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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SOUTH ALABAMA BANCORPORATION, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than
Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 previously paid 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:
_____________________________________________________________________
South Alabama Bancorporation, Inc.
Post Office Box 3067
Mobile, Alabama 36652
Telephone 334/431-7800
F. MICHAEL JOHNSON
CHIEF FINANCIAL OFFICER
AND SECRETARY
To the Stockholders of
South Alabama Bancorporation, Inc.
NOTICE IS HEREBY GIVEN that, pursuant to call of its Directors, the
Annual Meeting of the Stockholders of South Alabama Bancorporation, Inc. will
be held at 100 St. Joseph Street, Mobile, Alabama, on May 7, 1998,
at 10:00 a.m., C.D.T., for the purpose of considering and voting upon the
following matters:
1. Election of Directors. Election as directors of the
seventeen nominees named in the enclosed Proxy Statement.
2. Amendment of Articles of Incorporation to Increase the
Authorized Shares of Common Stock. Amendment of the company's
Articles of Incorporation to increase the number of authorized
shares of Common Stock, $.01 par, to 10,000,000.
3. Other Business. Transaction of such other business as may
be brought before the meeting or any adjournment thereof.
Management currently knows of no other business to be presented.
Only those stockholders of record at the close of business
on March 20, 1998, shall be entitled to notice of and to vote at
the meeting.
We hope very much that you will attend the meeting, but,
whether you plan to attend or not, we would appreciate your
signing and returning the enclosed Proxy. Should you attend the
meeting in person, the Proxy can be revoked at your request.
Management sincerely appreciates your support and
cooperation, and we earnestly solicit your continued help during
1998.
By Order of the Board of Directors,
F. Michael Johnson
Chief Financial Officer
and Secretary
NOTICE: YOUR PROXY FORM AND RETURN ENVELOPE ARE INSIDE THIS ENVELOPE.
SOUTH ALABAMA BANCORPORATION, INC.
100 St. Joseph Street, Mobile, Alabama 36602
PROXY STATEMENT
Annual Meeting, May 7, 1998, 10:00 a.m., C.D.T.
This Proxy Statement and the enclosed Proxy are being mailed
on April 7, 1998, to stockholders of South Alabama
Bancorporation, Inc. ("South Alabama") in connection with the
solicitation of proxies by the Board of Directors of South
Alabama for use at the Meeting of Stockholders on May 7, 1998,
and any adjournment thereof.
South Alabama is the parent company and owner of 100% of the
stock of South Alabama Bank, formerly The Bank of Mobile (the
"Mobile Bank"), headquartered in Mobile, Alabama, First National
Bank, Brewton (the "Brewton Bank"), located in Brewton, Alabama,
The Monroe County Bank (the "Monroeville Bank"), headquartered in
Monroeville, Alabama and South Alabama Trust Company, Inc. (the
"Trust Company"), headquartered in Mobile, Alabama.
VOTING SECURITIES
South Alabama's only class of stock outstanding is its
Common Stock, $.01 par. All stockholders of record at the close
of business March 20, 1998, will be entitled to vote their shares
on any matter brought before the meeting. The number of shares of
South Alabama Common Stock outstanding on March 20, 1998, was
4,247,586. Each share is entitled to one vote. Cumulative voting
is not permitted in the election of directors.
Security Ownership of Directors,
Nominees, 5% Stockholders and Officers
The only person known to beneficially own more than 5% of South
Alabama's outstanding Common Stock is Thomas E. McMillan, Jr. The tabulation
below reflects the number of shares beneficially owned by (i) Thomas E.
McMillan, Jr.; (ii) each director and nominee of South Alabama; (iii) the
executive officers named in the Summary Compensation Table; and (iv) the
directors and officers of South Alabama as a group.
<TABLE>
<CAPTION>
Number of Shares and Nature of
Beneficial Ownership as of March 20, 1998(1)
Voting/Investment Power Percentage
Name of Beneficial Owner or Group of Total
(and Address of 5% Stockholders) Sole Shared Aggregate Outstanding(2)
<S> <C> <C> <C> <C>
Thomas E. McMillan, Jr(3) 72,870(4) 206,306(5) 279,176 6.57%
(P.O. Box 809, Brewton, AL 36427) .
John B. Barnett, III 82,313 39,854(6) 122,167 2.91
Stephen G. Crawford 55,000 24,700(7) 79,700 1.87
Haniel F. Croft 7,162(8) 7,162 .16
David C. De Laney 13,000 19,700(9) 32,700 .76
Lowell J. Friedman 73,533 2,000(10) 75,533 1.77
Broox G. Garrett, Jr.(11) 4,361 54,020(12) 58,381 1.37
W. Dwight Harrigan 125,000 20,000(13) 145,000 3.41
James P. Hayes, Jr . 3,410 25,079(14) 28,489 .67
Clifton C. Inge (15) 25,300 25,300 .59
W. Bibb Lamar, Jr . 45,305(16) 895(17) 46,200 1.06
Kenneth R. McCartha 0 0 0 0
J. Richard Miller, III (18) 111,942(19) 2,500(20) 114,442 2.69
Harris V. Morrissette(15) 10,303 10,303 .24
J. Stephen Nelson 24,281(21) 395(22) 24,676 .56
Paul D. Owens, Jr.(3) 47,395 160,587(23) 207,982 4.89
Earl H. Weaver (11)(18) 39,614 35,079(24) 74,693 1.75
All directors and officers of South
Alabama as a group (19 persons) 775,850 476,159 1,252,009(25) 28.90%
</TABLE>
(1) The number of shares reflected encompasses shares that,
under applicable regulations, are deemed to be beneficially
owned. Shares deemed to be beneficially owned, under those
regulations, include shares as to which, through any contract,
relationship, arrangement, understanding, or otherwise, either
voting power or investment power is held or shared directly or
indirectly. Shares deemed to be beneficially owned also include
shares which may be acquired within sixty days. The total number
of shares beneficially owned is broken down, when applicable,
into the following two categories: (i) shares as to which voting
power/investment power is held solely; and (ii) shares as to
which voting power/investment power is shared. The percentage
calculation is based on the aggregate number of shares
beneficially owned.
(2) The percentage calculations for Mr. Nelson, Mr. Lamar
and Mr. Croft assume that all 61,192 shares subject to their
exercisable outstanding options at March 20, 1998, were
outstanding. The percentage calculation for all directors and
officers of South Alabama, as a group, assumes that all 84,192
shares subject to exercisable outstanding options at March 20,
1998, were outstanding.
(3) Mr. McMillan and Mr. Owens are brothers-in-law.
(4) Includes 29,600 shares owned by Thomas, Ltd., a limited
partnership. Mr. McMillan is managing general partner of the
partnership.
(5) Includes 114,956 shares owned by McMillan, Ltd., a
limited partnership of which Mr. McMillan is a managing partner,
and 72,036 shares and 19,314 shares owned by Mr. McMillan as
co-trustee under the wills of his grandmother and grandfather,
respectively.
(6) Includes 5,195 shares owned by Mr. Barnett's wife and
30,525 shares held by Mr. Barnett as co-trustee of three separate
irrevocable trusts for his three children. Mr. Barnett disclaims
beneficial ownership of these shares.
(7) Includes 20,000 shares owned by the trustee of Mr.
Crawford's self-directed subaccount of his law firm's retirement
plan. The figure also includes the following shares as to which
Mr. Crawford disclaims any actual beneficial ownership: 3,000
shares owned by Mr. Crawford as trustee for his two children;
1,000 shares owned by his wife; and 700 shares owned by his wife
as custodian for two children under the Uniform Transfers to
Minors Act.
(8) Includes 5,000 shares subject to purchase within 60 days
pursuant to options granted to Mr. Croft, as to which he would
have sole voting and investment power.
(9) All such shares are owned by the trustee of Mr. De
Laney's employer's retirement plan. Mr. De Laney may be deemed to
share voting and investment power with respect to those shares.
(10) Includes 2,000 shares owned by Mr. Friedman's wife, as
to which shares he may be deemed to share voting and investment
power.
(11) Mr. Garrett and Mr. Weaver are first cousins.
(12) Includes 2,714 shares owned by Mr. Garrett as custodian
for two children under the Alabama Uniform Transfers to Minors
Act, 44,822 shares as trustee of the Broox G. Garrett Family
Trust and 6,484 shares owned jointly with his wife.
(13) All such shares are owned by Mr. Harrigan's wife as
trustee of two separate trusts of which Mr. Harrigan's children
are the beneficiaries. Mr. Harrigan may be deemed to share voting
and investment power with respect to those shares.
(14) All such shares are owned by Mr. Hayes as co-trustee
for the Elizabeth Brannon Hayes Marital Trust.
(15) Mr. Inge is Mr. Morrissette's uncle.
(16) Includes 33,500 shares subject to purchase within 60
days pursuant to options granted to Mr. Lamar, as to which he
would have sole voting and investment power.
(17) Includes 650 shares owned by Mr. Lamar as custodian
under the Uniform Transfers to Minors Act and 145 shares owned by
his wife through her self-directed IRA account.
(18) Mr. Miller is Mr. Weaver's wife's first cousin.
(19) Includes 111,452 shares owned by Miller Investments, a
general partnership. Mr. Miller is Managing Partner of the
partnership.
(20) All such shares are owned by Mr. Miller as trustee of
two separate trusts of which Mr. Miller's children are the
beneficiaries.
(21) Includes 22,692 shares subject to purchase within 60
days pursuant to options granted to Mr. Nelson, as to which he
would have sole voting and investment power.
(22) All such shares are owned by Mr. Nelson's wife.
(23) Includes 114,956 shares owned by McMillan, Ltd., a
limited partnership of which Mr. Owens is a managing partner,
35,400 shares owned as trustee of two revocable management trusts
for his daughters, 4,176 shares owned jointly with his wife and
6,055 shares owned by his wife.
(24) Includes 27,698 shares owned by Mr. Weaver's wife as to
which Mr. Weaver disclaims any actual beneficial ownership and
7,381 shares owned jointly with his wife.
(25) Includes 84,192 shares subject to purchase within 60
days pursuant to options granted to officers of South Alabama, as
to which they would have sole voting and investment power.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires that South Alabama's directors and executive officers,
and persons who own more than ten percent of South Alabama's
common stock, file with the Securities and Exchange Commission
reports relating to their ownership and changes in ownership of
common stock and other equity securities of South Alabama.
Management believes, based solely upon information furnished to
South Alabama and written representations that no other reports
were required, that all persons subject to the reporting
requirements of Section 16(a) during 1997 filed the reports on a
timely basis.
ELECTION OF DIRECTORS
Number and Term
The Bylaws of South Alabama provide that the number of
directors to be elected at the Annual Meeting will be fixed by
resolution of the Board of Directors. The Board has adopted a
resolution fixing at seventeen the number of directors to be
elected at the 1998 Annual Meeting. The directors so elected will
serve a term of one year.
Nominees
The persons named below are the Board's nominees for
election as directors, and each has agreed to serve if elected.
All nominees are members of the present South Alabama Board of
Directors.
John B. Barnett, III
A South Alabama director since 1996
Mr. Barnett, age 45, has been Executive Vice President since 1996
of South Alabama, Chairman, since 1994, and director, since 1983,
of the Monroeville Bank and director since 1998 of the Trust
Company. Mr. Barnett is a partner in the law firm of Barnett,
Bugg & Lee, Attorneys, Monroeville, Alabama, and has practiced
law since 1983. From 1989 to 1994 Mr. Barnett was Vice Chairman
of the Monroeville Bank. From 1983 until its merger with South
Alabama, Mr. Barnett served as Vice President and a director of
the Monroeville Bank's holding company.
Stephen G. Crawford
A South Alabama director since 1985
Mr. Crawford, age 58, a member of the law firm Hand Arendall,
L.L.C., Mobile, Alabama, has practiced law since 1964. Mr. Crawford
has been a director of the Mobile Bank since 1986 and a director
since January, 1998 of the Trust Company.
Haniel F. Croft
A South Alabama director since 1996
Mr. Croft, age 57, has been President since 1979, Chief Executive
Officer since 1988, and a director since 1972, of the Monroeville
Bank. From 1982 until its merger with South Alabama, Mr. Croft served
as Vice President and a director of the Monroeville Bank's holding company.
David C. De Laney
A South Alabama director since 1985
Mr. De Laney, age 50, is President of First Small Business
Investment Company of Alabama, Mobile, Alabama, a position he has
held since 1978. Mr. De Laney has been a director of the Mobile
Bank since 1986.
Lowell J. Friedman
A South Alabama director since 1986
Mr. Friedman, age 68, has been President of Creola Investment
Corporation, Mobile, Alabama, a land and timber holding company,
since 1975. Mr. Friedman also directs personal investments in real
estate and oil and gas properties. Mr. Friedman has been a
director of the Mobile Bank since 1986.
Broox G. Garrett, Jr.
A South Alabama director since 1993
Mr. Garrett, age 49, is an attorney and partner in the law
firm of Thompson, Garrett and Hines, L.L.P., Brewton, Alabama,
where he has been employed since 1973. Mr. Garrett has been a
director of the Brewton Bank since 1983 and a director of the
Trust Company since January, 1998. Mr. Garrett was a director of
the Brewton Bank's holding company from 1986 until its merger
with South Alabama.
W. Dwight Harrigan
A South Alabama director since 1997
Mr. Harrigan, age 60, has alternated annually, since 1983,
as President and Executive Vice President of Scotch Lumber
Company, Fulton, Alabama. Mr. Harrigan has also served, since
1987, as Chairman of Harrigan Lumber Company, Monroeville,
Alabama. Mr. Harrigan has been a director of the Mobile Bank
since 1986.
James P. Hayes, Jr.
A South Alabama director since 1993
Mr. Hayes, age 50, is a financial consultant and has served
as President of J.P. Hayes & Company, Inc. since 1985. Mr. Hayes
has served since 1985 as a director of the Brewton Bank and was a director
of the Brewton Bank's holding company from 1986 until its merger
with South Alabama.
Clifton C. Inge
A South Alabama director since 1985
Mr. Inge, age 61, has been Chairman of the Board since 1991 of
Willis Corroon Corporation of Mobile, Mobile, Alabama, a
subsidiary of Willis Corroon Group PLC, insurance brokers. Mr.
Inge has been a director of the Mobile Bank since 1986 and a
director of the Trust Company since January, 1998.
W. Bibb Lamar, Jr.
A South Alabama director since 1989
Mr. Lamar, age 54, has been President, Chief Executive Officer
and director of South Alabama and the Mobile Bank since 1989 and
a director of the Trust Company since January, 1998.
Kenneth R. McCartha
A South Alabama director since 1997
Mr. McCartha, age 60, retired in 1996 as Superintendent of
Banks, State of Alabama Banking Department, a position he held by
gubernatorial appointment from 1993 until his retirement.
He had previously served as Deputy Superintendent (1985-1992).
Thomas E. McMillan, Jr.
A South Alabama director since 1985
Mr. McMillan, age 49, has been President of the general
partner of Smackco, Ltd., Brewton, Alabama, a limited partnership
engaged in oil and gas development, since 1974. Mr. McMillan has
been a director of the Brewton Bank since 1977, was a director of
the Mobile Bank from 1986-1993 and a director of the Brewton
Bank's holding company from 1977 until its merger with South
Alabama.
J. Richard Miller, III
A South Alabama director since 1991
Mr. Miller, age 51, has been managing partner since 1992 of
Miller Investments, and from 1989 through 1991 was managing
partner of its predecessor entities, Miller, Ltd. and Jern, Ltd.,
all of which are Brewton, Alabama partnerships engaged in private
investments. Mr. Miller has been a director of the Brewton Bank
since 1990, a director of the Mobile Bank since 1991, and was a
director of the Brewton Bank's holding company from 1990 until
its merger with South Alabama.
Harris V. Morrissette
A South Alabama director since 1997
Mr. Morrissette, age 38, has been president of Marshall
Biscuit Company, Inc., Mobile, Alabama, since 1994. Mr.
Morrissette has also served as Chairman of Azalea Aviation,
Inc. since 1993. He previously served as vice president of
Marshalls (1987-1993). Mr. Morrissette has been a director of
the Mobile Bank since 1990.
J. Stephen Nelson
A South Alabama director since 1993
Mr. Nelson, age 60, has been Chairman since 1993 of South
Alabama and Chairman, since 1993, Chief Executive Officer, since
1984, and director, since 1979, of the Brewton Bank. Mr. Nelson
has also been a director of the Trust Company since January,
1998. From 1986 until its merger with South Alabama, Mr. Nelson
was also President and a director of the Brewton Bank's holding
company.
Paul D. Owens, Jr.
A South Alabama director since 1997
Mr. Owens, age 52, is an attorney in the private practice of
law in Brewton, Alabama, where he has practiced since 1970. Mr.
Owens has been a director of the Mobile Bank since 1986.
Earl H. Weaver
A South Alabama director since 1993
Mr. Weaver, age 59, has been the sole proprietor of Earl H.
Weaver Management Services, a timber, oil, gas and general
management concern, since 1979. Mr. Weaver has served since 1981 as a
director of the Brewton Bank and since January, 1998 as a
director of the Trust Company. Mr. Weaver was a director of the
Brewton Bank's holding company from 1986 until its merger with
South Alabama.
-------------------------------------------------
Although the Board of Directors does not contemplate that
any nominee named on pages 4 or 5 will be unavailable for
election, if vacancies occur unexpectedly, the shares covered by
the Proxy will be voted for the Board's substitute nominees, if
any, or in such other manner as the Board of Directors deems
advisable.
The Bylaws of South Alabama permit the Board of Directors,
between annual meetings of stockholders, to increase the
membership of the Board and to fill any position so created and
any vacancy otherwise occurring. Any new director so elected
holds office until the next annual stockholders' meeting.
DIRECTOR COMMITTEES AND ATTENDANCE
The South Alabama Board of Directors held six meetings
during 1997. The Board has the following standing committees:
Executive, Audit and Personnel/Compensation. The Executive
Committee (whose members presently are Messrs. Barnett, Crawford,
Friedman, Lamar, McMillan, Miller, Nelson and Weaver) between
meetings of the Board may exercise all powers of the Board except
as limited by the Bylaws.
Actions taken by the Executive Committee are subject to
ratification by the Board at its next regular meeting. The
committee had one meeting in 1997. The Audit Committee (whose
members presently are Messrs. De Laney, Friedman and Garrett)
reviews the scope and plan of internal and external audits, audit
results and the adequacy of internal accounting controls and
makes recommendations to the Board on the appointment of outside
accountants. The committee held one meeting in 1997. The
Personnel/Compensation Committee (whose members presently are
Messrs. Crawford, Hayes, Inge and McMillan) sets compensation
for certain officers of South Alabama and its subsidiaries and
reviews guidelines within which the subsidiary boards of
directors fix compensation. The committee held four meetings in
1997. During 1997, director Miller attended fewer than 75% of the
total number of meetings of the Board of Directors of South
Alabama and meetings of committees of which he was a member.
Each subsidiary has standing committees composed of
directors from their respective Boards. The Mobile Bank, Brewton
Bank and Monroeville Bank all have a Finance (or Loan), Audit and
Personnel (or Salary) Committee. In addition, the Mobile Bank and
the Brewton Bank have Directors Nominating Committees, the Mobile
Bank has an Executive Committee, and the Trust Company has a
Trust Audit Committee.
EXECUTIVE COMPENSATION
Five Year Total Stockholder Return Comparison
The following indexed graph compares South Alabama's
five-year cumulative total stockholder return with the NASDAQ
Market Index and with a published peer group industry index,
prepared by Media General Financial Services, comprised of bank
holding companies in the east south central section of the United
States. The comparison assumes the investment of $100 on December
31, 1992, with dividends reinvested quarterly through December
31, 1997. Returns of each component issuer have been weighted
according to that issuer's market capitalization.
GRAPH
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
SOUTH ALABAMA BANCORPORATION $100 $138.01 $146.48 $164.71 $163.70 $332.34
MGFS EAST SOUTH CENTRAL BANKS 100 105.70 106.13 142.61 184.25 326.12
NASDAQ MARKET INDEX 100 119.95 125.94 163.35 202.99 248.30
</TABLE>
Report of Personnel/Compensation Committee of the Board of Directors
General Policies
The Personnel/Compensation Committee of the Board of
Directors of South Alabama (the "Committee") has responsibility
for recommending to the Board the compensation of the Chief
Executive Officer, Chairman, Chief Financial Officer and Auditor
of South Alabama and the Chief Executive Officer and Chairman of
the Monroeville Bank. Additionally, the Committee has oversight
responsibility with respect to the compensation of all other
executive officers of South Alabama's subsidiaries. Other than
the above named officers, all other salaries are set at the
subsidiary level.
The overall objectives of South Alabama's compensation
program are to attract and retain the best possible banking
talent, to motivate its officers to achieve the goals established
in the business strategy, to recognize both individual
contributions and overall business results and to link
shareholder and executive interests through long term
equity-based plans.
Base Salary. Except as noted above, executive officer
salaries are reviewed annually by the appropriate subsidiary
personnel committee. Individual salaries are set only after
consideration of the officer's level of responsibility,
experience and individual performance, and review of external
competitive practices. In order to determine external competitive
practices, the personnel committees review, and expect to
continue to review, salary surveys conducted by independent
compensation consulting firms. In establishing the base salaries
for South Alabama's executive officers, the personnel committees
consider the results of such surveys, but may establish the base
salary for executives above or below the averages indicated in
those surveys. The amounts paid to the Chief Executive Officer
and Chairman of South Alabama and to the Chief Executive Officer
and President of the Monroeville Bank in 1997 are shown in the
Summary Compensation Table under the heading "Annual
Compensation-Salary."
The Mobile Bank Incentive Plan. The Mobile Bank Incentive
Plan for 1997 was designed to reward officers for achieving and
exceeding current year net income goals of the Mobile Bank and
goals established for certain officers. Upon completion of the
business plan for 1997, the Mobile Bank Chief Executive Officer
presented to the Mobile Bank's personnel committee the net income
goal of the Mobile Bank for its approval. The incentive
opportunity for each individual officer was dependent upon that
officer's level of responsibility and the judgment of the Mobile
Bank's personnel committee of that officer's potential
contribution to the Mobile Bank's ability to achieve its net
income goal. The net income goal of the Mobile Bank was exceeded,
and awards were made by the personnel committee after
consideration of individual performance within the parameters of
the Incentive Plan. The amount awarded to the Chief Executive
Officer of South Alabama under the Mobile Bank's Incentive Plan
for 1997 is set forth in the "Annual Compensation-Bonus" column
of the Summary Compensation Table.
The Brewton Bank Incentive Compensation Plan. Each year the
Brewton Bank establishes a pool of funds equal to 15% of total
officers' salaries. Based upon the performance of the Brewton
Bank, the department and the individual, an officer can earn up
to 15% of his or her base salary, payable in a lump sum after the
close of the year. For each officer other than the top three
executives of the Brewton Bank, the formula is based 40% on the
Brewton Bank's achieving required levels of return on assets, 40%
on achievement of individual and departmental goals as
established at the beginning of the year, and 20% on the results
of the officers' annual review as conducted by his or her
supervisor. Each of the three most highly ranked officers
automatically receives the same percentage of his total available
amount as the average for all other officers. The amount awarded
to the Chairman of South Alabama under the Brewton Bank's
Incentive Compensation Plan for 1997 is set forth in the "Annual
Compensation-Bonus" column of the Summary Compensation Table.
The Monroeville Bank Performance Compensation Plan. The
Monroeville Bank Performance Compensation Plan was designed to
maximize long-term shareholder value by maximizing and balancing
long-term profit and growth. After the budget is completed,
senior management meets and sets goals for increases over the
previous year for loan volume, deposit volume, net interest
margin, non-interest income, loan losses and productivity. Each
category is weighted depending on where management feels the need
to place the most emphasis for that year. At the end of the year,
if goals are exceeded compensation is paid to the officers and
employees based on the weighted categories and the amount by
which the goals are exceeded. All officers and employees receive
the same percent of their gross annual salary. The amount awarded
to the Chief Executive Officer and President of the Monroeville
Bank under the Monroeville Bank's Incentive Compensation Plan for
1997 is set forth in the "Annual Compensation-Bonus" column of
the Summary Compensation Table.
Stock Options. Stock options are South Alabama's and its
subsidiaries' principal long-term incentive vehicle. The
committee believes that stock options not only motivate and
reward executives for exceptional performance, but also align
their goals more closely with those of the South Alabama
stockholders, by affording the recipients the possibility of
equity interests in South Alabama. The stock option plan is
designed to encourage a long-term perspective by providing a
ten-year term, which includes a nine-year exercise period and a
one-year period after the date of grant during which the option
cannot be exercised.
The number of options awarded to each officer generally is
tied to the officer's level of responsibility, with the result
that senior executive officers typically receive greater awards
than other officers. The Committee takes into consideration
previous grants to an individual officer as well as all other
factors.
The shares of the Common Stock covered by options awarded
during 1997 to the Chief Executive Officer and Chairman of South
Alabama and to the Chief Executive Officer and President of the
Monroeville Bank are shown in the table entitled "Option Grants
in Last Fiscal Year," and the options previously granted and
outstanding at year-end are shown in the table entitled
"Aggregate Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values."
Other Compensation. Additionally, the Mobile Bank, Brewton
Bank and Monroeville Bank maintain broad-based employee benefit
plans, including pension plans and, in the case of the Brewton
Bank and Monroeville Bank, profit sharing plans, as described
elsewhere in this document in the section entitled "Pension
Plans." Officers of South Alabama participate in such plans on
the same basis as other employees.
Chief Executive Compensation
The Committee meets in executive sessions to review the
Chief Executive Officer's salary and from time to time, but not
necessarily annually, consults with salary administration firms
and/or uses compensation surveys with respect to competitors'
practices. Compensation of the Chief Executive Officer is
determined in accordance with the same basic factors as described
above for other executive officers.
The 1997 base salary increase for the Chief Executive
Officer was established after a review of market data from
independent compensation surveys. The Committee is empowered to
recommend to the Board the Chief Executive Officer's base salary
in its discretion and without regard to particular factors. The
Committee considered, however, that 1996 corporate earnings
objectives had been exceeded. The Committee also considered the
achievement of certain other strategic objectives, both financial
and otherwise, under his leadership, including acceptable asset
quality, capital ratios, liquidity ratios, interest rate margins
and other financial goals under the business plan for 1996.
The 1997 bonus for the Chief Executive Officer for achieving
the net income goal of the Mobile Bank was $35,000, an amount
equal to approximately 26% of his 1997 salary. In setting the
amount of the bonus, the Committee considered the continued
improvement in the financial performance of South Alabama during
the year as well as the successful completion of other
non-financial related goals.
The Committee also granted to the Chief Executive Officer
options to purchase 5,000 shares of South Alabama Common Stock,
as described in the table entitled "Option Grants in Last Fiscal
Year."
The members of the Personnel/Compensation Committee are as
follows: Stephen G. Crawford, James P. Hayes, Jr., Clifton C.
Inge and Thomas E. McMillan, Jr.
Compensation
The table below reflects annual compensation for W. Bibb
Lamar, Jr., J. Stephen Nelson, and Haniel F. Croft for services
rendered in 1997, 1996 and 1995 to South Alabama, the Mobile
Bank, Brewton Bank and Monroeville Bank.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation1 Long Term Compensation
Awards
Shares Underlying All Other
Name and Principal Position Year Salary($)2 Bonus($)3 Options/SARs Compensation($)4
<S> <C> <C> <C> <C> <C>
W. Bibb Lamar, Jr. 1997 $132,500 $35,000 5,000
CEO, President and Director, 1996 $125,000 $30,000 5,000
South Alabama and Mobile Bank; 1995 $115,000 $27,500 5,000
Director, Trust Company
J. Stephen Nelson 1997 $122,000 $25,000 5,000 $6,570
Chairman and Director, 1996 $118,600 $22,000 5,000 $6,742
South Alabama; Chairman, 1995 $ 99,120 $13,800 5,000 $7,032
CEO and Director, Brewton Bank;
Director, Trust Company
Haniel F. Croft 1997 $122,400 $ 7,013 $7,470
Director, South Alabama and 1996 $121,600 5 $ 6,068 $7,466
CEO, President and Director, 1995 $116,000 $ 2,542 $7,376
Monroeville Bank
</TABLE>
1 Although Mr. Lamar, Mr. Nelson and Mr. Croft received
perquisites and other personal benefits in the years shown, the value of
these benefits did not exceed in the aggregate the lesser of
$50,000 or 10% of their salary and bonus in any year.
2 Includes for Mr. Nelson both salary and $3,600 in director's
fees paid by the Brewton Bank for each year shown.
3 Represents amounts paid under the Mobile Bank Incentive Plan
for Mr. Lamar, the Brewton Bank Incentive Compensation Plan for
Mr. Nelson and the Monroeville Bank Performance Compensation Plan
for Mr. Croft.
4 Represents employer contributions to the Brewton Bank Profit
Sharing Plan for Mr. Nelson and the Monroeville Bank Profit Sharing
Plan for Mr. Croft.
5 Includes $20,400 paid with respect to services to South Alabama
from the date of the merger of the Monroeville Bank's holding
company with South Alabama.
Stock Options
The following table sets forth the grant of stock options during
1997 to Mr. Lamar, Mr. Nelson and Mr. Croft:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Potential
<CAPTION>
Number of % of Total Realizable Value
Shares Options/SARs Assuming Rates of
Underlying Granted to Exercise Stock Price
Options/SARs Employees or Base Expiration Appreciation1
Name Granted in Fiscal Year Price ($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
W. Bibb Lamar, Jr. 5,000 2 18.18% $13.25 01/28/07 $47,058 $122,766
J. Stephen Nelson 5,000 2 18.18% $13.25 01/28/07 $47,068 $122,766
Haniel F. Croft 5,000 2 18.18% $13.25 01/28/07 $47,068 $122,766
</TABLE>
1 Calculated by comparing the exercise price of such options and
the market value of the shares of common stock subject to such
options, assuming the market price of such shares increases by 5%
and 10%, respectively, over the term of the options.
2 Incentive Stock Options which became exercisable on January 28,
1998.
The following table includes information with respect to
unexercised options held by Mr. Lamar, Mr. Nelson and Mr. Croft.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
<CAPTION>
Number of Shares Underlying Value of Unexercised
Unexercised Options/SARs Held At In-the-Money Options/SARs At
December 31, 1997 (#) December 31, 1997 ($) 1
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
W. Bibb Lamar, Jr. 5,000 5,000 $51,250 $52,500
5,000 $53,750
6,000 $64,500
7,500 $81,563
5,000 $76,250
J. Stephen Nelson 5,000 5,000 $51,250 $52,500
5,000 $53,750
7,692 $82,689
Haniel F. Croft 0 5,000 0 $52,500
1 Based on the average of the closing bid and ask prices quoted
in the NASDAQ inter-dealer system on December 31, 1997, minus the
exercise price.
</TABLE>
Pension Plans
South Alabama maintains a pension plan and certain other
long-term compensation plans, as described below.
The following table reflects estimated annual benefits
payable under the Retirement Plan for Employees of South Alabama
(the "South Alabama Plan") in effect as of December 31, 1997 at
various salary and years of service levels, assuming retirement
at age 65.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Compensation Years of Credited Service
10 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
25,000 2,500 3,750 5,000 6,250 7,500 8,750
50,000 5,000 7,500 10,000 12,500 15,000 17,500
75,000 7,500 11,250 15,000 18,750 22,500 26,250
100,000 10,000 15,000 20,000 25,000 30,000 35,000
125,000 12,500 18,750 25,000 31,250 37,500 43,750
150,000 15,000 22,500 30,000 37,500 45,000 52,500
175,000* 15,000 22,500 30,000 37,500 45,000 52,500
*Maximum Compensation for 1997 under IRC 401(a)(17) is $160,000.
</TABLE>
The amounts reflected are single life benefits computed under
the South Alabama Plan's basic formula. The South Alabama Plan
provides generally for a monthly benefit commencing at age 65
equal to 1% of the employee's average monthly base compensation
during the highest 5 consecutive calendar years out of the 10
calendar years preceding retirement, multiplied by years of
credited service, not to exceed 40 years. Alternative plan
formulas which may apply to certain participants who participated
in predecessor pension plans, might produce a greater benefit in
some situations. Joint and survivor benefits would be less.
Social Security benefits do not affect payments made under the
South Alabama Plan. As of December 31, 1997, Mr. Lamar was
credited with 9 years of service, Mr. Nelson was credited with 18
years of service, and Mr. Croft was credited with 28 years of
service.
The Mobile Bank. The Mobile Bank maintains an unfunded and
unsecured Supplemental Retirement Plan (the "Supplemental Plan")
designed to supplement the benefits payable under the South
Alabama Plan for certain key employees selected by the Mobile
Bank's Board of Directors. Each participant was a participant in
a pension plan of another bank prior to his employment by the
Mobile Bank, and the Supplemental Plan is designed to afford the
participant the same pension he would receive under the South
Alabama Plan if he were given years-of-service credit as if he
were employed by the Mobile Bank his entire banking career,
reduced by benefits actually payable to him under the South
Alabama Plan and any retirement benefit payable to him under any
such plan of another bank. Benefits for total and permanent
disability are supplemented in the same manner.
Because the Supplemental Plan is intended to complement
benefits otherwise available to the participants, the exact
amounts to be paid, if any, to any participant, including Mr.
Lamar, cannot be determined until retirement or disability.
Management of the Mobile Bank does not believe any current
expense and any liabilities associated with the Supplemental Plan
are material.
The Monroeville Bank. The Monroeville Bank also maintains
the Monroe County Bank Profit Sharing Plan (the "Monroeville Bank
Profit Sharing Plan"). Subject to certain employment and vesting
requirements, all Monroeville Bank personnel are permitted to
participate in the Monroeville Bank Profit Sharing Plan. At the
end of each plan year, the profit sharing contribution,
determined by the Monroeville Bank's Board of Directors, is
allocated to the profit sharing account of each active
participant. All contributions to the plan are made by the
Monroeville Bank. Employee contributions are not required or
allowed. Each participant's contribution is based on "units" for
the current calendar year in proportion to the total "units" of
all plan participants for that period. The number of units for
the year are based on annual pay and service.
The Brewton Bank. The Brewton Bank maintains the First
National Bank Employees' Profit Sharing Plan (the "Brewton Bank
Profit Sharing Plan"). Subject to certain employment and vesting
requirements, all Brewton Bank employees are permitted to
participate in the Brewton Bank Profit Sharing Plan, which
provides for employee contributions up to a maximum of $1,800
(limited in the case of certain "highly compensated employees" to
the extent required by law), matched by an employer contribution,
up to the lowest of (i) 10% of the Brewton Bank's net operating
earnings, (ii) four times the amount of all employee
contributions for the year, or (iii) the maximum amount
deductible by the Brewton Bank for federal income tax purposes.
The Brewton Bank's contribution, which is discretionary within
limits set forth above, is divided among the employees' accounts
in proportion to the employees' own contributions.
Change in Control Compensation Agreements
The Mobile Bank entered into a Change in Control
Compensation Agreement with Mr. Lamar on November 14, 1995. The
Brewton Bank entered into a Change in Control Compensation
Agreement with Mr. Nelson on November 14, 1995. The Monroeville
Bank entered into a Change in Control Compensation Agreement with
Mr. Croft on March 31, 1997. These Change in Control
Compensation Agreements (the "Agreements") provide that if Mr.
Lamar, Mr. Nelson, or Mr. Croft, respectively, are terminated
other than for "cause" (as defined), following a change in
control, or if their assigned duties or responsibilities are
diminished such that they are inconsistent with their present
position, they shall be entitled to receive a cash payment equal
to three times their average annual earnings (as defined), in the
case of Mr. Lamar and Mr. Nelson, and two times average annual
earnings in the case of Mr. Croft. Certain other existing
employee benefits may also be available to each of Mr. Lamar, Mr.
Nelson and Mr. Croft under terms of these Agreements for a period
after termination of three years for Mr. Lamar and Mr. Nelson and
eighteen months for Mr. Croft. The Agreements automatically
renew each calendar year unless terminated by the Mobile Bank,
the Brewton Bank or the Monroeville Bank at least 90 days prior
to any December 31.
Compensation of Directors
South Alabama directors who are not officers are paid a
$1,500 annual retainer, $400 for each Board meeting attended and
$200 for each committee meeting attended.
CERTAIN TRANSACTIONS AND MATTERS
Some of the directors, executive officers, and nominees for
election as directors of South Alabama, as well as firms and
companies with which they are associated, are and have been
customers of its subsidiary banks and as such have had banking
transactions, including loans and commitments to loan, with
subsidiary banks during 1997. These loans and commitments to
loan, including loans and commitments outstanding at any time
during the period, were made in the ordinary course of business
on substantially the same terms, including rates and collateral,
as those prevailing at the time for comparable transactions with
other persons and, in the opinion of subsidiary bank management,
did not involve more than the normal risk of collectibility or
present other unfavorable factors.
Stephen G. Crawford, a director and nominee, is a member of
the law firm of Hand Arendall, L.L.C., which serves as counsel
for South Alabama and the Mobile Bank. Broox G. Garrett, Jr., a
director and nominee, is a partner in the law firm of Thompson,
Garrett & Hines, L.L.P., which serves as counsel for the Brewton
Bank. John B. Barnett, III, a director, executive officer and
nominee, is a partner in the law firm of Barnett, Bugg & Lee,
which serves as counsel for the Monroeville Bank.
AMENDMENT OF ARTICLES OF INCORPORATION TO INCREASE
THE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has adopted a resolution to amend
South Alabama's Articles of Incorporation to increase the number
of authorized shares of Common Stock, $.01 par, from 5,500,000
shares to 10,000,000 shares. The Board has declared the change
advisable and recommends that stockholders vote "FOR" the
proposed amendment.
South Alabama's Articles of Incorporation currently
authorize issuance of 5,500,000 shares of Common Stock, $.01 par,
and 500,000 shares of Preferred Stock, no par value. At March
20, 1998, 4,247,586 shares of Common Stock were outstanding, an
additional 200,000 shares were allocated for issuance under the
South Alabama Bancorporation 1993 Incentive Compensation Plan
(the "1993 Plan"), and 15,000 shares were allocated for issuance
under a previous stock option plan. As of March 20, 1998, there
were no shares of Common Stock held as treasury stock. As of the
same date no shares of Preferred Stock were outstanding. The
Board of Directors is empowered, without further action by the
stockholders, to issue the remaining authorized but unissued
shares of Common Stock and to provide for the terms of and to
issue the authorized but unissued shares of Preferred Stock. If
the proposed amendment is approved by the stockholders, the Board
of Directors will be empowered, without further action by the
stockholders, to issue an additional 4,500,000 shares of Common
Stock for such purposes and for such consideration as the Board
may approve.
Although South Alabama has no present intention of issuing
additional shares of Common or Preferred Stock, except in
connection with the merger of Peterman State Bank with and into
the Monroeville Bank and other than upon the exercise of options
granted under the 1993 Plan, the Board of Directors believes that
the availability of increased shares of Common Stock will provide
South Alabama with needed flexibility in structuring possible
future financings and acquisitions and in meeting other corporate
needs that may arise. In the future, additional authorized shares
of Common Stock would be available for general corporate
purposes, including but not limited to possible issuances as
stock dividends or stock splits, in future mergers or
acquisitions, in a future public offering or private placement,
or under a stock benefit plan. The Board of Directors does not
intend to issue any additional shares of Capital Stock except on
terms which the Board of Directors deems to be in the best
interests of South Alabama and its shareholders. Although South
Alabama currently has no specific plans, intentions, arrangements
or understandings regarding specific acquisitions, except as
mentioned above, South Alabama expects to consider acquisition
opportunities as they become available in the future.
The holders of South Alabama's Common Stock have no
preemptive rights to subscribe to any future issues of the Common
Stock.
The approval of the proposed amendment requires the
affirmative vote of the holders of the majority of the
outstanding shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE ADOPTION OF THIS PROPOSED AMENDMENT.
APPOINTMENT OF AUDITORS
The Board of Directors of South Alabama, on recommendation
of the Audit committee, engaged Arthur Andersen L.L.P. as South
Alabama's independent accountant and auditor for the three year
period beginning in 1995. The engagement was entered into on
September 27, 1995. Arthur Andersen will have representatives
present at the annual meeting to respond to appropriate questions
and to make a statement if they so desire.
OTHER MATTERS
Management currently does not know of any other matters to
be presented at the meeting.
If a Proxy in the form enclosed is executed properly and is
returned, the shares represented thereby will be voted in
accordance with the directions given in that Proxy. If no
specific directions are given, the shares will be voted, subject
to and in accordance with the provisions herein contained, "For"
the Board of Directors' nominees in the election of directors and
"For" the proposed amendment to the Articles of Incorporation. If
any other matter is presented at the meeting, the shares will be
voted in accordance with the recommendations of the Board of
Directors. At any time prior to its exercise, a Proxy may be
revoked by written notice or a subsequently dated Proxy delivered
to the Secretary of South Alabama.
Solicitation of proxies will be made initially by mail. In
addition, proxies may be solicited in person, by telephone, and
by telegraph by directors, officers, and other employees of South
Alabama and its subsidiary banks. The cost of printing,
assembling, and mailing this Proxy Statement and related material
furnished to stockholders and all other expenses of solicitation,
including the expenses of brokers, custodians, nominees, and
other fiduciaries who, at the request of South Alabama, mail
material to or otherwise communicate with beneficial owners of
shares held by them, will be borne by South Alabama.
The presence, in person or by proxy, of a majority of the
outstanding shares of Common Stock is necessary to constitute a
quorum of the stockholders to take action at the meeting. Once a
quorum is established, (i) directors must be elected by a
plurality of the shares of Common Stock present, in person or by
proxy, and (ii) any other action to be taken must be approved by
a majority of the shares of Common Stock present, in person or by
proxy. For voting purposes, abstentions and broker non-votes will
in effect count as "no" votes.
Stockholder proposals intended to be submitted for
consideration at the 1999 Annual Meeting of the Stockholders of
South Alabama must be submitted in writing to and received by the
Secretary of South Alabama not later than December 6, 1998, to be
included in South Alabama's Proxy Statement and form of Proxy
relating to that meeting.
F. Michael Johnson
Chief Financial Officer
and Secretary
Enclosures
April 7, 1998
