SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Sec. 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 Sec. 240.14a-11(c) or Sec. 240.14a-12
COMSOUTH BANKSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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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>
COMSOUTH BANKSHARES, INC.
1136 Washington Street, Suite 200
Columbia, South Carolina 29201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held April 30, 1996
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of the Shareholders (the
"Annual Meeting") of ComSouth Bankshares, Inc., a South Carolina corporation
(the "Corporation"), will be held at The Mills House, 115 Meeting Street,
Charleston, South Carolina, at 11:00 a.m., local time, on Tuesday, April 30,
1996, for the following purposes:
(1) To elect three directors of the Corporation to serve three-year terms
expiring in 1999;
(2) To ratify the appointment of J. W. Hunt and Company, LLP as
independent auditors for the Corporation for the fiscal year ending
December 31, 1996; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only record holders of Common Stock of the Corporation at the close of
business on March 15, 1996, are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
You are cordially invited and urged to attend the Annual Meeting in
person. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENCLOSED, SELF- ADDRESSED, STAMPED ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING
AND DESIRE TO REVOKE YOUR PROXY AND VOTE IN PERSON YOU MAY DO SO. IN ANY EVENT,
A PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
THE CORPORATION'S BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF
ALL THE PROPOSALS PRESENTED.
By Order of the Board of Directors
Arthur M. Swanson
President
Charleston, South Carolina
April 5, 1996
<PAGE>
COMSOUTH BANKSHARES, INC.
1136 Washington Street, Suite 200
Columbia, South Carolina 29201
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
to be Held April 30, 1996
-------------------------------------------------
This Proxy Statement is furnished to shareholders of ComSouth Bankshares,
Inc., a South Carolina corporation (herein, unless the context otherwise
requires, together with its subsidiaries, the "Corporation"), in connection with
the solicitation of proxies by the Corporation's Board of Directors for use at
the Annual Meeting of Shareholders to be held at The Mills House, 115 Meeting
Street, Charleston, South Carolina at 11:00 a.m., local time on April 30, 1996,
and any adjournment thereof (the "Annual Meeting"), for the purposes set forth
in the accompanying Notice of Annual Meeting of Shareholders.
Solicitation of proxies may be made in person or by mail, telephone or
telegraph by directors, officers and regular employees of the Corporation. The
Corporation may also request banking institutions, brokerage firms, custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial
owners of Common Stock of the Corporation held of record by such persons, and
the Corporation will reimburse the reasonable forwarding expenses. The cost of
solicitation of proxies will be paid by the Corporation. This Proxy Statement
was first mailed to shareholders on or about April 5, 1996.
The Corporation has its principal executive offices at 1136 Washington
Street, Suite 200, Columbia, South Carolina 29201. The Corporation's telephone
number is (803) 343-2144.
ANNUAL REPORT
The Annual Report to Shareholders covering the Corporation's fiscal year
ended December 31, 1995, including financial statements, is enclosed herewith.
Such Annual Report to Shareholders does not form any part of the material for
the solicitation of proxies.
REVOCATION OF PROXY
Any shareholder returning the accompanying proxy may revoke such proxy at
any time prior to its exercise (a) by giving written notice to the Corporation
of such revocation, (b) by voting in person at the meeting, or (c) by executing
and delivering to the Corporation a later dated proxy. Attendance at the Annual
Meeting will not in itself constitute revocation of a proxy. Any written notice
or proxy revoking a proxy should be sent to ComSouth Bankshares, Inc., 1136
Washington Street, Suite 200, Columbia, South Carolina 29201, Attention: Harry
R. Brown, Secretary. Written notice of revocation or delivery of a later dated
proxy will be effective upon receipt thereof by the Corporation.
QUORUM AND VOTING
The Corporation's only outstanding voting security is its no par value
Common Stock (the "Common Stock"), each share of which entitles the holder
thereof to one vote on each matter to come before the Annual Meeting. At the
close of business on March 15, 1996 (the "Record Date"), the Corporation had
issued and outstanding 1,385,701 shares of Common Stock held of record by
approximately 600 persons. Only holders of record of Common Stock at the close
of business on the Record Date are entitled to notice of and to vote on matters
that come before the Annual Meeting.
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<PAGE>
The presence in person or by proxy of the holders of one third of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. If a share is
represented for any purpose at the Annual Meeting by the presence of the
registered owner or a person holding a valid proxy for the registered owner, it
is deemed to be present for the purposes of establishing a quorum. Therefore,
valid proxies which are marked "Abstain" or "Withhold" or as to which no vote is
marked, including proxies submitted by brokers that are the record owners of
shares (so-called "broker non-votes"), will be included in determining the
number of votes present or represented at the Annual Meeting. If a quorum is not
present or represented at the meeting, the shareholders entitled to vote,
present in person or represented by proxy, have the power to adjourn the meeting
from time to time, without notice other than an announcement at the meeting,
until a quorum is present or represented. Directors, officers and regular
employees of the Corporation may solicit proxies for the reconvened meeting in
person or by mail, telephone or telegraph. At any such reconvened meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.
If a quorum is present at the meeting, directors will be elected by a
plurality of the votes cast by shares present and entitled to vote at the
meeting. Votes that are withheld or shares that are not voted in the election of
directors will have no effect on the outcome of election of directors.
Cumulative voting will not be permitted.
Ratification of J. W. Hunt and Company, LLP as the Corporation's
independent auditors for 1996, and approval of any other matters that may be
considered and acted upon by the shareholders at the meeting require that the
number of shares of Common Stock voted in favor of the proposal exceed the
number of shares of Common Stock voted against the proposal, provided a quorum
is present. Votes that are withheld or shares that are not voted on any such
proposal will have no effect on the outcome.
ACTIONS TO BE TAKEN BY THE PROXIES
Each proxy, unless the shareholder otherwise specifies therein, will be
voted "FOR" the election of the three persons named in this Proxy Statement as
the Board of Directors' nominees for election to the Board of Directors, and
"FOR" the ratification of the appointment of J. W. Hunt and Company, LLP as
accountants for the fiscal year ending December 31, 1996. In each case where the
shareholder has appropriately specified how the proxy is to be voted, it will be
voted in accordance with such specifications. As to any other matter of business
which may properly be brought before the Annual Meeting, a vote may be cast
pursuant to the accompanying proxy in accordance with the best judgment of the
persons voting the same, but the Board of Directors does not know of any such
other business.
SHAREHOLDER PROPOSALS
Any shareholder of the Corporation desiring to present a proposal for
action at the 1997 Annual Meeting of Shareholders must deliver the proposal to
the executive offices of the Corporation no later than December 1, 1996. Only
proper proposals that are timely received will be included in the Corporation's
Proxy Statement and Proxy.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth as of March 15, 1996, the number and
percentage of outstanding shares beneficially owned by each executive officer
and director of the Corporation, by all executive officers and directors of the
Corporation as a group, and by each person known by the Corporation to own more
than 5% of the outstanding Common Stock.
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<PAGE>
Management
Number of Shares Percent
Name Beneficially Owned (1)(2) of Class
- ---- ------------------------- --------
Harry R. Brown 8,163 (3) *
W. Carlyle Blakeney, Jr. 11,053 (4) *
R. Lee Burrows, Jr. 2,251 (5) *
Mason R. Chrisman 31,063 (6) 2.24
Charles R. Jackson 11,892 (7) *
J. Michael Kapp 25,094 (8) 1.78
LaVonne N. Phillips 67,984 (9) 4.90
John C.B. Smith, Jr. 49,142 (10) 3.54
Arthur M. Swanson 51,459 (11) 3.69
Arthur P. Swanson 16,635 (12) 1.19
All Directors and
Executive Officers
as a group(10 persons) 274,736 19.2
* Less than one percent.
(1) Unless otherwise indicated, share amounts represent only those shares with
respect to which the named holder has sole power to vote or to direct the
vote and sole power to dispose of or to direct such disposition.
(2) Included in the Common Stock share amounts for certain individuals are
shares of Common Stock which such individuals have the right to acquire
within 60 days of March 15, 1995 pursuant to stock options as set forth in
more detail in the footnotes to this table and under the caption "Employee
Benefit Plans" appearing elsewhere herein. Consequently, the number of
shares shown in the table may not necessarily correspond with the number of
shares which may be voted by such individuals at the Annual Meeting.
Percentage calculations for these individuals assume that all of their
respective stock options have been exercised.
(3) Includes 4,000 shares subject to acquisition pursuant to exercise of stock
options.
(4) Includes 600 shares subject to acquisition pursuant to exercise of stock
options.
(5) Includes 57 shares held by spouse, and 400 shares subject to acquisition
pursuant to exercise of stock options.
(6) Includes 450 shares subject to acquisition pursuant to exercise of stock
options.
(7) Includes 10,662 shares owned by two corporations in which Mr. Jackson is a
principal and 1,075 shares subject to acquisition pursuant to exercise of
stock options.
(8) Includes 22,222 shares subject to acquisition pursuant to exercise of stock
options.
(9) Includes 5,750 shares held in a trust of which Mrs. Phillips is a
beneficiary and 725 shares subject to acquisition pursuant to exercise of
stock options.
(10) Includes 21,896 shares held by Mr. Smith as custodian for members of his
family, 1,600 shares subject to acquisition pursuant to exercise of stock
options, and 2,875 shares owned by Mr. Smith's spouse.
(11) Includes 2,612 shares owned by Mr. Swanson's spouse and 7,000 shares
subject to acquisition pursuant to exercise of stock options.
(12) Includes 7,000 shares subject to acquisition pursuant to exercise of stock
options.
Five Percent Shareholders
The following table sets forth information regarding persons or groups
that beneficially own five percent or more of the Corporation's stock. The
information presented is derived from Schedules 13D provided to the Corporation
pursuant to the regulations of the Securities and Exchange Commission. The
information has not been verified by the Corporation.
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<PAGE>
Number of Shares Percent
Name and Address Beneficially Owned of Class
- ---------------- ------------------ --------
Mid-Atlantic Investors (1) 78,858 5.7
Post Office Box 7574
Columbia, SC 29202
Jerry Shearer (1) 90,629 6.5
289 Hunters Blind Drive
Columbia, SC 29212
Jerry Zucker (1) 78,858 5.7
16 Buckingham Drive
Charleston, SC 29407
A group comprised of 105,463 7.6
James E. Finley, Carl H.
Almond, Gail Jordan,
R. Phil Roof, Oscar Wooten
and Carroll McGee,
c/o David R. Evans
Chambliss & Bahner
1000 Tallon Bldg., 2 Union Square
Chattanooga, TN 37402
(1) Messrs. Shearer and Zucker are the partners of Mid-Atlantic Investors.
Messrs. Shearer and Zucker have shared voting power in 78,858 shares owned
by Mid-Atlantic. Mr. Shearer has sole voting power in 9,771 shares and
holds options to acquire 2,000 shares. Mr. Shearer is employed by the
Corporation on a part time basis to provide additional support as the
Manager of Financial and Regulatory Affairs.
ELECTION OF DIRECTORS
The Articles of Incorporation and Bylaws of the Corporation provide for a
Board of Directors consisting of not less than nine nor more than twelve
directors divided into three classes serving staggered three year terms. The
exact number of directors who shall comprise the Board of Directors within the
range is to be fixed by the Board of Directors. The Board of Directors has, by
resolution, fixed the number of directors at nine, and three directors will be
elected at the Annual Meeting to serve for three-year terms until the annual
meeting of shareholders in 1998 and until their respective successors have been
elected and qualified.
The Board of Directors has nominated Mason R. Chrisman, John C. B. Smith,
Jr. and Arthur M. Swanson for election to the Board of Directors to serve for
three-year terms ending in 1999. Each nominee is presently a director of the
Corporation and has served continuously since first becoming a director.
In accordance with the Bylaws of the Corporation, if a quorum is present
at the Annual Meeting, the persons receiving the greatest number of votes at the
Annual Meeting will be elected as directors of the Corporation. The current
officers and directors of the Corporation, who together control approximately
19.2 percent of the votes which may be cast at the Annual Meeting with respect
to the election of directors, intend to vote in favor of each of the nominees
listed above.
A shareholder executing the enclosed proxy may vote for any or all of the
nominees or may withhold such vote from any or all nominees. Unless otherwise
instructed or unless authority to vote is withheld, the enclosed
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<PAGE>
proxy will be voted for the election of the nominees listed above. Shareholders
are not entitled to cumulate their votes in the election of directors. Should
any nominee named herein for the office of director become unable or unwilling
to accept nomination or election, it is intended that the persons acting under
the proxy will vote for the election, in his stead, of such other eligible
persons as the Board of Directors of the Corporation may recommend. The Board of
Directors has no reason to believe that any nominee named above will be unable
or unwilling to serve if elected.
The following table sets forth certain information with respect to
executive officers, nominees for director and persons who will continue to serve
as directors of the Corporation after the Annual Meeting.
<TABLE>
<CAPTION>
Directors
Principal Occupation for
Director of the he Past Five Years and
Name and (Age) Corporation Since Current Directorships
- -------------- ----------------- ---------------------
Director Nominees for Terms Expiring in 1999
<S> <C> <C>
Mason R. Chrisman(1) 1989 Chairman, ComSouth Bankshares, Inc., since 1992;
(58) Director of the Bank of Charleston, N.A. (the
"Charleston Bank") since 1990; Chairman, Harbor
Equities, Inc. of Charleston (venture capital
investments) since 1986; and Vice Chairman and
Director, System Associates, Inc. (health care
computer systems) 1966-1986.
John C.B. Smith, Jr.(2) 1988 Chairman, Bank of Columbia, N.A. since 1993;
(51) Director of Bank of Columbia, N.A. (the "Columbia
Bank") since 1988; Attorney, Nexsen, Pruet, Jacobs
& Pollard, Columbia, South Carolina, since 1974.
Arthur M. Swanson(3) 1988 President and Chief Executive Officer of the
(73) Corporation from 1992-present; Director, President
and Chief Executive Officer of the Charleston Bank
from 1988-1994; Chairman of the Charleston Bank
since 1994; Director Emeritus, South Carolina
National Corporation (bank holding company),
1985-1988; President, The South Carolina National
Bank, 1985; Vice Chairman and Executive Vice
President, First National Bank of South Carolina,
1950-1985.
</TABLE>
- ------------------
(1) Committees: Nominating, audit, compensation and executive
(2) Committees: Nominating, compensation and executive
(3) Committees: Nominating and executive
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<PAGE>
<TABLE>
<CAPTION>
Principal Occupation for
Director of the he Past Five Years and
Name and (Age) Corporation Since Current Directorships
- -------------- ----------------- ---------------------
Current Directors Whose Terms Expire in 1997
<S> <C> <C>
Arthur P. Swanson 1994 Director, President and Chief Executive Officer of
(44) the Bank of Charleston since 1994; Director,
Executive Vice President of Lending and Organizer
of the Bank of Charleston 1988 - 1993.
LaVonne N. Phillips(4) Director of the Charleston Bank since 1990;
(58) Director, Historic Charleston Foundation since
1981; Director, Roper Hospital Foundation since
1987.
W. Carlyle Blakeney, Jr.(5) 1991 Director of the Charleston Bank since 1990; Real
(51) Estate Broker, The Brumley Company, Charleston,
South Carolina, (commercial real estate brokerage
firm) since 1987; Vice President, National Audubon
Society 1972-1987.
<CAPTION>
Current Directors Whose Terms Expire in 1998
<S> <C> <C>
R. Lee Burrows, Jr.(6) 1992 Director of the Columbia Bank since 1988; Managing
(37) Director of Trident Financial Corporation, Raleigh,
North Carolina since January 1992; Senior Vice
President of Trident Financial Corporation
1988-1992; Vice President of Trident Financial
Corporation 1985-1988; Vice President of the C.
Felix Harvey Foundation, Director of Stackhouse,
Inc. of Goldsboro, North Carolina since 1991.
Charles R. Jackson(7) 1990 Director of the Columbia Bank since 1989; President
of C.R. Jackson, Inc., Columbia, South Carolina,
(grading and utility contractor) since 1972.
J. Michael Kapp 1994 Director, President and Chief Executive Officer of
(46) the Bank of Columbia since 1993; Senior Vice
President and District Manager, South Carolina
National Bank 1991 - 1992; Senior Vice President
and Columbia City Executive, South Carolina
National Bank 1986-1990.
</TABLE>
- ------------------
(4) Committees: Nominating, compensation and executive
(5) Committees: Audit and compensation
(6) Committees: Audit
(7) Committees: Audit and compensation
Arthur M. Swanson is the father of Arthur P. Swanson. No other immediate
family relationships exist among the above-named directors or the executive
officers of the Corporation.
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<PAGE>
Meetings of the Board of Directors and Committees.
The Board of Directors of the Corporation held four meetings in 1995.
Each director attended at least 75% of the aggregate of (a) the total number of
meetings of the Board of Directors held during the period for which he served as
a director and (b) the total number of meetings held by all committees of the
Board of Directors on which he served.
The Corporation's Audit Committee held one meeting in 1995. The Audit
Committee recommends to the Board of Directors the appointment of the
Corporation's independent auditors and reviews the scope and the results of the
audit by the Corporation's independent auditors. This committee also reviews the
scope and the results of the audits of the Corporation's internal audit
department and other matters pertaining to the Corporation's accounting and
financial reporting functions.
The Corporation's Executive Committee did not meet in 1995. The Executive
Committee makes recommendations to the Board of Directors and takes such action
as may be delegated to the committee from time to time by the Board of
Directors.
The Corporation's Compensation Committee held one meeting in 1995. The
Compensation Committee reviews the performance of executive officers of the
Corporation and the banks and makes salary and bonus recommendations to the
Board with respect to such persons.
The Corporation's Nominating Committee held one meeting in 1995. The
Nominating Committee recommends to the Board nominees for election to the Board.
Although it has no established procedure for considering shareholder
nominations, the Nominating Committee will consider such nominations made in
writing and in accordance with the Corporation's articles of incorporation.
Director Compensation
At the November 30, 1995 Board of Directors meeting, the Board approved
and implemented the payment of directors' fees for directors of the Corporation.
Fees are paid at the rate of $75.00 for each committee meeting and $500.00 for
attendance at each board meeting. Members of the Charleston Bank and the
Columbia Bank Boards of Directors, except those who are salaried officers of the
Banks, also receive directors' fees at the rate of $100 per board meeting and
$30 per committee meeting.
The list below details the total compensation paid to each director of
the Corporation for services rendered as a director or committee member of the
Corporation and as a director or committee member of the Charleston Bank or
Columbia Bank during 1995.
<TABLE>
<CAPTION>
Capacities in Cash
Name of Individual which Payment Received Compensation
- ------------------ ---------------------- ------------
<S> <C> <C>
W. Carlyle Blakeney, Jr. ComSouth Bankshares, Inc. and Bank of Charleston Director $1,770.00
R. Lee Burrows, Jr. ComSouth Bankshares, Inc. and Bank of Columbia Director 1,230.00
Mason R. Chrisman ComSouth Bankshares, Inc. and Bank of Charleston Director 1,720.00
Charles R. Jackson ComSouth Bankshares, Inc. and Bank of Columbia Director 1,920.00
LaVonne N. Phillips ComSouth Bankshares, Inc. and Bank of Charleston Director 1,620.00
John C. B. Smith, Jr. ComSouth Bankshares, Inc. and Bank of Columbia Director 1,920.00
</TABLE>
Executive Officers
Arthur M. Swanson and Harry R. Brown are the only executive officers of the
Corporation. Each also serves as an executive officer of one or both of the
subsidiary banks. Officers of the Corporation, the Columbia Bank and
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<PAGE>
the Charleston Bank serve at the pleasure of, and are appointed by, the
respective Boards of Directors of the Corporation and each bank.
Since January, 1992, Mr. Brown has served as Chief Financial Officer, Chief
Operating Officer, Secretary and Treasurer of the Corporation; Executive Vice
President, Chief Financial Officer and Cashier of the Charleston Bank; and Chief
Financial Officer, Cashier and Secretary of the Columbia Bank. Prior to his
employment with the Corporation, Mr. Brown was Vice President with The South
Carolina National Bank. Mr. Brown is 51 years old. Information about Mr. Swanson
is set forth above under "- Directors."
REMUNERATION AND OTHER TRANSACTIONS WITH MANAGEMENT
The compensation for 1995, 1994 and 1993 of the Chief Executive Officer of
the Corporation is set forth below. The Corporation does not presently have any
executive officers whose compensation for 1995 exceeded $100,000. Mr. Kapp is
Chief Executive Officer and President of the Bank of Columbia and Mr. Arthur P.
Swanson is Chief Executive Officer and President of the Bank of Charleston. The
Bank of Columbia and the Bank of Charleston are wholly owned subsidiaries of the
Corporation.
<TABLE>
<CAPTION>
Summary Compensation Table
Other Number of All
Annual Securities Other
Annual Compensation Compen- Underlying Compen-
Name and Principal Position Year Salary Bonus sation Options sation
- --------------------------- ---- ------ ----- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Swanson 1995 $82,000 - $10,950(1) 7,000 3,456(5)
President, Chief Executive Officer 1994 82,000 - $ 9,048(1) 1,995(5)
of the Corporation (July 28, 1992 - 1993 81,000 - 9,699(1) 1,995(5)
Present) and the Bank of Charleston
1988 - December 1994.
J. Michael Kapp 1995 $120,000 $7,500 $10,500(2) - $20,076(6)
President, Chief Executive Officer 1994 120,000 - 10,500(2) - 18,000(6)
of the Bank of Columbia since 1993 108,462 - 17,460(3) 22,222 18,000(6)
January 1993.
Arthur P. Swanson 1995 $102,582 $7,500 $3,000(4) 6,000 310(7)
President, Chief Executive Officer 1994 94,442 - 3,000(4) 290(7)
of the Bank of Charleston since 1993 80,500 - 3,000(4) 271(7)
December 1994.
</TABLE>
- -----------------
1) Includes $4,950, $3,048 and $3,699 paid for club dues in 1995, 1994 and 1993,
respectively, and an automobile allowance of $6,000 in each of 1995, 1994 and
1993.
2) Includes $2,100 paid for club dues in 1995 and 1994 and an automobile
allowance of $8,400.
3) Includes $8,000 paid to Mr. Kapp's former employer as a reimbursement of Mr.
Kapp's initiation fee at Forest Lake Country Club, which amount was
previously paid by the former employer on Mr. Kapp's behalf, and a $7,700 car
allowance.
4) Automobile allowance for 1995, 1994 and 1993.
5) Includes contribution by the Company in 1995 of $1,461 to the Company's 401K
Plan; and $1,995 in life insurance premiums paid by the Company in each of
1995, 1994 and 1993.
6) Includes amount included in Mr. Kapp's salary for 1995, 1994 and 1993 to
reflect the net impact of the estimated fair market value over the grant
price on unexercised in-the-money options that vested during 1995, 1994 and
1993 (see "Employee Benefit Plans"); and contribution by the Company in 1995
of $2,076 to the Company's 401K Plan.
7) Life insurance premiums paid by the Company in 1995, 1994 and 1993,
respectively.
8
<PAGE>
Employment Agreement
The Corporation and Bank of Columbia have entered into an employment
agreement with J. Michael Kapp, President of the Bank of Columbia. The agreement
provides for a base annual salary of $120,000, plus payment of club dues and an
automobile allowance of $700 per month. The agreement provides for life
insurance, health insurance and disability insurance, but these are provided on
the same terms as those provided for all employees. The agreement requires
election of Mr. Kapp to the Board of Directors of the Columbia Bank. The
agreement prohibits Mr. Kapp from soliciting employment of any employee of the
Corporation or its subsidiaries for a period of two years after termination of
his employment.
Mr. Kapp may be terminated for cause, as defined by the agreement. If he
is so terminated, all compensation to which he would otherwise be entitled will
be discontinued and forfeited as of the effective date of termination. Mr. Kapp
may also be terminated without cause upon 30 days prior written notice. In the
event of Mr. Kapp's termination by Bank of Columbia without cause, all
compensation to which he would otherwise be entitled will be discontinued and
forfeited as of the effective date of termination. In lieu thereof, Mr. Kapp
will be paid a lump sum equal to one year's base salary, and will receive from
the Bank of Columbia, at his own expense, life, health and disability insurance
for a period of one year. In the event of a change of ownership of the
Corporation, including acquisition by any person or group of 50% or more of the
Corporation's outstanding voting stock or of the Bank of Columbia's outstanding
voting stock, or acquisition of sale of all or substantially all of the assets
of the Bank of Columbia, except to an affiliate thereof, Mr. Kapp shall be
entitled, at his option, either (i) to extend the term of the agreement for an
additional three years on the same compensation terms, or (ii) receive a lump
sum equal to three times his base salary, and will receive from the Bank of
Columbia, at his own expense, health, life and disability insurance for a period
of three years. Furthermore, if the agreement is terminated without cause and
within one year thereafter a change in ownership occurs or a legally binding
agreement therefor is entered into, Mr. Kapp shall be paid, in addition to the
compensation provided for above in the event of termination without cause, a
lump sum equal to two times his base salary, and will receive from the Bank of
Columbia, at his own expense, life, health and disability insurance for a period
of two years. Mr. Kapp may terminate the agreement on thirty days prior written
notice and his rights to compensation will be discontinued and forfeited as of
the effective date of termination. The agreement also provides for stock options
as discussed below under "Employee Benefit Plans." Upon any change in control or
termination of Mr. Kapp without cause, his rights in all of such stock options
will immediately become vested.
The foregoing is a summary of Mr. Kapp's employment agreement and is
qualified in its entirety by reference to such agreement.
Employee Benefit Plans
The Corporation has adopted an Incentive Stock Option Plan (the
"Qualified Plan"), which authorizes stock options intended to qualify as
incentive stock options under Section 422A of the Internal Revenue Code (the
"Code") for up to 46,000 shares for issuance to key employees of the Corporation
or any subsidiaries of the Corporation. The Qualified Plan is intended to
attract and induce continued employment of key employees and to provide
additional incentive by offering an opportunity to acquire a proprietary
interest in the Corporation. The number of shares available pursuant to the
Qualified Plan is subject to adjustment for stock splits, stock dividends, and
similar events. Options granted under the Qualified Plan will be exercisable for
a period of not more than ten years from the date of the grant. The option price
is specified as the fair market value on the date of the grant. The Qualified
Plan is administered by the Board of Directors with the discretionary power to
select the grantees of options, but only key employees who hold executive or
other similar positions will be eligible for options under the Qualified Plan.
The aggregate fair market value of the common stock for which any eligible
employee may be granted options in any calendar year may not exceed $100,000
plus any unused carryover from prior years. The Qualified Plan may be amended by
the Board of Directors. At December 31, 1995, options to purchase 20,525 shares
were outstanding under the Qualified Plan, all of which are presently
exercisable, and 2,675 shares were available for grant pursuant to options.
These options have exercise prices ranging from $5.88 per share to $8.70 per
share and expire between December 31, 1996 and December 31, 2000.
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<PAGE>
The Corporation has also adopted a NonQualified Stock Option Plan (the
"NonQualified Plan") and has reserved an additional 46,000 shares for grant upon
exercise of options pursuant to such plan. Options may be granted under the
NonQualified Plan to key employees, officers, directors and Advisory Board
numbers. The NonQualified Plan is not intended to qualify under the Code for
more favorable or deferred tax treatment. At December 31, 1995, options to
purchase 39,100 shares were outstanding under the NonQualified Plan, all of
which are presently exercisable, and 3,600 shares were available for grant
pursuant to options. These options have exercise prices ranging from $5.88 to
$8.70 per share and expire between December 31, 1996 and December 31, 2000.
As an inducement to Mr. Kapp (President of Bank of Columbia) to enter
into an employment agreement with the Corporation, the Corporation granted Mr.
Kapp total stock options for 22,222 shares of stock at a purchase price of $4.00
each. Such options vested in nearly equal increments in January of each of 1993,
1994 and 1995, and are all presently exercisable. The Corporation accrued
compensation expenses of $8,800 in 1994 and $44,000 during 1993 since in
management's opinion the options were granted at a price below fair market
value. No such expenses were accrued in 1995. Any unexercised options expire
upon termination of Mr. Kapp's employment.
The following tables present information about options granted to and
exercised by persons named in the Summary Compensation Table during the year
ended December 31, 1995, and about options held by such persons at December 31,
1995.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Individual Grants (1) Appreciation for
Option Term(2)
------------------------------------------------------------------------ -------------------------------
Number of % of
Securities total
Under- Options
lying Granted to Exercise
Options Employees Price Expiration
Name Granted(1) in 1995 per share Date 5%($) 10%($)
- ---- ---------- --------- --------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Swanson 7,000 17.5 $8.50 12/01/00 $16,439 $36,325
J. Michael Kapp - - - - - -
Arthur P. Swanson 6,000 15.0 8.50 12/01/00 14,090 31,136
</TABLE>
(1) Such options are currently exercisable.
(2) The potential value is the product of (a) the difference between (i) the
product of the per-share market price at the time of grant and the sum of
1 plus the adjusted appreciation rate (the assumed rate of appreciation
compounded annually over the term of the option), and (b) the number of
securities underlying the grant at fiscal year-end.
10
<PAGE>
<TABLE>
Aggregated Option Exercises in 1995 and 1995 Year End Option Values
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Value Options 12/31/95 Options 12/31/95
Name on Exercise Realized Exercisable Unexercisable Exercisable* Unexercisable
- ---- --------------- -------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Arthur M. Swanson - - 7,000 0 $ 0 0
J. Michael Kapp - - 22,222 0 100,000 0
Arthur P. Swanson 3,450 $6,900 7,000 0 1,550 0
</TABLE>
*There is a limited trading market for the Corporation's stock. The fair value
of the stock has been estimated at $8.50 per share, which is the price most
frequently paid for purchases known to management during 1995.
1995 Stock Option Plan
At the Annual Meeting of Shareholders in 1995, the shareholders of the
Corporation approved the 1995 Stock Option Plan, which reserves 100,000 shares
of Common Stock for issuance pursuant to the exercise of options which may be
granted pursuant to the 1995 Stock Option Plan. Options under the 1995 Stock
Option Plan are nonqualified stock options and may be granted to persons who are
directors or employees of the Corporation or any subsidiary (including officers
and directors who are employees) at the time of grant. The Corporation presently
has nine directors and 67 employees. The Plan is administered by a committee
designated by the Board and comprised of not less than two disinterested members
of the Board (the "Committee"). To qualify as disinterested for purposes of
administration of the Plan, a director may not be an employee of the Company
and, may not have received a grant of any equity securities from the Company
pursuant to any plan of the Company during the one year prior to, or during,
service as an administrator of the Plan, except awards pursuant to a formula
plan and certain other limited types of awards permitted by Rule 16b-3(c)(2)(i)
of the Securities and Exchange Commission.
The Plan provides for discretionary grants of options to employees
(including officers and directors who are employees) and for nondiscretionary
grants of options pursuant to a set formula to non-employee directors. Pursuant
to the discretionary portion of the 1995 Stock Option Plan, the employees to
receive grants, the number of shares covered, and other terms of options granted
to employees shall be determined by the Board or the Committee. Such options
will become exercisable no earlier than six months after grant and expire no
later than ten years after grant.
Pursuant to the non-discretionary portion of the 1995 Stock Option Plan,
each year, on the last Friday preceding the Company's Annual Meeting of
Shareholders, each person who has served as a non-employee director of the
Company or any of its bank subsidiaries during any period since the most recent
prior Annual Meeting of Shareholders of the Company (the "Prior Annual Meeting")
will automatically receive nonqualified options pursuant to the 1995 Stock
Option Plan to purchase an aggregate number of shares of the Company's Common
Stock equal to the product of 25 multiplied by the number of Board meetings of
the Company and Board meetings of the Company's banking subsidiaries attended by
such non-employee director since the Prior Annual Meeting. Such options become
exercisable six months after grant and expire at the earlier of termination of
the optionee's status as director or ten years after grant. Options were first
granted under the non-discretionary portion of the Plan in March 1996, and are,
therefore, not reflected in 1995 Option Grants table set forth above.
The per share exercise price of all options granted pursuant to the Plan
is to be determined as follows: (i) if the Common Stock is not traded on any
exchange or on the NASDAQ National Market System, the per share exercise price
shall be the most frequently paid per share price in arm's length transactions
in the Common Stock between unrelated parties during the most recent quarter
prior to the date of grant in which there have been transactions in the Common
Stock as determined by a licensed stock broker who has no affiliation with the
Company; or (ii) if the Common Stock is traded on any exchange or on the NASDAQ
National Market System, the per share exercise price shall be the average
11
<PAGE>
of the high and low prices at which the Common Stock traded on such exchange or
market system during the 30 days immediately preceding the date of grant.
Options may not be transferred except by will or the laws of descent and
distribution. Adjustments in the number of shares subject to the Plan and the
number of shares subject to option, option price and exercise date thereof may
be made in certain events, including stock dividends, stock splits,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or liquidation of the Company. The 1995 Stock Option Plan will
terminate on April 25, 2005, and no options will be granted thereunder after
that date. Recipients of nonqualified options will recognize, as ordinary
income, the difference between the fair market value of the optioned shares on
the date of exercise and the exercise price for federal income tax purposes and
the Corporation will be able to expense a like amount. Because of the discretion
given to the Board of Directors in selecting employees to whom grants of options
will be made and the number of options granted, the benefits or amounts any
employee might receive under the 1995 Stock Option Plan are not presently
determinable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1995, the Columbia Bank and the Charleston Bank had loan and deposit
relationships with some of the directors and executive officers of the
Corporation and the banks and their families and affiliates. All such loan and
deposit relationships were in the ordinary course of business, were on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not involve more than the normal risk of collectability or present other
unfavorable features. Loans and unused portions of lines of credit outstanding
to these parties at December 31, 1995 totalled $6,052,697.
The banks expect to continue to enter into transactions in the ordinary
course of business on similar terms with such persons.
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT OF 1934
As required by Section 16(a) of the Securities Exchange Act of 1934, the
Corporation's directors, its executive officers and certain individuals are
required to report periodically to the Securities and Exchange Commission their
ownership of the Corporation's Common Stock and any changes in ownership. Based
on a review of Forms 3, 4 and 5 filed with the Securities and Exchange
Commission and provided to the Corporation, it does not appear that any of such
persons failed to make any filing required by Section 16(a) in 1995.
SHAREHOLDER LAWSUIT
On January 24, 1994, Carl H. Almond, a former director of the Corporation
and the Bank of Columbia and a current shareholder of the Corporation, brought
suit in the Court of Common Pleas for Richland County, South Carolina against
the Corporation and eight of its directors and former directors, including
Messrs. Chrisman and Swanson who are nominees for reelection to the Board of
Directors, alleging that the defendant directors had breached their fiduciary
duties in not pursuing proposals by third parties to acquire the Corporation in
1992. The Corporation is named as a defendant because the plaintiff asserts that
the suit is, in part, a derivative action, which is a claim brought by a
shareholder that belongs to the Corporation against officers and directors of
the Corporation. The Corporation has denied the allegations of the complaint and
management believes that the allegations of the complaint do not show that the
Corporation has suffered any injury. Management believes that the suit is
without merit and plans to vigorously defend the suit. Pursuant to S.C. Code
Section 33-8-530, the Corporation is advancing expenses for the defense of the
named directors in the lawsuit.
12
<PAGE>
INDEPENDENT ACCOUNTANTS
On February 21, 1995, the management of the Corporation, after receiving
approval of members of the Corporation's Audit Committee and Board of Directors,
informed its independent accountants, Price Waterhouse LLP (the "Prior
Accountants"), that such accounting firm would not be retained for the fiscal
year ending December 31, 1995. On January 26, 1995, the Board of Directors,
after receiving proposals from other accounting firms, formally elected to
engage J. W. Hunt and Company, LLP to serve as independent accountants for the
year ending December 31, 1995. Prior to their engagement on February 21, 1995,
the firm of J. W. Hunt and Company, LLP was not consulted by the Corporation for
any financial or accounting matters.
In connection with the audit of the Corporation's consolidated financial
statements for the year ended December 31, 1994, and any subsequent interim
period preceding the dismissal of the Prior Accountants and the engagement of
the new accountants, there were no disagreements with the Prior Accountants on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of the Prior Accountants would have caused them to make
reference in connection with their report to the subject matter of the
disagreements.
The audit report of the Prior Accountants on the Corporation's consolidated
financial statements for the year ended December 31, 1994 was unqualified. There
have not been any adverse, disclaimer or modified opinions issued by the Prior
Accountants, except as to inclusion of an "emphasis of a matter" paragraph
included in their reports addressing uncertainties related to a Formal Agreement
entered into with the Comptroller of the Currency with respect to their 1992 and
1993 report, the filing of a notice of intent to effect a change in the
composition of the Board of Directors with respect to their 1992 report, and the
filing of a shareholder lawsuit against certain members of the Board of
Directors with respect to their 1993 report.
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed J. W. Hunt and Company, LLP, independent certified public accountants,
as independent auditors for the Corporation and its subsidiaries for the current
fiscal year ending December 31, 1996, subject to ratification by the
shareholders. J. W. Hunt and Company, LLP has advised the Corporation that
neither the firm nor any of its partners has any direct or indirect material
interest in the Corporation and its subsidiaries except as auditors and
independent certified public accountants of the Corporation and its
subsidiaries. Representatives of J. W. Hunt and Company, LLP will be present at
the 1996 Annual Meeting and will be given the opportunity to make a statement on
behalf of their firm.
All shares represented by valid Proxies received pursuant to this
solicitation and not revoked before they are exercised will be voted in the
manner specified therein. If no specification is made, the Proxies will be voted
FOR the ratification of the appointment of J. W. Hunt and Company, LLP for the
fiscal year ending December 31, 1996.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
THE CORPORATION HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ITS
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995. A COPY
OF THE FORM 10-K WILL BE PROVIDED WITHOUT CHARGE TO EACH SHAREHOLDER TO WHOM
THIS PROXY STATEMENT IS DELIVERED UPON THE RECEIPT BY THE CORPORATION OF THE
WRITTEN REQUEST OF SUCH SHAREHOLDER. THE EXHIBITS TO THE FORM 10-K WILL ALSO BE
PROVIDED UPON REQUEST AND PAYMENT OF COPYING CHARGES. REQUESTS FOR THE FORM 10-K
SHOULD BE DIRECTED TO THE OFFICE OF THE SECRETARY, COMSOUTH BANKSHARES, INC.,
POST OFFICE BOX 11671, COLUMBIA, SOUTH CAROLINA 29211-1671.
OTHER BUSINESS
The Board of Directors of the Corporation does not know of any other
business to be presented at the Annual Meeting. If any other matters are
properly brought before the Annual Meeting, however, it is the intention of the
persons named in the accompanying proxy to vote such proxy in accordance with
their best judgment.
13
<PAGE>
APPENDIX -- FORM OF PROXY
REVOCABLE PROXY
COMSOUTH BANKSHARES, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
Harry R. Brown, and LaVonne N. Phillips or either of them, with full power of
substitution, are hereby appointed as agent(s) of the undersigned to vote as
proxies for the undersigned at the Annual Meeting of Shareholders to be held on
April 30, 1996 and at any adjournment thereof, as follows:
1. ELECTION OF DIRECTORS
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
Mason R. Chrisman, John C.B. Smith, Jr., Arthur M. Swanson
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
2. PROPOSAL TO RATIFY SELECTION OF J.W. HUNT AND COMPANY, LLP, as independent
public accountants for the Corporation for the year ending December 31,
1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy when properly
executed will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be voted for
Proposals 1 and 2.
Please sign exactly as name appears hereon. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If more
than one trustee, all should sign. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
All joint owners must sign.
Please be sure to sign and date this Proxy in the space below.
Date_______________ ___________________________________
Stockholder sign above
Co-holder (if any) sign above
14
