NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF SIMMONS FIRST NATIONAL CORPORATION:
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
Simmons First National Corporation will be held at the Banquet Hall of the Pine
Bluff convention Center, Pine Bluff, Arkansas, at 7:45 P.M., on Tuesday, May
10, 1994 for the following purposes:
1. To fix at 9 the number of directors to be elected at the meeting;
2. To elect 9 persons as directors to serve until the next annual
shareholders' meeting and until their successors have been duly elected
and qualified;
3. To amend the Articles of Incorporation to adopt the Arkansas Business
Corporation Act of 1987 as the corporate law to govern the affairs of the
company;
4. To amend the Articles of Incorporation to limit the liability of directors
as permitted by the Arkansas Business Corporation Act of 1987; and
5. To transact such other business as may properly come before the meeting or
any adjournment or adjournments thereof;
Only shareholders of record at the close of business on March 10, 1994,
will be entitled to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/ John L. Rush
John L. Rush, Secretary
Pine Bluff, Arkansas
April 11, 1994
<PAGE>
PROXY
ANNUAL MEETING OF SHAREHOLDERS
SIMMONS FIRST NATIONAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Don Graves, Pollye Tharp, William C.
Bridgforth and each of them proxies, with full power of substitution to vote
for the undersigned all shares of the common stock of Simmons First National
Corporation which the undersigned would be entitled to vote is personally
present at the Annual Meeting of Shareholders to be held on Tuesday, May 10,
1994, at 7:45 P.M., and at any adjournment or adjournments thereof, upon the
matters described in the accompanying Proxy Statement and upon any other
business that may properly come before the meeting or any adjournment thereof.
Said proxies are directed to vote or refrain from upon the following matters
as indicated below, and otherwise to vote in their discretion:
(1) PROPOSAL TO FIX NUMBER OF DIRECTORS AT 9: (mark only one box)
FOR
-----
AGAINST
-----
ABSTAIN
-----
(2) ELECTION OF DIRECTORS: (mark only one box)
FOR all nominees listed below, an equal number of votes each
----
FOR each of the nominees below, that number of shares filled
in beside each nominee's name (you may cast a total number of
shares equal to the number of shares you hold times 9; these
votes may be cast all for one nominee or spread among two or
more nominees as you see fit)
----
WITHHOLD AUTHORITY to vote for all nominees listed below
----
WITHHOLD AUTHORITY to vote for each of the nominees below
whose name has been lined through (shares will be voted FOR
all remaining nominees, divided equally among them)
----
W. E. Ayres Paul M. Henson Adam B. Robinson
- -- -- --
Ben V. Floriani J. Thomas May Dr. Harry L. Ryburn
- -- -- --
C. Ramon Greenwood David R. Perdue Donald W. Stone
- -- -- --
(3) PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO ADOPT THE
ARKANSAS BUSINESS CORPORATION ACT OF 1987 AS THE CORPORATE LAW TO
GOVERN THE AFFAIRS OF THIS CORPORATION: (Mark only one box)
FOR
-----
AGAINST
-----
ABSTAIN
-----
<PAGE>
(4) PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO LIMIT THE
LIABILITY OF DIRECTORS AS PERMITTED BY THE ARKANSAS BUSINESS
CORPORATION ACT OF 1987: (This proposal may only be adopted if
Proposal (3) above is also adopted): (Mark only one box)
FOR
-----
AGAINST
-----
ABSTAIN
-----
(5) Upon such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS (1), (3) AND (4) AND "FOR" THE ABOVE NOMINEES FOR
DIRECTOR.
The undersigned acknowledge receipt with this proxy of a copy of the
Notice of Annual Meeting and Proxy Statement.
----------------------------------------------
----------------------------------------------
Signature(s) of Shareholders(s)
Dated: -------------------, 1994.
IMPORTANT: Please date this proxy and sign
your name exactly as your name appears. If
stock is held jointly, both should sign.
Persons signing in a representative or
fiduciary capacity (executors,
administrators, trustees, guardians, etc.)
should so indicate, giving full title.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ENVELOPE PROVIDED.
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
SIMMONS FIRST NATIONAL CORPORATION
P. O. BOX 7009
PINE BLUFF, ARKANSAS 71611
PROXY STATEMENT
MEETING TO BE HELD ON MAY 10, 1994
PROXY AND PROXY STATEMENT FURNISHED ON OR ABOUT APRIL 11, 1994
The enclosed proxy is solicited on behalf of the Board of Directors of
Simmons First National Corporation (the "Company") for use at the annual
meeting of the shareholders of the Company to be held on Tuesday, May 10, 1994,
at 7:45 p.m., at the Banquet Hall of the Pine Bluff Convention Center, Pine
Bluff, Arkansas, or at any adjournment or adjournments thereof. When such proxy
is properly executed and returned, the shares represented by it will be voted
at the meeting in accordance with any directions noted thereon, or if no
direction is indicated, will be voted in favor of the proposals set forth in
the notice attached hereto.
REVOCABILITY OF PROXY
Any shareholder giving a proxy has the power to revoke it at any time
before it is voted.
COSTS AND METHOD OF SOLICITATION
The costs of soliciting proxies will be borne by the Company. In addition
to the use of the mails, solicitation may be made by employees of the Company
by telephone, telegraph and personal interview. These persons will receive no
compensation other than their regular salaries, but they will be reimbursed by
the Company for their actual expenses incurred in such solicitations.
VOTING SECURITIES AND PRINCIPAL HOLDERS
At the meeting, holders of the $5.00 par value Class A common stock (the
"Common Stock") of the Company will be entitled to one vote, in person or by
proxy, for each share of the Common Stock owned of record, as of the close of
business on March 10, 1994. On that date, the Company had outstanding 3,677,378
shares of the Common Stock, the only class of stock of the Company outstanding,
514,203 of such shares were held by the Trust and Investment Management Group
of Simmons First National Bank (the "Bank") in a fiduciary capacity, of which
64,060 shares will not be voted at the meeting. Accordingly, 3,613,318 shares
will be deemed outstanding and entitled to vote at the meeting.
In connection with the election of directors, each shareholder has
cumulative voting rights under the laws of the State of Arkansas and the bylaws
of the Company. Each shareholder may cast one vote per share held for as many
directors as are to be elected or may accumulate the votes and cast for one
nominee as many votes as the number of directors to be elected multiplied by
the number of shares held, or may distribute the votes upon the same principle
among as many nominees as is desired.
<PAGE>
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth all persons known to management who own
beneficially or of record, more than 5% of the outstanding Common Stock, the
number of shares owned by the named Executive Officers in the Summary
Compensation Table and by all Directors and Executive Officers as a group.
<CAPTION>
Name and Address of Shares Owned Percent
Beneficial Owner Beneficially<F1> of Class
- ------------------- ---------------- -----------
<S> <C> <C>
Simmons First National
Corporation Employee
Stock Ownership Trust 334,013<F2> 8.99%
501 Main Street
Pine Bluff, Arkansas 71601
W. E. Ayres<F3> 41,968 1.13%
Barry L. Crow<F4> 9,664 *
J. Thomas May<F5> 16,866 *
John L. Rush<F6> 9,153 *
Donald W. Stone<F7> 61,818 1.66%
All directors and officers 255,168 6.87%
as a group of 11 persons
- -----------------------
* The shares beneficially owned represent less than 1% of the outstanding
common shares.
<FN>
1 Under the applicable rules, "beneficial ownership" of a security means,
directly or indirectly, through any contract, relationship, arrangement,
undertaking or otherwise, having or sharing voting power, which includes the
power to vote or to direct the voting of such security, or investment power,
which includes the power to dispose of or to direct the disposition of such
security. Unless otherwise indicated below, each beneficial owner named has sole
voting and investment power with respect to the shares identified.
<FN>
2 The Simmons First National Corporation Employee Stock Ownership Plan
("ESOP") purchases, holds and disposes of shares of the Company's stock pursuant
to a Plan under the terms of which the trustees of the Trust determine when, how
many and upon what terms to purchase or dispose of such shares, other than by
distribution under the Plan. Shares held by the Trust may be voted only in
accordance with the written instructions of the beneficiaries of the Trust, who
are all employees of the Company and its subsidiaries.
<FN>
3 Mr. Ayres owned of record 20,126 shares; 404 shares were owned jointly
with his wife; 5,672 shares were owned by his wife; 8,766 shares were held in
his fully vested account in the ESOP and 7,000 shares were deemed held through
exercisable incentive stock options.
<FN>
4 Mr. Crow owned of record 2,132 shares; 5,132 shares were held in his
fully vested account in the ESOP and 2,400 shares were deemed held through
exercisable incentive stock options.
<PAGE>
<FN>
5 Mr. May owned of record 7,154 shares; 430 shares were owned by his
children; 2,282 shares were held in his account in the ESOP; and 7,000 shares
were deemed held through exercisable incentive stock options.
<FN>
6 Mr. Rush owned of record 2,248 shares; 4,505 shares were held in his
fully vested account in the ESOP and 2,400 shares were deemed held through
exercisable incentive stock options.
<FN>
7 Mr. Stone owned of record 3,456 shares; 26,068 shares were owned jointly
with his mother; 22,618 shares were owned by his wife; 6,334 shares were held in
his fully vested account in the ESOP; 1,542 shares were owned by trusts for his
children in which Mr. Stone, as trustee, shares the power of disposition and
voting; and 1,800 shares were deemed held through exercisable incentive stock
options.
</TABLE>
ELECTION OF DIRECTORS
The Board of Directors of the Company recommends that the number of
directors to be elected at the meeting be fixed at 9 and that the persons named
below be elected as such directors, to serve until the next annual meeting of
the shareholders and until their successors are duly elected and qualified.
Each of the persons named below is presently serving as a director of the
Company for a term which ends on May 10, 1994 or such other date upon which a
successor is duly elected and qualified.
The proxies hereby solicited will be voted for the election of the
nominees shown below, unless otherwise designated in the proxy. If at the
time of the meeting any of the nominees should be unable or unwilling to serve,
the discretionary authority granted in the proxy will be exercised to vote for
the election of a substitute or substitutes. Management has no reason to
believe that any substitute nominee or nominees will be required.
The table below sets forth the name, age, principal occupation or
employment during the last five years, prior service as a director of the
Company, the number of shares and percentage of the outstanding Common Stock
beneficially owned, with respect to each director and nominee proposed, as
reported by each nominee:
<PAGE>
<TABLE>
<CAPTION>
Director Shares Owned Percent
Name Age Principal Occupation<F1> Since Beneficially<F2> of Class
- ----- ---- ------------------------ ---------- ---------------- --------
<S> <C> <C> <C> <C> <C>
W. E. Ayres 63 Chairman of the 1977 41,968<F3> 1.13%
Company; Chairman
of the Bank
Ben V. Floriani 51 Chairman and Chief 1988 8,889<F4> *
Executive Officer,
Simmons First Bank
of Lake Village
C. Ramon Greenwood 66 President, Wave 9 1991 10,138<F5> *
Enterprises, Inc.
(management consultant)
Paul M. Henson 59 Resident Manager, 1991 3,000<F6> *
International
Paper Company
J. Thomas May 47 President and Chief 1987 16,866<F7> *
Executive Officer of
the Company; President
and Chief Executive
of the Bank
David R. Perdue 59 Vice President, 1976 11,168 *
JDR, Inc. (Investments)
Adam B. Robinson 69 Chairman, Ralph 1968 41,296<F8> 1.11%
Robinson & Son, Inc.
(funeral directors)
Harry L. Ryburn 58 Orthodontist 1976 41,208<F9> 1.11%
Donald W. Stone 63 Chairman, Simmons 1977 61,818<F10> 1.66%
First Bank of Jonesboro
- -------------------
<FN>
* The shares beneficially owned represent less than 1% of the outstanding
common shares.
<FN>
1 All persons have been engaged in the occupation listed for at least five
years.
<FN>
2 Under the applicable rules, "beneficial ownership" of a security means,
directly or indirectly, through any contract, relationship, arrangement,
undertaking or otherwise, having or sharing voting power, which includes the
power to vote or to direct the voting of such security, or investment power,
which includes the power to dispose or to direct the disposition of such
security. Unless otherwise indicated below, each beneficial owner named has sole
voting and investment power with respect to the shares identified.
<PAGE>
<FN>
3 Mr. Ayres owned of record 20,126 shares; 404 shares were owned jointly
with his wife; 5,672 shares were owned by his wife; 8,766 shares were held in
his fully vested account in the ESOP; and 7,000 shares were deemed held through
exercisable incentive stock options.
<FN>
4 Mr. Floriani owned of record 4,000 shares; 3,089 shares were held in his
fully vested account in the ESOP; and 1,800 shares were deemed held through
exercisable incentive stock options.
<FN>
5 Mr. Greenwood owned of record 9,212 shares; 200 shares were owned
jointly with his wife; 526 shares were owned by his wife; and 200 shares were
owned by Wave 9 Enterprises, Inc., of which Mr. Greenwood is President.
<FN>
6 Mr. Henson owned of record 1,500 shares; and 1,500 shares were owned by
his wife.
<FN>
7 Mr. May owned of record 7,154 shares; 430 shares were owned by his
children; 2,282 shares were held in his account in the ESOP; and 7,000 shares
were deemed held through exercisable incentive stock options.
<FN>
8 Mr. Robinson owned of record 9,044 shares; 10,950 shares were owned by
corporations of which he is the President, a director and substantial
shareholder; and 21,302 shares owned by his wife.
<FN>
9 Dr. Ryburn owned of record 29,092 shares; and 12,116 shares were owned
by his wife.
<FN>
10 Mr. Stone owned of record 3,456 shares; 26,068 shares were owned
jointly with his mother; 22,618 shares were owned by his wife; 6,334 shares were
held in his fully vested account in the ESOP; 1,542 shares were owned by trusts
for his children in which Mr. Stone, as trustee, shares the power of disposition
and voting; and 1,800 shares were deemed held through exercisable incentive
stock options.
</TABLE>
CERTAIN TRANSACTIONS
From time to time the Bank, Simmons First Bank of Lake Village and Simmons
First Bank of Jonesboro, banking subsidiaries of the Company, have made loans
and other extensions of credit to directors, officers, their associates and
members of their immediate families, and from time to time directors, officers
and their associates and members of their immediate families have placed
deposits with these banks. These loans, extensions of credit and deposits were
made in the ordinary course of business 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 collectibility or present other unfavorable features.
COMMITTEES AND RELATED MATTERS
Among the various committees of the Board of Directors of the Company are
the Audit and Security Committee and Executive Compensation and Retirement
Committee. The board of directors of the Company has no standing nominating
committee or other committee performing a similar function.
The Audit and Security Committee is presently composed of David Perdue,
Adam B. Robinson, William H. Roberts (non-voting Advisory Director), Mary
Pringos (non-voting Associate Director), Lara Hutt, III (Director of Simmons
<PAGE>
First National Bank), N. Casey Jones (non-voting Advisory Director), and
Louis L. Ramsay, Jr. (non-voting Advisory Director). This committee provides
assistance to the Board in fulfilling its responsibilities concerning
accounting and reporting practices, by regularly reviewing the adequacy of the
internal and external auditors, the disclosure of the financial affairs of the
Company and its subsidiaries, the control systems of management and internal
accounting controls. During 1993, the Audit and Security Committee met 12
times.
The Executive Compensation and Retirement Committee, presently composed of
C. Ramon Greenwood, Harry L. Ryburn, Adam B. Robinson, William H. Roberts
(non-voting Advisory Director), N. Casey Jones (non-voting Advisory Director),
and Louis L. Ramsay, Jr. (non-voting Advisory Director), fixes the compensation
of executive officers of the Company, adopts the salary programs for other
personnel and administers the retirement and employee benefit plans of the
Company. During 1993, the Executive Compensation Committee met 6 times.
The Board of Directors of the Company met 12 times during 1993, including
regular and special meetings. No director attended fewer than 75% of the
aggregate of all meetings of the Board of Directors and of all committees on
which such director served, except the following directors who attended the
percentage indicated: Paul Henson, 71%.
<TABLE>
DIRECTOR COMPENSATION
The following table set forth the schedule of compensation of Directors of
the Company and its subsidiaries.
<CAPTION>
Entity Monthly Retainer Meeting Fee<F1>
------ ---------------- ---------------
<S> <C> <C>
Simmons First National Corporation
Board of Directors $300 $100
All Committees 0 100
Simmons First National Bank
Board of Directors $300 $100
Senior Loan Committee 400<F2> 0
Agricultural Loan Committee 100 50
All Other Committees 0 100
Simmons First Bank of Jonesboro
Board of Directors $ 0 $100
All Committees 0 100
Simmons First Bank of Lake Village
Board of Directors $ 0 $ 50
All Committees 0 100
<FN>
1 Only Simmons First Bank of Lake Village pays meeting fees to directors
who are also officers of that entity. All entities pay meeting fees based upon
meetings attended except Simmons First Bank of Lake Village, which pays based
upon scheduled meetings.
<PAGE>
<FN>
2 The Senior Loan Committee monthly retainer is payable only to directors
on the committee who are not officers of the bank.
</TABLE>
EXECUTIVE COMPENSATION
The tables below set forth the compensation for 1991, 1992 and
1993 of the Chief Executive Officer and the four highest paid
executive officers of the Company, whose total cash compensation
exceeded $100,000 during 1993.
<TABLE>
Summary Compensation Table
---------------------------
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------ --------------
Other
Annual Securities All Other
Name and Compen- Underlying Compen-
Principal sation<F2> Options/ sation<F3>
Position Year Salary($) Bonus($)<F1> ($) SARs (#) ($)
- --------- ---- -------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
W. E. Ayres, 1993 $195,000 $48,495 $11,200 0 $84,323
Chief Executive 1992 $185,000 $51,258 $11,400 0 $47,599
Officer 1991 $170,000 $47,016 N/A 5,000 N/A
J. Thomas May, 1993 $195,000 $48,495 $10,700 0 $58,855
President 1992 $185,000 $51,258 $10,000 0 $56,593
1991 $162,500 $47,016 N/A 9,000 N/A
Donald W. Stone, 1993 $122,735 $24,811 $ 6,000 0 $16,770
Chairman, Simmons 1992 $117,735 $23,245 $10,200 3,000 $42,686
First Bank of 1991 $117,735 $14,767 N/A 0 N/A
Jonesboro
Barry L. Crow, 1993 $109,768 $28,195 0 0 $ 6,964
Executive Vice 1992 $103,818 $22,053 0 4,000 $ 6,112
President 1991 $101,803 $20,228 N/A 0 N/A
John L. Rush, 1993 $ 95,875 $20,864 $ 9,600 0 $ 6,596
Secretary 1992 $ 89,264 $20,027 $ 9,500 4,000 $ 5,405
1991 $ 87,051 $18,369 N/A 0 N/A
______________________
<FN>
1 The Bonuses shown in this column are earned and paid pursuant to the
Simmons First National Corporation Incentive Compensation Program which is more
fully described in the Compensation Committee Report on Executive Compensation.
<FN>
2 Fees paid to Directors and the Secretary for attendance at meetings of
the Board of Directors and committees of the Company and its subsidiaries.
This information is not required for 1991.
<FN>
3 For 1993, this category includes for MR. AYRES contribution to the ESOP,
$8,512, the Company's matching contribution to the Section 401(k) Plan, $2,182,
the accrual to his deferred compensation agreement, $71,361 and life insurance
premiums, $2,268; for MR. MAY contribution to the ESOP, $8,512, the Company's
<PAGE>
matching contribution to the Section 401(k) Plan, $1,500, the accrual to his
deferred compensation agreement, $48,687 and life insurance premiums, $156; for
MR. STONE contribution to the ESOP, $5,385, the Company's matching contribution
to the Section 401(k) Plan, $1,476, the accrual to his deferred compensation
agreement, $7,703 and life insurance premiums, $2,206; for MR. CROW
contribution to the ESOP, $4,833, the Company's matching contribution to the
Section 401(k) Plan, $1,674, and life insurance premiums, $457; for MR. RUSH
contribution to the ESOP, $4,257, the Company's matching contribution to the
Section 401(k) Plan, $1,474, and life insurance premiums, $865. For 1992, this
category includes for MR. AYRES contribution to the ESOP, $7,709, the Company's
matching contribution to the Section 401(k) Plan, $2,119, the accrual to his
deferred compensation agreement, $37,201 and life insurance premiums, $570; for
MR. MAY contribution to the ESOP, $7,709, the Company's matching contribution
to the Section 401(k) Plan, $1,500, the accrual to his deferred compensation
agreement, $46,814 and life insurance premiums, $570; for MR. STONE contribution
to the ESOP, $4,459, the Company's matching contribution to the Section 401(k)
Plan, $1,476, the accrual to his deferred compensation agreement, $36,123 and
life insurance premiums, $538; for MR. CROW contribution to the ESOP, $4,237,
the Company's matching contribution to the Section 401(k) Plan, $1,426, and
life insurance premiums, $449; for MR. RUSH contribution to the ESOP, $3,685,
the Company's matching contribution to the Section 401(k) Plan, $1,334, and
life insurance premiums, $386. This Information is not required for 1991.
Certain additional personal benefits, including club memberships and personal
use of automobiles, are granted to officers of the Company, including the named
executive officers; however, in the Company's estimation the value of such
personal benefits to the named executive officers does not exceed the lesser of
$50,000 or 10% of the aggregate compensation of any such officer.
</TABLE>
OPTION GRANTS DURING THE 1993 FISCAL YEAR
No Stock Options or Stock appreciation Rights ("SARs") were granted by the
Company during fiscal 1993.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table sets forth information with respect to the named
executive officers concerning exercised and unexercised options and SARs held
as of December 31, 1993.
<PAGE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
-----------------------------------------------------
AND FISCAL YEAR END OPTION/SAR VALUES<F1>
------------------------------------------
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)<F2>
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- ---- ------------- -------------
<S> <C> <C>
W. E. Ayres 7000 / 3000 $115,188 / $47,625
J. Thomas May 7000 / 7000 $115,188 / $107,875
Donald W. Stone 1200 / 1800 $ 15,625 / $23,513
Barry L. Crow 1600 / 2400 $ 20,900 / $31,350
John L. Rush 1600 / 2400 $ 20,900 / $31,350
- --------------------
<FN>
1 The Company has no outstanding SARs and none of the outstanding Options
were exercised by the named executive officers during 1993.
<FN>
2 The Values are computed using $27.50, the closing price for the
Company's stock on December 31, 1993.
<PAGE>
PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return, as of
December 31 of each year shown, for the Common Stock (assuming reinvestment of
dividends), as compared to the S&P 500 Index and the NASDAQ Bank Stock Index,
assuming a $100 investment on December 31, 1988.
Note: The stock price performance shown on the graph below is not
indicative of future price performance.
SUMMARY OF PERFORMANCE GRAPH
The Performance Graph depicts the comparison of cumulative five year total
return of Simmons First National Corporation common stock, the S&P 500 Index
and the NASDAQ Bank Index commencing on December 31, 1988. The graph plots the
change in relative value of SFNC stock and each of the indices, as of December
31 of the years 1989 through 1993. The data points plotted in the graph are
set forth in the table below.
</TABLE>
<TABLE>
Comparison of Cumulative Five Year Total Return
SFNC, S&P 500 Index and NASDAQ Bank Index
<CAPTION>
1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
SFNC $100 $111 $128 $165 $291 $361
S&P 500 $100 $132 $128 $166 $179 $197
NASDAQ Bank $100 $111 $ 81 $134 $194 $221
</TABLE>
<PAGE>
DEFERRED COMPENSATION AND CHANGE IN CONTROL ARRANGEMENTS
Three of the five individuals named above (W. E. Ayres, J. Thomas May and
Donald W. Stone) are each a party to a deferred compensation agreement, under
the terms of which Simmons First National Bank, in the case of Ayres and May,
and Simmons First Bank of Jonesboro, in the case of Stone, agrees to pay to
each such individual, upon normal retirement at age 65, or upon death or
disability prior to age 65, a monthly sum of deferred compensation equal to one
twelfth (1/12) of fifty percent (50%) of the final average compensation (the
average compensation paid to the individual by the employer for the most recent
five consecutive calendar years), less the accrued monthly benefit to such
individual under the deferred annuity received upon the termination of the
Company's pension plan; such payments begin the month following retirement and
continue for 120 consecutive months or until the individual's death, whichever
shall occur later.
Further, the deferred compensation agreements provide that, in the event
of a change of control of the Company and the subsequent separation from service
of the officer, eligibility to receive payments under the Agreement will be
accelerated. In such circumstance, if the officer has attained age 60, the
officer is entitled to commence receiving the specified monthly payments under
the agreement immediately after separation from service, without any actuarial
reduction due to age. If the officer has not attained age 60, the officer is
entitled to immediately commence receiving 72 monthly payments equal to one
twelfth (1/12) of fifty (50%) percent of the final average compensation less the
accrued monthly benefit to such individual then payable under the annuity
received pursuant to the termination of the Company's pension plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Compensation and Retirement Committee is presently composed
of C. Ramon Greenwood, Harry L. Ryburn, Adam B. Robinson, N. Casey Jones
(non-voting Advisory Director), William H. Roberts (non-voting Advisory
Director), and Louis L. Ramsay, Jr. (non-voting Advisory Director). None of
these individuals were employed as officers or employees of the Company during
1993. Louis L. Ramsay, Jr. was previously employed by the Company in various
capacities including Chief Executive Officer, prior to his retirement in 1983.
Compensation Committee Report on Executive Compensation
- -------------------------------------------------------
The Executive Compensation and Retirement Committee issues the following
report on the general guidelines concerning executive compensation and the bases
for establishing the compensation of the Chief Executive Officer:
GENERAL COMPENSATION GUIDELINES FOR EXECUTIVE OFFICERS
The Company and its subsidiaries in establishing executive compensation,
analyze four aspects of total compensation: Salary, Incentive Compensation,
Stock Options and Retirement Compensation.
The Company, after consultation with a compensation consultant, established
job grades and determined the value of each job within the Company. Subject to
adjustment for unique factors affecting the job or the executive, the Company
generally targets the midpoint of the market salary range, as adjusted annually,
as the guide for salaries for executive officers, who are satisfactorily
performing their duties. However, in spite of performance which the committee
<PAGE>
believes to be exemplary, the salaries of the Chief Executive Officer and the
President of the Company have been and are significantly below the midpoint of
the market compensation ranges for these positions.
The Simmons First National Corporation Incentive Compensation Program
provides compensatory incentives to executive officers to reinforce achievement
of the financial goals of the Company, its subsidiary banks and the
participating executives. At the beginning of each year, participating
executives are allocated incentive points, which are the basis of the
executive's participation within the program. Annually, performance thresholds
are established for the Company (net income threshold), each of the subsidiary
banks (net income threshold) and each of the participating executive officers
(thresholds based upon actual department income and expense factors versus
budgeted items). Incentive compensation is payable under the Plan for a fiscal
year only if (1) the Company satisfied its threshold, (2) the entity employing
the executive satisfied its threshold and (3) the executive satisfied at
least 75% of the applicable individual threshold. Performance by the Company
and the subsidiary banks above the thresholds may proportionately increase the
compensation of each incentive point.
The Company maintains an incentive stock option plan for additional
incentive compensation to certain executive officers. The Plan provides an
incentive to the participating executive officers to enhance the long term
financial performance of the Company and the value of the Common Stock.
Participation under this Plan has been offered to those executive officers whose
long term employment and job performance can significantly affect the continued
profitability of the Company and its subsidiary banks.
The Company also maintains an Employee Stock Ownership Plan and a Section
401(k) Plan to provide retirement benefits for substantially all of its
employees, including its executive officers. In addition, two of the
subsidiary banks have deferred compensation agreements for certain of the
executive officers, as a supplement to the retirement benefits available under
the other plans. These agreements provide for a monthly benefit at age 65, or
earlier upon death or disability, equal to 50% of the average monthly
compensation of the executive officer during the prior five years and provides
certain benefits, in the event of a change in control of the Company and the
subsequent separation from service by the executive officer.
BASES FOR THE CHIEF EXECUTIVE OFFICER'S COMPENSATION
The salary and retirement benefits provided to the Chief Executive Officer
is set by the Executive Compensation and Retirement Committee and approved by
the Board of Directors, after an examination of the annual market analysis
provided by the compensation consultant retained by the Company. The Committee
has historically emphasized incentive compensation for the Chief Executive
Officer, through the incentive compensation program and stock option grants.
The Chief Executive Officer was allocated 430 points in the incentive
compensation program. His threshold of performance was based upon the net
income of the Company (60%) and Simmons First National Bank (40%). The Company
and the Bank substantially exceeded their threshold in 1993, thereby increasing
the compensation value of each of his points to $112.78. The incentive
compensation earned by the Chief Executive Officer under this Program was
$48,495.
<PAGE>
EXECUTIVE COMPENSATION & RETIREMENT COMMITTEE
Harry L. Ryburn, Chairman Louis L. Ramsay, Jr.
C. Ramon Greenwood N. Casey Jones
William H. Roberts Adam B. Robinson
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 and the
regulations issued thereunder require directors and certain officers of any
company registered under such Act to file statements (SEC Forms 3, 4 & 5) with
the Securities and Exchange Commission, showing their beneficial ownership in
securities issued by such company. Based upon a review of the SEC Forms 3, 4
and 5 of the directors and officers of the Company for the preceding fiscal
years, provided to the Company by the officers and directors, the Company has
not identified any person who failed to timely file the required statements
during the preceding fiscal year.
PROPOSAL TO AUTHORIZE ADOPTION OF THE
ARKANSAS BUSINESS CORPORATION ACT OF 1987 AS THE
CORPORATE LAW WHICH SHALL GOVERN THE AFFAIRS OF THE COMPANY
In 1987, the Arkansas General Assembly passed the Arkansas Business
Corporation Act of 1987 (the "1987 Act"). This legislation contains a transition
provision providing that Arkansas corporations, existing on January 1, 1988,
shall continue to be governed by the preceding corporate statutes, the Arkansas
Business Corporation Act of 1965 (the "Prior Act"), unless a corporation
affirmatively elects to be governed under the 1987 Act. The 1987 Act provides
that existing Arkansas corporations, such as the Company, may irrevocably elect
to be governed by the 1987 Act upon receiving requisite shareholder approval.
The 1987 Act is based primarily upon the American Bar Association's Model
Business Corporation Act as revised in 1984. The 1987 Act is perceived to be
easier to understand, and more flexible in allowing corporations to avail
themselves of many modern financing techniques and management procedures not
available under the Prior Act. The comments of draftsmen regarding the intent
and purpose of the provisions of the American Bar Association's Model Business
Corporation Act, together with judicial interpretations from other states
construing similar or identical provisions may result in more predictable
judicial interpretations of the 1987 Act by Arkansas courts. At least fifteen
other states have passed legislation similar to the 1987 Act. A SUMMARY
COMPARISON OF CERTAIN SIGNIFICANT DIFFERENCES IN THE RIGHTS OF SHAREHOLDERS AND
THE POWERS OF MANAGEMENT UNDER THE 1987 ACT AND THE PRIOR ACT IS SET FORTH IN
APPENDIX A OF THIS PROXY STATEMENT. PLEASE CAREFULLY REVIEW THIS SUMMARIZED
DISCUSSION.
The Board of Directors proposes to adopt the 1987 Act as the corporate law
governing the affairs of the Company, by amending its Articles of Incorporation
to include the following Article:
FIFTEENTH: The corporation elects to be governed by and subject to
---------
the Arkansas Business Corporation Act of 1987.
If requisite shareholder approval is not obtained at the Shareholders'
Meeting, then the Company shall continue to be governed under the Prior Act.
The Board of Directors believes that it is in the best interests of the
Company, its management and shareholders to elect to be governed by the
<PAGE>
provisions of the 1987 Act. Notwithstanding the discussion of the 1987 Act and
the Prior Act herein, many of the legal rules and standards set forth in the
corporate law applicable to the Company are also affected by other laws. The
Company is subject to the provisions of Bank Holding Company Act and the rules
and regulations promulgated thereunder by the Board of Governors of the Federal
Reserve System. Further, as a company whose equity securities are registered
under the Securities Act of 1933, as amended, and the Securities Exchange Act
of 1934, as amended, and whose common stock is listed for trading on the
National Association of Securities Dealers Automated Quotation system, the
Company is also governed by the federal securities laws and the rules and
regulations promulgated thereunder by the Securities and Exchange Commission, as
well as the rules of the National Association of Securities Dealers. In
addition, the Company's banking subsidiaries are subject to various federal and
state banking laws and are subject to regulation and supervision by the
Comptroller of the Currency, the Arkansas State Bank Department and the Federal
Deposit Insurance Corporation.
If this proposal is adopted at the Shareholders' Meeting, the 1987 Act will
allow management of the Company to better respond to changing circumstances
concerning the Company. Additional techniques are available to management in the
field of corporate acquisitions and takeovers, whether hostile or friendly.
Under the 1987 Act, the Company's management may, at some time in the future,
propose for shareholder approval additional defensive measures to impede or
delay hostile takeovers that are unavailable under the Prior Act. Staggering
the terms of the Company's Board of Directors, permissible under the 1987 Act
but not under the Prior Act, may have such an anti-takeover effect. It should
be reiterated that the proposal to adopt the 1987 Act as the corporate law
governing the affairs of the Company is not being presented by the Board of
Directors as part of a plan to implement additional anti-takeover defense
measures. At this time, no additional anti-takeover defense measures are being
contemplated or anticipated by management of the Company.
If authority to amend the Articles of Incorporation is granted by the
shareholders at the Shareholders' Meeting, management intends to file the
Articles of Amendment to the Articles of Incorporation immediately following
such approval, and the amended Articles of Incorporation will become effective
upon filing with the Arkansas Secretary of State.
ADOPTION OF THIS PROPOSAL AND THE PROPOSED AMENDMENT TO THE ARTICLES OF
INCORPORATION REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST
TWO-THIRDS OF THE SHARES OF COMMON STOCK OF THE COMPANY ELIGIBLE TO VOTE AT THE
SHAREHOLDERS' MEETING IN ORDER TO ADOPT THE 1987 ACT. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
PROPOSAL TO LIMIT DIRECTOR LIABILITY AS PERMITTED BY
ARKANSAS BUSINESS CORPORATION ACT OF 1987
The Board of Directors believes that the best interests of the Company and
its shareholders require the attraction and retention of the most capable and
qualified individuals available to serve as directors and officers of the
Company. However, service as a director or officer of a public company exposes
individuals to the potential risk of incurring substantial liability, as well
as personal expense arising from lawsuits brought by shareholders or others,
regardless of whether such suits have any merit. Consequently, directors and
officers are customarily and traditionally indemnified by the corporation and
covered by directors' and officers' liability insurance against such liability
and expenses, except for cases of clear wrongdoing, such as fraud or willful
misconduct by the officer or director. At the present time, the Company's
<PAGE>
directors and officers have certain rights to indemnity under the applicable
terms of the Company's Bylaws and pursuant to the applicable provisions of the
Prior Act.
The Company also purchases directors' and officers' liability insurance
("D & O Insurance") to supplement the protection afforded to directors and
officers by these indemnity rights. During the last decade, the number of
insurance underwriters underwriting D & O Insurance has declined, and the
policies which are available offer a reduced scope of coverage at higher
premiums, thereby making D & O Insurance not economically feasible for many
corporations. In addition, the increased incidence of litigation has increased
the personal risk of liability and the expense of defense to individuals
serving as corporate directors.
The 1987 Act was adopted amid widespread concern about the ability of
Arkansas corporations to attract capable directors, due in part to the
restricted availability of D & O Insurance and the nationwide trend of imposing
director liability. Included within the 1987 Act are certain provisions,
patterned after the Delaware corporate law, which are intended to allow
Arkansas corporations to provide substitute protection, in various forms, to
their directors and to limit director liability for monetary damages under
certain circumstances. Specifically, the 1987 Act permits a corporation to
include a provision in its articles of incorporation, after shareholder
approval, which eliminates or limits the personal liability of a director for
monetary damages to the corporation or its shareholders arising from certain
breaches of the director's fiduciary duties, subject to certain exceptions
discussed below.
The Board, at its March 28, 1994 meeting, unanimously concluded that it
would be in the best interests of the Company to include such a provision in
its Articles of Incorporation and proposes to include a new Article SIXTEENTH
to the Articles of Incorporation, to read in its entirety as follows:
"ARTICLE SIXTEENTH: To the fullest extent permitted by the Arkansas
Business Corporation Act, as it now exists or may hereafter be
amended, a director of this corporation shall not be liable to the
corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director."
The proposed amendment allows the Company to insulate its directors from
personal liability for monetary damages to the corporation or its shareholders,
resulting from negligence or lack of due care in discharging fiduciary duties
as a director. The proposed amendment does not extend protection to directors
for claims by third parties, but would eliminate personal liability of a
director to the Company or to its shareholders for monetary damages for breach
of director's fiduciary duties with certain exceptions required by the 1987
Act. Under the required exceptions, a director would remain personally liable
for monetary damages to the Company or its shareholders for the following:
(1) any breach of the director's duty of loyalty to the Company and its
shareholders; (2) acts or omissions not in good faith or which involve
intentional misconduct or intentional violations of law; (3) willful or
negligent conduct in paying dividends, distributions or repurchasing the
Company's stock other than as permitted by the 1987 Act; or (4) any transaction
from which the director derives an improper personal benefit.
In accordance with the terms of the 1987 Act, the proposed amendment does
not limit any liability for acts or omissions of a director, which occurred
prior to the effective date of the proposed amendment. Assuming shareholder
approval, the proposed amendment will take effect on the day immediately
<PAGE>
following the shareholders meeting when such amendment is contemplated to be
filed with the Arkansas Secretary of State. Further, even though an individual
is a director, the 1987 Act and the proposed amendment do not eliminate or
limit liability for acts or omissions related to the performance of any duties
by such individual as an officer or employee of the corporation or in any
capacity other than as a director. The availability of equitable remedies,
including injunctions, for any violation of a director's fiduciary duty to the
Company or its shareholders will not be affected by the proposed amendment.
Finally, the 1987 Act and the proposed amendment may not affect director
liability based upon other laws or statutes; for example, liability of a
director incurred in connection with violations of federal or state securities
laws, federal or state bank or bank holding company laws.
However, if this proposal is approved, shareholders will surrender any
future causes of action against the Company's directors for negligence or
failure to exercise due care in their business decisions, including any business
decisions relating to attempted change of control of the Company, except to the
extent that the liability limitation is restricted by the provisions of the 1987
Act or any other laws as discussed above.
Even though the Company has not experienced difficulty in attracting and
retaining qualified directors in the past and has no knowledge of any pending or
threatened resignations from any of its current directors and officers, the
Company's continued ability to attract and retain competent and qualified
persons is uncertain, in view of the liability risks summarized above. The
Board of Directors believes that shareholder approval of this proposal will
assist the Company in attracting and retaining capable, qualified and
responsible individuals as directors.
The members of the Board of Directors of the Company have a personal
interest in the adoption of the proposed amendment, perhaps in conflict with
existing or future shareholders of the Company. Specifically, the proposed
amendment will affect shareholders' rights, by curtailing to some extent, the
right of shareholders to pursue monetary damage claims against directors on
behalf of themselves or the Company in a shareholder derivative action.
Nonetheless, the Board of Directors has concluded that, in light of the current
limited availability of D & O Insurance, the Company should adopt the proposed
amendment, in order to continue to attract and retain capable, qualified and
responsible individuals to serve as directors of the Company.
The proposed amendment is drafted under the premise that if the 1987 Act
is subsequently amended to either further reduce or expand the liability of a
director for breach of fiduciary duty to the Company or its shareholders, such
subsequent change shall automatically apply to the directors of the Company.
Although the Company is not aware of any proposals in the Arkansas General
Assembly to that effect, the Board of Directors deems it advisable to make
provision for any such changes now, so that they automatically become
effective, rather than to require a further shareholder vote at a later date.
The proposed amendment could, under certain circumstances, have an
anti-takeover effect on the Company. Due to the decreased likelihood of being
held liable for monetary damages for breaches of fiduciary duties as directors,
the directors might be more likely to reject a takeover proposal which may be
beneficial to the Company's shareholders that they might have otherwise
accepted, absent the limitation of liability through the proposed amendment.
<PAGE>
BECAUSE THE PROPOSED AMENDMENT IS PERMITTED SOLELY UNDER THE ARKANSAS BUSINESS
CORPORATION ACT OF 1987, APPROVAL OF THE PROPOSED AMENDMENT TO LIMIT DIRECTOR
LIABILITY IS DIRECTLY CONTINGENT UPON SHAREHOLDER APPROVAL OF THE ARKANSAS
BUSINESS CORPORATION ACT OF 1987, AS PREVIOUSLY DESCRIBED IN THIS PROXY
STATEMENT. THEREFORE, UNLESS SHAREHOLDERS APPROVE THE PREVIOUSLY DESCRIBED 1987
ACT PROPOSAL, THE COMPANY SHALL NOT BE PERMITTED TO EFFECTUATE THIS PROPOSED
AMENDMENT, REGARDLESS OF WHETHER SHAREHOLDERS VOTE IN FAVOR OF THIS PROPOSAL.
ADOPTION OF THIS PROPOSAL AND THE PROPOSED AMENDMENT TO THE ARTICLES OF
INCORPORATION REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST A
MAJORITY OF THE SHARES OF COMMON STOCK OF THE COMPANY ELIGIBLE TO VOTE AT THE
SHAREHOLDERS' MEETING. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THIS PROPOSAL.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Baird, Kurtz & Dobson served as the Company's
auditors in 1993 and has been selected to serve in 1994. Representatives of
Baird, Kurtz & Dobson are expected to be present at the shareholders meeting
with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
FINANCIAL STATEMENTS
The annual report of the Company and its subsidiaries for the year ended
December 31, 1993, including audited financial statements, is enclosed
herewith. Such report and financial statements contained therein are not
incorporated in this Proxy Statement and are not to be considered as a part of
the proxy soliciting materials, since they are not deemed material for the
exercise of prudent judgment in regard to the matters to be acted upon at the
meeting.
UPON WRITTEN REQUEST BY ANY SHAREHOLDER ADDRESSED TO MR. JOHN L. RUSH,
SECRETARY, SIMMONS FIRST NATIONAL CORPORATION, P. O. BOX 7009, PINE BLUFF,
ARKANSAS, 71611, A COPY OF THE COMPANY'S ANNUAL REPORT FOR 1993 ON FORM 10-K
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE FURNISHED WITHOUT CHARGE.
PROPOSALS FOR 1995 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1995 annual
meeting of the shareholders of the Company must be received by the Company at
its principal executive offices on or prior to December 12, 1994, for inclusion
in the Company's Proxy Statement and form of proxy relating to that meeting.
OTHER MATTERS
Management knows of no other matters to be brought before this annual
meeting. However, if other matters should properly come before the meeting,
it is the intention of the persons named in the proxy to vote such proxy in
accordance with their best judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/John L. Rush
John L. Rush, Secretary
Pine Bluff, Arkansas
April 11, 1994
<PAGE>
APPENDIX A
SUMMARY COMPARISON OF CERTAIN SIGNIFICANT
DIFFERENCES BETWEEN THE NEW AND OLD
ARKANSAS BUSINESS CORPORATION ACTS
The 1987 Act and the Prior Act differ in many respects, and, therefore,
it is not practical to summarize all of the differences. The following
discussion summarizes certain significant differences, which may affect the
interest of shareholders:
SHAREHOLDER VOTING ON EXTRAORDINARY CORPORATE MATTERS. With respect to
mergers, consolidations, sales of all or substantially all of a corporation's
assets outside the normal course of business, or voluntary dissolution of a
corporation, the Prior Act requires the adoption of a resolution by the board
of directors setting forth the proposed transaction, followed by the
affirmative vote of the holders of at least two-thirds of the shares present in
person or by proxy at a shareholders meeting held to consider such action,
assuming that at least 50% of the shares eligible to vote are present in person
or by proxy.
The 1987 Act generally requires the adoption of a resolution by the board
of directors and the affirmative vote of the holders of a majority of the
shares entitled to vote to approve such extraordinary corporate transactions.
Because a smaller number of total outstanding shares entitled to vote could
approve these types of transactions under the 1987 Act as compared to the Prior
Act, it could be more difficult for minority shareholders to defeat such
actions.
In addition, the 1987 Act also permits mergers without shareholder
approval of the surviving corporation if the plan of merger: (1) does not amend
the articles of incorporation of the surviving corporation; (2) each share of
stock of such corporation outstanding prior to the merger is to be an identical
share of the surviving corporation; and (3) the shares to be delivered under
the plan of merger do not exceed 20% of the shares outstanding immediately
prior to the effective date of the merger. Therefore, under the 1987 Act, it is
possible for the Company to merge with another corporation, in the
circumstances set forth above, without requiring shareholder approval, whereas
shareholder approval would be necessary in such cases under the Prior Act.
AMENDMENT OF ARTICLES OF INCORPORATION. In order to amend articles of
incorporation, the Prior Act established separate voting requirements for
amendments which required class voting and amendments which did not require
class voting. In those instances in which class voting is not required to
approve an amendment, the Prior Act authorized the amendment of the articles by
adoption of a resolution of the board of directors setting forth the proposed
amendment, followed by the affirmative vote of the holders of at least
two-thirds of the shares eligible to vote at a shareholders meeting held to
consider such action. If class voting is required to approve an amendment, for
a corporation having 500 or more shareholders, the Prior Act authorized the
amendment of the articles by adoption of a resolution of the board of directors
setting forth the proposed amendment, followed by the affirmative vote of the
holders of at least two-thirds of the shares present in person or by proxy at
a shareholders meeting held to consider such action, assuming that at least 50%
of the shares eligible to vote are present in person or by proxy.
<PAGE>
Except as stated below, articles of incorporation may be amended under the
1987 Act, if the board of directors adopts a resolution setting forth the
proposed amendment, declares its advisability, and holds a meeting of
shareholders to consider the amendment, followed by approval of a majority of
the outstanding shares entitled to vote thereon. Accordingly, it may be easier
under the 1987 Act for management to obtain shareholder approval for amendments
to the articles because of the reduced voting requirement for shareholder
approval and more difficult for minority shareholders to defeat any such
amendments. Further, under the 1987 Act, the board of directors has the power
to adopt certain "administrative" amendments without shareholder approval
unless the articles provide otherwise. These "administrative" amendments
include: (1) extension of the duration of the corporation where duration has
been limited; (2) deletion of the names and addresses of the initial directors,
initial registered agent and office; (3) change each issued and unissued
authorized share of an outstanding class into a greater number of whole shares
if only shares of that class are outstanding; (4) change of corporate name in a
very limited fashion; or (5) any other amendment specifically allowed without
shareholder approval under the 1987 Act. The 1987 Act also increases certain
shareholder rights over the corresponding terms of the Prior Act. Certain
proposed amendments to the articles which materially and adversely affect the
rights of particular shareholders give rise to dissenters' rights under the
1987 Act for the affected shareholders. The amendments which give rise to
dissenters' right include those which (1) alter or abolish a preferential right
of the shares; (2) create, alter or abolish a right in respect of redemption;
(3) alter or abolish preemptive rights; (4) exclude or limit the rights of
shares to vote on any matter, including cumulative voting rights; or (5) reduce
the number of shares of any holder to a fractional share, if such fractional
share is to be acquired for cash.
SHARE EXCHANGES. The 1987 Act authorizes a mandatory share exchange, a
transaction unknown under the Prior Act. A share exchange is a transaction
pursuant to which a corporation becomes the owner of all the outstanding shares
of one or more classes or series of the stock of another corporation by a
compulsory exchange with all owners of the acquired shares. The corporation
acquiring shares in the share exchange may give cash, other property or shares,
obligations, or other securities of the acquiring corporation or any other
corporation to effect a share exchange. Unlike a merger, a share exchange does
not affect the separate existence of any corporation which is a party thereto.
The implementation of a share exchange begins with the adoption of the
plan of exchange by the board of directors of the corporation whose shares
will be acquired in the share exchange. Thereafter, the plan is submitted to
the shareholders of that corporation for approval. Unless another provision of
the 1987 Act, the articles of incorporation, or the board of directors require
a greater vote, the plan of share exchange must be approved by each voting
group entitled to vote separately on the plan by a majority of all the votes
entitled to be cast on the plan by that voting group.
CUMULATIVE VOTING FOR ELECTION OF DIRECTORS. The Prior Act mandates that
a shareholder entitled to vote for the election of directors, may vote the
number of shares owned for as many candidates as are subject to election, or
may cumulate all such votes and distribute them among any candidate or
candidates as deemed fit. The cumulative voting rights cannot be revoked,
restricted or impaired by the articles of incorporation or bylaws. If the
shareholder is given the right to vote for directors, cumulative voting rights
are mandatory by law. Cumulative voting may afford minority shareholders some
assurance of representation on the board of directors.
<PAGE>
Under the 1987 Act, cumulative voting is authorized only if affirmatively
stated in the articles of incorporation. If so authorized in the articles,
shareholders may exercise cumulative voting rights only if (1) the meeting
notice or proxy statement states conspicuously that such rights are authorized;
and (2) the shareholder (or another shareholder in the same voting group) gives
notice to the corporation of his intent to cumulate votes at least 48 hours
prior to the meeting. Currently, shareholders of the Company have cumulative
voting rights. However, the Board of Directors feels that cumulative voting
rights are not in the best interest of the Company and its shareholders.
Cumulative voting rights, when exercised, may allow a minority shareholder (or
a group of such shareholders) to elect one or more Directors to represent
the interest of that shareholder (or group), rather than the interests of all
shareholders and the Company. Management believes that the Company is more
likely to operate at its highest level of economic performance, when the
Directors are elected by, and responsive to, a majority of the shareholders,
rather than a small minority shareholder group. The deletion of cumulative
voting rights may be considered a substantial change in the rights of
shareholders. The Articles of Incorporation of the Company do not expressly
authorize cumulative voting rights. If the 1987 Act Proposal is adopted ,
shareholders will no longer be entitled to cumulative voting for directors.
PREEMPTIVE RIGHTS TO ACQUIRE AUTHORIZED BUT UNISSUED CAPITAL STOCK. Under
the Prior Act, shareholders are granted preemptive rights to acquire a
proportionate amount of a corporation's authorized but unissued shares, unless
the articles of incorporation specifically deny such right. Currently,
shareholders of the Company do not have preemptive rights. Article Fourth,
Paragraph (f) of the existing Articles, as amended, denies preemptive rights to
shareholders for the acquisition of new shares or treasury shares.
Under the 1987 Act, shareholders do not have preemptive rights, unless
expressly granted such rights in the articles of incorporation. Even if so
authorized, preemptive rights do not apply with respect to (1) shares issued as
compensation to directors, officers, employees or agents or to satisfy
conversion or option rights for compensation to such persons; (2) shares
authorized in the articles which are issued within 6 months from incorporation;
and (3) shares sold for consideration other than money.
No change in the current rights of shareholders is contemplated, because
the Articles of Incorporation contains a specific denial of preemptive rights
to shareholders.
REMOVAL OF DIRECTORS. The Prior Act provides that any director or the
entire board of directors may be removed, with or without cause, by a vote of
the holders of majority of shares entitled to vote at an election of directors;
provided, however if less than the entire board is to be removed, a director
may not be removed if the votes cast against his removal would be sufficient
to elect him if voted cumulatively.
Under the 1987 Act, directors also may be removed, with or without cause,
unless the articles of incorporation provide that removal shall be for cause
only. The Articles of Incorporation of the Company do not provide that removal
of directors shall be for cause only. If cumulative voting for the election of
directors is authorized in the articles, a director may not be removed if the
number of votes sufficient to elect the director under cumulative voting is
voted against removal. If cumulative voting is not authorized, as will be the
case for the Company, a director may be removed only if the number of votes
cast to remove the director exceeds the number of votes cast against removal.
<PAGE>
The Prior Act and 1987 Act generally provide shareholders with comparable
rights with respect to the removal of directors, except that the elimination of
cumulative voting rights prevents a minority of shareholders from protecting a
Director which the majority of shareholders has voted to remove. The Articles
of Incorporation of the Company do not provide a provision to restrict the
removal of directors for cause only, and such a proposal is not presently
contemplated by the Company.
STAGGERED BOARD OF DIRECTORS. The Prior Act specifies that the terms of
directors are for a period of one year and does not allow the corporation to
stagger the terms of its board of directors.
Under the 1987 Act, if specifically authorized by its articles of
incorporation, a corporation with 9 or more directors may divide the board of
directors into either two or three separate, equal classes. In such event, the
term of the first class expires at the first annual meeting after the
establishment of the classes, the term of the second class expires at the
second annual meeting thereafter, and the term of the third class, if any,
expires at the third annual meeting thereafter.
Staggering the terms of directors may potentially increase the difficulty
of changing the composition of the board, by requiring at least two shareholder
meetings, rather than one, in order to effect a change in the majority control
of the board. No such staggering of terms is currently permitted or proposed to
be permitted for the Company's Board of Directors. Although the Company
currently has no intention of staggering the terms of its Board of Directors,
such an action, if taken, could make it more difficult for minority
shareholders to effect a change in the composition of the Company's Board.
DISSENTERS' RIGHTS OF APPRAISAL. Dissenters' rights of appraisal is a
statutory mechanism which allows shareholders who object to certain
extraordinary corporate events to have their shares appraised and purchased by
the corporation in accordance with the statutory procedure. The Prior Act
permits dissenters' rights of appraisal in connection with mergers,
consolidations and the sale or exchange of all, or substantially all, of a
corporation's assets other than in the usual and regular course of its
business; provided, however, dissenters rights are not available to a
shareholder in connection with a merger, if on the date of the filing of the
articles of merger, the surviving corporation is the owner of 100% of the
outstanding shares of the other corporations which were parties to the merger.
Under the 1987 Act, any shareholder entitled to vote is granted
dissenters' rights of appraisal, in connection with any merger, mandatory share
exchange, sale of all, or substantially all, of the corporation's assets other
than in the usual and regular course of its business; amendment to the articles
of incorporation that materially and adversely affects shareholder's rights in
as specified in the 1987 Act; and any other action taken pursuant to a
shareholder vote to the extent the articles of incorporation, bylaws, or a
resolution of the board of directors grants dissenters' rights of appraisal to
shareholders.
Both Acts permit a dissenting shareholder to obtain the fair value of the
shares held by complying with the specified procedures to perfect their
dissenter's rights. The 1987 Act has modified the procedural requirements for
perfecting dissenters' rights found in the Prior Act. Under the Prior Act, the
dissenting shareholder must object to the proposed action at or prior to the
shareholders meeting, not vote his shares in favor of the proposed action when
the vote occurs and must within 10 days after such vote, make written demand
on the corporation for the fair value of the shares. The terms of the 1987 Act
<PAGE>
require the dissenting shareholders to notify the corporation of the intent to
demand payment prior to the shareholder vote on the issue, and the dissenting
shareholder must not vote the shares in favor of the proposed action when the
vote occurs. If the dissenters' rights of appraisal are perfected and the
shareholder and the corporation cannot agree on a value for the shares, both
acts require a judicial determination of the fair value of the shares.
Greater procedural duties have been placed upon corporations under the
1987 Act. These duties generally require a corporation to: (1) notify
shareholders of their right to dissent in advance of the meeting at which the
shareholders' vote occurs; (2) furnish a dissenters' notice to the dissenting
shareholders after the meeting detailing the procedure for demanding payment;
and (3) pay the dissenting shareholder either as soon as the proposed corporate
action is taken, or upon receipt of a payment demand. After the shareholder
receives the dissenters' notice from the corporation, he must deposit his
shares and demand payment, in compliance with the terms of the dissenters'
notice. Additionally, corporations are required to furnish copies of the
applicable statutes and certain financial information related to the
calculation of the value of the shares.
DERIVATIVE RIGHTS. Under both Acts, shareholders have certain derivative
rights to bring suits against officers and directors of the corporation in the
name of the corporation for the benefit of the corporation. While the procedural
mechanisms in the Acts are similar, certain differences are present. Under the
Prior Act, no action can be brought derivatively, unless the plaintiff was a
holder of the shares or a voting trust certificate at the time of the
transaction (or his shares or voting trust certificates devolved upon him by
operation of law from a person who was a holder at such time). The corporation
may move the court for an order requiring the plaintiff to furnish security
for costs and expenses in any derivative action instituted by holders of less
than five percent (5%) of the outstanding shares (unless such shares have a
market value in excess of $25,000). A derivative action may not be dismissed
or settled without the approval of the court.
The procedural requirements under the 1987 Act are as follows: (1)
plaintiff must be either a registered owner or a beneficial owner of shares
held by a nominee in his behalf; (2) the plaintiff must have been an owner of
shares at the time of the transaction in question or have become a shareholder
through transfer by operation of law from one who was a shareholder at that
time; (3) the complaint must be verified; (4) the plaintiff must give prior
notice and demand on directors in most circumstances and if demand has not
made, the reason for not making the demand must be stated. Further, in a
derivative action, the court: (1) may, in its discretion, stay the suit while
the board of directors investigates the claim; (2) may award the corporation
reasonable expenses of suit, including attorneys' fees, if the court determines
the suit is brought without good cause; and (3) must approve any settlement or
discontinuance of derivative litigation.
INSPECTION RIGHTS. Under both Acts, a shareholder has a right to inspect
certain books and records of the corporation. Under the Prior Act, a
corporation is required to maintain complete books and records of account,
keep minutes of the proceedings of the shareholders and board of directors
and keep a record of its shareholders, giving their names and addresses and the
number and class of shares held by each shareholder. Any person, who has been
a shareholder of record for at least six (6) months immediately preceding his
demand, may review the corporation's books and records of account, minutes and
records of the shareholders and make extracts therefrom for any proper purpose.
If the corporation refuses to permit the inspection, a shareholder may file a
civil action to permit the requested inspection.
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Under the 1987 Act, the corporation must maintain and make available for
shareholders' inspection, the following documents: (1) all minutes of meetings
of its shareholders and board of directors, a record of action by the
shareholders or board of directors without a meeting, and all actions taken by
committees of the board of directors; (2) appropriate accounting records;
(3) a record of shareholders in the form that permits preparation of a list
of names and addresses of all shareholders in alphabetical order by class of
shares; (4) its articles of incorporation and all amendments, (5) its bylaws,
all amendments and resolutions adopted by its board of directors; (6) all
written communications to shareholders within the past three (3) years; (7) a
list of names and business addresses of its current officers and directors;
(8) the most recent Franchise Tax Report delivered to the Secretary of State.
Upon written demand giving five (5) business days notice, a shareholder has a
right to inspect the records of a corporation, subject to the requirement
that, for certain specified records, the inspection must be in good faith and
for a proper purpose. Additionally, the 1987 Act requires the corporation to
maintain a shareholders' list for inspection by any shareholder, beginning
two days after notice of a meeting is given and continuing through the date
of the meeting. Any shareholder is entitled to inspect and copy the list of
shareholders prior to and during such meeting. The 1987 Act authorizes the
local circuit court, in the event of the failure of the corporation to allow
inspection of the shareholder list, to summarily order the inspection or
copying at the corporation's expense and to postpone such meeting until
compliance with the 1987 Act is effected. However, the failure of the
corporation to make the shareholder list subject to inspection does not affect
the validity of any action taken at the meeting.
INFORMAL ACTION BY SHAREHOLDERS. Both Acts allow shareholders to act
informally without a shareholders meeting. Under the Prior Act, any action
required or permitted to be taken at a meeting may be taken without a meeting,
if written consents to that effect are signed by all shareholders entitled to
vote on the particular matter. Under the 1987 Act generally, any action
required or permitted to be taken at a meeting may be done, without a meeting,
if written consents are signed by the holders of outstanding shares having not
less than the minimum number of votes necessary to take such action at a
meeting, at which all shares entitled to vote thereon were present and voted;
provided, however, unanimous written consent of all shareholders is required
to approve any increase in the capital stock or bond indebtedness without a
meeting.
DIVIDENDS. Generally, the Prior Act allows the payment of dividends from
a corporation's "net profits" for the current fiscal year or from the
"unreserved and unrestricted earned surplus" of the corporation. If no
"unreserved and unrestricted earned surplus" is available, dividends may be
paid out of a corporation's "capital surplus, other than revaluation surplus"
but only to shares entitled to cumulative preferential dividends, and not to
any class of shares junior to the class which paid the capital surplus.
Further, no dividends may be declared or paid, if there are reasonable grounds
to believe, that upon payment of such dividends, (1) the liabilities of the
corporation would exceed its assets; (2) the corporation would be unable to
pay its obligations to creditors as they become due in the ordinary course of
business; (3) the highest liquidation preferences of shares entitled to
preference over the shares receiving the dividend would exceed the
corporation's net assets; or (4) the payment of such dividend would be contrary
to any provision of the corporation's articles of incorporation. Thus, the
determination of a permissible dividend under the Prior Act requires the
satisfaction of several complex tests, prior to declaration and payment.
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The 1987 Act has materially modified the tests under the Prior Act. Under
the 1987 Act, a corporation may not pay dividends to its shareholders to the
extent that the dividend would result in (1) the corporation's being unable to
pay its debts as they become due in the normal course of business; or (2) the
corporation's total assets being less than its total liabilities plus the
amount needed to satisfy shareholders with preferential rights upon
dissolution. If these two tests are satisfied, dividends may be paid from any
available source.
REPURCHASE OF STOCK. Under the Prior Act, the ability of a corporation to
acquire its own shares was subject to numerous tests, some of which present
complex computational issues.
The 1987 Act significantly simplified the rules applicable to the
repurchase of a corporation's shares. A corporation may redeem or repurchase
its own stock, if such transaction will not result in (1) the corporation
being unable to pay its debts as they become due in the ordinary course of
business; or (2) the corporation's total assets being less than its total
liabilities plus the amount necessary to satisfy shareholders with preferential
dissolution rights. As in the case of dividends, in general the 1987 Act
provides the Board of Directors more flexibility than the Prior Act, regarding
the redemption or repurchase of stock. The 1987 Act abolishes the concept of
treasury shares. Any repurchased shares revert to the status of authorized but
unissued shares, which eliminates confusion as to voting rights and simplifies
the accounting treatment.
VOTING RIGHTS. Under the Prior Act, each outstanding share, regardless of
class, is entitled to one vote, except to the extent that voting rights are
limited or denied in certain circumstances. The Prior Act prohibits shares of a
parent corporation held by a subsidiary and shares held by the corporation in a
fiduciary capacity from being voted at any meeting.
The 1987 Act allows a corporation more flexibility in structuring the
voting rights of its shares. Under the 1987 Act, unless the articles of
incorporation provide otherwise, each outstanding share is entitled to one
vote, but the articles may provide that shares are entitled to multiple voting
rights, fractional voting rights, no voting rights (so long as at least one
or more classes of shares has unlimited voting rights), voting rights only on
particular matters or vote in separate voting groups. Under the 1987 Act,
corporations can vote their own shares held in a fiduciary capacity but,
absent special circumstances, the shares of a parent corporation held by a
subsidiary are not entitled to vote. Certainly, the 1987 Act allows a
corporation much more flexibility in structuring corporate voting rights
and control. However, no change in the shareholders' existing rights under
the Articles of Incorporation to one vote per share is proposed, and no such
change is presently contemplated by the Company.
OTHER VOTING MATTERS. Except for certain extraordinary corporate matters,
the vote of the majority of shares is considered under the Prior Act as the act
of the shareholders on ordinary corporate matters. If a quorum is present at a
particular vote, the Prior Act specifies that the affirmative vote of the
majority of shares represented and entitled to vote is designated the act of
the shareholders.
The 1987 Act adopts a "majority of votes cast" as the applicable method of
calculation. Action on a particular ordinary corporate matter is approved, if
the votes cast within the requisite voting group favoring the action exceeds
the vote cast opposing the action. The 1987 Act, by using votes cast rather
than shares entitled to vote, ignores abstentions rather than counting them as
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negative votes. A voting group, as defined in the 1987 Act, consists of all
shares in one or more classes or series that are entitled to be counted
together collectively in voting on a matter.
OFFICER AND DIRECTOR STANDARDS. The Prior Act does not specifically
establish any standard of responsibility or conduct for directors and officers
of corporations in the performance of their respective duties. The applicable
standards for directors under the Prior Act arise through a common law
standard, known as the "business judgment" rule.
General standards governing the conduct of directors and officers in
performing their duties are specifically stated in the 1987 Act, rather than
being left to judicial development. By setting the standard of conduct in the
statute, the analysis should focus upon the manner in which a director
performs the duties, not the correctness of the decisions made. The statute
obligates a director or officer to perform all duties in good faith with the
care an ordinarily prudent person in a like position would exercise under
similar circumstances and in a manner the director reasonably believes to be
in the best interest of the corporation. For directors, the 1987 Act does not
affect a director's essential duty and responsibility to manage the affairs of
the corporation; however, it affects the applicable standard of review, in
determining whether that duty has been properly discharged. Further, the 1987
Act provides that directors are entitled to rely on information, opinions,
reports and statements prepared or presented by (1) legal counsel, accountants
and other persons, if the director reasonably believes the matters under
consideration are within the area of expertise of such persons; or (2) a
committee of the board of directors, of which the director is not a member if
the director reasonably believes that the committee merits confidence; or
(3) officers or employees whom the director reasonably believes to be reliable
and competent, unless in any such instance the director has knowledge
concerning the matter in question that would cause reliance to be unwarranted.
Similarly, officers may rely upon those persons specified in (1) and (3) in
performing their duties. The 1987 Act provides a more definite, as well as an
objective standard for measuring the performance of officers and directors in
discharging their responsibilities to the corporation.
INTERESTED DIRECTOR TRANSACTIONS. The Prior Act does not contain any
provisions concerning business transactions in which a director has a
financial interest. Under common law, these types of transactions are
automatically voidable, at the option of the corporation, regardless of the
fairness of the transaction or the manner in which it was approved.
The 1987 Act applies a conflict of interest analysis to transactions in
which a director has a direct or indirect financial interest. The 1987 Act
provides that these transactions are not voidable by the corporation solely by
reason of such conflict of interest, if any of the following are true: (1) the
material facts of the transaction and the director's interest are disclosed to
the board of directors and the board approves the transaction; (2) the
material facts of the transaction and the director's interest are disclosed to
shareholders and shareholders approve the transaction; or (3) the transaction
was fair to the corporation. Thus, the 1987 Act limits the common law principal
of automatic voidability and allows corporations more flexibility in entering
into business or financial transactions with directors. Further, the 1987 Act
also prohibits loans to a director or guaranties by the corporation of loans
to the directors, unless the particular transaction (1) is approved by a
majority of shares (except shares owned by or voted under the control of the
benefitted director), (2) is approved by the board of directors after specific
finding that the transaction benefits the corporation, or (3) is pursuant to
a general plan approved by the board of directors as being of benefit to the
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corporation.
LIMITATION OF DIRECTOR LIABILITY. The Prior Act does not specifically
allow any limitation of director liability.
In a significant departure from current Arkansas law, the 1987 Act includes
a provision on the limitation of director liability, patterned after Delaware
law. This provision allows corporations to include an article in its articles
of incorporation, which limits a director's liability to the corporation and
its shareholders in certain circumstances. The Company proposes to utilize this
provision, if shareholders vote to convert to the 1987 Act through an amendment
to the Articles to insert of Article SIXTEENTH to the Articles of Incorporation
of the Company which is being separately presented to the shareholders for
approval. For a more complete discussion of this provision, please see pages 12
through 14 of the Proxy Statement.
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