annuity for the life of the participant with payments
commencing as of the first day of the month following the later of (i) the date
on which the participant is no longer a Director or (ii) the date on which the
participant attains age 65 (the "payment commencement date") and continuing
until the first day of the month in which the participant's death occurs if the
participant survives until his payment commencement date (although monthly
payments are suspended during any period in which the participant again serves
as a Director). A participant who dies prior to his payment commencement date
will receive no monthly benefit under the Directors' Retirement Plan.
The amount of a participant's monthly payments under the Directors'
Retirement Plan is generally equal to the product of (i) the average monthly
compensation (including only compensation paid for service as a Director) of the
participant, and (ii) a percentage based upon the participant's years of service
ranging from 0% with less than six years of service up to 100% with at least
twelve years of service. A participant's average monthly compensation is
determined by averaging the participant's monthly compensation during the
24-month period in the participant's compensation history during which the
participant's compensation is the highest.
In addition to the monthly benefit (if any) provided to a participant
under the Directors' Retirement Plan, a participant also is generally entitled
to an additional lump sum benefit if (i) the participant has completed at least
12 but not 18 or more years of service as of the date on which the participant
is no longer a Director, or (ii) the participant was a Director as of the
effective date of the Directors' Retirement Plan, has completed 12 years of
service as of such date and ceases to be a Director as of, or prior to, the end
of his current term of service as a Director. The lump sum benefit payable to
such participants is 2,000 shares of the Common Stock of the Company or a cash
payment equal to the fair market value (determined in accordance with the
provisions of the DSOP and determined as of the date of payment) of such 2,000
shares, whichever is elected by the participant.
Generally, all benefits under the Directors' Retirement Plan are
unsecured obligations of Tucker Federal, and participants do not, and cannot,
make contributions to fund benefits under the Directors' Retirement Plan.
Generally, the Directors' Retirement Plan is not funded and benefit payments are
made directly by Tucker Federal, although Tucker Federal may make discretionary
contributions to a trust to aid in funding the benefits to be provided under the
Directors' Retirement Plan, and, upon a change of control (as defined in the
Directors' Retirement Plan), the Company must, within ten days of the change of
control, make an irrevocable contribution to a trust in an amount sufficient to
pay all accrued benefits and lump sum benefits to which participants are
entitled as of the date of the change of control.
EXECUTIVE OFFICERS OF THE COMPANY
The following provides information as of March 31, 1998 as to the name,
age and position of the executive officers who are not directors of the Company,
including all positions and offices with the Company and its
-10-
<PAGE> 14
subsidiaries and their business experience during the past five years and shares
of Common Stock beneficially owned. Information with respect to executive
officers who are directors of the Company is set forth under "Information
Regarding Nominees and Directors." There are no agreements or understandings
between any officer and any other person pursuant to which any officer was
selected.
<TABLE>
<CAPTION>
Shares
Beneficially
Name and Age Current Position(s) and Business Experience Owned(1)(%)
- ------------ ------------------------------------------- -----------
<S> <C> <C>
LuAnn Durden Mrs. Durden has been Senior Vice President and Chief
(37) Financial Officer of Tucker Federal since 1994 and was 23,179(2)
Internal Auditor and Vice President of Finance of (*)
Tucker Federal from 1987 to 1994. Prior to joining
Tucker Federal, Mrs. Durden was a Senior Auditor with
Peat Marwick Mitchell & Co. She was elected Executive
Vice President and Chief Financial Officer of the Company
in 1997.
Betty Petrides Mrs. Petrides has been Executive Vice President of the 99,334 (3)
(44) Company since 1997 and of Tucker Federal since 1988 (1.73%)
and Secretary of Tucker Federal since 1989. She was
elected to the Board of Directors of Tucker Federal in
April 1995.
</TABLE>
- -----------------------
* Less than one percent.
(1) The stock ownership information shown above has been furnished to the
Company by the named persons. Beneficial ownership as reported in this table has
been determined in accordance with regulations of the Commission and includes
shares of Common Stock which may be acquired within 60 days. Except as otherwise
indicated, the named persons have sole voting and investment power with regard
to the shares shown as owned by them.
(2) With regard to Mrs. Durden, the shares shown include (i) 16,000 shares
that may be acquired upon exercise of stock options granted in accordance with
the terms and conditions of the Stock Option Plan and the 1995 ESIP, and (ii)
7,179 shares held for her account as a participant in the Plan.
(3) With regard to Mrs. Petrides, the shares shown include (i) 55,166 shares
that may be acquired upon exercise of stock options granted in accordance with
employment agreements with Tucker Federal and pursuant to the Stock Option Plan,
the 1995 ESIP and the DSOP; and (ii) 9,165 shares held for the account of Mrs.
Petrides as a participant in the Plan. See "Compensation of Executive Officers -
Compensation Committee Report" and "Compensation of Executive Officers -
Executive Employment Agreements."
-11-
<PAGE> 15
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION COMMITTEE REPORT
The following report of the Compensation Committee of the Board of
Directors (the "Committee") discusses generally the Committee's executive
compensation objectives and policies in connection with developing and
implementing compensation for executive officers and the relationship of those
objectives and policies to corporate performance for the fiscal year ended March
31, 1998. The report also specifically discusses the Committee's bases for
compensation of the executive officers of the Company and Tucker Federal named
in the Summary Compensation Table. During the previous fiscal year the Committee
engaged SNL Compensation Services, a joint venture between the law firm of
Housley Kantarian & Bronstein and SNL Securities, (1) to review and evaluate all
compensation plans, contracts and other compensation practices in connection
with executive compensation of the Company, (2) to review compensation packages
at comparable institutions and (3) to recommend changes to any of those plans or
other practices as the firm deemed appropriate in their professional opinion. As
a result of the engagement, the Committee adopted certain recommendations and
implemented certain changes in the executive compensation program. The Committee
continues to closely monitor, and continually upgrade the compensation system
for executive officers.
Each director serving on the Committee is a disinterested director. The
Committee understands that the performance of each executive officer and the
structure for the reward of that performance has the potential to directly
impact both the short-term and long-term profitability of the Company.
Therefore, the structure of the compensation packages for each objective has
both short-term and long-term components. Persons covered by this report are C.
Jere Sechler, Jr., who serves as both Chairman and President of the Company and
of Eagle Service Corporation, a subsidiary of Tucker Federal, and as Chairman of
Eagle Real Estate Advisors, a subsidiary of the Company; Richard B. Inman, Jr.,
who serves as the President of Tucker Federal and of Eagle Bancshares Capital
Group, a newly formed subsidiary of the Company designed to provide mezzanine
financing that is not readily available from traditional commercial banking
sources to small and medium size businesses; Betty Petrides, who serves as
Executive Vice President of the Company and of Tucker Federal and Corporate
Secretary of Tucker Federal; and LuAnn Durden, who serves as Executive Vice
President and Chief Financial Officer of the Company and of Tucker Federal. Each
of these individuals is compensated in an amount greater in total than $100,000
per year and occupies a position that has the ability to directly influence
policy decisions in the Company or Tucker Federal.
EXECUTIVE COMPENSATION OBJECTIVES AND POLICIES. The mission of the
Committee is to provide for a compensation system that not only supports the
Company's strategic direction but that balances competitive pay requirements and
business economics. We believe that the interests of shareholders are best
served by closely aligning corporate performance objectives to executive
compensation. It is expected that compensation will vary annually based upon
both Company and individual executive performance. The Committee believes that
compensation should be based upon both short-term and long-term measurements and
be directly and visibly tied to Company performance, thus introducing
substantial risk in the payout levels. This approach is best demonstrated in the
amounts reflected under the Bonus column of the Summary Compensation Table from
1996 to 1998. The Committee continues to be guided by the following policies for
compensation decisions:
- - The total compensation package must be designed with the current
competitive employment environment in mind in order to attract the best
and brightest executives, provide a motive for high level individual
performance and retain executives whose skills and leadership are
essential for building long-term shareholder value.
- - Establish annual incentive bonus compensation for executive officers
that is directly tied to the Company's strategic objectives and is
rewarded for individual performance within those objectives.
-12-
<PAGE> 16
- - Implement long-term equity incentives to align executive compensation
with benefits realized by all shareholders.
Total executive compensation consists of base salary, cash bonus
compensation that has a potential to be paid out annually (short-term incentive)
and a combination of stock options and grants that vest over a longer period of
time (long-term incentive). All these components are determined by an extensive
review of compensation packages paid by financial institutions both within the
Southeast and in a broader geographic range that are of comparable size to our
Company. The Company's base salary level for executive officers is below the
median of base salaries of the financial institutions included in the review.
Short-term incentives or cash bonus payments are based upon
predetermined corporate performance measures. Earnings per share target levels
are the principal measurers used to determine bonus amounts. A formula of other
performance factors such as asset growth, return on assets, return on equity,
profit center earnings and efficiency ratios are also considered and weighted in
the awarding of bonus compensation. The formula provides for awards ranging in
amount from 15% of base salary at the threshold performance level to bonuses
that exceed 100% of base salary at the maximum performance level for Mr. Inman,
and from 10% to 50% of base salary for Mrs. Durden. Short term incentive
compensation cannot be earned regardless of Company performance when the level
of nonperforming assets and delinquencies exceed 3% of the total assets of the
Company on the last day of any fiscal year. These criteria serve to insure a
continued level of safety and soundness for the Company.
Long-term incentives or the awards of stock options and stock grants
are made pursuant to the Company's stock option plans. Option grants for Mr.
Inman, Mr. Sechler and Mrs. Petrides are subject to three-year vesting, and
options granted to Mrs. Durden in 1994 are subject to five-year vesting, while
options granted to Mrs. Durden in 1998 are subject to three year vesting. The
Committee's belief that a significant portion of senior executives' compensation
should be dependent upon value created for the shareholders is shared by many of
the peer group institutions used in the recently completed analysis done for the
Committee by SNL Compensation Services. The Committee believes that both
qualified and non-qualified options as well as restricted stock grants are
excellent vehicles to accomplish the aligning of interests of executive officers
of the Company directly with the interests of shareholders. Options are granted
with an exercise price of not less than the fair market value of the Company's
Common Stock on the date of grant, thus providing value in the executive's
options only if the value for other shareholders is created as well. Options
generally are exercisable for a period of ten years. Long-term compensation is a
significant component of total executive compensation. While the amount of the
awards are not based upon any particular formula, peer group comparisons of
stock options and grants as a percentage of base pay is taken into consideration
in determining the amount of such awards. It is intended to provide the
executive officers with a meaningful ownership interest in the Company, thereby
linking compensation both to performance and to the interests of all other
shareholders.
All of the named executive officers are subject to employment
agreements. See "Compensation of Executive Officers - Employment Agreements."
Compensation arrangements for those executives are based upon and in accordance
with the employment agreements. Officers not named in the Summary Compensation
Table and all other employees receive total compensation upon the factors noted
above, including incentive performance award component and their base annual
compensation.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER OF TUCKER FEDERAL. The
compensation of Richard B. Inman, Jr., President and Chief Executive Officer of
Tucker Federal, was based upon an employment agreement entered into on October
1, 1993. In connection with the employment agreement, which was approved by the
Committee, the base salary was determined based upon the competitive analysis
described above, and was subject to adjustment annually by the Committee,
provided that the base salary would not have been less than $120,000 per year,
and any increases in base salary were not subject to reduction. Mr. Inman's base
salary had not been adjusted since the effective date of that employment
agreement. On March 25, 1997, a new employment agreement was reached between Mr.
Inman
-13-
<PAGE> 17
and Tucker Federal Bank. See "Compensation of Executive Officers - Employment
Agreements." For the year ended March 31, 1998, Mr. Inman was awarded a cash
bonus of $154,410.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993 IMPLICATIONS FOR EXECUTIVE
COMPENSATION. It is the responsibility of the Committee to address the issues
raised by tax laws which make certain non-performance-based compensation in
excess of $1,000,000 to executives of public companies nondeductible to the
Company. In this regard, the Committee must determine whether any actions with
respect to this limit should be taken by the Company. Given the Company's
current level of executive compensation, it is not now necessary to consider
this issue. The Committee will continue to monitor this situation and will take
appropriate action if it is warranted in the future.
THE COMPENSATION COMMITTEE
Richard J. Burrell, Chairman
Walter C. Alford
Weldon A. Nash, Jr.
George G. Thompson, V
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION. The following table summarizes, for the
Company and its subsidiaries, the elements of compensation paid or accrued
during the three fiscal years ended March 31, 1998 to the Chief Executive
Officer of Tucker Federal and each of the other executive officers whose salary
and bonus exceeded $100,000 for the fiscal year ended March 31, 1998 (the "named
executive officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-Term
------------------- ---------
Compensation
------------
Securities All
Name and Principal Underlying Other
Position Year Salary ($) Bonus ($)(1) Options (#) Compensation ($)(2)
- ------------------- ---- ---------- ------------ ----------- -------------------
<S> <C> <C> <C> <C> <C>
Richard B. Inman, Jr. 1998 $ 150,000 $ 154,410 - $ 31,000
President and Chief
Executive Officer of 1997 $ 126,100 $ 88,800 36,500 $ 21,321
Tucker Federal 1996 $ 127,000 $ 112,800 - $ 19,351
C. Jere Sechler, Jr. 1998 $ 198,958 - 68,000 $ 28,000
Chairman of the Board
and President of the 1997 $ 115,750 $ 69,375 - $ 18,404
Company; Chairman of
the Board of EREA; 1996 $ 113,650 $ 88,125 1,500 $ 20,371
President of Eagle
Service Corporation
</TABLE>
-14-
<PAGE> 18
<TABLE>
<CAPTION>
Annual Compensation Long-Term
------------------- ---------
Compensation
------------
Securities All
Name and Principal Underlying Other
Position Year Salary ($) Bonus ($)(1) Options (#) Compensation ($)(2)
- ------------------- ---- ---------- ------------ ----------- -------------------
<S> <C> <C> <C> <C> <C>
Betty Petrides 1998 $ 119,780 - 26,000 $ 22,094
Executive Vice President
of the Company and 1997 $ 105,400 $ 69,375 - $ 15,517
Tucker Federal and 1996 $ 105,450 $ 88,125 3,500 $ 17,484
Secretary of Tucker
Federal
LuAnn Durden 1998 $ 98,125 $ 52,500 22,000 $ 5,262
Executive Vice President
and Chief Financial 1997 $ 87,917 $ 23,400 - $ 9,318
Officer of the Company 1996 $ 78,526 $ 29,908 - $ 11,031
and Tucker Federal
</TABLE>
- ------------------
(1) Reflects cash bonus awards paid during fiscal 1998, 1997 and 1996 for
the achievement of specific performance criteria (see "Compensation of
Executive Officers -- Compensation Committee Report -- Executive
Compensation Objectives and Policies").
(2) All Other Compensation paid during fiscal 1998 includes the following:
(i) contributions to the Plan which are made annually by Tucker
Federal: Mr. Sechler - $8,050; Mr. Inman - $6,900; Mrs. Petrides -
$6,894; Mrs. Durden $5,262; (ii) a car allowance in the following
amounts: Mr. Sechler - $5,600; Mr. Inman - $5,100; Mrs. Petrides -
$3,300 and Mrs. Durden - $0; (iii) directors' fees for serving as a
director of Eagle Service Corporation in the following amounts: Mr.
Sechler - $900; Mr. Inman - $1,200; and (iv) directors' fees for
serving as a director of EREA in the following amounts: Mr. Sechler -
$1,400; Mr. Inman - $1,400.
All Other Compensation paid during fiscal 1997 includes the following:
(i) contributions to the Plan by Tucker Federal: Mr. Sechler - $8,275;
Mr. Inman - $7,375; Mrs. Petrides - $6,587; and Mrs. Durden - $5,163
and (ii) a car allowance in the following amounts: Mr. Sechler -
$4,800; Mr. Inman - $4,800; Mrs. Petrides - $3,600; and Mrs. Durden -
$0.
All Other Compensation paid during fiscal 1996 includes the following:
(i) contributions to the Plan by Tucker Federal: Mr. Sechler - $9,112;
Mr. Inman - $8,162; Mrs. Petrides - $7,424; and Mrs. Durden - $5,924
and (ii) a car allowance in the following amounts: Mr. Sechler -
$4,800; Mr. Inman - $4,800; Mrs. Petrides - $3,600; and Mrs. Durden -
$0.
OPTIONS. The following table sets forth information regarding the
number and terms of stock options granted to the named executive officers during
the fiscal year ended March 31, 1998. In addition, in accordance with the rules
and regulations of the Commission, set forth is the present value of each option
granted, calculated using the Black-Scholes option pricing model.
-15-
<PAGE> 19
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
- ---------------------------------------------------------------
% of Total
Number of Options
Securities Underlying Granted to Exercise or
Options Employees in Base Price Grant Date
Name Granted (#) (1) Fiscal Year ($/Sh) Expiration Date Present Value ($)(2)
- ---- --------------------- ------------ --------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
Conrad J. (Jere) Sechler, Jr. 68,000 40% $15.75 6/01/07 $602,480
Richard B. Inman, Jr. -- -- -- --
Betty Petrides 20,000 12% $15.75 5/13/07 $177,200
6,000 3.6% $16.50 8/28/07 $ 55,740
LuAnn Durden 20,000 12% $17.50 7/28/07 $197,000
2,000 1.2% $16.50 8/28/07 $ 18,580
</TABLE>
- --------------
(1) On May 13, 1997, Mr. Sechler was granted an option to purchase 68,000
shares of Common Stock at $15.75 per share pursuant to the provisions
of a non-qualified stock option agreement. The options vest in
increments, with 25% of the shares covered thereby becoming exercisable
on the date of grant, an additional 25% of the option shares becoming
exercisable on each anniversary date, and full vesting occurring on the
third anniversary date. The Board of Directors of the Company approves
the grants of these nonqualified options. On May 13, 1997 and on August
28, 1997, respectively, Mrs. Petrides was granted an incentive option
to purchase 20,000 shares of Common Stock at $15.75 per share and a
non-qualified option to purchase 6,000 shares of Common Stock at $16.50
per share pursuant to the 1995 ESIP. On July 28, 1997 and on August 28,
1997 respectively, Mrs. Durden was granted an incentive option to
purchase 20,000 shares on Common Stock at $17.50 per share and a
non-qualified option to purchase 2,000 shares of Common Stock at $16.50
per share pursuant to the 1995 ESIP. Options granted pursuant to the
1995 ESIP represent 69% of the total options granted to employees of
the Company during fiscal 1998. The options for Mrs. Petrides and Mrs.
Durden vest in increments, with 33% of the option shares becoming
exercisable on each successive anniversary date, and full vesting
occurring on the third anniversary date. Pursuant to the terms of the
1995 ESIP, the Stock Option Committee retains discretion, subject to
plan limits, to modify the terms of outstanding options and to reprice
options. The options were granted for 10 years, subject to earlier
termination upon the occurrence of certain events related to
termination of employment or "change in control" of the Company or of
Tucker Federal. The exercise price may be paid in cash, by delivery of
already owned shares or by a combination thereof, subject to certain
conditions.
(2) The "Grant Date Present Value" is calculated using the Black-Scholes
Warrant Valuation Call Option Model, assuming a constant dividend
yield. This model assumes no dilution effects and includes the
following assumptions for the option to purchase 68,000 shares granted
to Mr. Sechler (stock price as of the grant date - $15.75), 20,000
shares (stock price as of the grant date - $15.75) and 6,000 shares
(stock price as of the grant date - $16.50) granted to Mrs. Petrides,
and 20,000 shares (stock price as of the grant date - $17.50) and 2,000
shares (stock price as of the grant date - $16.50) granted to Mrs.
Durden: expected monthly volatility -2.9%; annual risk free rate of
return (drawn from the bid yield on the ten year Treasury note on the
grant date) -6.41%; annual dividend yield -2.4%; and period to exercise
- ten years.
-16-
<PAGE> 20
The following table sets forth option exercises by the named executive
officers during the fiscal year ended March 31, 1998, including the aggregate
value of gains on the date of exercise. The table also sets forth (i) the number
of shares covered by options (both exercisable and unexercisable) as of March
31, 1998 and (ii) the respective value for "in-the-money" options, which
represents the positive spread between the exercise price of existing options
and the fair market value of the Company's Common Stock at March 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Year End(#) Fiscal Year End($)
Shares Acquired Value -------------------------- ---------------------------
Name on Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard B. Inman, Jr. -- -- 35,666 24,334 $464,182 $210,630
Conrad J. (Jere) Sechler, Jr. -- -- 48,000 34,500 $519,375 $332,813
Betty Petrides 20,000 $385,000 48,500 26,000 $935,516 $245,750
LuAnn Durden -- -- 12,000 30,000 $169,500 $288,250
</TABLE>
-17-
<PAGE> 21
PERFORMANCE GRAPH
The Commission requires that the Company provide a line graph
presentation that compares the Company's cumulative five year return on an
indexed basis with an overall stock market index and either a published industry
index or an index of peer companies selected by the Company. The performance
graph set forth below compares the Company's cumulative total shareholder return
on Common Stock with the cumulative total return of companies on the Standard
and Poors 500 Index and on the Standard and Poors Savings and Loan Holding
Companies Index. The graph assumes that the value of the investment in the
Company's Common Stock in each index was $100 on March 31, 1993 and also assumes
dividend reinvestment. The shareholder return reflected below for the five year
historical period may not be indicative of future performance.
[GRAPH]
<TABLE>
<CAPTION>
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
3/31/93 3/31/94 3/31/95 3/31/96 3/31/97 3/31/98
Eagle Bancshares, Inc. $100 $138 $140 $196 $213 $344
S&P 500 Index $100 $101 $117 $155 $186 $275
S&P Savings and Loan
Holding Co's Index $100 $ 88 $ 98 $136 $202 $336
==========================================================================================================================
</TABLE>
-18-
<PAGE> 22
EXECUTIVE EMPLOYMENT AGREEMENTS
The Compensation of Richard B. Inman, Jr., President and Chief
Executive Officer of Tucker Federal, was based on an employment agreement
between Mr. Inman and Tucker Federal entered into on October 1, 1993 and
expiring March 31, 1997. The agreement provided for a three year term of
employment and a base salary of not less than $120,000 per year. The agreement
further provided for both short-term, performance based cash incentives and for
long-term incentive compensation through the award of stock options. Cash
compensation and stock options granted under the 1993 agreement are reflected in
the "Summary Compensation Table" for the period of the agreement.
On March 25, 1997, Tucker Federal entered into an employment
agreement with Mr. Inman, which provides for a base salary of not less than
$150,000 per year. The agreement further provides for a performance based, cash
bonus based upon criteria established by the Board of Directors annually. The
formula for bonus compensation for the period ending March 31, 1998 provided for
a cash award of from 30% to in excess of 100% of base salary based upon
measurable performance of the executive against threshold, mid-range and maximum
goals for the Company which includes, among other things, growth in assets,
earnings per share, return on equity and percent of nonaccrual loans and
foreclosed property to total assets. The 1997 agreement further stipulates that
Mr. Inman will continue to receive his base salary for the greater of (i) the
remaining term of the agreement or (ii) 24 months following termination without
cause. The agreement also provides for long-term incentive compensation through
the grant of stock options pursuant to the 1995 ESIP. Pursuant to the agreement,
on March 25, 1997, Mr. Inman was granted an incentive stock option to purchase
15,000 shares of Common Stock at $16.75 per share and a nonqualified stock
option to purchase 20,000 shares of Common Stock at $16.75. Both options vest in
increments of one-third over a three year period and expire 10 years from the
date of grant. The term of the agreement may be extended by resolution of the
Board of Directors on each anniversary date of the agreement for an additional
one year beyond the then effective expiration date of the agreement. On May 19,
1998, the Board extended the term of the agreement for one additional year. In
the event the Agreement terminates in due course at the expiration date by
reason of either nonrenewal or nonextension, Mr. Inman is entitled to 100% of
his base pay in effect at the time, with such amount to be payable over 12
months.
The terms of employment of C. Jere Sechler, Jr., as President of Eagle
Service Corporation, a wholly owned subsidiary of Tucker Federal, and of Betty
Petrides, Executive Vice President of Tucker Federal, had been defined by
employment agreements entered into on June 1, 1994. The agreements provided for
a three year term of employment and a base salary of not less than $93,750 per
year for both Mr. Sechler and Mrs. Petrides. The agreements further provided for
both short-term, performance based cash incentives and for long-term incentive
compensation through the award of stock options. Cash compensation and stock
options granted under the 1994 agreements are reflected in the "Summary
Compensation Table" for the period of the agreements.
On June 1, 1997, the Company entered into an employment agreement with
C. Jere Sechler, Jr. as Chairman, President and Chief Executive Officer with a
base salary of not less than $175,000 per year. The 1997 agreement further
stipulates that Mr. Sechler will continue to receive his base salary for the
greater of (i) the remaining term of the agreement or (ii) 24 months following
termination without cause. The agreement also provides for long-term incentive
compensation through the grant of stock options pursuant to the 1995 ESIP.
Pursuant to the agreement, on June 1, 1997, Mr. Sechler was granted a
nonqualified stock option to purchase 68,000 shares of Common Stock at $15.75
per share. The option vests one-fourth immediately and one-fourth each year over
the next three year period and expires ten years from the date of grant. The
term of the agreement may be extended by resolution of the Board of Directors on
each anniversary date of the agreement for an additional one year beyond the
then effective expiration date of the agreement. On June 2, 1998, the Board
extended the agreement for one additional year.
-19-
<PAGE> 23
Also, on June 1, 1997, Tucker Federal and the Company entered into an
employment agreement with Betty Petrides which provides for a base salary of not
less than $125,000 per year to serve as Executive Vice President of Tucker
Federal and the Company. The 1997 agreement further stipulates that Ms. Petrides
will continue to receive her base salary for the greater of (i) the remaining
term of the agreement or (ii) 24 months following termination without cause. The
agreement also provides for long-term incentive compensation through the grant
of stock options pursuant to the 1995 ESIP. Pursuant to the agreement, on June
1, 1997, Ms. Petrides was granted an incentive stock option to purchase 20,000
shares of Common Stock at $15.75 per share and a non-qualified option to
purchase 6,000 shares of Common Stock at $16.50 per share. The option vests in
increments of one-third over a three year period and expires ten years from the
date of grant. The term of the agreement may be extended by resolution of the
Board of Directors on each anniversary date of the agreement for an additional
one year beyond the then effective expiration date of the agreement. On June 2,
1998, the Board of Directors extended the agreement for one additional year.
The compensation of LuAnn Durden, Executive Vice President and Chief
Financial Officer of the Company and of Tucker Federal was based on an
employment agreement between Mrs. Durden and Tucker Federal entered into on May
17, 1996. This agreement provided for a base salary of $90,000 and for an annual
cash incentive award of between 10% and 40% of base pay based upon a matrix
containing performance factors including earnings per share, efficiency ratio,
return on assets and return on equity. On July 28, 1997 Tucker Federal entered
into an employment agreement with Mrs. Durden providing for a base salary of
$105,000 per year and a cash incentive award of up to 50% of base pay based upon
a performance matrix. The agreement further stipulates that if Mrs. Durden's
employment is terminated due to either a Without Cause Termination or a
Constructive Discharge (both as defined in the agreement), she is entitled to be
paid her then current base salary for up to two years from the date of the
agreement but in no event less that one year severance from the date of such
termination. Pursuant to the agreement, on July 28, 1998, Mrs. Durden was
granted an incentive stock option to purchase 20,000 shares of Common Stock at
$17.50 and on August 28, 1998 was granted a non-qualified stock option to
purchase 2,000 shares of Common Stock at $16.50. Both options vest in increments
of one-third over a three year period and expire 10 years from the date of the
grant. The term of the agreement may be extended by resolution of the Board of
Directors on each anniversary date of the agreement for an additional one year
beyond the then effective expiration date of the agreement. On June 2, 1998, the
Board of Directors extended the agreement for one additional year.
Additionally, the employment agreements of Messrs. Inman and Sechler
and Mrs. Petrides provide that in the event of a "Change of Control" (as
hereafter defined) of the ownership of Tucker Federal or the Company, such
executives may resign immediately upon notice to the Company. A "Change in
Control" includes (i) a transaction resulting in the change in holding or power
to vote more than 25% of the voting stock of Tucker Federal or the Company (ii)
the acquisition of the ability to control the election of a majority of Tucker
Federal's or the Company's directors, (iii) the acquisition of a controlling
influence over the management or policies of Tucker Federal or the Company by
any person or by persons acting as a group (within the meaning of Section 13(d)
of the Securities Exchange Act of 1934) or (iv) during any period of two
consecutive years, individuals (the "Continuing Directors") who at the beginning
of such period constitute the Board of Directors of Tucker Federal or of the
Company ("Existing Board") cease for any reason to constitute at least
two-thirds thereof, provided that any individual whose election or nomination
for election as a member of the Existing Board was approved by a vote of at
least two-thirds of the Continuing Directors then in office shall be considered
a Continuing Director. Upon a Change in Control of Tucker Federal or the
Company, each executive will receive severance benefits in the event that either
(i) the executive voluntarily terminates his/her employment within 30 days of
the date of the change in control or (ii) the executive voluntarily terminates
employment within 90 days of the date six months before the event of a Change in
Control or the later of the expiration of the Agreement or the second
anniversary of the event. In the event of a Change of Control, severance
benefits for Mr. Inman, Mr. Sechler and Mrs. Petrides shall be paid in an amount
equal to the difference between the Code Section 280G Maximum and the sum of any
other "parachute payments" as defined under Code Section 280G (b) (2) that such
person receives on account of the Change in Control. Additionally, pursuant
-20-
<PAGE> 24
to certain Stock Option Agreements entered into upon the granting of stock
options under the 1995 ESIP, all outstanding, unexpired options vest immediately
upon a Change in Control as defined in the 1995 ESIP.
CERTAIN TRANSACTIONS
Set forth below is certain information relating to loans made to
executive officers, Directors and Director nominees of the Company and Tucker
Federal, and their affiliates (including immediate family members), during the
fiscal year ended March 31, 1998, and whose aggregate loan balances exceeded
$60,000 at any time during such fiscal year. Loans to affiliates of the
executive officers, Directors and Director nominees are not listed below, as all
such loans 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 other persons, and did not involve more than the
normal risk of collectibility or present other unfavorable features.
<TABLE>
<CAPTION>
DATE MAXIMUM RATE BALANCE
LOAN LOAN LOAN NOTE AT AT
NAME TYPE MADE AMOUNT RATE 3-31-98 3-31-98
---- ---- ---- ------ ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
C. Jere Sechler, Jr., Equity 11/96 $250,000 9.5% 9.5% $119,825
Chairman of Board and Credit
President of the Line
Company; President of
Eagle Service
Corporation
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and regulations
of the Commission thereunder require the Company's executive officers and
directors and persons who own more than ten percent of the Company's Common
Stock, as well as certain affiliates of such persons, to file initial reports of
ownership and reports in changes in ownership with the Commission and the
National Association of Securities Dealers, Inc. Executive officers, directors
and persons owning more than ten percent of the Company's Common Stock are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on its review of the copies of such
forms received by it and written representations that no other reports were
required for those persons, the Company believes that, during the fiscal year
ended March 31, 1998 its executive officers, directors, and owners of more than
ten percent of the Company's Common Stock complied with all such applicable
filing requirements, except that Weldon A. Nash, Jr., a director of the Company,
failed to file one report of a change in ownership upon the receipt of shares of
Common Stock from the estate of a relative.
PROPOSAL 2 - SHAREHOLDER PROPOSAL
The following proposal, which is opposed by the Board of Directors, was
submitted to the Company by Dr. J. C. Serrato, Jr., whose address and the number
of shares of Common Stock held by him will be furnished by the Company promptly
upon the receipt of any oral or written request therefor.
-21-
<PAGE> 25
RESOLUTION
RESOLVED, that the shareholders of the Company hereby recommend that
the Board of Directors take steps to achieve a sale, merger or other acquisition
of the Company, on terms that will maximize shareholder value.
SUPPORTING STATEMENT
In the dynamic economy enjoyed in recent years in the Southeast and,
particularly, in the Atlanta area, Management has proven unable to increase the
earnings of our Company in a meaningful way.
WHAT IS OUR PROBLEM?
On February 12, 1996, Management substantially diluted our
earnings-per-share by a secondary offering of 1,300,000 shares of our common
stock, at $16.00 per share. The result, because of Management's inability to
properly employ our newly-acquired capital (approximately $20,800,000.00), was a
significant decrease in our earnings-per-share.
Subsequently, in October of 1996, Management, in its poorly-conceived
acquisition of Southern Crescent Financial Corp, again diluted our
earnings-per-share by the issuance of 1,108,889 shares of our common stock. The
result of this additional dilution, because of Management's failure to properly
analyze the financial effects of this acquisition, was to further decrease our
earnings-per-share.
Specifically, while Management continued to receive substantial
bonuses and stock options, our earnings-per-share decreased from $1.40 at fiscal
year-end 1996, to an embarrassing $.66 at fiscal year-end 1997. Further, based
on our third-quarter earnings-per-share of $.89, it appears that our 1998
earnings-per-share prospects will be approximately $1.20--which is where we were
three years ago, at fiscal year-end 1995 ($1.18 per share). Some progress!
When compared to representative peer groups, Management's failure at
enhancing our shareholder value is even more disturbing. For example, your
investment of $100.00 in the Company's dilutive secondary offering on February
12, 1996, assuming the reinvestment of all dividends, resulted in shareholder
value of $137.35 as of February 28, 1998. However, your same investment in the
Media General Savings and Loan Index, a representative index of 375 thrifts,
would have resulted in shareholder value of $227.98, representing a "shortfall"
in our relative shareholder value of over 65%. Some performance!
Simply put, our problem is this--Management is three years too late,
and we, therefore, have missed the economic boat!
WHAT IS THE SOLUTION?
Management has demonstrated its inability to implement any effective
business plan. The obvious solution is the sale of the Company.
The math is easy. For example, a sale of the Company at three times
its third-quarter book value ($12.84 at December 31, 1997) would produce a price
of $38.52 per share. Based upon well-publicized, recent acquisition prices for
financial institutions, this is a conservative goal. If the Board proved
skillful in its negotiations, the price could be significantly higher,
especially if an in-market (Atlanta) acquisition is pursued. Given Management's
track record, it will be years before we could hope to achieve such a return,
and our window of opportunity is ultimately going to close.
-22-
<PAGE> 26
Therefore, in order to maximize the value of our investment, please
support this resolution with your favorable vote and, thereby, recommend the
sale of our Company, while prospects yet remain for a significant acquisition
premium.
STATEMENT AGAINST SHAREHOLDER PROPOSAL
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST"
THE SERRATO SHAREHOLDER PROPOSAL.
Eagle Bancshares is in a better position today than in our history to
continue to increase shareholder value. Atlanta continues to grow as a regional,
national and global business center, and your Company is uniquely positioned as
one of only two financial institutions headquartered in Atlanta with assets over
$1.1 billion at March 31, 1998. Dynamic growth in metropolitan Atlanta and
continued consolidation in the financial services industry have resulted in
significant increases in the Company's customers, loans and deposits. Our assets
at March 31, 1998 exceeded $1.1 billion. Over the last year, deposits have grown
40% to $779 million from $558 million; income has increased 92% from $3.7
million to $7.2 million; and total loans have increased 50% from $577 million to
$868 million. THIS IS NOT THE TIME TO SELL EAGLE BANCSHARES.
THIS IS NOT THE WAY TO SELL. In some instances, the price achieved for
the stock of a Bank forced to sell is lower than the market price of the stock
on the day that the sale is announced. Serrato wants you to limit the Board's
options by forcing a sale. A forced sale attracts bottom fishers and bargain
buyers instead of the strategic acquirers that will maximize shareholder value.
It is reasonable to expect that the value of Eagle stock and the price which an
acquirer might pay would increase as your Company continues to grow market share
and become a more important participant in the Atlanta banking market.
THE FUTURE FOR EAGLE BANCSHARES IS BRIGHT. Eagle Bancshares' strategic
plan is designed to increase long-term value for shareholders. The strategic
plan is updated quarterly and is currently focused on increasing shareholder
value by creating competitive advantages in targeted business niches, which
include community banking, mortgage banking and real estate development. The
Company's plan is focused on five basic areas; (i) improving financial
performance and operating efficiencies, (ii) continuing to grow market share in
metropolitan Atlanta, (iii) developing new sources of net income, (iv) utilizing
technology to enhance the Company's operating results and capitalize on new
business opportunities, and (v) being the "Bank of Choice" for the small
business community. The Company's strategic size enables it to provide a broad
array of financial services to consumers and small and medium sized businesses
that consider personalized service and local decision-making to be an important
component of a banking relationship. Management has positioned the Bank as an
institution with "big bank capabilities" that provides personalized service with
a friendly "small bank attitude."
WE HAVE AN OPPORTUNITY TO SIGNIFICANTLY INCREASE OUR SHARE OF THE
METROPOLITAN ATLANTA MARKET AND INCREASE FRANCHISE VALUE. At the same time, we
expect to benefit from the investments in infrastructure that we made last year.
We also expect growth in contribution to earnings from the investments made by
Eagle Real Estate Advisors and Eagle Bancshares Capital Group. It seems foolish
to invest and plan for future growth and not reap the benefits.
The Board of Directors, management and the employees of Eagle
Bancshares own a significant percentage of the equity of the Company. We assure
you that our goals are aligned with the goals of our shareholders. We take our
responsibilities to shareholders very seriously. We have always and will
continue to place increasing the long-term value of Eagle Bancshares stock above
all other objectives. Management believes the Company is on the right course,
and we urge the shareholders to make the right decision and support management
in continuing to increase shareholder value by voting NO on the Serrato
proposal.
-23-
<PAGE> 27
SERRATO BACKGROUND
This is another hostile action in a series of hostile actions by
shareholder Serrato. Serrato is a doctor in Columbus, Georgia. He bought stock
in 1991. His original investment of $745,000 was worth more than $6,720,000 at
June 10, 1998. These facts raise questions about his motives.
IN 1993, without making any attempt to contact the Company and discuss
his concerns, he hired D. F. King as proxy solicitors, submitted a hostile slate
of directors to Shareholders, and proposed that the Company sell for $12.50 per
share. You defeated his proposal by a 2 to 1 margin. In spite of his expressed
disappointment, he did not sell his stock and seek an alternative investment. IN
1994, he again submitted a hostile shareholder proposal to eliminate your
Shareholder Rights Protection Plan telling the Board to sell the company for $15
to $17.50 per share. As in 1993, you defeated his proposal. Serrato, despite his
continuing expressed "dissatisfaction" continues to own the stock.
Now he is back and says again that the Board needs to sell. IN SPITE
OF SERRATO'S HARASSMENT and the significant amount of time and expense by the
Company associated with the hostile actions, EAGLE BANCSHARES HAS SUCCESSFULLY
GROWN ASSETS, INCREASED NET INCOME AND INCREASED DIVIDENDS TO BENEFIT ALL
STOCKHOLDERS.
Contrary to assertions made by Serrato, OUR STRATEGIC PLAN IS WORKING.
The plan is based upon taking advantage of the significant opportunities
resulting from industry consolidation and the dynamic growth of metro Atlanta.
In connection with our February 1996 public offering, we stated we intended to
hire seasoned and experienced banking professionals, open or acquire new
branches, acquire other community banks and attract new deposits and loan
customers. Since February 1996, we have in fact built an impressive team of
experienced bankers, acquired Southern Crescent Financial Corp with it's $150
million in assets, and acquired four branch locations from NationsBank. In
addition, our deposits have grown 108% over the two-year period and our loans
have increased 89% over the same period. We have increased our level of
commercial lending and nearly tripled the number of loans in our portfolio. In
conjunction with this growth, we have invested in the future by converting
computer systems from a savings and loan to a bank-like processing and product
delivery system.
Your Company also reported record earnings for the fiscal year ended
March 31, 1998 of $7.2 million or $1.23 per share, exceeding analyst estimates.
Your board of directors believes that its strategic plan is working and will
provide more long-term shareholder value than any potential short-term gain.
Serrato states that management substantially diluted earnings per
share through our February 1996 public offering which raised $20.8 million in
additional capital for the Bank. This is misleading. THE ADDITIONAL CAPITAL HAS
SUPPORTED RECORD GROWTH IN DEPOSITS AND PROVIDED THE ABILITY TO INCREASE ASSETS
BY 39.2%.
Serrato is attempting to mislead you, in this allegation that the
acquisition of Southern Crescent Financial Corp was poorly conceived and
dilutive to earnings per share. The acquisition of Southern Crescent
accomplished its fundamental objectives which were to expand coverage in the
rapidly growing South Metro Atlanta area and to add commercial banking
expertise. FURTHER THE TRANSACTION WAS ACCRETIVE TO EARNINGS, NOT DILUTIVE AS
SERRATO SPECULATES.
Serrato also attempts to mislead you by implying that the decrease in
earnings per share for the year ended March 31, 1997, when compared to the same
period of 1996, resulted from the 1996 public offering and the 1997 acquisition.
In fact, Serrato failed to tell you that a one-time assessment imposed by
federal regulators on all savings and loans to recapitalize the SAIF fund in
1997 amounted to $1,946,000. Additionally in 1997, the Company incurred one-time
merger charges of $1,685,000 and your management planned for the future by
investing capital and incurring expenses to enhance infrastructure to support
growth and operating efficiencies.
-24-
<PAGE> 28
We respect the right of any shareholder to criticize Company
performance and seek to communicate with the Board of Directors of the Company.
Although we have offered on numerous occasions to meet with Serrato to discuss
his views, he has never taken us up on this request. He continues to point
towards short-term objectives instead of focusing on the long-term results of
his investment in Eagle Bancshares. ADHERENCE TO OUR BUSINESS PLAN OVER THE LONG
TERM HAS ALLOWED US TO INCREASE SHAREHOLDER VALUE. In Serrato's statement, he
points out the value of $100 invested in Eagle Bancshares stock at the time of
the Company's last offering in February 1996 would have grown to $137.35 by
February 1998. To continue his analysis, if someone had invested $100 in Eagle
Bancshares' stock at the time of our last offering, that investment would be
worth $153.13 on June 10, 1998. That is a 53.13% return over the two-year
period. Unfortunately, the story "spun" for you by Serrato lacks reality, as
does his proposed solution.
SERRATO HAS CONSISTENTLY UNDER-ESTIMATED YOUR COMPANY'S VALUE. Twice
before, he told you, the Shareholders, to sell out at prices lower than the
current value of your Company's stock. Both times you supported management's
strategic plan to build long-term shareholder wealth beyond Serrato's short-term
speculations. Management's current plan is designed to out-perform Serrato's
recent speculations. The Company is experiencing rapid growth, increased market
share and improved earnings, this is not the time to sell. A forced sale
restricts the Board of Directors' ability to maximize sales price. This is not
the way to sell.
THE FUTURE FOR EAGLE BANCSHARES IS BRIGHT but Serrato continues to
take hostile actions. Each time in the past that you have supported management's
plan, you have succeeded in building your wealth. We urge you to vote to
continue to build your wealth by VOTING NO ON THE SERRATO PROPOSAL.
PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, as independent accountants for the Company for the fiscal
year ending March 31, 1999, which appointment the shareholders are requested to
ratify. The appointment will be reconsidered by the directors if not ratified by
shareholders.
Representatives of Arthur Andersen LLP are expected to be present at
the Annual Meeting, will have an opportunity to make a statement if they desire
to do so and will be available to respond to shareholders' questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING MARCH 31, 1999.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of shareholders of the Company intended to be presented at
the 1999 Annual Meeting of Shareholders must be received by the Company at its
principal executive offices on or before March 19, 1999 to be eligible for
inclusion in the Company's Proxy Statement and form of Proxy relating to the
1999 Annual Meeting of Shareholders.
-25-
<PAGE> 29
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no other matters other than those
described herein which may properly come before the Annual Meeting. However, if
any other matters should properly come before the Annual Meeting, it is the
intention of the persons designated as proxies to vote on such matters in
accordance with their judgment.
UPON THE WRITTEN REQUEST OF ANY PERSON WHOSE PROXY IS SOLICITED BY THIS
PROXY STATEMENT, THE COMPANY WILL FURNISH TO SUCH PERSON WITHOUT CHARGE (OTHER
THAN FOR EXHIBITS) A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR ITS
FISCAL YEAR ENDED MARCH 31, 1998, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES
THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD
BE DIRECTED TO EAGLE BANCSHARES, INC., 4305 LYNBURN DRIVE, TUCKER, GEORGIA
30084-4441, ATTENTION: RICHARD B. INMAN, JR., SECRETARY. SUCH ANNUAL REPORT IS
NOT TO BE TREATED AS PART OF THE PROXY SOLICITATION MATERIALS OR AS HAVING BEEN
INCORPORATED HEREIN BY REFERENCE.
-26-
