<PAGE> 1
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-b(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
MERIT HOLDING CORPORATION
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(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
-------------------------------------------
(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:(1)
----------------------------------
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:
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- ----------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
MERIT HOLDING CORPORATION
5100 LAVISTA ROAD
TUCKER, GEORGIA 30085-0049
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1998
The Annual Meeting of Shareholders of Merit Holding Corporation (the
"Company") will be held on Tuesday, May 19, 1998 at 10:00 a.m. at The Ashford
Club, 10th Floor, 400 Perimeter Center Terrace, N.E., Atlanta, Georgia 30346,
for the following purposes:
(1) To elect five (5) directors to serve for a term of one year
and until their successors are elected and qualified; and
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 20, 1998
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
A Proxy Statement and a proxy solicited by the Board of Directors are
enclosed herewith. Please sign, date and return the proxy promptly. If you
attend the meeting, you may, if you wish, withdraw your proxy and vote in
person.
By Order of the Board of Directors
/s/J. Randall Carroll
-------------------------
J. Randall Carroll
Chairman of the Board and
Chief Executive Officer
Tucker, Georgia
April 6, 1998
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
IN PERSON, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE PAID ENVELOPE. IF YOU ATTEND THE
MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
MERIT HOLDING CORPORATION
5100 LAVISTA ROAD
TUCKER, GEORGIA 30085-0049
ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
-------------------------
PROXY STATEMENT
-------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Merit Holding Corporation (the
"Company") for the Annual Meeting of Shareholders to be held on Tuesday, May 19,
1998, at 10:00 a.m. at the Ashford Club, 10th Floor, 400 Perimeter Center
Terrace, N.E., Atlanta, Georgia 30346, and any adjournment thereof, for the
purposes set forth in the accompanying notice of the meeting. The expense of
this solicitation, including the cost of preparing and mailing this Proxy
Statement, will be paid by the Company. In addition to solicitations by mail,
officers and regular employees of the Company, at no additional compensation,
may assist in soliciting proxies by telephone. This Proxy Statement and the
accompanying proxy are first being mailed to shareholders on or about April 6,
1998. The address of the principal executive offices of the Company is 5100
LaVista Road, Tucker, Georgia 30085.
Any proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives oral notice of his election to
vote in person, without compliance with any other formalities. In addition, any
proxy given pursuant to this solicitation may be revoked prior to the meeting by
delivering to the Secretary of the Company an instrument revoking it or a duly
executed proxy for the same shares bearing a later date. Proxies which are
returned properly executed and not revoked will be voted in accordance with the
shareholder's directions specified thereon. Where no direction is specified,
proxies will be voted FOR the election of the nominees for director named herein
and, on other matters presented for a vote, in accordance with the judgment of
the persons acting under the proxies. Abstentions and broker non-votes will not
be counted as votes either in favor of or against the matter with respect to
which the abstention or broker non-vote relates, but will be counted as present
for the purpose of determining the presence of a quorum for the transaction of
business.
Only shareholders of record at the close of business on March 20, 1998
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. As of March 20, 1998, the Company had outstanding 3,996,078
shares of common stock, par value $2.50 per share. Each share of common stock
issued and outstanding on such record date is entitled to one vote.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 20, 1998
with respect to the ownership of the outstanding common stock of the Company by
(i) all persons known to the Company to own beneficially more than five percent
(5%) of the outstanding common stock of the Company, (ii) each director of the
Company, (iii) each of the executive officers named in the Summary Compensation
Table on page 6, and (iv) all directors and executive officers of the Company as
a group:
<TABLE>
<CAPTION>
SHARES OF
NAME OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF TOTAL
- ---------------- --------------------- --------
<S> <C> <C>
Lloyd M. Smith(2) 360,000 9.0%
John A. Williams(3) 320,000 7.7
J. Randall Carroll(4) 150,020 3.6
Michael E. Coles(5) 197,016 4.9
Philip H. Ekern (6) 14,258 *
Ronald H. Francis(7) 48,935 1.2
Patrick H. Hickok(8) 88,160 2.2
William L. Kane (9) 33,420 *
Walter J. McCloud, II(10) 82,980 2.1
Martha Sue Watkins(11) 20,980 *
Directors and Executive Officers
as a Group (5 persons)(12) 567,111 13.3%
</TABLE>
* Less than 1%.
(1) Unless otherwise indicated, the named individual or entity has sole voting
and investment power with respect to all shares. "Beneficial Ownership"
includes shares for which an individual, directly or indirectly, has or
shares voting or investment power or both and also includes warrants and
options which are exercisable within 60 days. Beneficial ownership as
reported in the above table has been determined in accordance with Rule
13d-3 of the Securities Exchange Act of 1934. The percentages are based
upon 3,996,078 shares outstanding, except for certain parties who hold
presently exercisable warrants or options to purchase shares. The
percentages for those parties who hold presently exercisable warrants or
options are based upon the sum of 3,996,078 shares plus the number of
shares subject to presently exercisable warrants or options held by them,
as indicated in the following notes.
(2) All shares are owned by Mr. Smith as joint tenants with his wife. Mr.
Smith's business address is 14270 Phillips Circle, Alpharetta, Georgia
30004.
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<PAGE> 5
(3) Includes 160,000 shares subject to presently exercisable stock purchase
warrants granted in connection with the initial stock offering of Mountain
National Bank, the predecessor of the Company and one of the Company's two
banking subsidiaries ("Mountain"). Mr. Williams' business address is 3350
Cumberland Circle, Suite 2200, Atlanta, Georgia 30339.
(4) Includes 30,000 shares subject to presently exercisable stock purchase
warrants granted in connection with Mountain's initial stock offering,
100,000 shares subject to presently exercisable stock options granted in
connection with Mr. Carroll's employment agreement and 15,000 shares
subject to presently exercisable stock options granted to Mr. Carroll by
the Board of Directors.
(5) Includes 6,035 shares owned by Mr. Coles' wife, with respect to which Mr.
Coles disclaims beneficial ownership. Mr. Coles' business address is 4685
Frederick Drive, Atlanta, Georgia 30336.
(6) Includes 13,454 shares subject to presently exercisable stock options.
(7) Includes 35,365 shares subject to presently exercisable stock options,
1,239 shares owned jointly with Mr. Francis' wife; 501 shares held by Mr.
Francis' daughter and 100 shares owned by Mr. Francis' wife, with respect
to which Mr. Francis disclaims beneficial ownership.
(8) Includes 31,880 shares subject to presently exercisable stock purchase
warrants granted in connection with Mountain's initial stock offering,
23,000 shares held by Hickok's Irrevocable Trust for which Mr. Hickok is
the Trustee, and 700 shares held by Mr. Hickok's wife. Mr. Hickok
disclaims beneficial ownership of shares owned by his wife.
(9) Includes 1,000 shares subject to presently exercisable stock purchase
warrants granted in connection with Mountain's initial stock offering,
25,400 shares subject to presently exercisable stock options, 6,000 shares
owned jointly by Mr. Kane and his wife and 200 shares owned by Mr. Kane as
custodian for his two minor children.
(10) Includes 45,000 shares subject to presently exercisable stock purchase
warrants granted in connection with Mountain's initial stock offering and
1,500 shares owned by Mr. McCloud's wife with respect to which Mr.
McCloud disclaims beneficial ownership.
(11) Includes 16,750 shares subject to presently exercisable stock options.
(12) Includes an aggregate of 257,245 shares subject to presently exercisable
stock options or stock purchase warrants.
There are no arrangements known to the Company, the operation of which
may at a subsequent date, result in a change in control of the Company.
-3-
<PAGE> 6
ITEM ONE
ELECTION OF DIRECTORS
The Board of Directors consists of five (5) members, all of whom stand
for re-election at the Annual Meeting. Proxies received will be voted FOR the
election of the nominees named below, unless authority to do so is withheld. In
the event any nominee is unable or declines to serve as a director at the time
of the meeting, the persons named as proxies therein will have discretionary
authority to vote the proxies for the election of such person or persons as may
be nominated in substitution by the present Board of Directors. Management knows
of no current circumstances which would render any nominee named herein unable
to accept nomination or election. The five nominees receiving the affirmative
vote of a plurality of all votes cast at the meeting by the holders of common
stock will be elected. All of the nominees have been directors of the Company
since November 1990, with the exception of Messrs. Cole and Francis, who have
served as directors since December 1994. Members of the Board of Directors are
elected annually to serve until the next Annual Meeting of Shareholders or until
their successors are elected and qualified.
The following persons have been nominated by management for election to
the Board of Directors of the Company:
J. RANDALL CARROLL, age 52, has served as Chairman of the Board,
President and Chief Executive Officer of the Company and Mountain since November
1990 and June 1987, respectively. He relinquished the title of President of the
Company upon the Company's acquisition of Charter Bank & Trust Co. ("Charter")
on December 30, 1994. Mr. Carroll was involved in the organization of Mountain
from June 1987 to August 1988, at which time Mountain opened for business. From
August 1972 until February 1987, Mr. Carroll was employed in various management
positions with National Bank of Georgia. Prior to leaving National Bank of
Georgia, Mr. Carroll was Senior Vice President in charge of Branch
Administration.
MICHAEL J. COLES, age 54, is the co-founder of Great American Cookie
Company, Inc., having served from 1977 until December 1996 as Chairman of the
Board and Chief Executive Officer. He presently acts as Chairman Emeritus. He
also serves on the Board of Directors of Cookies USA, Inc. Mr. Coles is also the
general partner or owner of other businesses involved in real estate,
photography and equipment leasing in the Atlanta, Georgia area. Mr. Coles serves
as Vice Chairman of the Board of Directors of Charter.
RONALD H. FRANCIS, age 54, has served as President, Chief Executive
Officer and a Director of Charter since 1989. He became President and Chief
Financial Officer of the Company upon the Company's acquisition of Charter on
December 30, 1994. Prior to joining Charter, Mr. Francis served as Vice Chairman
and President of the Chattahoochee Bank and as President of Chattahoochee
Bancorp. Inc.
PATRICK H. HICKOK, age 49, was owner, President and Chief Executive
Officer of Hickok's Sporting Goods from 1980 to June 1989. Since 1991, Mr.
Hickok has served as Vice
-4-
<PAGE> 7
President of Hickok's Team Sports in Doraville, Georgia, a division of Dillard's
Sports & Marine, and as President of Atlanta Embroidery and Twill.
WALTER J. MCCLOUD, II, age 59, been in the real estate and construction
business since 1971. He has been President and owner of Grove, Inc., a real
estate development company since 1992. Since 1980, he has been President and
owner of Royal Oak Properties, Inc., a real estate investment and construction
company. He continues to serve as President of Lynburn Enterprises, Inc.,
although that company has limited activities.
There are no family relationships between any director or executive
officer and any other director or executive officer of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE COMPANY'S
SHAREHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES NAMED IN THIS PROXY
STATEMENT.
COMMITTEES OF THE BOARD AND MEETINGS
The Company's Board of Directors presently has the following standing
committees:
(A) The Audit Committee, currently comprised of Messrs. Coles, Hickok
and McCloud. The Audit Committee, which held one meeting in 1997, is authorized
to review and make recommendations to the Board of Directors with respect to the
Company's audit procedures and independent auditor's report to management and to
recommend to the Board of Directors the appointment of independent auditors for
the Company, to review with the independent auditors the scope and results of
audits, to monitor the Company's financial policies and control procedures, to
monitor the non-audit services provided by the Company's auditors and to review
all potential conflicts of interest.
(B) The Compensation Committee, currently comprised of Messrs. Coles,
Hickok and McCloud. The Compensation Committee, which held two meetings in 1997,
is authorized to review and make recommendations to the Board of Directors with
respect to establishing salaries, bonuses and other compensation for the
officers of the Company and its subsidiaries.
(C) The Stock Option Committee, currently comprised of Messrs. Coles,
Hickok and McCloud. The Stock Option Committee, which held one meeting in 1997,
is responsible for administering the Company's 1991 Incentive Stock Option Plan.
The Company does not have a Directors Nominating Committee, that
function being reserved to the entire Board of Directors.
During 1997, the Board of Directors held a total of 12 meetings. Each
incumbent director attended at least 75% of the aggregate number of meetings
held by the Board and by the committees on which he served during the term of
his service.
-5-
<PAGE> 8
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons who own more than 10% of the
outstanding common stock of the Company, to file with the Securities and
Exchange Commission reports of changes in ownership of the common stock of the
Company held by such persons. Officers, directors and greater than 10%
shareholders are also required to furnish the Company with copies of all forms
they file under this regulation. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company and
representations that no other reports were required, during fiscal 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% shareholders were complied with.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company or one of the Company's subsidiaries
to or on behalf of the Company's Chief Executive Officer and the other most
highly compensated executive officers of the Company or of the Company's
subsidiaries whose cash compensation during fiscal 1997 exceeded $100,000 (the
"Named Executive Officers"), for fiscal 1997, 1996 and 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
------------------- ---------------------
Name and Securities Underlying Other Annual
Principal Position Year Salary Bonus Options Compensation(1)
- ------------------ ---- ------ ----- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
J. Randall Carroll 1997 $161,000 $60,000 7,500 $4,560
Chairman and Chief 1996 161,000 50,000 10,000 4,560
Executive Officer 1995 159,667 40,000 10,000 4,500
Ronald H. Francis 1997 $158,400 $50,000 10,000 $4,500
President and 1996 158,400 45,000 9,500 4,500
Chief Financial Officer 1995 148,800 40,000 7,500 4,464
Philip H. Ekern 1997 $ 84,900 $20,000 1,500 $2,487
Senior Vice President/ 1996 82,900 13,000 1,200 2,487
Chief Financial Officer 1995 79,600 10,000 1,000 2,388
(Charter Bank &
Trust Co.)
William L. Kane 1997 $106,000 $47,500 2,000 $3,000
Executive Vice 1996 101,000 40,000 2,000 2,850
President (Mountain 1995 101,000 30,000 2,000 2,850
National Bank)
Martha Sue Watkins 1997 $ 81,800 $32,500 1,000 $2,400
Secretary (Merit) 1996 81,800 22,500 1,000 2,400
Senior Vice President/ 1995 77,800 20,000 1,000 2,280
Cashier (Mountain
National Bank)
</TABLE>
(1) Represents the Company's matching contribution under the Company's 401(k)
Plan during the last fiscal year.
-6-
<PAGE> 9
EMPLOYMENT AGREEMENTS
On September 1, 1995, the Company and Mountain National Bank entered
into an Employment Agreement with J. Randall Carroll, pursuant to which Mr.
Carroll serves as Chairman of the Board and Chief Executive Officer of the
Company and as Chairman of the Board, President and Chief Executive Officer of
Mountain at an annual salary of $152,000. Adjustments to this annual minimum
base salary may be made based upon such factors as the Board of Directors in its
sole discretion deems appropriate given Mr. Carroll's performance of his duties
and an annual cost of living increase commensurate with those given other key
executive officers. Mr. Carroll is entitled to receive standard directors fees.
In addition, Mr. Carroll is entitled to receive, at the sole discretion of the
outside directors of the Company, an annual performance bonus in the form of
cash or stock options or both. Under a prior employment agreement with Mr.
Carroll, he has been granted 100,000 options at $5.00 per share exercisable
until August 2, 1998. The Employment Agreement also provides for Mr. Carroll to
receive group health, hospitalization, disability insurance, club memberships, a
monthly automobile allowance and use of a central station security system in his
principal residence. The Employment Agreement has a term of three years, with an
automatic three year renewal on each succeeding September 1, unless earlier
terminated in accordance with the Agreement.
Mr. Carroll's Employment Agreement contains a non-competition
provision, which provides that during the term of the agreement, and, if Mr.
Carroll voluntarily resigns or if his employment is terminated for "cause," then
for a period of one year thereafter, Mr. Carroll will not, without the prior
written consent of the Company and Mountain, serve as an executive officer of
any bank, bank holding company or other financial institution in DeKalb or
Gwinnett Counties in the State of Georgia. In addition, the agreement provides
that following any voluntary resignation or termination, Mr. Carroll will not,
without the prior written consent of the Company and Mountain (i) furnish anyone
with the name of, or any list or lists of, customers of the Company or any
subsidiary bank of the Company or utilize such list for information himself,
(ii) furnish, use or divulge to anyone any information acquired by him from the
Company or any subsidiary bank of the Company relating to the Company's or any
of its subsidiaries' methods of doing business, (iii) contact directly or
indirectly any customer of the Company or any subsidiary bank of the Company
with whom he had contact during the term of his employment in regard to offering
or providing banking services or related services, (iv) employ any employees of
the Company or any subsidiary bank of the Company with whom he had contact
during the term of his employment, or directly or indirectly cause such employee
to leave the Company or any subsidiary bank of the Company to work for another,
or (v) undertake a business opportunity that came to his attention through his
employment which he had not previously offered in writing to the Company or
Mountain and which the Company or Mountain had not rejected in writing.
The Employment Agreement provides that the Company and Mountain may
terminate Mr. Carroll for "cause," generally defined as such negligence or
misconduct as shall constitute a breach of the Employment Agreement, the failure
or refusal of Mr. Carroll to comply with provisions of the Employment Agreement,
or his being charged with a crime involving moral turpitude.
The Employment Agreement further provides that in the event of a
"change in control" of the Company, Mr. Carroll will be entitled to terminate
the Agreement and in such event will
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<PAGE> 10
be entitled to receive a lump sum cash payment equal to 200% times the minimum
annual base salary then in effect, as well as the immediate vesting of all stock
options contemplated under a previous employment contract between Mr. Carroll
and Mountain. For purposes of the Agreement, a "change in control" is defined as
(i) any transaction, whether by merger, consolidation, asset sale or otherwise
which results in the acquisition or beneficial ownership by any person or group
of 50% or more of the outstanding shares of common stock of the Company, (ii)
the sale of all or substantially all of the assets of the Company or (iii) the
liquidation of the Company.
On September 1, 1995, the Company and Charter Bank & Trust Co. entered
into an Employment Agreement with Ronald H. Francis, pursuant to which Mr.
Francis serves as President of the Company and as President and Chief Executive
Officer of Charter at an annual salary of $150,000. In all other material
respects, Mr. Francis' Employment Agreement is identical to that of Mr. Carroll
(with the exception of the additional options to purchase shares authorized for
Mr. Carroll).
INCENTIVE STOCK OPTION PLAN
On June 20, 1991, the Board of Directors of the Company adopted the
1991 Incentive Stock Option Plan (the "Plan"). Shareholders of the Company
approved the Plan at the 1992 Annual Meeting of Shareholders. The Plan
originally authorized options for up to 200,000 shares and provides for the
grant of options at the discretion of the Board of Directors or a committee
designated by the Board of Directors to administer the Plan. The Plan was
amended at the 1995 Annual Meeting of Shareholders to increase the number of
shares authorized for issuance upon the exercise of options granted under the
Plan to 350,000 shares. The option exercise price must be at least 100% of the
fair market value of the stock on the date the option is granted (or 110% in the
case of an option granted to a person who owns more than 10% of the total
combined voting power of all classes of stock of the Company), and the options
are exercisable by the holder thereof prior to their expiration in accordance
with the terms of his or her Stock Option Agreement and the Plan. Stock options
granted pursuant to the Plan expire no later than ten years from the date on
which such option is granted, except in the case of options granted to ten
percent (10%) shareholders, which options expire no later than five (5) years
from the date on which such option is granted. During the fiscal year ended
December 31, 1997, options were granted under the Plan to 34 persons to purchase
an aggregate of 24,500 shares of common stock of the Company, each at $19.50 per
share. Of the 350,000 shares currently authorized for issuance under the Plan,
options to purchase an aggregate of 123,400 are outstanding. During the fiscal
year ended December 31, 1997, options to purchase 1,950 shares expired and,
under the provisions of the Plan, such shares are again available for option
grants.
Prior to its acquisition by the Company on December 30, 1994, Charter
maintained a stock option plan which reserved 150,000 shares of Charter common
stock for issuance pursuant to non-qualified stock options. At the time of the
acquisition, options to purchase 67,725 shares were outstanding and pursuant to
the terms of the acquisition, became rights to purchase 109,037 shares of Merit
common stock (calculated using the agreed upon exchange ratio of 1.61 Merit
shares for each Charter share outstanding). As of March 20, 1998, of such
shares, options to purchase 92,989 shares were outstanding.
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<PAGE> 11
The following table presents information regarding fiscal 1997 grants
of options to purchase shares of the Company's common stock to the Named
Executive Officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1997
INDIVIDUAL GRANTS
-------------------------------------------------------
Number of Potential Realizable Value at Assumed
Securities % of Total Options Annual Rates of Stock Appreciation
Underlying Granted to for Option Term(1)
Options Employees in Exercise Expiration ----------------------------------------------
Name Granted Fiscal Year Price Date 0%(2) 5% 10%
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Randall Carroll 7,500(3) 23.4% $ 5.00 8/2/98 $138,750 $200,700 $341,857
Ronald H. Francis 10,000(4) 31.3% 19.50 12/31/07 N/A 122,600 310,800
Philip H. Ekern 1,500(4) 4.7% 19.50 12/31/07 N/A 18,390 46,620
William L. Kane 2,000(4) 6.3% 19.50 12/31/07 N/A 24,520 62,160
Martha Sue Watkins 1,000(4) 3.1% 19.50 12/31/07 N/A 12,260 31,080
</TABLE>
- --------------------------
(1) The dollar amounts under these columns represent the potential
realizable value of each grant of options assuming that the market
price of the Company's common stock appreciates in value from the date
of grant at 5% and 10% annual rates prescribed by the Commission and
therefore are not intended to forecast possible future appreciate, if
any, of the price of the Company's common stock.
(2) The column indicating 0% appreciation is shown only with respect to
options with an exercise price below the market value of the Company's
common stock at the date of grant and is provided to show the value of
the option at the grant date market price.
(3) Pursuant to the terms of his Employment Agreement, Mr. Carroll is
entitled to receive annually an option with respect to 15,000 shares of
common stock. In satisfaction of this obligation for fiscal 1997, the
Company granted Mr. Carroll an option with respect to 7,500 shares on
each of December 31, 1997 and January 1, 1998. These options are not
granted pursuant to the Company's 1991 Incentive Stock Option Plan.
(4) Options granted pursuant to the Company's 1991 Incentive Stock Option
Plan vest at 25% per year.
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<PAGE> 12
The following table provides information regarding the options
exercised by the Named Executive Officers during fiscal 1997 and the value of
options outstanding for such individuals at December 31, 1997:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Shares Fiscal Year End at Fiscal Year End
Acquired on Exercisable/ Exercisable/
Name Exercise Value Realized Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J. Randall Carroll -- -- 107,500/-0- $ 1,558,750/$0
Ronald H. Francis -- -- 41,270/17,125 $ 572,472/$55,218
Phillip H. Ekern -- -- 13,454/2,400 $ 212,233/$ 6,975
William L. Kane 800 $ 11,000 27,400/3,500 $ 391,959/$11,625
Martha Sue Watkins -- -- 16,750/1,750 $ 235,745/$ 5,813
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company receive directors fees of $700 per month.
CERTAIN TRANSACTIONS
The Company's subsidiaries, Mountain National Bank and Charter Bank &
Trust Co., have outstanding loans to certain of the Company's directors, their
associates and members of the immediate families of the directors and executive
officers. These loans were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with persons not affiliated
with the Company or the Banks and did not involve more than the normal risk of
collectibility or present other unfavorable features.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this proxy statement, in whole or in part, the following
Report of the Compensation Committee of the Board of Directors on Executive
Compensation shall not be incorporated by reference into any such filings.
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<PAGE> 13
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
In accordance with proxy statement rules of the Securities and Exchange
Commission, the Compensation Committee of the Board of Directors of the Company
offers the following report regarding compensation policies for executive
officers and the Chief Executive Officer of the Company with respect to
compensation paid to such persons during the last fiscal year.
During 1997, the Compensation Committee of the Company was comprised of
Michael J. Coles, Patrick H. Hickok and Walter J. McCloud, II, each a
non-employee director of the Company. It is the Committee's responsibility to
establish the salaries, bonuses and other compensation of the Chief Executive
Officer and other executive officers of the Company and its banking
subsidiaries. In formulating its compensation policy and decisions, the
Compensation Committee endeavors to provide a competitive compensation package
that enables the Company to attract and retain key executives and to integrate
compensation programs with the Company's annual and long-term business
strategies and objectives and focus executive actions on the fulfillment of
those objectives.
The Company's executive compensation program generally consists of base
salary, annual incentive compensation and long-term equity incentives in the
form of stock options. Base salaries for executive officers are reviewed
annually and, following a review of the Company's performance during the
previous fiscal year, the individual's contribution to that performance and the
individual's level of responsibility, adjusted accordingly. In order to align
executive officers' interests more closely with the interests of the
shareholders of the Company, the Company's long-term compensation program
emphasizes the grant of stock options exercisable for shares of common stock.
The amount of such awards, if any, is determined from time to time by the Stock
Option Committee and reviewed by the Compensation Committee. The Compensation
Committee may take into account various factors in evaluating the size of stock
option grants, including the need to attract and retain individuals who will
provide valuable service to the Company.
In approving the compensation paid in 1997 to Mr. Carroll, the
Company's Chief Executive Officer, the Compensation Committee considered the
following factors:
(i) the reasonableness of Mr. Carroll's salary relative to that
of chief executive officers of similarly placed public
companies;
(ii) Mr. Carroll's contribution to the overall financial
performance of the Company, and his leadership within the
Company and the communities it serves.
With respect to the other executive officers of the Company and the
subsidiary banks, the Compensation Committee considered the salaries to be
commensurate with those paid to similarly positioned executives in similar
companies.
Michael J. Coles
Patrick H. Hickok
Walter J. McCloud, II
-11-
<PAGE> 14
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Company's common stock against
the cumulative total return of the Nasdaq Market Index and the Nasdaq Bank
Index, for the approximately two and one-half-year period commencing June 27,
1995 (the date the Company's common stock commenced trading on the Nasdaq
National Market) and ending December 31, 1997. The graph assumes that the value
of the investment in the Company's common stock and each index was $100 on June
27, 1995. The change in cumulative total return is measured by dividing (i) the
sum of (a) the cumulative amount of dividends for the period, assuming dividend
reinvestment, and (b) the change in share price between the beginning and end of
the period, by (ii) the share price at the beginning of the period.
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY,PEER GROUP AND BROAD MARKET
- -----------------------FISCAL YEAR ENDING-----------------------
COMPANY 1995 1995 1996 1997
<S> <C> <C> <C> <C>
MERIT HOLDING CORP 100.00 128.13 150.52 247.42
PEER GROUP 100.00 123.20 162.66 274.79
BROAD MARKET 100.00 110.52 137.34 168.00
</TABLE>
THE PEER GROUP WAS:
NASDAQ BANK INDEX
THE BROAD MARKET INDEX CHOSEN WAS:
NASDAQ MARKET INDEX
-12-
<PAGE> 15
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP served as independent accountants of the Company
for the fiscal year ended December 31, 1997. The Board of Directors has
appointed Price Waterhouse LLP to serve as independent accountants of the
Company for the fiscal year ending December 31, 1998. Representatives of Price
Waterhouse LLP are expected to be present at the shareholders' meeting and will
have the opportunity to make a statement if they desire to do so and to respond
to appropriate questions.
ANNUAL REPORT TO SHAREHOLDERS AND REPORT ON FORM 10-K
Additional information concerning the Company, including financial
statements of the Company, is provided in the Company's 1997 Annual Report to
Shareholders that accompanies this proxy statement. The Company's Annual Report
on Form 10-K for the year ended December 31, 1997, as filed with the Securities
and Exchange Commission, is available to shareholders who make a written request
therefore to Mrs. Martha Sue Watkins, at the offices of the Company, 5100
LaVista Road, Tucker, Georgia 30085. Copies of exhibits filed with that report
or referenced therein will be furnished to shareholders of record upon request
and payment of the Company's expenses in furnishing such documents.
SHAREHOLDER PROPOSALS
Any proposal to be presented at next year's annual meeting must be
received at the principal executive offices of the Company not later than
December 7, 1998, directed to the attention of the Secretary, for consideration
for inclusion in the Company's proxy statement and form of proxy relating to
that meeting. Any such proposals must comply in all respects with the rules and
regulations of the Securities and Exchange Commission.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
the Annual Meeting. However, if other matters should come before the Annual
Meeting, it is the intention of the persons named in the enclosed form of Proxy
to vote the Proxy in accordance with their judgment of what is in the best
interest of the Company.
By Order of the Board of Directors
J. Randall Carroll
Chairman of the Board
and Chief Executive Officer
Tucker, Georgia
April 6, 1998
-13-
<PAGE> 16
APPENDIX
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF
MERIT HOLDING CORPORATION
The undersigned shareholder(s) of Merit Holding Corporation, a Georgia
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated April 6, 1998, and hereby appoints
Roy L. Simmons, Jr. and Ruth B. McLarty and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1998 Annual Meeting
of Shareholders of Merit Holding Corporation to be held on Tuesday, May 19, 1998
at 10:00 a.m. Eastern Time, at The Ashford Club, 10th Floor, 400 Perimeter
Center Terrace, N.E., Atlanta, Georgia 30346, and at any adjournment or
postponement thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below:
1. To elect five (5) directors for a term of one year and until their
successors are elected and qualified:
<TABLE>
<S> <C> <C> <C> <C> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ] ABSTAIN
(except as marked to the contrary below) to vote for all
nominees
</TABLE>
J. Randall Carroll; Michael J. Coles; Ronald H. Francis; Patrick H. Hickok; and
Walter J. McCloud, II
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
---------------------------------------------------------------------------
2. In their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or postponement thereof.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY. THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR THE
ELECTION OF THE NAMED DIRECTOR NOMINEE AND AS THE PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE MEETING.
Dated: , 1998
----------------------
------------------------------
Name of Shareholder
------------------------------
No. of Shares
------------------------------
Signature
------------------------------
Signature
(This Proxy should be marked,
dated, and signed by the
shareholder(s) exactly as his
or her name appears hereon,
and returned promptly in the
enclosed envelope. Persons
signing in a fiduciary
capacity should so indicate.
If shares are held by joint
tenants or as community
property, both should sign.)
