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:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CAROLINA FIRST CORPORATION
(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CAROLINA FIRST CORPORATION
102 SOUTH MAIN STREET
GREENVILLE, SOUTH CAROLINA 29601
March 23, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Carolina First Corporation (the "Annual Meeting") to be held in the Gunter
Theatre, Peace Center for the Performing Arts, 300 South Main Street,
Greenville, South Carolina, on Wednesday, April 21, 1999 at 10:30 a.m.
The attached Notice of the Annual Meeting and Proxy Statement describe
the formal business to be transacted at the Annual Meeting. During the Annual
Meeting, we will report on the operations of Carolina First Corporation and its
subsidiaries. Directors and officers of Carolina First Corporation and its
subsidiaries, as well as representatives of KPMG Peat Marwick LLP, our
independent auditors, will be present to respond to any questions shareholders
may have.
To ensure proper representation of your shares at the Annual Meeting,
please sign, date and return the enclosed proxy card as soon as possible, even
if you currently plan to attend the Annual Meeting. This will not prevent you
from voting in person, but will ensure that your vote will be counted if you are
unable to attend.
Sincerely,
Mack I. Whittle, Jr.
President and Chief Executive Officer
<PAGE>
CAROLINA FIRST CORPORATION
102 SOUTH MAIN STREET
GREENVILLE, SOUTH CAROLINA 29601
(864) 255-7900
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 21, 1999
To the Shareholders of Carolina First Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Carolina First Corporation (the "Company") will be held on
April 21, 1999 at 10:30 a.m., Greenville time, in the Gunter Theatre, Peace
Center for the Performing Arts, 300 South Main Street, Greenville, South
Carolina for the following purposes:
1. To set the number of Directors at 12 and to elect four Directors
to hold office until their respective terms expire or until their
successors are duly elected and qualified; and
2. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Shareholders of record at the close of business on March 15, 1999 will
be entitled to vote at the Annual Meeting.
By Order of the Board of Directors,
William S. Hummers III
Secretary
Greenville, South Carolina
March 23, 1999
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE POSTAGE-PAID
ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU WISH, YOU
MAY WITHDRAW YOUR PROXY AND VOTE YOUR SHARES IN PERSON AT THE ANNUAL MEETING.
<PAGE>
CAROLINA FIRST CORPORATION
102 SOUTH MAIN STREET
GREENVILLE, SOUTH CAROLINA 29601
----------------------
PROXY STATEMENT
----------------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 21, 1999
This Notice of Annual Meeting, Proxy Statement and Proxy (these "Proxy
Materials") are being furnished to the shareholders of Carolina First
Corporation (the "Company") in connection with a solicitation of proxies by the
Company's Board of Directors. This solicitation is being made in connection with
the Annual Meeting of Shareholders (the "Annual Meeting") to be held in the
Gunter Theatre, Peace Center for the Performing Arts, 300 South Main Street,
Greenville, South Carolina at 10:30 a.m. on April 21, 1999.
These Proxy Materials are being mailed on approximately March 23, 1999.
WHO IS ENTITLED TO VOTE; OTHER VOTING MATTERS
Shareholders of record as of the close of business on March 15, 1999 of
the Company's $1.00 par value per share common stock ("Common Stock") will be
entitled to vote at the Annual Meeting. At the close of business on that day,
22,025,025 shares of Common Stock were outstanding. Holders of Common Stock are
entitled to one vote per share on each matter presented at the Annual Meeting.
Shares of Common Stock may be voted in person or by proxy. The presence, either
in person or by proxy, of holders of shares representing a majority of the
outstanding Common Stock of the Company on March 15, 1999 is necessary to
constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are
each included in the determination of the number of shares present and voting.
In connection with the election of directors, abstentions and broker non-votes
are not counted in determining the votes cast for directors. Shareholders do not
have cumulative voting rights with respect to the election of directors.
AVAILABILITY OF VOTING BY PROXY; REVOCABILITY OF PROXIES
Shares represented by a properly executed proxy (such as the form of
proxy included with these Proxy Materials) will be voted in accordance with the
instructions on such proxy. If a returned proxy does not specify otherwise, the
shares represented thereby will be voted in favor of all proposals set forth
herein. Proxies may be revoked at any time prior to their being voted at the
Annual Meeting by oral or written notice to William S. Hummers III at Carolina
First Corporation, 102 South Main Street, Greenville, South Carolina 29601,
(864) 255-7913 or by execution and delivery of a subsequent proxy or by
attendance and voting in person at the Annual Meeting.
SOLICITATION OF PROXIES
This solicitation of proxies is made by the Company, and the Company
will bear the cost of this proxy solicitation, including the cost of preparing,
handling, printing and mailing these Proxy Materials. Proxies will be solicited
principally through these Proxy Materials. Proxies may also be solicited by
telephone or through personal solicitation conducted by regular employees of the
Company. Employees and officers will be reimbursed for the actual out-of-pocket
expenses incurred in connection with such solicitation. Banks,
1
<PAGE>
brokers and other custodians are requested to forward these Proxy Materials to
their customers where appropriate, and the Company will reimburse such banks,
brokers and custodians for their reasonable out-of-pocket expenses incurred in
sending these Proxy Materials to beneficial owners of the shares.
ELECTION OF DIRECTORS
ITEM 1 ON THE PROXY
NOMINATIONS FOR ELECTION OF DIRECTORS
The Company's Board of Directors is currently comprised of 13 persons.
However, William R. Phillips (presently a Company director) is not standing for
reelection pursuant to applicable provisions in the Company's Bylaws regarding
age of directors. Accordingly, Management proposes to set the number of Company
directors at 12. The Company's Articles of Incorporation provide that in the
event that the Board of Directors is comprised of nine or more persons the Board
of Directors shall be divided into three classes of Directors with each class
being elected for staggered three-year terms. Directors will be elected by a
plurality of votes cast at the Annual Meeting. Abstentions and broker non-votes
with respect to Nominees will not be considered to be either affirmative or
negative votes.
IDENTIFICATION OF NOMINEES
Management proposes to nominate to the Board of Directors the four persons
listed as Nominees in the table below. Each of the Nominees is currently serving
as a Director. Each Nominee, if elected, will serve until the expiration of his
respective term and until his successor is duly qualified. Unless authority to
vote with respect to the election of one or more Nominees is "WITHHELD," it is
the intention of the persons named in the accompanying Proxy to vote such Proxy
for the election of these Nominees. Management believes that all such Nominees
will be available and able to serve as Directors. However, should any Nominee
become unable to accept election, it is the intention of the person named in the
Proxy, unless otherwise specifically instructed in the Proxy, to vote for the
election of such other persons as management may recommend. The following table
sets forth the names and ages of the Nominees for Directors and the Directors
continuing in office, the positions and offices with the Company held by each
such person, and the period that each such person has served as a Director.
<TABLE>
<CAPTION>
NAME AGE POSITION OR OFFICE WITH THE COMPANY DIRECTOR SINCE
- ---- --- ----------------------------------- --------------
<S> <C> <C> <C>
NOMINEES FOR DIRECTORS (FOR TERMS EXPIRING IN 2002)
William S. Hummers III 53 Executive Vice President, Secretary 1990
Charles B. Schooler 70 Director 1990
Eugene E. Stone IV 60 Director 1996
Mack I. Whittle, Jr. 50 President, Chief Executive Officer 1986
DIRECTORS CONTINUING IN OFFICE (FOR TERMS EXPIRING IN 2001)
Judd B. Farr 73 Director 1994
C. Claymon Grimes, Jr. 76 Director 1990
Elizabeth P. Stall 67 Director 1986
David C. Wakefield III 55 Director 1997
(FOR TERMS EXPIRING IN 2000)
M. Dexter Hagy 54 Director 1993
Vernon E. Merchant, Jr. 68 Director 1997
H. Earle Russell, Jr. 57 Director 1997
William R. Timmons, Jr. 75 Chairman of the Board of Directors 1986
</TABLE>
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<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held eight meetings in 1998. No Director attended less than 75%
of such meetings.
The Board has an Audit Committee which reviews the audit plan, the results
of the audit engagement of the Company's accountants, the scope and results of
the Company's procedures for internal auditing and internal control, and the
internal audit reports of the Company's subsidiaries. The Audit Committee is
also reviewing the Company's plans and progress in addressing Year 2000 system
issues. The Audit Committee is currently comprised of Messrs. Grimes, Russell
and Schooler. The Audit Committee met four times during 1998. All current
members were present at each of the meetings.
The Board has a Compensation Committee which reviews the Company's
compensation policies and makes recommendations regarding senior management
compensation. Its report is set forth herein. The Compensation Committee is
currently comprised of Mr. Farr, Mr. Hagy, Ms. Stall and Mr. Stone. The
Compensation Committee met two times during 1998. All current members were
present at all meetings. No members of the Compensation Committee are officers
or employees of the Company or its subsidiaries.
The Board has a Nominating Committee comprised of Mr. Hagy, Ms. Stall,
Mr. Timmons and Mr. Whittle. The Nominating Committee did not meet during 1998.
The Nominating Committee met one time in 1999 to recommend the Nominees for
Directors presented in this Proxy Statement. The Nominating Committee will
consider nominees recommended by security holders. Any such recommendations
should be made in writing and delivered to the Company's principal offices
before December 1 of each year.
EXECUTIVE OFFICERS
The Company's executive officers are appointed by the Board of Directors
and serve at the pleasure of the Board. The following persons serve as executive
officers of the Company.
<TABLE>
<CAPTION>
NAME AGE COMPANY OFFICES CURRENTLY HELD COMPANY OFFICER SINCE
- ---- --- ------------------------------ --------------- -----
<S> <C> <C> <C>
Mack I. Whittle, Jr. 50 President and Chief Executive Officer 1986
William S. Hummers III 53 Executive Vice President, Secretary 1988
James W. Terry, Jr. 51 President of Carolina First Bank 1991
Joseph C. Reynolds 53 President of Carolina First Mortgage Company 1993
John C. DuBose 47 Executive Vice President 1998
Michael W. Sperry 53 Executive Vice President 1998
William J. Moore 64 Executive Vice President 1998
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS
Mr. DuBose joined the Company in December 1998 as Executive Vice
President and Chief Operations Officer/Chief Technology Officer. From 1991 to
1998, Mr. DuBose was Director of Technology Services for Barnett Bank in
Jacksonville, Florida.
Mr. Farr is the owner and President of Greenco Beverage, Inc., a
distributorship headquartered in Greenville, South Carolina. Mr. Farr has served
as President since the opening of Greenco Beverage, Inc. in 1965.
Mr. Grimes is an attorney in private practice in Georgetown, South
Carolina.
3
<PAGE>
Mr. Hagy is a principal of Vaxa Capital Management, LLC, an investment
management firm formed in 1995, and President of Vaxa Corporation, an investment
holding company formed in 1987, located in Greenville, South Carolina. Since
January 1996, Mr. Hagy has been Chairman and Chief Executive Officer of BPM
Technology, Inc., a development stage producer of printing equipment used in
engineering design offices.
Mr. Hummers joined the Company in June 1988 in his present capacity. He
is also a director of World Acceptance Corporation.
Dr. Merchant retired in March 1997 after being a physician and surgeon
for over 37 years. Dr. Merchant serves as an assistant clinical professor at the
Medical University of South Carolina.
Mr. Moore joined the Company in July 1998 as Executive Vice President.
In December 1995, he retired from his position as Senior Vice President for Sun
Trust Banks, Inc. where he was President and Chief Executive Officer of SunTrust
Bank Cards, N.A., a special purpose credit card bank. Upon retirement, Mr. Moore
formed a private consulting practice which was terminated upon his employment
with the Company.
Mr. Reynolds has served as President of Carolina First Mortgage Company
since 1993. From 1984 until 1993, Mr. Reynolds was Senior Vice President and
Chief Mortgage Banking Officer at South Carolina Federal Savings Bank, F.S.B. in
Columbia, South Carolina.
Dr. Russell is a surgeon in Greenville, South Carolina.
Dr. Schooler is an optometrist in Georgetown, South Carolina.
Mr. Sperry joined the Company in November 1998 as Executive Vice
President and Chief Credit Officer. From 1990 to 1995, Mr. Sperry was Executive
Vice President and Chief Credit Officer of Southern National Corporation in
Winston-Salem, North Carolina. From 1996 to 1998, he was Senior Executive Vice
President and Manager of Commercial Loan Administration for BB&T Corporation in
Winston-Salem, North Carolina.
Ms. Stall is a private investor in Greenville, South Carolina.
Mr. Stone currently serves as Chairman of Umbro International, Inc.,
formerly known as Stone Manufacturing. Mr. Stone is a director of the Liberty
Corporation.
Mr. Terry has served as the President and a Director of Carolina First
Bank since 1991. From 1986 to 1991, Mr. Terry was Senior Vice President and
Regional Executive for First Union National Bank of South Carolina in
Greenville, South Carolina.
Mr. Timmons is Chairman of Canal Insurance Company, a nationwide insurer
of commercial motor vehicles ("Canal"). From 1947 until 1993, Mr. Timmons served
as Canal's First Vice President and Secretary.
Mr. Wakefield is Partner of Wakefield Associates, a real estate
development company, since 1998. From November 1997 to December 1998, Mr.
Wakefield served as an independent consultant to the Company following the
Company's acquisition of First Southeast Financial Corporation ("First
Southeast"). Mr. Wakefield was President and Chief Executive Officer of First
Southeast since its formation in 1993 and President and Chief Executive Officer
of First Federal Savings and Loan Association of Anderson, a subsidiary of First
Southeast, since 1991.
Mr. Whittle has been President and CEO of the Company since its
organization in 1986. From 1986 until 1991, Mr. Whittle also served as President
of Carolina First Bank and is currently Chairman and Chief Executive Officer of
Carolina First Bank. Mr. Whittle is a director of Net.B@nk, Inc.
4
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
During 1998, each non-officer Director's total compensation was valued
at $30,000, assuming that the Director attended all meetings. Meeting fees were
$500 for each Board of Directors' meeting attended and $250 for each committee
meeting attended. In 1999, fees for each committee meeting attended were
increased to $500. A total of 60% of each Company Director's total compensation
was paid in the form of options to purchase Common Stock, which was valued based
on the Black-Scholes valuation method. The balance was paid in cash.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth information concerning all compensation
paid by the Company and its subsidiaries during the fiscal years ended December
31, 1996, 1997 and 1998, to the Company's CEO and to each of the four most
highly compensated executive officers other than the CEO (collectively the
"Executive Officers") for services rendered in all capacities to the Company and
its subsidiaries. For purposes of the table, all bonus amounts listed for a
particular year (including annual bonus compensation and Long Term Compensation
payments) were actually paid in February of the following year. For example, the
bonuses for 1998 were paid in February 1999, but listed as 1998 compensation,
because the bonuses were earned as of December 31, 1998.
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------------
Annual Compensation Award Payouts
------------------------------ ----------------------- --------------------
Other Restricted Securities)
Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compen- Awards Options/ Payouts Compensation
Principal Position Year ($) ($) sation ($) SARs (#) ($) ($)
------------------ ---- ------ ----- ------- ---------- --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
)
Mack I. Whittle, Jr. 1998 325,382 205,440 (1) --(2) 83,581 -- 65,467(3)
President, Chief Executive 1997 298,330 177,436 (1) 73,336 72,583 73,343 50,872
Officer 1996 274,520 28,342 (1) -- 11,987 -- 408,559
William S. Hummers III 1998 192,550 120,430 (1) --(4) 31,889 -- 56,967(5)
Executive Vice President 1997 181,900 105,147 (1) 43,473 51,836 43,463 59,316
1996 171,145 17,006 (1) -- 7,242 -- 127,459
James W. Terry, Jr. 1998 191,600 79,249 (1) --(6) 10,969 -- 29,467(7)
President 1997 186,585 92,782 (1) 35,991 36,672 35,989 30,732
Carolina First Bank 1996 175,920 18,530 (1) -- 5,630 -- 25,806
David L. Morrow 1998 156,330 41,266 (1) --(8) 9,585 -- 29,467(9)
Executive Vice President 1997 156,600 49,346 (1) 29,455 25,260 29,446 25,278
Carolina First Bank 1996 144,790 12,754 (1) -- 4,141 -- 23,177
Joseph C. Reynolds 1998 165,500 106,932 (1) --(10) 10,046 -- 39,467(11)
President, Carolina First 1997 165,820 134,104 (1) 31,626 45,172 31,627 38,949
Mortgage Company 1996 148,110 22,788 (1) -- 4,360 -- 12,115
- -------------------------------
</TABLE>
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<PAGE>
(1) Certain amounts may have been expended by the Company which may have had
value as a personal benefit to the executive officer. However, the total
value of such benefits did not exceed the lesser of $50,000 or 10% of
the annual salary and bonus of such executive officer.
(2) At December 31, 1998, Mr. Whittle held a total of 4,794 shares of
restricted stock awarded pursuant to the Restricted Stock Plan having a
market value as of December 31, 1998 of $121,336. Dividends are payable on
the restricted stock to the extent paid on the Company's Common Stock
generally.
(3) This amount is comprised of (i) $8,000 contributed to the Company's 401(k)
Plan by the Company on behalf of Mr. Whittle to match fiscal 1998 pre-tax
deferral contributions, all of which was vested, (ii) $6,467 contributed
to the Company's Employee Stock Ownership Plan (the "ESOP"), and (iii)
$51,000 in premiums paid by the Company on behalf of Mr. Whittle with
respect to insurance not generally available to all Company employees.
(4) At December 31, 1998, Mr. Hummers held a total of 2,860 shares of
restricted stock awarded pursuant to the Restricted Stock Plan having a
market value as of December 31, 1998 of $72,387. Dividends are payable on
the restricted stock to the extent paid on the Company's Common Stock
generally.
(5) This amount is comprised of (i) $8,000 contributed to the Company's 401(k)
Plan by the Company on behalf of Mr. Hummers to match fiscal 1998 pre-tax
deferral contributions, all of which was vested, (ii) $6,467 contributed
to the ESOP, and (iii) $42,500 in premiums paid by the Company on behalf
of Mr. Hummers with respect to insurance not generally available to all
Company employees.
(6) At December 31, 1998, Mr. Terry held a total of 2,124 shares of restricted
stock awarded pursuant to the Restricted Stock Plan having a market value
at December 31, 1998 of $53,758. Dividends are payable on the restricted
stock to the extent paid on the Company's Common Stock generally.
(7) This amount is comprised of (i) $8,000 contributed to the Company's 401(k)
Plan by the Company on behalf of Mr. Terry to match fiscal 1998 pre-tax
deferral contributions, of which all was vested, (ii) $6,467 contributed
to the ESOP, and (iii) $15,000 in premiums paid by the Company on behalf
of Mr. Terry with respect to insurance not generally available to all
Company employees.
(8) At December 31, 1998, Mr. Morrow held a total of 1,922 shares of
restricted stock awarded pursuant to the Restricted Stock Plan having a
market value at December 31, 1998 of $48,646. Dividends are payable on the
restricted stock to the extent paid on the Company's Common Stock
generally.
(9) This amount is comprised of (i) $8,000 contributed to the Company's 401(k)
Plan by the Company on behalf of Mr. Morrow to match fiscal 1998 pre-tax
deferral contributions, of which all was vested, (ii) $6,467 contributed
to the ESOP, and (iii) $15,000 in premiums paid by the Company on behalf
of Mr. Morrow with respect to insurance not generally available to all
Company employees.
(10) At December 31, 1998, Mr. Reynolds held a total of 1,988 shares of
restricted stock awarded pursuant to the Restricted Stock Plan having a
market value at December 31, 1998 of $50,316. Dividends are payable on the
restricted stock to the extent paid on the Company's Common Stock
generally.
(11) This amount is comprised of (i) $8,000 contributed to the Company's 401(k)
Plan by the Company on behalf of Mr. Reynolds to match fiscal 1998 pre-tax
deferral contributions, all of which was vested, (ii) $6,467 contributed
to the ESOP and (iii) $25,000 in premiums paid by the Company on behalf of
Mr. Reynolds with respect to insurance not generally available to all
Company employees.
6
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, which is composed solely
of non-officer directors, works with Company management in establishing the
underlying philosophy and principles of the Company's compensation system. These
principles and philosophy are then reviewed and approved by the full Board of
Directors.
This Report discusses the philosophy, principles and policies underlying the
Company's compensation programs that were in effect during 1998 and which will
be applicable in 1999.
OUR GUIDING PHILOSOPHY
In 1986, Carolina First was created with one specific mission in mind --- to
become a premier bank by putting customers first. To achieve this mission, the
Company must recruit, hire and retain outstanding employees who deliver, on a
consistent basis, financial services that are flexible, innovative and
responsive to customer needs.
Maintaining such a workforce requires a compensation plan that is competitive
and designed to emphasize the Company's fundamental values: support and respect
for people, teamwork, leadership and a "customer-driven" focus. Accordingly,
the Company supports and encourages employees who embrace the Company's values,
as well as those who are entrepreneurial, innovative, visionary, profit-driven
and growth-driven. These attributes, taken together, supply the critical
ingredients necessary to generate outstanding performance.
SIGNIFICANT LINKAGE BETWEEN PAY AND PERFORMANCE
Employee pay should be dealt with in the same manner as corporate performance --
strong performance deserves higher pay than average performance. However,
today's performance not only affects today's outcome; it also creates the
foundation for the future. Therefore, it is important to balance current
performance with enhancing longer-term prospects for the future.
To achieve this balance, the Company has developed both short-term and long-term
incentive plans. Both plans provide for "variable" compensation, which can be
earned only by meeting or exceeding pre-determined performance goals. Over the
past few years, the Company's focus has shifted toward a greater utilization of
variable, performance-based compensation. Consequently, on average, 60% of
current executive compensation is performance-based. We believe that this
compensation structure achieves an appropriate alignment of both employee and
shareholder interests. Accordingly, if the Company performs well, both employees
and shareholders should benefit over the long term through stock appreciation.
ELEMENTS OF COMPENSATION
The elements comprising executive compensation include:
Base salary
Performance-related income based on achievement of short and long-term goals
ESOP contributions
401(k) plan with matching contributions
Other benefits (i.e., health insurance)
Base salary is determined after reviewing compensation surveys for banks of
similar size and lines of business and assessing subjective, qualitative factors
to discern a particular executive's relative value to the Company. Overall, the
Company targets base pay at the 50th percentile of the national financial
services market survey.
7
<PAGE>
PERFORMANCE-RELATED INCOME AND MEASURES
Performance-related income is composed of both short-term and long-term
incentive programs. Short-term incentives are paid in cash and stock options.
Long-term incentives are paid in stock. All incentives are tied to performance
measures.
The Compensation Committee believes that by setting high performance standards
for executives, a high performance culture will develop which will lead to
sustained company achievement. To challenge executives, the incentive
compensation programs emphasize stretch goals. Both the Short and Long-Term
Incentive Plans focus on reaching and exceeding established performance goals,
which are set by the Compensation Committee and approved by the Board of
Directors. The goals are developed to reflect what the Committee considers will
be superior performance for the Company. In determining performance goals, the
Committee gives significant and careful consideration to the historical and
projected performance of the Company's performance peer group, which consists of
nine financial institutions in the southeast that are similar in size and line
of business to the Company.
Short-Term Incentive Plan
- -------------------------
The Short-Term Incentive Plan is designed to reward executives for performance
contributions that have impacted the overall success of the Company or its
operating units during the fiscal year. The Short-Term Incentive Plan is
intended to motivate employees and direct their efforts toward achievement of
key short-term performance objectives. The Company focuses on the following
areas of performance:
Earnings per share,
Asset quality (i.e. non-performing assets as a percent of total loans and net
charge-offs as a percent of total loans),
Certain strategic incentives (such as average deposits per branch), and
Leverage (such noninterest expense less noninterest income as a percent of
average assets).
The relative weighting of these measures is customized on an individual basis to
reflect specific roles, responsibilities, and objectives.
The Short-Term Incentive Plan establishes a point system, which determines cash
incentive awards based on the extent to which the Company meets performance
goals. Each goal is considered separately. If one goal falls below threshold,
the other three goals are evaluated on their own merit. The threshold level of
performance is 85% of a particular performance goal. At this level, executives
receive only 35% of the targeted incentive for that goal. Any performance less
than the threshold level will result in no cash incentive. If the Company
achieves 125% of a performance goal, the cash incentive will be 150% of target.
The Short- Term Incentive Plan payout schedule is illustrated in the following
table.
- --------------------------------------------------------------------------------
PERFORMANCE LEVEL AWARD LEVEL REQUIRED PERFORMANCE
(%) OF TARGET RELATIVE TO THE PLAN
- --------------------------------------------------------------------------------
Below Threshold 0% <85% of Plan
Threshold 35% 85% of Plan
Target 100% 100% of Plan
Superior 150% 125% of Plan
- -------------------------
8
<PAGE>
In addition, a corporate profitability modifier allows Short-Term Incentive Plan
awards to be adjusted up or down based on overall corporate financial
performance. The modifier can reduce incentive plan awards if overall
performance falls below expectations or increase awards if overall corporate
performance exceeds expectations.
Calculating the Short-Term Incentive
- ------------------------------------
BEFORE THE FISCAL YEAR BEGINS
As part of the planning process, the Compensation Committee establishes superior
standards of performance consistent with the "stretch-goal" philosophy of the
Committee. A target incentive is created for each eligible executive. This
target ranges from 35% to 50% of base salary, depending on the executive, if
100% of the performance goals are met.
The Board of Directors approves each of the measures and target incentives. The
Company communicates threshold, target, and superior award opportunities to each
eligible executive officer.
AFTER FISCAL YEAR END
Corporate financial statements are generated, and the Company determines whether
it was successful in achieving its performance measures.
During 1998, under the Short-Term Incentive Plan, the Company achieved 94% of
its earnings goal, 294% of its asset quality goal, 94% of its strategic
incentive goal, and 96% of its leveraging goal. As a result of this performance
level, executive officers received cash incentives ranging from 26% to 65% of
their annual base salaries.
Long-Term Incentive Plan
- ------------------------
The primary objective of the Long-Term Incentive Plan is to link a significant
portion of senior management compensation to Company performance achievements
over a multi-year period. The Long-Term Incentive Plan focuses on long-term
financial success factors, which are intended to align the interest of the
Company's executives and shareholders. The Long-Term Incentive Plan is
structured with three year "performance cycles" and consists of two components:
stock options and performance shares. The stock option and performance share
awards provide a long-term incentive opportunity targeted at the top quartile of
the performance peer group. The Long-Term Incentive Plan is structured to
provide 50% of the total award opportunity in stock options and 50% in
performance shares if the target goals are met exactly.
In the future, the Compensation Committee may consider additional forms of
long-term compensation (e.g., restricted stock, performance units, direct equity
participation in joint ventures, etc.) to appropriately reward those executives
for being entrepreneurial and innovative in creating value for the Company. As
described later in this report, the Compensation Committee recently adopted an
Enterprise program that rewards employees (generally not executives) for both
the generation of a value added idea and its demonstrated success.
Stock Option Element
- --------------------
The Long-Term Incentive Plan provides for the grant of stock options over the
three-year performance period. At the beginning of the performance period the
Compensation Committee determines the grant size for each executive. The number
of options granted is based on a number of factors, including competitive grant
practices from national financial services surveys, the participant's level of
responsibility, the ability of the participant to influence future performance
of the Company, and the desired mix of long-term incentive vehicles. Each year
the executive receives a fixed stock option grant based on one-third of the
executive's
9
<PAGE>
total grant (for the performance period). For example, if the three-year total
equals 1,200 options, then 400 options will be granted each year. The exercise
price will reflect fair market value at the time of grant. Executives will only
realize value from the options if the share price appreciates during the option
term.
The Company's policy is not to reprice stock options.
Performance Share Element
- -------------------------
The Compensation Committee also awards shares of common stock (i.e. restricted
stock and not options) to Long-Term Incentive Plan participants that will be
earned only if Company performance goals are achieved during the three-year
performance period. The goals that are currently in place for the 1997-1999
performance cycle are (1) average annual total shareholders return ("TSR")
during the three-year cycle versus the performance peer group and (2) cumulative
earnings per share for this cycle.
The number of shares awarded is based on performance achievements. If Company
performance does not reach threshold levels, no performance shares will be
distributed; if only threshold performance is achieved, 25% of the targeted
award will be given. If a superior level of performance is achieved (i.e.,
maximum), 150% of the targeted reward will be given. The payout matrix is
illustrated in the following table.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
PERFORMANCE LEVEL AWARD LEVEL REQUIRED PERFORMANCE RELATIVE TO THE PLAN
(% OF TARGET)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Below Threshold 0% A specific TSR result and <85% of the EPS goal
Threshold 25% A specific TSR result and 85% of the EPS goal
Target 100% A specific TSR result and 100% of the EPS goal
Superior 150% A specific TSR result and 125% of EPS goal
- -------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
Grants of performance shares are made on a biennial basis for overlapping
three-year performance cycles. Therefore, an overlapping 1999-2001 cycle will
follow the current 1997-1999 performance cycle. The Compensation Committee may
establish different performance goals for each cycle. As of year-end 1998, the
Company is on target for the 1997-1999 cycle to achieve its total shareholder
return goal, but below target on achieving its earning per share goal. The
following table demonstrates how each component of the Long- Term Incentive Plan
operates on a year-to-year basis.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CYCLE 97-99 THREE-YEAR PERFORMANCE CYCLE
------------------------------------------------
1/3 of Fixed 1/3 of Fixed 1/3 of Fixed
Options Granted Options Granted Options Granted
Performance
Shares Awarded
---------------------------------------------------
CYCLE 99-01 THREE-YEAR PERFORMANCE CYCLE
---------------------------------------------------
1/3 of Fixed 1/3 of Fixed 1/3 of Fixed
Options Granted Options Granted Options Granted
Performance
Shares Awarded
- -----------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
ALIGNMENT OF EXECUTIVE AND SHAREHOLDER INTEREST
The Compensation Committee believes that one of the best ways to align executive
and shareholder interest is through stock ownership. During 1998, the Committee
employed an independent consulting firm, Sibson & Company, to determine if
beneficial ownership of its top two executives, Mr. Whittle and Mr. Hummers, was
competitive with the stock ownership of the top two executives of a peer group
consisting of 16 banks of similar size to the Company that have achieved
above-market total shareholder returns. Of the 16 banks in this peer group, six
are part of the performance peer group. As a result of this study, the
Compensation Committee recommended to the Board of Directors that a special
one-time performance accelerated stock option grant be awarded to Mr. Whittle
and Mr. Hummers. The grant is to recognize their contribution to the strong
performance of the Company. In addition, the grant increased their ownership
levels to the top quartile of the above-mentioned peer group. This was approved,
and Mr. Whittle and Mr. Hummers, respectively, received 50,000 and 17,000
performance accelerated stock options in September 1998. Although this increases
the competitiveness of Mr. Whittle and Mr. Hummers' pay, the intent of the grant
was to recognize performance and to bring equity ownership to top quartile
levels. The options will vest on an accelerated schedule if the Company achieves
a 20% compounded annual growth rate for the share price over a four year period
from the date of the grant, otherwise the options will vest seven years from the
date of the grant. In 1999, the Compensation Committee will consider similar
one-time grants to other senior executives to further align executive and
shareholder interests.
Although the Company does not currently have stock ownership guidelines for
executives, the Company encourages all of its executive officers to hold a
significant amount of Company stock and promotes this goal through various
plans.
ENTERPRISE PROGRAM
To further align the interests of employees and shareholders, the Board in 1998
approved the Enterprise Program to encourage innovation and entrepreneurship.
This Program is designed to motivate and reward employees for both the
generation of a value-added idea and its demonstrated success. Participants will
receive stock options upon the initiation of their idea and these options will
provide accelerated vesting if the pre-established business goals are achieved
within a stated period of time. This Program is open to all employees and is
expected to have a strong impact on the Company's shareholder value.
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986 stipulates that publicly
held companies are denied a deduction for compensation in excess of $1,000,000,
unless such compensation is performance based. Currently, it is the Company's
policy not to pay compensation in excess of the amount referenced in Section
162(m). However, in the event the compensation were to exceed this limit, the
Company will review its compensation plans to determine the appropriateness of
changing the compensation plan to comply (so that compensation payable under
such plans remains deductible).
CEO COMPENSATION
Mr. Whittle's 1998 compensation consisted of base salary, cash incentives, stock
options, and certain perquisites (which did not exceed 10% of base salary and
incentives). The Compensation Committee determined Mr. Whittle's base salary of
$290,000 at the beginning of the year. The Committee established Mr. Whittle's
base salary by analyzing compensation levels of other chief executive officers
of comparable size banks based on national financial services surveys. In
addition to base salary, Mr. Whittle received an automobile allowance of
$35,382. Mr. Whittle's cash incentive was determined in accordance with the
Short- Term Plan and was targeted at 50% of base salary if all performance
measures were achieved. Actual performance resulted in Mr. Whittle receiving a
cash incentive of $205,440.
11
<PAGE>
The Committee believes that the Company's strong performance during 1998 was
directly related to the leadership of Mr. Whittle and the other executive
officers. The Compensation Programs as outlined in this Report are designed to
give further momentum to this progress.
Compensation Committee: Eugene E. Stone IV, Judd B. Farr, M. Dexter Hagy,
Elizabeth P. Stall
STOCK OPTIONS
The following table sets forth information regarding option grants with
respect to Common Stock made by the Company to the Named Executive Officers
during 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
- ------------------------------------------------------------------------------------------------
Number of % of Total Fair Market
Securities Options Value per Share
Underlying Granted to of Common Exercise
Options Granted Employees Stock at Time Price Expiration Grant Date
Name (#) in 1998 of Grant(1) ($/Sh) Date(2) Valuation
- ---- --- ------- ----------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mack I. Whittle, Jr. 15,506 3.82% $21.500 $21.500 01/02/08 $173,512 (3)
18,075 4.46 24.375 24.375 08/19/08 226,415 (4)
50,000 12.32 20.500 20.500(5) 09/15/08 410,992 (6)
William S. Hummers III 9,189 2.27% $21.500 $21.500 01/02/08 $102,825 (3)
5,700 1.41 24.375 24.375 08/19/08 71,400 (4)
17,000 4.19 20.500 20.500(5) 09/15/08 139,737 (6)
James W. Terry, Jr. 7,609 1.88% $21.500 $21.500 01/02/08 $ 85,145 (3)
3,360 0.83 24.375 24.375 08/19/08 42,089 (4)
David L. Morrow 6,225 1.53% $21.500 $21.500 01/02/08 $ 69,659 (3)
3,360 0.83 24.375 24.375 08/19/08 42,089 (4)
Joseph C. Reynolds 6,686 1.65% $21.500 $21.500 01/02/08 $74,816 (3)
3,360 0.83 24.375 24.375 08/19/08 42,089 (4)
</TABLE>
- -------------------------------------
(1) The number shown is the closing price of a share of Common Stock as quoted
on the Nasdaq National Market on the date of grant.
(2) The plan pursuant to which the options were granted sets forth certain
earlier expiration dates upon the option holder's termination of
employment.
(3) Calculated by using the Black-Scholes option-pricing model with the
following assumptions: dividend yield of 2.50%, expected volatility of
38%, risk-free interest rate of 5.75% and expected lives of 7.5 years.
(4) Calculated by using the Black-Scholes option-pricing model with the
following assumptions: dividend yield of 2.50%, expected volatility of
38%, risk-free interest rate of 5.44% and expected lives of 7.5 years.
(5) Prior to 9/16/02, exercisable only if the Company's stock price exceeds
$42.51. From 9/17/02 to 9/16/05, exercisable only if a change of control
occurs. From 9/17/05 to 9/15/08, exercisable without restrictions.
(6) Calculated by using the Black-Scholes option-pricing model with the
following assumptions: dividend yield of 2.50%, expected volatility of
38%, risk-free interest rate of 4.85% and expected lives of 7.5 years.
This valuation was reduced by 20% to account for the exercise restrictions
prior to 9/17/05 as detailed in footnote (5).
12
<PAGE>
OPTION EXERCISES
The following table sets forth certain information with respect to options
to purchase shares of Common Stock held by the Named Executive Officers and as
to the number of shares covered by both exercisable and unexercisable stock
options in 1998. Also reported are the values for the "in-the-money" options
which represent the positive spread between the exercise price of any such
existing stock option and the year-end fair market value of the Common Stock.
None of the Named Executive Officers exercised stock options during 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at 1998 Fiscal at 1998 Fiscal
Year-End (#) Year-End ($) (1)
Shares Value -------------- -----------------
Acquired on Realized
Name Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ ----- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Mack I. Whittle, Jr. ----- ----- 42,912 / 125,239 $242,807 / $604,852
William S. Hummers III ----- ----- 27,080 / 63,887 136,272 / 225,596
James W. Terry, Jr. ----- ----- 20,739 / 32,532 104,591 / 55,835
David L. Morrow ----- ----- 15,586 / 23,400 80,907 / 46,087
Joseph C. Reynolds ----- ----- 20,246 / 39,332 89,262 / 63,094
- -----------------------------------
</TABLE>
(1) The indicated value is based on exercise prices ranging from $14.58 to
$24.79 per share and a per share value of $25.31, which was the closing
market price of a share of the Company's Common Stock on December 31, 1998
as reported by the Nasdaq National Market.
LONG-TERM INCENTIVE PLAN
The following table sets forth information concerning awards made under
the Long-Term Plan.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN AWARDS
Estimated Future Payouts under
Non-Stock Price-Based Plans
------------------------------------
Performance Period
Number of Until Maturation Threshold Target Maximum
Name Shares (1) or Payout Shares Shares Shares
- ---------------------- ---------- ------------------ --------- ------- --------
<S> <C> <C> <C> <C>
Mack I. Whittle, Jr. 48,000 One year 12,000 48,000 72,000
William S. Hummers III 14,100 One year 3,525 14,100 21,150
James W. Terry, Jr. 10,080 One year 2,520 10,080 15,120
David L. Morrow 10,080 One year 2,520 10,080 15,120
Joseph C. Reynolds 10,080 One year 2,520 10,080 15,120
- ------------------------------------
</TABLE>
(1) Represents awards made in 1997 and payable in the year 2000 if certain
performance criteria are met for the years 1997 until 1999.
13
<PAGE>
EMPLOYMENT CONTRACTS
NONCOMPETITION, SEVERANCE AND EMPLOYMENT AGREEMENTS
The Company has entered into substantially similar Noncompetition,
Severance and Employment Agreements (individually, the "Agreement") with William
S. Hummers III, David L. Morrow, Joseph C. Reynolds, James W. Terry, Jr. and
Mack I. Whittle, Jr. (each an "Executive"). The Agreement is summarized below.
However, this summary is qualified in its entirety by reference to the Agreement
itself, a copy of which may be obtained, without charge, by written request to
the Company at its principal executive offices, Att.: William S. Hummers III.
The Agreement has a rolling term of three years (the "Term") and extends
automatically unless either party causes the Term to be a fixed three-year term.
Under the Agreement, the Executive is given duties and authority typical of
similar executives, and the Company is obligated to pay the Executive an annual
salary determined by the Board, such incentive compensation as may become
payable to the Executive under the Company's Short-Term Plan and Long-Term Plan,
and certain other typical executive benefits.
The Executive may terminate the Agreement if (i) the Company breaches the
Agreement, (ii) there is a VOLUNTARY TERMINATION, or (iii) there is an
INVOLUNTARY TERMINATION (clauses (i), (ii) and (iii) being hereinafter referred
to as "Legitimate Executive Reasons"). If an Executive terminates his employment
other than for Legitimate Executive Reasons, the Company's obligations under the
Agreement cease as of the date of such termination, and the Executive becomes
subject to certain noncompetition provisions described generally below. If an
Executive terminates his employment as a result of clauses (i) or (iii) of the
Legitimate Executive Reasons, the Executive is entitled to receive an amount
generally equal to three years' compensation. If an Executive terminates his
employment pursuant to clause (ii) of the Legitimate Executive Reasons, the
Executive is entitled to receive an amount generally equal to one year's
compensation. "INVOLUNTARY TERMINATION" is defined as the Executive's
termination of his employment following a change in control (as defined in the
Agreement) due to (i) a change in the Executive's responsibilities, position or
authority, (ii) a change in the Term, (iii) a reduction in the Executive's
compensation, (iv) a forced relocation of the Executive outside the Executive's
area, (v) a significant increase in the Executive's travel requirements, (vi) an
attempted termination for "cause" that violates the Agreement, (vii) the
Company's insolvency, or (viii) the Company's breach of the Agreement.
"VOLUNTARY TERMINATION" is defined as the Executive's termination of his
employment following a change in control which is not the result of any of
clauses (i) through (viii) set forth in the definition of Involuntary
Termination above. The Company may terminate the Agreement at any time during
its Term (i) for "cause" (as defined in the Agreement), (ii) if the Executive
becomes disabled (generally unable to perform Company duties on a full-time
basis for six months), or (iii) upon the Executive's death (clauses (i), (ii)
and (iii) being hereinafter referred to as "Legitimate Company Reasons"). If the
Company terminates an Executive's employment for Legitimate Company Reasons, the
Company's obligations under the Agreement cease as of the date of termination,
except that if the Executive is terminated for cause after a change in control,
then such termination shall be treated as a Voluntary Termination. If the
Company terminates an Executive other than for Legitimate Company Reasons after
a change in control, the Executive is entitled to receive as severance upon such
termination, such amounts as would be payable in the event of an Involuntary
Termination. If the Company terminates the Executive other than for Legitimate
Company Reasons but in the absence of a change in control, the Executive shall
be entitled to receive as severance upon such termination, the aggregate
compensation and benefits that would have been payable under the Agreement for
the remaining Term of this Agreement. In the event of termination pursuant to
clauses (i) or (iii) of the Legitimate Executive Reasons, or in the event of
termination other than for Legitimate Company Reasons, (A) all rights of the
Executive pursuant to awards of share grants or options granted by the Company
generally become vested and released from all conditions and restrictions, and
(B) the Executive is credited with Company service for the remaining Term of the
Agreement for the purposes of the Company's benefit plans.
14
<PAGE>
In the event that an Executive's employment is terminated before a change
in control voluntarily by the Executive or by the Company for cause, then the
Executive may not, for a period of one year following such termination of
employment, become employed by any insured depository institution which conducts
certain business activities in South Carolina or interfere with or otherwise
compete against the Company or its operations in violation of the provisions set
forth in the Agreement. In the case of Messrs. Whittle and Hummers, the
noncompetition period is five years. The Agreement also imposes certain
confidentiality obligations on the Executive.
PERFORMANCE GRAPH
The following graph sets forth the performance of the Company's Common
Stock for the five year period from December 31, 1993 through December 31, 1998
as compared to the Nasdaq Market Composite Index and an index comprised of all
NASDAQ commercial banks and bank holding companies. All stock prices reflect the
reinvestment of cash dividends.
[PLOT POINTS FOR PERFORMANCE GRAPH APPEAR BELOW]
<TABLE>
<CAPTION>
12/93 12/94 12/95 12/96 12/97 12/98
--------- --------- -------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
CFC 100.000 114.717 150.356 166.667 221.567 260.732
Nasdaq Market 100.000 97.752 138.256 170.015 208.580 293.209
Nasdaq Bank Stocks 100.000 99.636 148.383 195.908 328.018 324.902
</TABLE>
15
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
COMMON STOCK. The following table sets forth as of March 15, 1999
information with respect to the Common Stock owned beneficially or of record by
each of the Directors and Nominees individually, by the Named Executive Officers
and by all Directors and executive officers of the Company as a group. Unless
otherwise noted, each person has sole voting power and sole investment power
with respect to the shares listed. There are no persons known to the Company to
own beneficially 5% or more of the Common Stock.
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
- ------------------------ -------------------- ------------------
Judd B. Farr 133,435(2) *
C. Claymon Grimes, Jr. 63,350(2) *
M. Dexter Hagy 13,246(2) *
William S. Hummers III 84,008(3) *
Vernon E. Merchant, Jr. 30,318(4) *
David L. Morrow 37,561(5) *
Joseph C. Reynolds 41,319(6) *
H. Earle Russell, Jr. 8,105(2) *
Charles B. Schooler 32,459(7) *
Elizabeth P. Stall 48,673(2) *
Eugene E. Stone IV 4,326(8) *
James W. Terry, Jr. 49,618(9) *
William R. Timmons, Jr. 318,781(10) 1.45%
David C. Wakefield III 71,271(4) *
Mack I. Whittle, Jr. 130,322(11) *
ALL DIRECTORS/EXECUTIVE OFFICERS
AS A GROUP 1,066,792 4.81%
(15 persons)
Carolina First Employee Stock
Ownership Plan 429,039 1.95%
Carolina First Salary Reduction
Plan and Trust 383,919 1.74%
- -----------------------------------------
* Less than 1%.
(1) The calculation is based on 22,025,025 shares of Common Stock which is the
actual number of shares outstanding as of the record date. Pursuant to Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended,
percentages of total outstanding shares have been computed on the
assumption that shares of Common Stock that can be acquired within 60 days
upon the exercise of options by a given person or group are outstanding,
but no other shares similarly subject to acquisition by other persons are
outstanding.
(2) This includes 6,126 shares of Common Stock issuable pursuant to options
granted under the Directors' Plan.
(3) This includes 2,186 shares of Common Stock owned by Mr. Hummers through the
Restricted Stock Plan, 27,080 shares of Common Stock issuable to Mr.
Hummers under outstanding options and 9,614 shares of Common Stock owned
by his spouse.
(4) This includes 1,406 shares of Common Stock issuable pursuant to options
granted under the Directors' Plan.
(5) This includes 1,465 shares of Common Stock owned by Mr. Morrow through the
Restricted Stock plan and 15,586 shares of Common Stock issuable to
Mr. Morrow under outstanding options.
(6) This includes 1,498 shares of Common Stock owned by Mr. Reynolds through
the Restricted Stock Plan and 20,246 shares of Common Stock issuable to Mr.
Reynolds under outstanding options.
(7) This includes 5,496 shares of Common Stock issuable pursuant to options
granted under the Directors' Plan.
(8) This includes 3,606 shares of Common Stock issuable pursuant to options
granted under the Directors' Plan.
(9) This includes 1,566 shares of Common Stock owned by Mr. Terry through the
Restricted Stock Plan and 20,739 shares of Common Stock issuable to
Mr. Terry under outstanding options.
(10) This includes 206,489 shares of Common Stock owned by Canal, of which Mr.
Timmons is an officer, and 6,126 shares of Common Stock issuable to Mr.
Timmons pursuant to options granted under the Directors' Plan.
(11) This includes 3,657 shares of Common Stock owned by Mr. Whittle through the
Restricted Stock Plan and 42,912 shares of Common Stock issuable to Mr.
Whittle under outstanding options.
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Carolina First Bank (the Company's principal banking subsidiary) has had,
and expects to have in the future, banking transactions in the ordinary course
of business with the Company's Directors and officers and their associates, on
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with unrelated third parties. Such loans
have not involved more than normal risks of collectibility nor have they
presented any other unfavorable features. Under banking regulations applicable
to state banks, any loan made by such a bank to any of its officers or Directors
must be collaterally secured. The aggregate dollar amount of these loans was
approximately $6,040,000 at December 31, 1998. During 1998, approximately
$2,371,000 in new loans were made and payments totaled approximately
$13,718.000.
Carolina First Bank and David C. Wakefield III entered into a consulting
agreement that became effective upon consummation of the merger of the Company
and First Southeast, whereby Mr. Wakefield, as an independent contractor, shall
assist the Company in the assimilation of First Southeast. Compensation under
such agreement was $8,500 per month and included the provision of health and
other employee benefits to Mr. Wakefield and his spouse. The consulting
agreement terminated effective December 31, 1998. In 1998, the Company sold a
condominium in Columbia, South Carolina to Mack I. Whittle, Jr. The sales price
of $130,500 was determined by averaging two independent appraisals. Furniture
and fixtures in the condominium were also sold to Mr. Whittle based on the book
value of $11,898.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Executive officers, Directors and greater than ten-percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms filed. To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during 1998, all required Section 16(a) filings
applicable to its executive officers, Directors and greater than 10% beneficial
owners were made.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP ("KPMG") served as the Company's independent public
accountants for the 1998 current fiscal year. KPMG has indicated that it plans
to have a representative present at the Annual Meeting. Such representative will
have the opportunity to make a statement and will be available to respond to
appropriate questions from shareholders. The Board of Directors has selected
KPMG as the independent public accountants for the Company for the 1999 fiscal
year.
PROPOSALS BY SHAREHOLDERS
A shareholder who wishes to present a proposal for inclusion in the proxy
materials relating to the Company's Annual Meeting of Shareholders to be held in
2000 should submit his or her proposal on or before November 25, 1999, to the
Secretary of the Company, 102 S. Main Street, Greenville, South Carolina 29601.
After that date, the proposal will not be considered timely. Shareholders
submitting proposals for inclusion in the proxy statement and form of proxy must
comply with the proxy rules under the Securities Exchange Act of 1934, as
amended, and all shareholders submitting proposals must comply with the Bylaw
requirements described below.
17
<PAGE>
The Bylaws of the Company require timely advance written notice of
shareholder nominations of director candidates and of any other proposals to be
presented at an annual meeting of shareholders. In the case of director
nominations by shareholders, the Bylaws require that a shareholder's notice be
delivered to the principal executive offices of the Company during the period of
time from the 30th day to the 60th day prior to the annual meeting of
shareholders at which directors are to be elected, unless such requirement is
expressly waived in advance of the meeting by formal action of the board of
directors. In the case of other proposals by shareholders at an annual meeting,
the Bylaws require that advance written notice be delivered to the Company's
Secretary (at the address indicated above). To be timely, a shareholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Company between the 60th and 90th days prior to the first anniversary of
the preceding year's annual meeting. However, in the event that the date of the
annual meeting is more than 30 days before or more than 60 days after such
anniversary date, such shareholder notice must be so delivered between the 60th
and 90th days prior to such annual meeting or within 10 days following the day
on which public announcement of the date of such meeting is first made by the
Company. A copy of the Bylaws is available upon request to the Secretary of the
Company at the address indicated above.
FINANCIAL INFORMATION
THE COMPANY'S 1998 ANNUAL REPORT IS BEING MAILED TO SHAREHOLDERS
CONTEMPORANEOUSLY WITH THESE PROXY MATERIALS. THE COMPANY WILL PROVIDE WITHOUT
CHARGE TO ANY SHAREHOLDER OF RECORD AS OF MARCH 15, 1999, WHO REQUESTS IN
WRITING, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS)
FOR THE YEAR ENDED DECEMBER 31, 1998 FILED WITH THE SEC. ANY SUCH REQUEST SHOULD
BE DIRECTED TO CAROLINA FIRST CORPORATION, POST OFFICE BOX 1029, GREENVILLE,
SOUTH CAROLINA 29602 ATTENTION: WILLIAM S. HUMMERS
III.
OTHER MATTERS
Management is not aware of any other matter to be brought before the Annual
Meeting. If other matters are brought before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote on such matters in
accordance with their judgment.
By order of the Board of Directors,
William S. Hummers III
Secretary
March 23, 1999
Greenville, South Carolina
18
<PAGE>
*************************************APPENDIX***********************************
PROXY CAROLINA FIRST CORPORATION
ANNUAL MEETING, APRIL 21, 1999
The undersigned shareholder of Carolina First Corporation, hereby revoking
all previous proxies, hereby appoints William R. Timmons, Jr. and William S.
Hummers III and each of them, the attorneys of the undersigned, with power of
substitution, to vote all stock of Carolina First Corporation standing in the
name of the undersigned upon all matters at the Company's Annual Meeting to be
held in the Gunter Theatre, Peace Center for the Performing Arts, 300 South
Main Street, Greenville, South Carolina on Thursday, April 21, 1999 at 10:30
a.m. and at any adjournments thereof, with all powers the undersigned would
possess if personally present, and without limiting the general authorization
and power hereby given, directs said attorneys or either of them to cast the
undersigned's vote as specified below.
<TABLE>
<S> <C>
1. ELECTION OF
DIRECTORS.
[ ] FOR ALL NOMINEES set forth [ ] WITHHOLD AUTHORITY to vote
below and to set the number of for all nominees below and to set
Directors at 12 persons (except the number of Directors at
as marked to the contrary below [ ]) 12 persons
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William S. Hummers III Charles B. Schooler Eugene F. Stone IV
Mack I. Whittle, Jr.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.
2. At their discretion upon such other matters as may properly come before the
meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CAROLINA
FIRST CORPORATION. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR
APPROVAL OF EACH OF THE PROPOSALS ABOVE.
(Please date and sign on reverse side and return in the enclosed envelope.)
(This proxy is continued on the other side.)
<PAGE>
Please sign this Proxy as your name or names appear hereon. If stock is
held jointly, signature should appear for both names. When signing as attorney,
administrator, trustee, guardian or agent, please indicate the capacity in
which you are acting. If stock is held by a corporation, please sign in full
corporate name by authorized officer and give title of office.
Dated this day of , 1999
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Print Name (and title if appropriate)
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Signature
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Print Name (and title if appropriate)
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Signature
PLEASE COMPLETE, DATE, SIGN AND
MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
