<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SEA PINES ASSOCIATES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
FEBRUARY 5, 1999
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 6, 1999
TO THE SHAREHOLDERS OF SEA PINES ASSOCIATES, INC.:
The 1999 Annual Meeting of Shareholders of Sea Pines Associates, Inc.
(the "Company"), will be held in the CRYSTAL BALLROOM, CROWNE PLAZA RESORT IN
SHIPYARD PLANTATION, Hilton Head Island, South Carolina, on Saturday, March 6,
1999, at 3:00 p.m., local time, for the following purposes:
1. To elect five directors;
2. To ratify the appointment of Ernst & Young LLP as independent
auditors for the Company for the fiscal year ending October
31, 1999; and
3. To transact such other business as may properly come before
the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on February 2,
1999, as the record date for determining the shareholders entitled to notice of
and to vote at the meeting and any adjournments thereof. The transfer books of
the Company will not be closed.
A copy of the Company's 1998 Annual Report to Shareholders is enclosed.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE VOTE,
DATE, AND SIGN THE ENCLOSED PROXY BALLOT AND RETURN IT IN THE ENCLOSED ENVELOPE.
YOUR VOTE IS IMPORTANT WHETHER YOU OWN A FEW OR MANY SHARES. IF YOU ARE PRESENT
AT THE MEETING, YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AND VOTE YOUR SHARES
PERSONALLY.
By order of the Board of Directors,
/s/ Angus Cotton
Angus Cotton
Secretary
<PAGE> 3
SEA PINES ASSOCIATES, INC.
P. O. BOX 5965
HILTON HEAD ISLAND, SOUTH CAROLINA 29938
----------
PROXY STATEMENT
----------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MARCH 6, 1999
This Proxy Statement is furnished in connection with the solicitation of proxies
by and on behalf of the Board of Directors of Sea Pines Associates, Inc. ("the
Company") to be voted at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting") to be held at 3:00 P.M. LOCAL TIME, ON SATURDAY, MARCH 6,
1999, AT THE CRYSTAL BALLROOM, CROWNE PLAZA RESORT IN SHIPYARD PLANTATION,
HILTON HEAD ISLAND, SOUTH CAROLINA, and at any adjournments of such meeting, for
the purposes set forth in the accompanying notice. This Proxy Statement and the
accompanying proxy card are first being mailed to shareholders on or about
February 5, 1999.
USE AND REVOCATION OF PROXIES
When proxies are properly executed and returned, the shares they represent will
be voted at the meeting in accordance with any directions noted thereon, and if
no directions are noted, they will be voted FOR each of the proposals noted
herein. Execution of the accompanying proxy will not affect a shareholder's
right to attend the Annual Meeting and vote in person. A shareholder may revoke
a proxy at any time before it is exercised by written notification to the
Company sent to the attention of the Company's Secretary at Post Office Box
5965, Hilton Head Island, South Carolina 29938, and received prior to the Annual
Meeting date or by attending the Annual Meeting and indicating that the proxy is
revoked or by appointment of a substitute proxy.
SOLICITATION
The accompanying proxy is solicited by and on behalf of the Board of Directors.
The expense of solicitation, which is not expected to exceed the normal expense
of a proxy solicitation for a meeting of shareholders at which directors are
elected, will be borne by the Company. In addition, the directors, officers and
employees of the Company and its subsidiaries may solicit proxies, personally or
by telephone, but at no additional salary or compensation.
<PAGE> 4
OUTSTANDING VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Board of Directors has set the close of business on February 2, 1999, as the
record date for determination of shareholders entitled to notice of and to vote
at the Annual Meeting. As of such date, the total number of outstanding shares
of the Company's voting common stock, no par value (the "Common Stock"), was
1,842,525 held by approximately 610 shareholders of record. Each share of Common
Stock is entitled to one vote on each matter presented for a vote at the Annual
Meeting. The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of the Common Stock is necessary to constitute a quorum
at the Annual Meeting. Abstentions and broker non-votes will be counted for
purposes of determining the presence or absence of a quorum. Abstentions and
broker non-votes will have the same effect as a vote to withhold authority in
the election of directors or a negative vote on proposals. Common Stock is the
only class of outstanding voting securities of the Company entitled to be voted
at the Annual Meeting.
ITEM 1
ELECTION OF DIRECTORS
Five directors are to be elected at the Annual Meeting. The Company's Articles
of Incorporation provide for a classified Board of Directors which as of the
date of this Proxy Statement consists of fifteen directorships divided into
three classes of directorships whose terms will expire on the dates of the
Annual Meetings of Shareholders as follows: Five directorships will expire at
this year's Annual Meeting, five directorships will expire in 2000 and five
directorships will expire in 2001.
The five nominees listed below have been nominated by the Nominating Committee
of the Board of Directors to serve three year terms or until their respective
successors shall have been elected and qualified. It should be noted Messrs.
Daniels and Zimmerman will reach age 75 during the first year of their tenure
and, as required by the bylaws, must resign no later than the Annual
Shareholders Meeting in the year 2000. Pursuant to the Company's Bylaws, the
Board of Directors may, from time to time, by majority vote, increase or
decrease the total number of directors on the Board to any number between 11 and
15, inclusive. In accordance with the Company's Articles of Incorporation, if a
quorum is present at the Annual Meeting, the affirmative vote of a majority of
the shares of Common Stock entitled to vote for the election of directors is
required to elect each director of the Company.
A shareholder executing the enclosed proxy card may vote for any or all of the
nominees or may withhold such shareholder's vote from any or all nominees.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted for the election of the nominees listed below.
Although it is not contemplated that any nominees will become unable to serve
prior to the Annual Meeting, the persons named on the enclosed proxy card shall
have authority to vote for the election of other persons in accordance with
their best judgment.
2
<PAGE> 5
Set forth below is certain biographical information regarding the five nominees
as of February 5, 1999.
DIRECTORS WHOSE TERMS EXPIRE IN 2002
<TABLE>
<CAPTION>
NAME, AGE AND ADDRESS BIOGRAPHICAL INFORMATION
- --------------------- ------------------------
<S> <C>
Thomas G. Daniels (74) Mr. Daniels, founding director, has served as a director
21 Baynard Park Road since 1987. He also currently serves on the Board of
Hilton Head Island, SC 29928 Governors of the Hilton Head Hospital and Clinics, a
subsidiary of Tenet. He retired as a Vice President of
Ford Motor Company in 1984. Prior to his retirement,
he also served as a Vice President of Ford of Europe
and as a Director of Ford of Europe, Britain and
Germany.
Ralph L. Dupps, Jr. (53) Mr. Dupps has served as a director since 1995. He is
30 East Beach Lagoon Road President of Dupps and Company and a partner in NWI,
Hilton Head Island, SC 29928 a real estate development company. He is currently
Chairman of the Board of Directors of Atlantic Savings
Bank, a subsidiary of Wachovia Bank, N.A., a director
of Forked Deer River Corporation, a land holding
company, a member of the Wachovia Bank of South
Carolina Advisory Board, Chairman of the Hilton Head
Preparatory School Board of Trustees, a member
of the Hilton Head Museum Board of Directors and a
CSA Board member. Mr. Dupps is also Chairman of
the Town of Hilton Head Island Housing Commission.
Charles W. Flynn (72) Mr. Flynn, founding director, served as a director from
13 Pine Island Court 1987 through 1990. He is currently the Chairman of the
Hilton Head Island, SC 29928 Company. He retired in 1980 from Ford Motor
Company as the Director of Dealer Development. Prior
to his employment with Ford, he was an agent for the
Federal Bureau of Investigation
Arthur P. Sundry (69) Mr. Sundry has served as a director since 1993. He re-
35 South Beach Lane tired in 1990 as President and General Manager of the
Hilton Head Island, SC 29928 Communications Sector, Motorola, Inc. During his 34
years with Motorola, he served in various management
and executive positions.
Frank E. Zimmerman, Jr. (74) Mr. Zimmerman, founding director, has served as a
31 Audubon Pond Road director since 1987. He retired as an executive of Ford
Hilton Head Island, SC 29928 Motor Company in 1977.
</TABLE>
3
<PAGE> 6
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES LISTED ABOVE.
Set forth below is certain biographical information concerning the directors
whose terms extend beyond the Annual Meeting.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
<TABLE>
<CAPTION>
NAME, AGE, AND ADDRESS BIOGRAPHICAL INFORMATION
- ---------------------- ------------------------
<S> <C>
Angus Cotton (73) Mr. Cotton, founding director, has served as a director
7 Willet Road since 1987. He is currently the Secretary of the
Hilton Head Island, SC 29928 Company. He currently serves as Chairman of the
Commissioners of the Technical College of the Low
Country and is a co-founder and Treasurer of the
Heritage Classic Foundation. He retired from Marriott
Hotels and Resorts where he had been an Executive
Vice President.
P. R. Easterlin, Jr. (57) Mr. Easterlin has served as a director since 1989. He
350 2nd Street North No. 12 is President of Florida Properties of Amelia, Inc. and
St. Petersburg, FL 33701 he was one of the founding directors of Atlantic Savings
Bank and served on the Board of Trustees of
Hilton Head Preparatory School for six years.
James L. Gray (63) Mr. Gray has served as a director since 1995. He
32 Club Course Drive retired in 1998 as Chairman and CEO of Primestar
Hilton Head Island, SC 29928 Partners, LP, a national distributor of satellite delivered
television services to residences. Previously, Mr. Gray
served as Vice Chairman of Time Warner Cable. During his
twenty-year career in cable television, he also served as a
Director of Turner Broadcasting System and the Cable
Satellite Public Affairs Network C-SPAN.
John G. McGarty (61) Mr. McGarty has served as a director since 1992. He
2 Mockingbird Lane was President and Owner of Charleston Valve and
Hilton Head Island, SC 29928 Fitting Company, a distributor of industrial products,
retiring in 1989 after twenty-seven years. Mr. McGarty
is a licensed real estate agent with Sea Pines Real
Estate Company, Inc., a subsidiary of the Company.
He formerly served on the Board of Regents of
Georgetown University. He presently serves on the
Community Services Associates, Inc. Board of Directors.
</TABLE>
4
<PAGE> 7
<TABLE>
<S> <C>
Joseph F. Vercellotti (69) Mr. Vercellotti has served as a director since 1995.
18 Old Military Road He retired in 1987 after a 35 year general management,
Hilton Head Island, SC 29928 strategic planning and marketing career with General
Electric Company, to pursue interests in management
consulting, primarily with high-tech, start up firms. He
presently serves on the Community Services Associates,
Inc. Board of Directors.
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 2000
<TABLE>
<CAPTION>
NAME, AGE, AND ADDRESS BIOGRAPHICAL INFORMATION
- ---------------------- ------------------------
<S> <C>
Paul B. Barringer, II (68) Mr. Barringer has served as a director since 1997. He
14 South Calibogue Cay is Chairman and CEO of Coastal Lumber Company,
Hilton Head Island, SC 29928 headquartered in Weldon, North Carolina. He is a
member of the Board of Directors of Southern National
Corporation, the holding company for BB&T Financial
Corporation. He currently serves on the board of
several educational institutions and is an active board
member of various civic and industry associations.
Norman P. Harberger (69) Mr. Harberger has served as a director since 1993. He
22 Oyster Landing Road is currently the Vice Chairman of the Company. He
Hilton Head Island, SC 29928 is President and Owner of Harberger & Associates, Inc.,
management consultants. He was previously an executive
of Rohm and Haas Company, retiring as that firm's
Administrative Vice President in 1986.
Michael E. Lawrence (54) Mr. Lawrence has served as a director since 1994. He
46 Baynard Park Road currently serves as Chief Executive Officer of the
Hilton Head Island, SC 29928 Company. He has served as President of Sea Pines
Company, Inc. since November 1994, and as its Vice
President and Chief Financial Officer from February 1991
to November 1994 and as its Controller from February
1990 to February 1991. He currently serves on the
Board of Directors of Jameson Inn, Inc. and the
Personnel and Compensation Committee of such Board,
and Atlantic Savings Banks, a subsidiary of
Wachovia Bank, N.A. Formerly, he was a partner in the
Management Consulting Division of Ernst & Young LLP.
Thomas C. Morton (57) Mr. Morton has served as a director since 1991. He is
20 Harleston Green a certified public accountant who has owned and
Hilton Head Island, SC 29928 operated tax and accounting practices in Michigan and
South Carolina since 1974. Prior to that he spent 10 years
in the audit and tax departments of the international
accounting firm of Deloitte & Touche.
</TABLE>
5
<PAGE> 8
<TABLE>
<S> <C>
Robert W. Siler, Jr. (70) Mr. Siler has served as a director since 1997. He retired
414 Baynard Cove Club in 1993 as Chairman/CEO of Hammer, Siler, George
Hilton Head Island, SC 29928 Associates, an international economic and development
consulting firm based in Silver Spring, Maryland. He is
a principal in Elgin Land Company, LLC, a Texas invest-
ment firm, and serves on the Hilton Head Island
Planning Commission.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met 12 times during fiscal year 1998. Only Messrs.
Barringer and Gray attended fewer than 75 percent of the aggregate of (a) the
total number of meetings of the Board of Directors and (b) the total number of
meetings held by all committees of the Board of Directors on which such director
served.
Pursuant to the by-laws of the Company, the Board of Directors has established
standing Audit, Finance, Nominating, and Personnel and Compensation Committees,
each of which held meetings during fiscal year 1998.
The Audit Committee, composed of Messrs. McGarty and Morton, makes
recommendations regarding the certified public accountants serving the Company,
considers the adequacy of internal accounting controls and undertakes other
activities related to the fiscal affairs of the Company. No directors of the
Company who are also executive officers may serve on the Audit Committee. The
Audit Committee met 2 times during fiscal year 1998.
The Finance Committee, composed of Messrs. Flynn, Gray, Lawrence, Morton,
Sundry, and Barringer, met 11 times during fiscal year 1998. The Committee
reviews and makes recommendations regarding matters concerning the financial
condition of the Company and provides advice to the Company's management on
financial and accounting matters.
The Nominating Committee, composed of Messrs. Cotton, Daniels, Dupps, Gray, and
Vercellotti, designates on behalf of the Board of Directors candidates for the
directors of the class to be elected at the next Annual Meeting of shareholders.
There is no formal procedure for the submission of shareholder recommendations
for nomination. The Nominating Committee met 2 times during fiscal year 1998.
The Personnel and Compensation Committee, composed of Messrs. Harberger, Cotton,
and Vercellotti, met 8 times during fiscal year 1998. The Committee considers
and oversees the development of programs to attract and equitably compensate
employees to promote the economic success of both the employee and the Company,
including its subsidiaries. No officers or employees of the Company or its
subsidiaries served on the Personnel and Compensation Committee or participated
in deliberations of such Committee concerning executive officer compensation.
6
<PAGE> 9
CERTAIN TRANSACTIONS
Mr. Dupps' wife provides certain interior decorating and design services and
furnishings to the Company. Total payments to Mrs. Dupps for such services and
furnishings in the Company's last fiscal year were $99,448.
Mr. Lawrence's wife is a licensed real estate agent with Sea Pines Real Estate
Company, Inc., a subsidiary of the Company. Total commissions paid to Mrs.
Lawrence in the Company's last fiscal year were $103,163.
REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
CONCERNING EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
The Personnel and Compensation Committee of the Board of Directors recommends to
the full Board all policies under which compensation is paid or awarded to the
Company's executive officers. No Director who is employed by the Company serves
on the Personnel and Compensation Committee, nor is any such employee Director
present when matters concerning executive compensation are discussed and voted
on by the Board of Directors.
COMPENSATION OBJECTIVES AND STRUCTURE
The Company's objective is to provide total compensation opportunity sufficient
to attract and retain highly capable executives and key managers for the Company
and its subsidiaries. Each year the Personnel and Compensation Committee reviews
the Company's executive compensation practices and guidelines, and recommends
any changes needed to achieve this objective.
The Chairman, Vice Chairman, Secretary and Treasurer of the Company are not
salaried employees. These non-employee officers receive only the compensation
applicable to other non-employee directors. The Chief Executive Officer and
other key managers of the Company and its subsidiaries are salaried employees.
Their compensation currently consists of salary and the opportunity for a bonus.
There is no stock option plan at present, nor any other form of long-term
incentive compensation.
EXECUTIVE SALARIES
Salary ranges for executive positions are substantially equivalent to those
found in positions of similar responsibility level and type in related business
sectors. These salary ranges were increased 2.5 percent in January 1998 to
maintain the Company's competitive position. Individual salary increases were
granted where appropriate, based on competitive salary levels and individual
performance.
7
<PAGE> 10
MANAGEMENT BONUSES
Twelve executives and senior managers participated in the Management Bonus Plan
in fiscal year 1998. The plan assures that part of the compensation opportunity
of these executives depends directly on business results. The Management Bonus
Plan is currently structured as follows:
- - Basic and Adjusted Bonus Standards
At the beginning of each fiscal year, an initial bonus standard
("target bonus") is established for each position covered by the
Management Bonus Plan. These standards are consistent with typical
competitive bonus levels, except that they may not total more than 10
percent of the "operating income" called for in the Company's initial
budget for the fiscal year.
- - Factors Determining Actual Bonus Payout
Actual bonus payments vary from the adjusted standards based primarily
on the ratio of actual corporate operating income to budgeted operating
income. Business unit performance and personal contribution also affect
individual awards. For bonus purposes, "operating income" is defined as
pre-tax income before bonuses, excluding any non-operating gains and
losses and any extraordinary income or expense items.
The present bonus arrangement has applied for the past six years.
During this period, two years resulted in no bonus pay-out (1993 and
1995), two produced bonuses lower than target levels (1994 and 1996).
Only in the past two years (1997 and 1998) have operating results
earned premium pay-outs.
BONUS STANDARDS AND BONUS PAYMENTS - FISCAL YEAR 1998
Basic bonus standards for all bonus-eligible positions in fiscal year 1998
totalled $220,700. This figure is roughly $30,000 lower than it would have been
if all eligible positions had been filled for the entire year. Fiscal year 1998
pre-tax income for bonus purposes exceeded budget by 13.25%, permitting a bonus
premium of 26.5%. The resulting allowable bonus payout totalled $279,100, of
which $271,000 was actually awarded to the twelve eligible participants.
SPECIFIC COMMENTS ON COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Lawrence's salary was increased to $164,000 in January 1998, based on the
Board's assessments of his performance and of competitive salary levels. Surveys
indicate that this figure is somewhat lower than the market average for CEOs in
firms of similar size and type.
8
<PAGE> 11
In December 1998, Mr. Lawrence was awarded a bonus of $86,000 under the terms of
the previously described Management Bonus Plan. The bonus was based on the
Company's very favorable operating profit performance during the fiscal year
1998, and the Board's assessment of Mr. Lawrence's accomplishments in other key
areas of responsibility.
Norman P. Harberger, Chairman, Personnel and Compensation Committee
Angus Cotton
J. Gordon Osborn
Joseph F. Vercellotti
ITEM 2
RATIFICATION OF INDEPENDENT PUBLIC AUDITORS
The Board of Directors wishes to obtain from the shareholders a
ratification of their action in appointing Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending October 31, 1999. Ernst &
Young LLP was initially engaged as independent auditors of the Company for the
fiscal year ended October 31, 1993.
The engagement of Ernst & Young LLP for audit services has been
approved by both the Audit Committee of the Board of Directors and by the full
Board of Directors.
In the event the appointment of Ernst & Young LLP as independent
auditors for fiscal year 1999 is not ratified by the affirmative vote of the
holders of a majority of the shares of Common Stock entitled to vote, the
adverse vote will be considered as a direction to the Board of Directors to
select other independent auditors.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, with the opportunity to make a statement if they desire to do
so. Such representatives are also expected to be available to respond to
appropriate questions.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote is required to ratify the appointment of
independent auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR ITEM 2.
9
<PAGE> 12
EXECUTIVE OFFICERS
The following table lists the executive officers of the Company as of
the date hereof and the capacities in which they serve. Officers of the Company
serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL CAPACITY AGE YEARS OF SERVICE
- ------------------ -------- --- ----------------
<S> <C> <C> <C>
Charles W. Flynn Chairman 72 3
Norman P. Harberger Vice Chairman 69 3
Michael E. Lawrence Chief Executive Officer 54 3
Angus Cotton Secretary 73 4
Thomas C. Morton Treasurer 57 7
</TABLE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock and the Company's Series A Cumulative
Preferred Stock, $7.60 liquidation preference (the "Preferred Stock"), as of
January 20, 1999 by (i) each shareholder known by the Company to be the
beneficial owner of more than five percent of the outstanding Common Stock, (ii)
each of the Company's directors, director nominees, and executive officers
identified in the Summary Compensation Table below, individually, and (iii) all
current directors and executive officers as a group. Except as otherwise
indicated, the Company believes that each of the beneficial owners of the shares
listed below, based on information furnished by such owner, (a) holds less than
one percent of the outstanding Common Stock and less than one percent of the
outstanding Preferred Stock, and (b) has sole investment and voting power with
respect to such shares. Preferred Stock is non-voting unless the Company has
failed to pay dividends on the Preferred Stock in an amount equal to four years'
dividends.
10
<PAGE> 13
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
--------------------------------------------
COMMON PERCENT PREFERRED PERCENT
NAME OF INDIVIDUAL STOCK OF CLASS STOCK OF CLASS
- ------------------ ------ -------- --------- --------
<S> <C> <C> <C> <C>
Angus Cotton (9) 3,750 * 2,500 *
Thomas G. Daniels (1) 5,250 * 3,500 *
Ralph L. Dupps, Jr. (2) 12,000 * 8,000 *
P. R. Easterlin, Jr. (1) 2,250 * 1,500 *
Charles W. Flynn 9,000 * 6,000 *
James L. Gray (1) 3,750 * 2,500 *
Norman P. Harberger (3) 6,000 * 4,000 *
Michael E. Lawrence (4) 4,500 * 3,000 *
John G. McGarty (1) 9,750 * 6,500 *
Thomas C. Morton (5) 7,500 * 5,000 *
Robert W. Siler, Jr. 5,250 * 3,500 *
Arthur P. Sundry (6) 4,500 * 3,000 *
Joseph F. Vercellotti 2,250 * 1,500 *
Frank E. Zimmerman, Jr. (1) 9,750 * 6,500 *
Paul B. Barringer, II (7) 118,500 6.43% 79,000 6.43%
14 South Calibogue Cay
Hilton Head Island, SC 29928
L.F. Loree, III and 302,250 16.40% 201,500 16.40%
Norwood H. Davis, Jr. as
Co-Trustees (8)
901 East Cary Street
Suite 1400
Richmond, Virginia 23219
All current directors and 204,000 11.07% 136,000 11.07%
executive officers as a group
(15 Persons)
</TABLE>
*Represents less than one percent of the class
11
<PAGE> 14
(1) Shares of Common Stock and Preferred Stock reflected in the table as
owned by Messrs. Daniels, Easterlin, Gray, McGarty, and Zimmerman are
owned by each of them directly. Unless otherwise indicated, shares
reflected in the table as owned by each of the other shareholders are
owned jointly with such shareholder's spouse.
(2) Includes 1,500 shares of Common Stock and 1,000 shares of Preferred
Stock held directly by Mr. Dupps and 10,500 shares of Common Stock and
7,000 shares of Preferred Stock owned jointly with his spouse.
(3) Includes 3,000 shares of Common Stock and 2,000 shares of Preferred
Stock held by Mr. Harberger directly and 3,000 shares of Common Stock
and 2,000 shares of Preferred Stock owned jointly with his spouse.
(4) Includes 3,750 shares of Common Stock and 2,500 shares of Preferred
Stock held by Mr. Lawrence directly and 750 shares of Common Stock and
500 shares of Preferred Stock directly held by his spouse.
(5) Includes 2,250 shares of Common Stock and 1,500 shares of Preferred
Stock held by Mr. Morton directly, 3,000 shares of Common Stock and
2,000 shares of Preferred Stock owned jointly with his spouse and 2,250
shares of Common Stock and 1,500 shares of Preferred Stock directly
held by his spouse.
(6) Includes 750 shares of Common Stock and 500 shares of Preferred Stock
held by Mr. Sundry directly and 3,750 shares of Common Stock and 2,500
shares of Preferred Stock held for the benefit of Arthur P. Sundry
Trust.
(7) Based on information supplied to the Company by Mr. Barringer, all of
the shares are owned by a limited partnership, the general partner of
which is a limited liability company controlled by Mr. Barringer and
his wife.
(8) Based on information supplied to the Company, all of the shares are
held pursuant to an Irrevocable Trust Agreement dated November 12, 1986
by William H. Goodwin, Jr., creating five separate trusts for the
benefit of William Hunter Goodwin, III, Molly Shepherd Goodwin, Mathew
Tolley Goodwin, Sarah Camp Goodwin and Peter Overton Goodwin (the
"Trusts").
(9) Shares of Common Stock and Preferred Stock are held for the benefit of
the Angus Cotton Trust.
12
<PAGE> 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
directors, officers and certain shareholders of the Company file reports of
holdings and transactions in the Company's Common Stock and Preferred Stock with
the SEC. Based solely on the Company's review of such reports furnished to the
Company and written representations from certain reporting persons, the Company
believes that all SEC filing requirements applicable to its directors and
officers with respect to the Company's fiscal year ended October 31, 1998 were
complied with. The Company does not believe that the Trusts or Trustees
described in footnote (8) of the table under "Principal Shareholders" above have
filed such reports for the fiscal year ended October 31, 1998.
EXECUTIVE COMPENSATION
None of the officers of the Company receives any cash or non-cash
compensation for services rendered in such capacity. The Company's operations
are conducted exclusively through its wholly-owned subsidiary, Sea Pines
Company, Inc. The following table summarizes the compensation earned by Michael
E. Lawrence, the President of Sea Pines Company, Inc. for services performed
during fiscal years 1998, 1997 and 1996. Mr. Lawrence is the only executive
officer of the Company whose compensation exceeded $100,000 during any of the
fiscal years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS (2) COMPENSATION (3)
- --------------------------- ---- --------- --------- ----------------
<S> <C> <C> <C> <C>
Michael E. Lawrence 1998 $ 165,332 $ 86,000 $ 2,456
President, Sea Pines 1997 $ 154,056 $ 66,000 $ 4,741
Company, Inc. and 1996 $ 140,923 $ 43,600 $ 4,833
Sea Pines Real
Estate Company,
Inc.
</TABLE>
(1) Salary includes amounts deferred at the election of the named officer
pursuant to the Company's 401(k) plan.
(2) Bonus includes amounts earned by the named officer in the year
indicated, but paid in the following fiscal year.
(3) All other compensation consists of amounts contributed by the Company
to the 401(k) plan account of the named officer.
13
<PAGE> 16
The remuneration described in the previous table does not include the cost to
Sea Pines Company, Inc. of certain employee benefits furnished to Mr. Lawrence
in connection with the conduct of the business of Sea Pines Company, Inc. The
amount of such employee benefits accrued for Mr. Lawrence in each of fiscal
years 1998, 1997 and 1996 did not exceed the lesser of $50,000 or 10% of the
total of his respective annual salary and bonus reported above.
COMPENSATION PURSUANT TO PLANS
The Company and its subsidiaries have adopted a retirement plan
pursuant to Section 401(k) of the Internal Revenue Code of 1986. This plan
requires the Company and its subsidiaries to contribute $.50 for every $1
contributed by the respective company's employees, limited to 6% of gross
earnings of each employee.
COMPENSATION OF DIRECTORS
All directors of the Company, who are not also employees of the Company
or its subsidiaries, are paid $100 for each Board of Directors meeting attended
and $300 per quarter for serving as a director. Directors who are members of any
of the standing committees of the Board of Directors and who are not also
employees of the Company or its subsidiaries are paid $50 for each meeting
attended, with maximum payment of $600 per year.
SHAREHOLDER RETURN
Item 402 under Regulation S-K promulgated by the Securities and
Exchange Commission calls for disclosure of a five year graph comparison of the
Company's cumulative total shareholder returns on its Common Stock with both the
cumulative total return on selected published market indices and the cumulative
total return on selected industry or line-of-business indices over the same
period.
The known trading in the outstanding securities of the Company remains
very limited and has been effected exclusively through transactions in units
consisting of both Common and Preferred Stock. Consequently, the Company does
not have a reliable indicator of Common Stock share value. Because information
required for the calculation of the referenced comparisons is not available to
the Company, and based on the fact that the Company has not paid any dividend on
its Common Stock since the Company's incorporation, the Company believes that
presentation of the referenced comparisons would not be meaningful.
14
<PAGE> 17
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal to be included in the
Proxy Statement for the 2000 Annual Meeting of Shareholders should submit such
proposal to the Company on or before October 15, 1999.
AVAILABILITY OF FORM 10-K REPORT
The Company has filed with the Securities and Exchange Commission its
Annual Report on Form 10-K for the fiscal year ended October 31, 1998. 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 Company 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, Sea Pines Associates, Inc., Post
Office Box 5965, Hilton Head Island, South Carolina 29938.
OTHER MATTERS
Management of the Company knows of no other matters to be brought
before the Annual Meeting. If, however, any other matter properly comes before
the Annual Meeting for a vote of the shareholders, it is the intention of the
persons named on the enclosed proxy ballot to vote the proxy in accordance with
their discretion and judgment in such matters.
By Order of the Board of Directors,
/s/ Angus Cotton
Angus Cotton
Secretary
Hilton Head Island,
South Carolina
February 5, 1999
15
<PAGE> 18
APPENDIX A
SEA PINES ASSOCIATES, INC.
P.O. Box 5965
Hilton Head Island, South Carolina 29936
PROXY BALLOT FOR
ANNUAL MEETING OF SHAREHOLDERS
MARCH 6, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Angus Cotton and Thomas C. Morton as Proxies, each with full
power to appoint his substitute, and hereby authorizes them to represent and to
vote, as designated below, all the shares of voting common stock, no par value,
of Sea Pines Associates, Inc., held of record by the undersigned on February 2,
1999, at the Annual Meeting of Shareholders, to be held on March 6, 1999.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. When signing in a representative capacity, please
provide full title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------- ---------------------------------------
- ------------------------------- ---------------------------------------
- ------------------------------- ---------------------------------------
<PAGE> 19
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- --------------------------------------------------------------------------------
SEA PINES ASSOCIATES, INC.
- --------------------------------------------------------------------------------
1. Election of Directors.
For All With- For All
Nominees hold Except
Thomas G. Daniels Arthur P. Sundry
Ralph L. Dupps, Jr. Frank E. Zimmerman, Jr. [ ] [ ] [ ]
Charles W. Flynn
NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of
the nominee(s). Your shares will be voted for the remaining nominee(s).
For Against Abstain
2. Ratification of the appointment of [ ] [ ] [ ]
Ernst & Young LLP as independent
auditors of Sea Pines Associates,
Inc. for the fiscal year ending
October 31, 1999.
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting
and at any adjournment(s) thereof.
Mark box at right if you plan to attend the Annual Meeting. [ ]
Mark box at right if an address change or comment has been
noted on the reverse side of this card. [ ]
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date
-------------------------
- ------------------------------------ --------------------------------
Shareholder sign here Co-owner sign here
DETACH CARD DETACH CARD
SEA PINES ASSOCIATES, INC.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your stock.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual meeting of Shareholders,
March 6, 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Sea Pines Associates, Inc.
