FIRST FINANCIAL HOLDINGS, INC.
34 Broad Street
Charleston, S. C. 29401
803-529-5933
December 23, 1997
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of First Financial Holdings, Inc. to be held at the Corporation's main office,
34 Broad Street, Charleston, South Carolina, on Wednesday, January 28, 1998,
at 5:30 p.m., South Carolina time.
The Notice of Annual Meeting of Shareholders and Proxy Statement on the
following pages describe the formal business to be transacted at the meeting.
During the meeting, we will also report on the operations of the Corporation.
Directors and officers of the Corporation, as well as a representative of KPMG
Peat Marwick LLP, the Corporation's independent auditors, will be present to
respond to any questions shareholders may have.
To ensure proper representation of your shares at the meeting, please sign,
date and return the enclosed proxy ballot in the enclosed postage-prepaid
envelope as soon as possible, even if you currently plan to attend the
meeting. This will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend the meeting.
Sincerely,
A. Thomas Hood
President and Chief Executive Officer
<PAGE>
FIRST FINANCIAL HOLDINGS, INC.
34 Broad Street
Charleston, South Carolina 29401
803-529-5933
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 28, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders ("Meeting")
of First Financial Holdings, Inc. ("Corporation") will be held at the main
office of the Corporation at 34 Broad Street, Charleston, South Carolina, on
Wednesday, January 28, 1998, at 5:30 p.m., South Carolina time for the
following purposes:
1. To elect three directors of the Corporation;
2. To approve the First Financial Holdings, Inc. 1997 Stock Option and
Incentive Plan;
3. To ratify an amendment to the Corporation's Certificate of
Incorporation to increase the number of authorized shares of common
stock; and
4. To consider and act upon other matters as may properly come before the
Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come before
the Meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Shareholders of
record at the close of business on November 28, 1997, are entitled notice of
and to vote at the Meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed Proxy, which is
solicited by the Board of Directors, and to mail it promptly in the enclosed
envelope. The Proxy will not be used if you attend and vote in person at the
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
PHYLLIS B. AINSWORTH
SECRETARY
Charleston, South Carolina
December 23, 1997
IMPORTANT: THE PROMPT RETURN OF THE SIGNED PROXY WILL SAVE THE CORPORATION
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
OF
FIRST FINANCIAL HOLDINGS, INC.
34 Broad Street
Charleston, South Carolina 29401
803-529-5933
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 28, 1998<PAGE>
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of First Financial Holdings, Inc. ("First
Financial" or "Corporation") to be used at the Annual Meeting of Shareholders
of the Corporation ("Meeting"). The Meeting will be held at the Corporation's
main office at 34 Broad Street, Charleston, South Carolina, on Wednesday,
January 28, 1998, at 5:30 p.m., South Carolina time. The accompanying Notice
of Annual Meeting of Shareholders and this Proxy Statement are first being
mailed to shareholders on or about December 23, 1997.
First Financial operates as a multiple savings and loan holding company for
First Federal Savings and Loan Association of Charleston ("First Federal") and
Peoples Federal Savings and Loan Association, Conway, South Carolina ("Peoples
Federal") (collectively, the "Associations").
REVOCATION OF PROXIES
Shareholders who execute proxies retain the right to revoke them at any
time before they are voted. Unless so revoked, the shares represented by such
proxies will be voted at the Meeting and all adjournments thereof. Proxies
may be revoked by written notice delivered in person or mailed to the
Secretary of the Corporation at 34 Broad Street, Charleston, South Carolina
29401, or the filing of a later proxy, to be received prior to a vote being
taken on a particular proposal at the Meeting. A proxy will not be voted if a
shareholder attends the Meeting and votes in person. Proxies solicited by the
Board of Directors of First Financial will be voted in accordance with the
directions given therein. Where no instructions are indicated, proxies will
be voted for the nominees for directors set forth below, for the approval of
the First Financial Holdings, Inc. 1997 Stock Option and Incentive Plan and
for the ratification of an amendment to the Corporation's Certificate of
Incorporation to increase the number of authorized shares of common stock.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record as of the close of business on November 28, 1997,
are entitled to one vote for each share then held. Shareholders are not
permitted to cumulate their votes for the election of directors. As of
November 28, 1997, the Corporation had 6,751,538 shares of common stock
("Common Stock") issued and outstanding.
Persons and groups owning in excess of 5% of the Corporation's Common Stock
are required to file certain reports disclosing such ownership pursuant to the
Securities Exchange Act of 1934, as amended ("1934 Act"). Based upon such
reports, the following table sets forth, as of September 30, 1997, certain
information as to those persons who were beneficial owners of more than 5% of
the outstanding shares of Common Stock. Management knows of no persons other
than those set forth below who owned more than 5% of the Corporation's
outstanding shares of Common Stock at September 30, 1997. The table also sets
forth information as to the shares of Common Stock beneficially owned by each
director of the Corporation, by the Chief Executive Officer of the
Corporation, by the Corporation's or the Associations' four other most highly
compensated executive officers ("Named Executive Officers") and by all
officers and directors of the Corporation as a group.
Name and Amount and Nature Percent of Shares
Address of of Beneficial of Capital Stock
Beneficial Owner Ownership(1)(3) Outstanding
Dimensional Fund Advisors, Inc.(2) 400,500 6.28%
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401
Non-Employee Directors
Gary C. Banks, Jr. 25,590 (4)
Joseph A. Baroody 8,858 (4)
Paula Harper Bethea 2,443 (4)
Paul G. Campbell, Jr. 6,265 (4)
A. L. Hutchinson, Jr. 119,506 1.87%
James C. Murray 16,785 (4)
D. Kent Sharples 12,648 (4)
D. Van Smith 26,597 (4)
Thomas E. Thornhill 19,914 (4)
Named Executive Officers
A. Thomas Hood 108,635 1.69%
George N. Magrath, Jr. 29,516 (4)
Charles F. Baarcke, Jr. 35,551 (4)
John L. Ott, Jr. 60,861 (4)
Susan E. Baham 44,131 (4)
All Executive Officers and 517,300 7.90%
Directors as a group (14 persons)
(1) Unless otherwise indicated, all shares are owned directly by the named
persons or by the persons indirectly through spousal ownership, or
through a trust, corporation or association, or as custodians or
trustees for the shares of minor children. The named persons
effectively exercise voting and investment power over such shares.
(2) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 400,500 shares of the
Corporation's Common Stock as of September 30, 1997, 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 the DFA Participating 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) Includes options awarded under the Corporation's Directors Stock
Options-for-Fees Plan that are exercisable within 60 days of November
28, 1997, for the following directors: Mr. Banks - 11,832 shares; Mr.
Baroody - 6,945 shares; Mrs. Bethea - 2,320 shares; Mr. Campbell - 1,207
shares; Mr. Murray - 13,927 shares; Dr. Sharples - 11,024 shares; Mr.
Smith - 1,633 shares; and Mr. Thornhill - 1,655 shares. In addition,
Mr. Hutchinson has 13,500 options available for exercise which were
granted under the Corporation's 1990 Stock Option and Incentive Plan
when Mr. Hutchinson was President of the Corporation. Also includes
42,352, 18,050, 7,400, 15,675, 20,060 and 167,580 shares of Common Stock
that may be received upon the exercise of stock options, which are
exercisable within 60 days of November 28, 1997, for Messrs. Hood,
Magrath, Baarcke, Ott and Mrs. Baham and all executive officers and
directors as a group, respectively.
(4) Less than one percent.
PROPOSAL I - ELECTION OF DIRECTORS
The Corporation's Board of Directors ("Board") is currently composed of 10
members. Mr. Baroody will retire from the Board on January 28, 1998. The
Corporation's Certificate of Incorporation provides that directors are to be
elected for terms of three years with approximately one-third elected
annually. Accordingly, the Board has amended the Bylaws effective as of the
date of Mr. Baroody's retirement to reduce the number of directors to nine and
to re-classify the Board in accordance with the Corporation's Certificate of
Incorporation to reflect the reduction in the size of the Board. At the
Meeting, three directors will be elected to serve for a three-year period, or
until their respective successors have been elected and qualified. The
Nominating Committee has nominated for election as directors Gary C. Banks,
Jr., Paula Harper Bethea and Paul G. Campbell, Jr. each for three-year terms.
All nominees are currently members of the Board.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board may
recommend or the Board may amend the Bylaws and reduce the size of the Board.
At this time, the Board knows of no reason why any nominee might be
unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR
DIRECTORS OF THE CORPORATION.
The following table sets forth certain information regarding the nominees
for election at the Annual Meeting as well as information regarding those
directors continuing in office after the Annual Meeting.
<TABLE>
<CAPTION>
Year First
Elected
Name Age(1) Director(2) Year Term Expires
Board Nominees
<S> <C> <C> <C>
Gary C. Banks, Jr. (3) 63 1987 2001(4)
Paul G. Campbell, Jr. (3) 51 1991 2001(4)
Paula Harper Bethea (3) 42 1996 2001(4)
Directors Continuing in Office
James C. Murray (3) 58 1991 1999
D. Kent Sharples (5) 54 1992 (6) 1999
D. Van Smith (3) 66 1968 1999
A. Thomas Hood (3)(5) 51 1987 2000
A. L. Hutchinson, Jr. (3)(5) 63 1985 2000
Thomas E. Thornhill(3) 68 1979 2000
</TABLE>
(1) As of September 30, 1997.
(2) Includes prior service, as applicable, on the Board of Directors of
First Federal.
(3) Also serves as a Director of First Federal.
(4) Assuming re-election at the Meeting.
(5) Also serves as a Director of Peoples Federal.
(6) Does not include prior service on Board of Directors of Peoples Federal.
The following discussion presents information with respect to the nominees
at the Meeting:
GARY C. BANKS, JR. was elected to First Federal s Board of Directors in
1987 and to First Financial s Board of Directors in January 1988. He is a
Director and retired Executive Vice President of Banks Construction Company,
which specializes in highway construction. A graduate of the University of
South Carolina, he is a member of several professional organizations and
serves on the Board of Directors of the Roper Hospital Foundation, Saul
Alexander Foundation, and the SCANA Advisory Board.
PAUL G. CAMPBELL, JR. was elected to First Financial s and First Federal's
Board of Directors in 1991. He is Vice President of Operations for Alumax
Primary Corporation of South Carolina, a leading primary aluminum reduction
company in the United States. He is a graduate of Clemson University and
received a masters degree from Jacksonville University. In addition to
membership in several professional organizations, Mr. Campbell is past
President of the Coastal Carolina Council of the Boy Scouts of America,
Charleston Trident United Way, Berkeley County Chamber of Commerce, the
Minerals, Metals and Material Society (TMS) and TMS Foundation. He is
immediate past Chairman of the South Carolina Chamber of Commerce. He is on
the Board of Governors of the School of Business and Economics of the College
of Charleston, the Board of Visitors for Clemson University, the Clemson
Engineering Advisory Board and the Trident Technical College Foundation.
PAULA HARPER BETHEA is the Director of Client Relations and Development for
Bethea, Jordan & Griffin, P.A. of Hilton Head Island, South Carolina, a law
firm. A native of Hampton County, Mrs. Bethea is a graduate of the
University of South Carolina. Currently she is Chair Emeritus of the Board of
Governors of United Way America and a Board member of United Way
International. She is a Board member and past Chair of United Way of South
Carolina and past Chair of the Hilton Head Island Chamber of Commerce and is
Chair elect of the Board of the South Carolina Chamber of Commerce. She
served in 1991 on the State Chamber's Task Force for Restructuring State
Government and was a member and a Subcommittee Chair of the Governor's
Commission on Restructuring. Governor Campbell presented the Order of the
Palmetto, South Carolina's highest award for volunteer service, to her in
1992.
The present principal occupation and other business experience during the
last five years of each director continuing in office is set forth below:
A. Thomas Hood has been President and Chief Executive Officer of the
Corporation since July 1, 1996, and of First Federal since February 1, 1995.
Previously he served in various capacities for the Corporation and First
Federal.
A. L. Hutchinson, Jr. has been Vice Chairman of the Corporation and First
Federal since February 1, 1995. Previously he served as President and Chief
Executive Officer and in other various capacities for the Corporation and
First Federal.
James C. Murray is President, Chief Executive Officer and Chairman of
Utilities Construction Co., an electrical contracting company specializing in
high voltage utility, industrial and commercial electrical work in the
Southeast.
D. Kent Sharples is President of Horry-Georgetown Technical College.
D. Van Smith is Chairman and co-owner of Van Smith Company, Inc., a
concrete company; and President and owner of Smith and Smith, Inc., an
investment property company.
Thomas E. Thornhill is Principal of Clement, Crawford & Thornhill, Inc., a
commercial real estate firm.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board conducts its business through meetings of the Board of Directors
and through its committees. During the fiscal year ended September 30, 1997,
the Board held 11 meetings. No director of First Financial attended fewer
than 75% of the total meetings of the Board and committee meetings on which
such Board member served during this period for the Corporation, except for
Mr. Smith who missed three Board meetings and the Nominating Committee meeting
due to other commitments.
The Executive Committee of the Corporation, composed of Messrs. Smith,
Banks, Hood, Hutchinson and Sharples met twice during the fiscal year ended
September 30, 1997.
The Audit Committee of the Corporation, composed of Messrs. Baroody,
Thornhill and Mrs. Bethea, meets periodically to study the findings of the
Corporation's independent auditors and internal auditor and to evaluate
policies and procedures relating to internal controls. This Committee met
four times during the fiscal year ended September 30, 1997.
The Compensation/Benefits Committee of the Corporation, composed of Messrs.
Murray, Campbell and Sharples, reviews compensation policies and benefit
plans of the Corporation, grants stock options and recommends compensation for
senior management. This Committee held three meetings during the fiscal year
ended September 30, 1997.
Article II, Section 14 of the Corporation's Bylaws provides that the Board
shall act as a nominating committee for selecting the management nominees for
election as directors. Such section of the Bylaws also provides as follows:
"No nominations for directors except those made by the nominating committee
shall be voted upon at the annual meeting unless other nominations by
shareholders are made in writing and delivered to the Secretary of the
Corporation in accordance with the provisions of the Corporation's Certificate
of Incorporation." Article II, Section 15 further provides that any new
business to be taken up at the annual meeting shall be stated in writing and
filed with the Secretary of the Corporation in accordance with the provisions
of the Corporation's Certificate of Incorporation. Article IX of the
Certificate of Incorporation provides that notice of a shareholder's intent to
make a nomination or present new business at the meeting ("shareholder
notice") must be given not less than 30 days nor more than 60 days prior to
any such meeting; provided, however, that if less than 31 days notice of the
meeting is given to shareholders by the Corporation, a shareholder's notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the tenth day following the day on
which notice of the meeting was mailed to shareholders. If properly made,
such nominations or new business shall be considered by shareholders at such
meeting. The Board held one meeting in its capacity as the nominating
committee during the fiscal year ended September 30, 1997.
DIRECTORS' COMPENSATION
During the fiscal year ended September 30, 1997, non-management members of
the Board of Directors of the Corporation received a fee of $8,040 except the
Chairman, who received a fee of $9,600. Non-management members of the First
Federal Board received $10,800 except the Chairman, who received $12,900. No
additional fees are paid to directors who serve on the committees appointed by
the Board. No fees are paid to officers of First Federal who serve on the
Board of Directors of the Corporation. Non-management members of the Peoples
Federal Board received a fee of $10,380 except for the Chairman, who
received $12,600. The members of management who serve on the Peoples Federal
Board receive no additional compensation.
Effective October 1, 1994, non-management directors of the Corporation,
First Federal and Peoples Federal were offered the opportunity to participate
in the 1994 Outside Directors Stock Options-for-Fees Plan, approved by the
shareholders at the January 25, 1995, Annual Meeting. In fiscal 1997, seven
Directors (excluding Emeritus and Advisory Directors) participated in the
Plan, deferring $72,704 in fees.
The Performance Equity Plan for Non-Employee Directors was approved by
shareholders at the January 22, 1997, Annual Meeting of Shareholders.
Performance targets for the initial plan year resulted in the award of 3,576
shares to the 15 directors serving the Corporation and the Associations.
MANAGEMENT REMUNERATION
Summary Compensation Table.
The following information is furnished for the Corporation's Chief
Executive Officer and the four other most highly compensated executive
officers during the fiscal year ended September 30, 1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE*
Long-Term
Annual Compensation Compensation
Awards
Other Annual All Other
Name and Principal Salary Compensation Stock Options Compensation
Position Year ($) ($)(1) (#) ($) (2)
<S> <C> <C> <C> <C> <C>
A. Thomas Hood 1997 186,114 -- 5,000 12,898
President and Chief
Executive Officer of the 1996 176,006 -- 3,000 10,240
Corporation and First
Federal 1995 162,829 -- -- 6,259
George N. Magrath, Jr. 1997 123,379 -- 3,250 10,397
President and Chief
Executive Officer of 1996 111,028 -- 2,000 9,351
Peoples Federal
1995 110,319 -- -- 7,457
Charles F. Baarcke, Jr. 1997 131,066 -- -- 8,987
Senior Vice President of
the Corporation and First 1996 127,866 -- 2,000 6,761
Federal
1995 121,755 -- -- 3,943
John L. Ott, Jr. 1997 136,260 -- -- 11,411
Senior Vice President of
the Corporation and First 1996 131,441 -- 2,000 8,649
Federal
1995 125,271 -- -- 5,090
Susan E. Baham 1997 105,589 -- 3,000 8,301
Senior Vice President and
Chief Financial Officer 1996 89,680 -- 1,500 6,581
of the Corporation and
First Federal 1995 85,798 -- -- 4,677
* All compensation, except for the compensation of George N. Magrath, Jr., is paid by First Federal
but allocated between the Corporation and First Federal based on approximate time spent by the Named
Executive Officer on Corporation business. Mr. Magrath is compensated by Peoples Federal.
</TABLE>
(1) Excludes perquisites which did not exceed $50,000 or 10% of salary and
bonus.
(2) Represents total 401(k) and profit sharing plan contributions paid by
the Corporation in fiscal year.
Option Grants Table.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable Value
at Assumed Annual Rates of
% of Total Stock Price Appreciation for
Options Option Term
Granted to
Employees Exercise
Options in Fiscal Price Expiration 5% 10%
Name Granted (#) Year ($/Sh) Date ($)(1) ($)(1)
<S> <C> <C> <C> <C> <C> <C>
A. Thomas Hood 5,000 14.00 19.50 10/24/06 158,817 252,889
George N. Magrath, Jr. 2,000/ 9.04 19.50/ 10/24/06 & 63,526/ 101,155/
1,250 25.25 4/24/07 51,411 81,864
Charles F. Baarcke, Jr. -- -- -- -- -- --
John L. Ott, Jr. -- -- -- -- -- --
Susan E. Baham 3,000 8.34 19.50 10/24/06 95,290 151,733
</TABLE>
(1) The dollar amounts indicated in these columns are the result of
calculations assuming 5% and 10% growth rates as required by the rules
of the Securities and Exchange Commission ("SEC"). These growth rates
are not intended by First Financial to forecast future appreciation, if
any, of the price of First Financial Common Stock. The actual value, if
any, realized by an executive officer will depend on the excess of the
market price of the shares over the exercise price on the date the
option is exercised.
Option Exercise Table.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Value of
Unexercised
In-the-Money
Number of Options at
Unexercised Fiscal Year
Shares Options at End(1)
Acquired Value Fiscal Year End Exercisable/
on Realized Exercisable/ Unexercisable
Name Exercise ($) Unexercisable ($)
<S> <C> <C> <C> <C>
A. Thomas Hood 1,837 32,351 41,152/-- 1,068,140/--
George N. Magrath, Jr. -0- -0- 17,050/-- 391,006/--
Charles F. Baarcke, Jr. -0- -0- 6,400/-- 134,800/--
John L. Ott, Jr. 2,375 53,516 14,675/1,000 350,475/17,625
Susan E. Baham 1,200 20,850 19,060/1,240 505,783/28,055
</TABLE>
(1) The values shown equal the difference between the exercise price of
unexercised in-the-money options and the closing market price ($37.875)
of the underlying Common Stock at September 30, 1997. Options are in-
the-money if the fair market value of the Common Stock exceeds the
exercise price of the option.
During fiscal 1993, the Stock Option Committee established First Financial
stock ownership guidelines for members of management. The desired level of
stock ownership is based on the market value of the shares owned as a
percentage of annual salary. The percentages are 400%, 200% and 100% for the
President, Senior Vice Presidents and other members of management,
respectively. Stock ownership goals are expected to be met within five years.
When goals are met, additional stock options may be granted. All members of
management have met stock ownership goals set by the Corporation, with the
exception of eight management members, all of which have been management
members for less than five years.
Employment Agreements.
First Federal entered into an employment agreement ("Agreement") with Mr.
Hood on July 30, 1987, which Agreement was subsequently amended on September
29, 1988, October 1, 1993, and September 26, 1996, and includes First
Financial as a party to the Agreement since 1993. Additionally, First Federal
and First Financial entered into three-year Agreements with Messrs. Baarcke
and Ott on October 1, 1993. On the same date, Peoples Federal and First
Financial entered into an employment agreement with Mr. Magrath for a term of
three years. On September 26, 1996, First Federal and First Financial entered
into a three-year Agreement with Mrs. Baham. The Agreements of Messrs. Hood,
Magrath, Baarcke, Ott and Mrs. Baham provide for a salary of not less than
$175,620, $93,600, $104,220, $112,080 and $88,448 per annum, respectively,
disability and retirement income benefits and bonus and other fringe benefits
as may be approved by the Board. The terms of the Agreements may be extended
for an additional 12 full calendar months upon action of the Boards of First
Federal, Peoples Federal and First Financial, as appropriate, prior to the
anniversary date of the Agreements. Each of the Agreements provides for
termination for cause or in certain events specified by Office of Thrift
Supervision regulations. Each of the Agreements is also terminable by First
Federal, Peoples Federal or the Corporation without cause except that the
affected employee would be entitled to the full amount of salary remaining
under the term of the Agreement. In the event of a change in control (as
defined in each Agreement) of the Corporation followed by the involuntary
termination of employment (or voluntary termination of employment in certain
circumstance) of the executive following such change in control, each
Agreement provides for the payment to the employee of the greater of the
salary which would have been received for the remainder of the Agreement or
2.99 times the average of the prior five years' salaries for Messrs. Hood,
Magrath, Baarcke, Ott and Mrs. Baham. At September 30, 1997, Messrs. Hood,
Magrath, Baarcke, Ott and Mrs. Baham would have received approximately
$437,646; $286,630; $324,511; $330,732; and $232,138, respectively, if their
employment were terminated subsequent to change in control.
Report of the Compensation Committee.
The Compensation/Benefits Committees of the Boards of Directors of the
Corporation, First Federal and Peoples Federal are composed entirely of
independent directors. The Corporation's Committee is responsible for
establishing and monitoring compensation policies of the Corporation and for
reviewing and ratifying the actions of the Associations' Compensation
Committees. Performance of the Corporation and the individual is evaluated
and compensation is set accordingly.
It is the policy of First Federal and Peoples Federal that the performance
of senior management be evaluated using the same established criteria which
are used for the staff and that the salary structure for the executive
officers be included in the salary structure of the Associations. The
Committees are responsible for evaluating the performance of the Chief
Executive Officers of the Associations while the Chief Executive Officers of
the Associations evaluate the performance of other senior officers of the
respective Associations. Salary increases are recommended to the Committee
based on these evaluations. The Committee reviews the evaluations and sets
the salaries for the coming year.
The Compensation Committees' considerations include management skills,
long-term performance, shareholder returns, operating results, asset quality,
asset-liability management, regulatory compliance and unusual accomplishments
as well as economic conditions and other external events that affect the
operations of the Corporation and the Associations. Compensation policies
must promote the attraction and retention of highly-qualified executives and
the motivation of these executives for performance related to a financial
interest in the success of the Corporation and the Associations and the
enhancement of long-term shareholder value.
In addition to salaries, the Corporation's compensation plan includes
Profit Sharing Plan contributions and matching contributions to the 401(k)
Plan, both of which are based on return on shareholders' equity. Stock
options are also awarded periodically based on performance, length of service
and salary grades. The awards of stock options should provide increased
motivation to work for the success of the Corporation thereby increasing
personal financial success. All options granted to executives and employees
are exercisable at the closing price of the Corporation's stock on the date of
grant.
In September 1996, the Board approved a management Performance Incentive
Compensation Plan to become effective October 1, 1996. The purpose of the
plan is to share the rewards of excellent performance with those managers who
provide the knowledge, direction and work to accomplish results that are above
expectations. Standards of measurement have been developed and the
Associations must meet the goals as identified in their strategic business
plans.
Any incentive awards are supplements to annual compensation. No incentive
bonus will be awarded for a fiscal year regardless of performance on
individual factors if the Associations' return on shareholders' equity is less
than the approved minimum for that fiscal year. Participants in the plan are
limited to executives who are responsible for directing functions which have
significant impact on the growth and profitability of the Associations and the
Corporation.
Periodically, independent compensation consultants are engaged to review
the salary levels of all members of management as compared with peers with
comparable responsibilities in other companies. Results are reported to the
Compensation/Benefits Committee.
During the fiscal year ended September 30, 1997, the base compensation for
A. Thomas Hood, President and Chief Executive Officer of the Corporation, was
$186,181, which represented a 6.0% increase from the previous fiscal year.
Based on the criteria of the Performance Incentive Compensation Plan, Mr. Hood
will be paid a bonus of $28,646 in fiscal 1998. The Corporation also made
contributions to the Sharing Thrift Plan and the Profit Sharing Plan on his
behalf.
PEOPLES FEDERAL SAVINGS AND FIRST FEDERAL SAVINGS AND LOAN
LOAN ASSOCIATION ASSOCIATION OF CHARLESTON
Joseph A. Baroody, Chairman Walter A. Stilley, III, Chairman
D. Kent Sharples Paula Harper Bethea
Herman B. Speissegger, Jr. Paul G. Campbell
James C. Murray
FIRST FINANCIAL HOLDINGS, INC.
James C. Murray, Chairman
Paul G. Campbell, Jr.
D. Kent Sharples
Compensation Committee Interlocks And Insider Participation. The Board has
a Compensation/ Benefits Committee currently composed of Messrs. Murray,
Campbell and Sharples. Mr. Murray is presently the Committee's Chairman. The
Committee reviews and ratifies the actions of the Compensation Committees of
First Federal and Peoples Federal. No member of the Compensation Committee is
a former or current officer or employee of the Corporation or any of its
subsidiaries.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
CORPORATION'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE 1934 ACT THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY
STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND PERFORMANCE GRAPH
SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
Performance Graph. The following graph shows a five year comparison of
cumulative total returns for the Corporation, the CRSP Index for Nasdaq Stock
Market (U.S. Companies) and the CRSP Peer Group Index for Nasdaq Stocks.*
<TABLE>
<CAPTION>
Comparison of Five Year Cumulative Total Returns
Performance Graph for
FIRST FINANCIAL HOLDINGS, INC.
9/30/92 9/30/93 9/30/94 9/30/95 9/30/96 9/30/97
<S> <C> <C> <C> <C> <C> <C>
FIRST FINANCIAL HOLDINGS, INC. $ 100.0 $ 148.4 $ 171.4 $ 217.5 $ 221.7 $ 432.3
CRSP Index for Nasdaq Stock Market (US 100.0 131.0 132.1 182.4 216.4 297.1
Companies)
CRSP Peer Group Index for Nasdaq Stocks 100.0 163.0 187.5 239.9 282.5 488.3
(SIC 6030-6039 US Only) Savings Institutions
</TABLE>
Assumptions
- Assumes $100 invested September 30, 1992, in First Financial Holdings,
Inc. Common Stock, Nasdaq Stock Market (U.S. Companies) and CRSP Peer
Group Index for Nasdaq Stocks.
- Total return assumes reinvestment of dividends.
- Fiscal year ending September 30.
Source: Center for Research in Security Prices (CRSP), the University of
Chicago Graduate School of Business.
COMPLIANCE WITH SECTION 16(a) OF THE 1934 ACT
Section 16(a) of the 1934 Act requires certain officers of the Corporation
and its directors, and persons who beneficially own more than 10 percent of
any registered class of the Corporation's equity securities, to file reports
of ownership and changes in ownership with the SEC.
Based solely on a review of the reports and written representations
provided to First Financial by the above-referenced persons and, except as
noted below, the Corporation believes that during the fiscal year ended
September 30, 1997, all filing requirements applicable to its reporting
officers, directors and greater than 10 percent beneficial owners were
properly and timely complied with. On January 9, 1997, Mr. Hood filed an
amended Form 4 to correct a Form 4 filed in June 1996.
TRANSACTIONS WITH MANAGEMENT
Applicable law and regulations require that all loans or extensions of
credit by the Associations to executive officers and directors must be made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons
(unless the loan or extension of credit is made under a benefit program
generally available to all employees and does not give preference to any
insider over any other employee) and does not involve more than the normal
risk of repayment or present other unfavorable features. The Associations
have adopted policies which comply with these provisions.
PROPOSAL II -- APPROVAL OF 1997 STOCK OPTION AND INCENTIVE PLAN
General
On October 23, 1997, the Board of Directors of the Corporation adopted,
subject to shareholder approval, the First Financial Holdings, Inc. 1997 Stock
Option Plan (the "1997 Plan").
The objective of the 1997 Plan is to reward performance and build the
participant's equity interest in the Corporation by providing long-term
incentives and rewards to officers, key employees and other persons who
provide services to the Corporation and its subsidiaries and who contribute to
the success of the Corporation by their innovation, ability, industry, loyalty
and exceptional service.
The Corporation presently maintains the 1990 Stock Option and Incentive
Plan for the benefit of participating officers and employees. However, at
present, only 10,686 shares are available for the grant of options under the
existing plan. The Corporation believes that the availability of stock
compensation programs is an important element of the Corporation's overall
incentive compensation strategy and that, accordingly, the adoption of the
1997 Plan will assist the Corporation in meeting the objectives of such
strategy.
The following summary is a brief description of the material features of
the 1997 Plan. This summary is qualified in its entirety by reference to the
1997 Plan, a copy of which is attached as Exhibit A.
Summary of the 1997 Plan
Type of Stock Option Grants. The 1997 Plan provides for the grant of
incentive stock options ("ISOs"), within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), and Non-Qualified Stock
Options ("NQSOs"), which do not satisfy the requirements for ISO treatment.
Administration. The 1997 Plan is administered by the Corporation's Board
of Directors (or a committee designated by the Board). Subject to the terms
of the 1997 Plan and resolutions of the Board, the Board interprets the 1997
Plan and is authorized to make all determinations and decisions thereunder.
The Board also determines the participants to whom stock options will be
granted, the type and amount of stock options that will be granted and the
terms and conditions applicable to such grants.
Participants. All officers and employees of the Corporation and its
subsidiaries are eligible to participate in the 1997 Plan.
Number of Shares of Common Stock Available. The Corporation has reserved
300,000 shares of Common Stock for issuance under the 1997 Plan in connection
with the exercise of options. Shares of Common Stock to be issued under the
1997 Plan may be either authorized but unissued shares, or reacquired shares
held by the Corporation in its treasury. Any shares subject to an award which
expires or is terminated unexercised will again be available for issuance
under the 1997 Plan.
Stock Option Grants. The exercise price of each ISO or NQSO will not be
less than the fair market value of the Common Stock on the date the ISO or
NQSO is granted. The aggregate fair market value of the shares for which ISOs
granted to any employee may be exercisable for the first time by such employee
during any calendar year (under all stock option plans of the Corporation and
its subsidiaries) may not exceed $100,000.
The exercise price of an option may be paid in cash, Common Stock or other
property, by the surrender of all or part of the option being exercised, by
the immediate sale through a broker of the number of shares being acquired
sufficient to pay the purchase price, or by a combination of these methods, as
and to the extent permitted by the Board.
Under the 1997 Plan, the Board may permit participants to transfer options
to eligible transferees (as such eligibility is determined by the Board).
Each option may be exercised during the holder's lifetime, only by the holder
or the holder's guardian or legal representative, and after death only by the
holder's beneficiary or, absent a beneficiary, by the estate or by a person
who acquired the right to exercise the option by will or the laws of descent
and distribution. Options may become exercisable in full at the time of grant
or at such other times and in such installments as the Board determines or as
may be specified in the 1997 Plan. Options may be exercised during periods
before and after the participant terminates employment, as the case may be, to
the extent authorized by the Board or specified in the 1997 Plan. However, no
option may be exercised after the tenth anniversary of the date the option was
granted. The Board may, at any time and without additional consideration,
accelerate the date on which an option becomes exercisable.
Effect of a Change in Control. In the event of a change in control (as
defined in the 1997 Plan) of the Corporation, each outstanding stock option
grant will become fully vested and immediately exercisable. In addition, in
the event of a change in control, the 1997 Plan provides for the cash
settlement of any outstanding stock option if provision is not made for the
assumption of the options in connection with the change in control.
Term of the 1997 Plan. The 1997 Plan will be effective only upon approval
by the shareholders of the Corporation. The 1997 Plan will expire on the
tenth anniversary of the effective date, unless terminated sooner by the
Board.
Amendment of the Plan. The 1997 Plan allows the Board to amend the 1997
Plan without shareholder approval unless such approval is required to comply
with a tax law or regulatory requirement.
Certain Federal Income Tax Consequences. The following brief description
of the tax consequences of stock option grants under the 1997 Plan is based on
federal income tax laws currently in effect and does not purport to be a
complete description of such federal income tax consequences.
There are no federal income tax consequences either to the optionee or to
the Corporation upon the grant of an ISO or/and NQSO. On the exercise of an
ISO during employment or within three months thereafter, the optionee will not
recognize any income and the Corporation will not be entitled to a deduction,
although the excess of the fair market value of the shares on the date of
exercise over the option price includible in the optionee's alternative
minimum taxable income, which may give rise to alternative minimum tax
liability for the optionee. Generally, if the optionee disposes of shares
acquired upon exercise of an ISO within two years of the date of grant or one
year of the date of exercise, the optionee will recognize ordinary income, and
the Corporation will be entitled to a deduction, equal to the excess of the
fair market value of the shares on the date of exercise over the option price
(limited generally to the gain on the sale). The balance of any gain or loss
will be treated as a capital gain or loss to the optionee. If the shares are
disposed of after the two year and one year periods mentioned above, the
Corporation will not be entitled to any deduction, and the entire gain or loss
for the optionee will be treated as a capital gain or loss.
On exercise of an NQSO, the excess of the date-of-exercise fair market
value of the shares acquired over the option price will generally be taxable
to the optionee as ordinary income and deductible by the Corporation, provided
the Corporation properly withholds taxes in respect of the exercise. The
disposition of shares acquired upon the exercise of a NQSO will generally
result in a capital gain or loss for the optionee, but will have no tax
consequences for the Corporation.
New Plan Benefits
Although the Corporation anticipates that option grants will be made to
officers and employees following the effective date and during the term of the
1997 Plan, no specific determinations have been made regarding the timing,
recipients, size or terms of individual awards.
Vote Required
Approval of the 1997 Plan will require the affirmative vote of holders of a
majority of the shares of Common Stock present at the meeting or represented
by proxy and entitled to vote on this proposal. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR APPROVAL OF THE 1997 PLAN.
PROPOSAL III -- RATIFICATION OF AN AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
On November 25, 1997, the Board of Directors adopted unanimously a
resolution to amend Article V of the Corporation's Certificate of
Incorporation that would increase the number of authorized shares of Common
Stock from 12,000,000 shares to 24,000,000 shares. The shareholders are being
asked to approve this proposed amendment. As of November 28, 1997, 6,751,538
shares of Common Stock were issued and outstanding and 405,229 shares were
reserved for issuance under the Corporation's stock option plans.
The Board of Directors believes that this proposed amendment is in the best
interests of the Corporation and its shareholders. The proposed increase in
the number of authorized shares would give the Board the necessary flexibility
to issue Common Stock in connection with stock dividends and splits,
acquisitions, financing and employee benefits and for general corporate
purposes without the expense and delay incidental to obtaining shareholder
approval of an amendment to the Certificate of Incorporation increasing the
number of authorized shares at the time of such action, except as may be
required for a particular issuance by applicable law or by the rules of any
stock exchange on which the Corporation's securities may then be listed.
Although the Board of Directors has no present intention of issuing
additional shares for such purposes, the proposed increase in the number of
authorized shares of Common Stock may enable the Board of Directors to render
more difficult or discourage an attempt by another person or entity to obtain
control of the Corporation. The amendment to the Certificate of Incorporation
is not being proposed in response to any known effort to acquire control of
the Corporation.
As a Delaware corporation, the Corporation is required to file annually
franchise taxes with the State of Delaware. The franchise tax is based on the
Corporation's authorized capital. The Corporation expects that its annual
franchise tax liability would increase by approximately $60,000 as a result of
the proposed increase in the authorized shares of Common Stock.
The amendment to the Corporation's Certificate of Incorporation to increase
the number of authorized shares of Common Stock requires the affirmative vote
of a majority of the outstanding shares of Common Stock entitled to vote at
the Meeting. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE AMENDMENT TO THE CORPORATION'S CERTIFICATE OF
INCORPORATION.
OTHER MATTERS
The Board of Directors of the Corporation is not aware of any business to
come before the Meeting other than the matters described above in this Proxy
Statement. However, if any other matters should properly come before the
Meeting, it is intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the judgement of the person or persons
voting the proxies. The cost of solicitation of proxies will be borne by the
Corporation. In addition to solicitations by mail, directors, officers and
regular employees of the Corporation may solicit proxies personally or by
telegraph or telephone without additional compensation.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the Annual Report to Shareholders and the Annual Report on Form
10-K for the fiscal year ended September 30, 1997 are being mailed to each
shareholder of record together with these proxy materials. THE ANNUAL REPORT
ON FORM 10-K AND THE ANNUAL REPORT TO SHAREHOLDERS ARE NOT A PART OF THE
CORPORATION'S SOLICITING MATERIAL.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation's proxy materials
for next year's Annual Meeting of Shareholders, any shareholder proposal to
take action at such meeting must be received at the Corporation's main office
at 34 Broad Street, Charleston, South Carolina, no later than August 26, 1998.
Any such proposals shall be subject to the requirements of the proxy rules
adopted under the 1934 Act.
BY ORDER OF THE BOARD OF DIRECTORS
PHYLLIS B. AINSWORTH
SECRETARY
Charleston, South Carolina
December 23, 1997
EXHIBIT A
FIRST FINANCIAL HOLDINGS, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
SECTION 1. PURPOSE
The First Financial Holdings, Inc. 1997 Stock Option and Incentive Plan
(the "Plan") is hereby established to foster and promote the long-term success
of First Financial Holdings, Inc. (the "Corporation") and its shareholders by
providing officers and employees of the Corporation with an equity interest in
the Corporation. The Plan will assist the Corporation in attracting and
retaining the highest quality of experienced persons as officers and employees
and in aligning the interests of such persons more closely with the interests
of the Corporation s shareholders by encouraging such parties to maintain an
equity interest in the Corporation.
SECTION 2. DEFINITIONS
For purposes of this Plan, the capitalized terms set forth below shall have
the following meanings:
BOARD means the Board of Directors of the Corporation.
CHANGE IN CONTROL shall mean an event deemed to occur if and when (a) an
offeror other than the Corporation purchases shares of the stock of the
Corporation pursuant to a tender or exchange offer for such shares, (b) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Corporation representing twenty-five percent (25%) or more of the
combined voting power of the Corporation s then outstanding securities, (c)
the membership of the Board changes as the result of a contested election,
such that individuals who were directors at the beginning of any twenty-four
(24) month period (whether commencing before or after the date of adoption of
this Plan) do not constitute a majority of the Board at the end of such
period, or (d) shareholders of the Corporation approve a merger,
consolidation, sale or disposition of all or substantially all of the
Corporation s assets, or a plan of partial or complete liquidation. If any of
the events enumerated in clauses (a) - (d) occur, the Board shall determine
the effective date of the Change in Control resulting therefrom, for purposes
of the Plan.
CODE means the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated thereunder.
CORPORATION means First Financial Holdings, Inc., a Delaware corporation.
DISABILITY means any physical or mental injury or disease of a permanent
nature which renders a Participant incapable of meeting the requirements of
the employment or service performed by such Participant immediately prior to
the commencement of such disability. The determination of whether a
Participant is disabled shall be made by the Board in its sole and absolute
discretion.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
FAIR MARKET VALUE shall mean, as of any date, the closing price of the
Corporation s Common Stock on the Nasdaq National Market System. If the Stock
is not traded on a national securities exchange or quoted on the Nasdaq Stock
Market and there are not at least two brokerage companies reporting a bid
price per share on such date, then the Fair Market Value shall be that value
determined in good faith by the Board in such manner as it deems appropriate.
INCENTIVE STOCK OPTION means an option to purchase shares of Stock granted
to a Participant under the Plan which is intended to meet the requirements of
Section 422 of the Code.
NON-QUALIFIED STOCK OPTION means an option to purchase shares of Stock
granted to a Participant under the Plan which is not intended to be an
Incentive Stock Option.
OPTION means an Incentive Stock Option or a Non-Qualified Stock Option.
PARTICIPANT means an officer or employee of the Corporation or its
subsidiaries selected by the Board to receive an Option under the Plan.
PLAN means this First Financial Holdings, Inc. 1997 Stock Option and
Incentive Plan.
STOCK means the common stock, $0.01 par value, of the Corporation.
TERMINATION FOR CAUSE shall mean because of a Participant s personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Corporation and/or any subsidiary of the
Corporation and a Participant.
SECTION 3. ADMINISTRATION
(a) The Plan shall be administered by the Board (or, by a committee of
outside directors designated by the Board that complies with the requirements
of Rule 16b-3 under the Exchange Act). Among other things, the Board shall
have authority, subject to the terms of the Plan, to grant Options, to
determine the individuals to whom and the time or times at which Options may
be granted, to determine whether such Options are to be Incentive Options or
Non-Qualified Stock Options (subject to the requirements of the Code), to
determine the terms and conditions of any Option granted hereunder, and the
exercise price thereof.
(b) Subject to the other provisions of the Plan, the Board shall have
authority to adopt, amend, alter and repeal such administrative rules,
guidelines and practices governing the options of the Plan as it shall from
time to time consider advisable, to interpret the provisions of the Plan and
any Option and to decide all disputes arising in connection with the Plan.
The Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem appropriate to carry the Plan into effect, in its sole
and absolute discretion. The Board s decision and interpretations shall be
final and binding. Any action of the Board with respect to the administration
of the Plan shall be taken pursuant to a majority vote or by the unanimous
written consent of its members.
SECTION 4. ELIGIBILITY AND PARTICIPATION; LIMITATIONS ON AWARDS
Officers and employees of the Corporation and its subsidiaries shall be
eligible to participate in the Plan. The Participants under the Plan shall be
selected from time to time by the Board, in its sole discretion, from among
those eligible, and the Board shall determine, in its sole discretion, the
numbers of shares to be covered by the Option or Options granted to each
Participant. Options intended to qualify as Incentive Stock Options shall be
granted only to persons who are eligible to receive such options under Section
422 of the Code.
SECTION 5. SHARES OF STOCK AVAILABLE FOR OPTIONS
(a) The maximum number of shares of Stock which may be issued and
purchased pursuant to Options granted under the Plan is 300,000, subject to
the adjustments as provided in Section 5 and Section 9, to the extent
applicable. If an Option granted under this Plan expires or terminates before
exercise or is forfeited for any reason, the shares of Stock subject to such
Option, to the extent of such expiration, termination or forfeiture, shall
again be available for subsequent Option grant under the Plan. Shares of
Stock issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) In the event that the Board determines, in its sole discretion, that
any stock dividend, stock split, reverse stock split or combination,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reclassification, reorganization, merger, consolidation,
split-up, spin-off, combination, exchange of shares, or other similar
transaction affects the Stock such that an adjustment is required in order to
preserve the benefits or potential benefits intended to be granted or made
available under the Plan to Participants, the Board shall have the right to
proportionately and appropriately adjust equitably any or all of (i) the
maximum number and kind of shares of Stock in respect of which Options may be
granted under the Plan to Participants, (ii) the number and kind of shares of
Stock subject to outstanding Options held by Participants, and (iii) the
exercise price with respect to any Options held by Participants, without
changing the aggregate purchase price as to which such Options remain
exercisable, provided that no adjustment shall be made pursuant to this
Section if such adjustment would cause the Plan to fail to comply with Section
422 of the Code with regard to any Incentive Stock Options granted hereunder.
No fractional Shares shall be issued on account of any such adjustment.
(c) Any adjustments under this Section will be made by the Board, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive.
SECTION 6. NON-QUALIFIED STOCK OPTIONS
The Board may, from time to time, grant Non-Qualified Stock Options to
Participants upon such terms and conditions as the Board may determine. Non-
Qualified Stock Options granted under this Plan are subject to the following
terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon the
exercise of each Non-Qualified Stock Option shall be determined by the Board
on the date the option is granted. Such purchase price shall not be less than
one hundred percent (100%) of the Closing Fair Market Value of the Stock on
the date of grant. Shares may be purchased only upon full payment of the
purchase price. Payment of the purchase price may be made, in whole or in
part, through the surrender of shares of the Stock at the Fair Market Value of
such shares on the date of surrender or through a "cashless exercise"
involving a stock brokerage firm.
(b) Terms of Options. The term during which each Non-Qualified Stock
Option may be exercised shall be determined by the Board, but in no event
shall a Non-Qualified Stock Option be exercisable in whole or in part more
than ten (10) years from the date of grant. Except as provided herein, no
Non-Qualified Stock Option granted under this Plan is transferable except by
will or the laws of descent and distribution. The Board shall have
discretionary authority to permit the transfer of any Non-Qualified Stock
Option to members of a Participant s immediate family, including trusts for
the benefit of such family members and partnerships in which such family
members are the only partners; provided, however, that a transferred Non-
Qualified Stock Option may be exercised by the transferee on any date only to
the extent that the Participant would have been entitled to exercise the Non-
Qualified Stock Option on such date had the Non-Qualified Stock Option not
been transferred. Any transferred Non-Qualified Stock Option shall remain
subject to the terms and conditions of the Participant s stock option
agreement.
(c) Termination of Service. Unless otherwise determined by the Board,
upon the termination of a Participant s service as an employee for any reason
other than Disability, death or Termination for Cause, the Participant s Non-
Qualified Stock Options shall be exercisable only as to those shares which
were immediately exercisable by the Participant at the date of termination
and only for a period of one year following termination. Notwithstanding any
provision set forth herein nor contained in any Agreement relating to the
award of an Option, in the event of Termination for Cause, all rights under
the Participant s Non-Qualified Stock Options shall expire upon termination.
In the event of death or termination of service as a result of Disability of
any Participant, all Non-Qualified Stock Options held by the Participant,
whether or not exercisable at such time, shall be exercisable by the
Participant or his legal representatives or beneficiaries of the Participant
for two years or such longer period as determined by the Board following the
date of the Participant s death or termination of service due to Disability.
In no event shall the period extend beyond the expiration of the Non-Qualified
Stock Option term.
SECTION 7. INCENTIVE STOCK OPTIONS
The Board may, from time to time, grant Incentive Stock Options to eligible
officers and employees. Incentive Stock Options granted pursuant to the Plan
shall be subject to the following terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon the
exercise of each Incentive Stock Option shall not be less than one hundred
percent (100%) of the Closing Fair Market Value of the Stock on the date of
grant. However, if a Participant owns (or, under Section 422(d) of the Code,
is deemed to own) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of Stock, the purchase price per share of
Stock deliverable upon the exercise of each Incentive Stock Option shall not
be less than one hundred ten percent (110%) of the Fair Market Value of the
Stock on the date of grant. Shares may be purchased only upon payment of the
full purchase price. Payment of the purchase price may be made, in whole or
in part, through the surrender of shares of the Stock at the Fair Market Value
of such shares on the date of surrender or through a "cashless exercise"
involving a stock brokerage firm.
(b) Incentive Stock Options may be granted to any eligible employee in
such amounts as determined by the Board. In the case of an option intended to
qualify as an Incentive Stock Option, the aggregate Fair Market Value
(determined as of the time the option is granted) of the Stock with respect to
which Incentive Stock Options granted are exercisable for the first time by
the Participant during any calendar year shall not exceed $100,000. The
provisions of this Section 7(b) shall be construed and applied in accordance
with Section 422(d) of the Code and the regulations, if any, promulgated
thereunder. To the extent an award is in excess of such limit, it shall be
deemed a Non-Qualified Stock Option. The Board shall have discretion to
redesignate options granted as Incentive Stock Options as Non-Qualified Stock
Options.
(c) Terms of Options. The term during which each Incentive Stock Option
may be exercised shall be determined by the Board, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than ten (10)
years from the date of grant. If at the time an Incentive Stock Option is
granted to an employee, the employee owns Stock representing more than ten
percent (10%) of the total combined voting power of the Corporation (or, under
Section 422(d) of the Code, is deemed to own Stock representing more than ten
percent (10%) of the total combined voting power of all such classes of Stock,
by reason of the ownership of such classes of Stock, directly or indirectly,
by or for any brother, sister, spouse, ancestor or lineal descendent of such
employee, or by or for any corporation, partnership, estate or trust of which
such employee is a shareholder, partner or beneficiary), the Incentive Stock
Option granted to such employee shall not be exercisable after the expiration
of five years from the date of grant. No Incentive Stock Option granted under
this Plan is transferable except by will or the laws of descent and
distribution.
(d) Termination of Employment. Upon the termination of a Participant s
service for any reason other than Disability, death or Termination for Cause,
the Participant s Incentive Stock Options which are then exercisable at the
date of termination may only be exercised by the Participant for a period of
three months following termination, after which time they shall be void.
Notwithstanding any provisions set forth herein nor contained in any Agreement
relating to an award of an Option, in the event of Termination for Cause, all
rights under the Participant s Incentive Stock Options shall expire
immediately upon termination.
(e) Unless otherwise determined by the Board, in the event of death or
termination of service as a result of Disability of any Participant, all
Incentive Stock Options held by such Participant, whether or not exercisable
at such time, shall be exercisable by the Participant or the Participant's
legal representatives or the beneficiaries of the Participant for one year
following the date of the Participant's death or termination of employment as
a result of Disability. In no event shall the exercise period extend beyond
the expiration of the Incentive Stock Option term.
(f) Compliance with Code. The options granted under this Section 7 of
the Plan are intended to qualify as incentive stock options within the meaning
of Section 422 of the Code, but the Corporation makes no warranty as to the
qualification of any option as an incentive stock option within the meaning of
Section 422 of the Code. A Participant shall notify the Board in writing in
the event that he disposes of Stock acquired upon exercise of an Incentive
Stock Option within the two-year period following the date the Incentive
Stock Option was granted or within one-year following the date he received
Stock upon the exercise of an Incentive Stock Option and shall comply with any
other requirements imposed by the Corporation in order to enable the
Corporation to secure the related income tax deduction to which it will be
entitled in such event under the Code.
SECTION 8. EXTENSION
The Board may, in its sole discretion, extend the dates during which all or
any particular Option or Options granted under the Plan may be exercised;
provided, however, that no such extension shall be permitted without the
consent of the Participant if it would cause Incentive Stock Options issued
under the Plan to fail to comply with Section 422 of the Code.
SECTION 9. GENERAL PROVISIONS APPLICABLE TO OPTIONS
(a) Each Option under the Plan shall be evidenced by a writing delivered
to the Participant specifying the terms and conditions thereof and containing
such other terms and conditions not inconsistent with the provisions of the
Plan as the Board considers necessary or advisable to achieve the purposes of
the Plan or comply with applicable tax and regulatory laws and accounting
principles.
(b) Each Option may be granted alone, in addition to or in relation to
any other Option. The terms of each Option need not be identical, and the
Board need not treat Participants uniformly. Except as otherwise provided by
the Plan or a particular Option, any determination with respect to an Option
may be made by the Board at the time of grant or at any time thereafter.
(c) In the event of a Change in Control, all then outstanding Options
shall become one hundred percent vested and exercisable as of the effective
date of the Change in Control. If, in connection with or as a consequence of
a Change in Control, the Corporation is merged into or consolidated with
another corporation, if the Corporation becomes a subsidiary of another
corporation or if the Corporation sells or otherwise disposes of substantially
all of its assets to another corporation, then unless provisions are made in
connection with such transactions for the continuance of the Plan and/or the
assumption or substitution of then outstanding Options with new options
covering the stock of the successor corporation, or parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares and
prices, such Options shall be canceled as of the effective date of the merger,
consolidation, or sale and the Participant shall be paid in cash an amount
equal to the difference between the Fair Market Value of the Stock subject to
the Options on the effective date of such corporate event and the exercise
price of the Options. Notwithstanding anything in this Section 9(c ) or any
Option agreement to the contrary, in the event that the consummation of a
Change in Control is contingent on using pooling of interests accounting
methodology, the Board may, in its discretion, take any action necessary to
preserve the use of pooling of interests accounting.
(d) The Corporation shall be entitled to withhold (or secure payment from
the Participant in lieu of withholding) the amount of any withholding or other
tax required by law to be withheld or paid by the Corporation with respect to
any Options exercised under this Plan, and the Corporation may defer issuance
of Stock hereunder until and unless indemnified to its satisfaction against
any liability for any such tax. The amount of such withholding or tax payment
shall be determined by the Board or its delegate and shall be payable by the
Participant at such time as the Board determines. Such withholding obligation
may be satisfied by, without limitation, the payment of cash by the
Participant to the Corporation, the tendering of previously acquired shares of
Stock of the Participant or the withholding, at the appropriate time, of
shares of Stock otherwise issuable to the Participant, in a number sufficient,
based upon the Fair Market Value of such Stock, to satisfy such tax
withholding requirements. The Board shall be authorized, in its sole
discretion, to establish such rules and procedures relating to any such
withholding methods as it deems necessary or appropriate, including, without
limitation, rules and procedures relating to elections by Participants who are
subject to the provisions of Section 16 of the Exchange Act.
(e) Subject to the terms of the Plan, the Board may at any time, and from
time to time, amend, modify or terminate the Plan or any outstanding Option
held by a Participant, including substituting therefor another Option of the
same or a different type or changing the date of exercise or realization,
provided that the Participant s consent to each action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
SECTION 10. MISCELLANEOUS
(a) No person shall have any claim or right to be granted an Option, and
the grant of an Option shall not be construed as giving a Participant the
right to continued employment or service on the Corporation s Board. The
Corporation expressly reserves the right at any time to dismiss a Participant
free from any liability or claim under the Plan, except as expressly provided
in the Plan or the applicable Option.
(b) Nothing contained in the Plan shall prevent the Corporation from
adopting other or additional compensation arrangements.
(c) Subject to the provisions of the applicable Option, no Participant
shall have any rights as a shareholder (including, without limitation, any
rights to receive dividends, or non cash distributions with respect to such
shares) with respect to any shares of Stock to be distributed under the Plan
until he or she becomes the holder thereof.
(d) Notwithstanding anything to the contrary expressed in this Plan, any
provisions hereof that vary from or conflict with any applicable Federal or
State securities laws (including any regulations promulgated thereunder) shall
be deemed to be modified to conform to and comply with such laws.
(e) No member of the Board shall be liable for any action or
determination taken or granted in good faith with respect to this Plan nor
shall any member of the Board be liable for any agreement issued pursuant to
this Plan or any grants under it. Each member of the Board shall be
indemnified by the Corporation against any losses incurred in such
administration of the Plan, unless his action constitutes serious and willful
misconduct.
(f) The Plan shall be effective upon approval by the Corporation's
shareholders at the 1998 annual meeting of shareholders. The Plan will be so
approved if at such meeting a quorum is present and the votes of the holders
of a majority of the securities of the Corporation present or represented by
proxy at the meeting and entitled to vote on such matter shall be cast in
favor of its approval.
(g) The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, provided that no amendment shall be granted without
shareholder approval if such approval is necessary to comply with any
applicable tax laws or regulatory requirement.
(h) Options may not be granted under the Plan after the tenth anniversary
of the effective date of the Plan, but then outstanding Options may extend
beyond such date.
(i) To the extent that State laws shall not have been preempted by any
laws of the United States, the Plan shall be construed, regulated, interpreted
and administered according to the other laws of the State of South Carolina.
Board Approved: October 23, 1997
Pending Shareholder approval on
January 28, 1998
<TABLE>
<S> <C>
PLEASE MARK VOTES
(X) AS IN THIS EXAMPLE REVOCABLE PROXY
FIRST FINANCIAL HOLDINGS, INC.
With- For All
For hold Except
ANNUAL MEETING OF SHAREHOLDERS 1. The election as directors of ( ) ( ) ( )
JANUARY 28, 1998 all nominees listed (except as
marked to the contrary below)
The undersigned hereby appoints A. L.
Hutchinson, Jr. and Thomas E. Thornhill, with Gary C. Banks, Jr., Paula Harper Bethea and Paul G. Campbell, Jr.
full powers of substitution, to act as attorneys
and proxies for the undersigned to vote all shares Instruction: To withhold authority to vote for any individual
of capital stock of First Financial Holdings, Inc. nominee, mark "For All Except" and write that nominee's name in the
(the "Corporation") which the undersigned is entitled space provided below.
to vote at the Annual Meeting of Shareholders (the
"Meeting") to be held at the Company's main
office, located at 34 Broad Street, Charleston, For Against Abstain
South Carolina on January 28, 1998 at 5:30 p.m.
and at any and all adjournments and postponements
thereof.
2. The ratification of the ( ) ( ) ( )
adoption of the 1997 Stock
Option and Incentive Plan.
3. The ratification of an ( ) ( ) ( )
amendment to the Corporation's
Certificate of Incorporation to
increase the number of authorized
shares of common stock.
In their discretion, the proxies are authorized to vote on any
other business that may properly come before the Meeting or any
adjournment or postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
Date SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS AND EACH OF THE
Please be sure to sign and date NOMINEES LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE
this Proxy in the box below MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN
THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
Shareholder sign above Co-holder (if any) The Board of Directors recommends a vote "FOR" the proposals and the
sign above election of the nominees listed above.
Detach above card, sign, date and mail in postage paid envelope provided.
FIRST FINANCIAL HOLDINGS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Should the above signed be present and choose to vote at the Meeting or at any
adjournments or postponements thereof, and after notification to the Secretary of the
Company at the Meeting of the shareholder's decision to terminate this proxy, then the
power of such attorneys or proxies shall be deemed terminated and of no further force
and effect. This proxy may also be revoked by filing a written notice of revocation
with the Secretary of the Company or by duly executing a proxy bearing a later date.
The above signed acknowledges receipt from the Company, prior to the execution of
this proxy, of notice of the Meeting, a Proxy Statement, an Annual Report to
Shareholders and a Form 10-K.
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If shares
are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
</TABLE>
