<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
OAK HILL FINANCIAL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
OAK HILL FINANCIAL, INC.
14621 State Route 93
Jackson, Ohio 45640
NOTICE OF ANNUAL MEETING
OF
SHAREHOLDERS
TO BE HELD APRIL 25, 2000
Jackson, Ohio
March 31, 2000
To the Shareholders:
The Annual Meeting of Shareholders of Oak Hill Financial, Inc. (the
"Corporation") will be held at the Ohio State University Extension South
District Office, 17 Standpipe Road, Jackson, Ohio 45640, on April 25, 2000, at
1:00 p.m., local time, for the following purposes:
1. To elect the following four Directors for terms expiring in
2002 (Class II), as successors to the class of Directors whose
terms expire in 2001: Barry M. Dorsey, Ed.D., Rick A. McNelly,
Donald R. Seigneur, and H. Grant Stephenson.
2. To consider and act upon a proposed amendment to the
Corporation's 1995 Stock Option Plan to increase the number of
shares of the Corporation's Common Stock issuable upon
exercise of stock options under the Corporation's 1995 Stock
Option Plan from 800,000 to 1,200,000 shares.
3. To ratify the appointment of Grant Thornton LLP, independent
auditors, as auditors for the Corporation for the fiscal year
2000.
4. To consider and act upon such other matters as may properly
come before the Annual Meeting or any adjournment thereof.
On March 14, 2000, there were 5,337,101 common shares outstanding. Each
shareholder is entitled to one vote for each common share held regarding each
matter properly brought before the meeting. Holders of record of the Corporation
at the close of business on March 14, 2000, are entitled to notice of and to
vote at the Annual Meeting and at any adjournment thereof.
By Order of the Board of Directors,
/s/ H. Tim Bichsel
H. Tim Bichsel
Secretary and Treasurer
EVERY SHAREHOLDER'S VOTE IS IMPORTANT. IF YOU ARE UNABLE TO BE PRESENT AT THE
ANNUAL MEETING, YOU ARE REQUESTED TO COMPLETE AND RETURN PROMPTLY THE ENCLOSED
PROXY SO THAT YOUR SHARES WILL BE REPRESENTED. A STAMPED, ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 3
OAK HILL FINANCIAL, INC.
14621 State Route 93
Jackson, Ohio 45640
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION
On behalf of the Board of Directors of Oak Hill Financial, Inc. (the
"Corporation"), a proxy is solicited from you to be used at the Corporation's
Annual Meeting of Shareholders ("Annual Meeting") to be held April 25, 2000, at
1:00 p.m., local time, at the Ohio State University Extension South District
Office, 17 Standpipe Road, Jackson, Ohio 45640. This Proxy Statement is being
mailed on or about March 31, 2000.
Proxies in the form enclosed herewith are being solicited on behalf of
the Corporation's Board of Directors. Proxies which are properly executed and
returned will be voted at the Annual Meeting as directed; proxies properly
executed and returned which indicate no direction will be voted in favor of the
proposals set forth in the notice attached hereto and more fully described in
this Proxy Statement. Proxies indicating an abstention from voting on any matter
will be tabulated as a vote withheld on such matter and will be included in
computing the number of shares present for purposes of determining the presence
of a quorum for the Annual Meeting. If a broker indicates on the form of proxy
that it does not have discretionary authority as to certain common shares to
vote on a particular matter, those common shares will be considered as present
but not entitled to vote with respect to that matter. Any shareholder giving the
enclosed proxy has the power to revoke the same prior to its exercise by filing
with the Secretary of the Corporation a written revocation or duly executed
proxy bearing a later date, or by giving notice of revocation in open meeting.
VOTING SECURITIES
As of March 14, 2000, the record date fixed for the determination of
shareholders entitled to vote at the Annual Meeting, there were 5,337,101 shares
of the Corporation's common stock outstanding. Each such share is entitled to
one vote on each matter properly coming before the Annual Meeting.
OWNERSHIP OF COMMON STOCK BY PRINCIPAL SHAREHOLDERS
As of February 25, 2000, persons known by the Corporation to own
beneficially more than 5% of the outstanding common shares of the Corporation
are set forth below.
<TABLE>
<CAPTION>
NO. OF SHARES OF COMMON
-----------------------
NAME(1) STOCK BENEFICIALLY OWNED(2) PERCENTAGE OF CLASS(3)
---- ------------------------ -------------------
<S> <C> <C>
Evan E. Davis 919,987(4) 16.4%
John D. Kidd 527,046(4)(5)(6) 9.4%
D. Bruce Knox 344,373(4)(5) 6.1%
</TABLE>
- -----------------------------
(1) The address of Evan E. Davis, John D. Kidd, and D. Bruce Knox is c/o
Oak Hill Financial, Inc., 14621 State Route 93, Jackson, Ohio 45640.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting
power and/or investment power with respect to those securities.
(3) "Percentage of class" is calculated by dividing the number of shares
beneficially owned by the total number of outstanding shares of the
Corporation on February 25, 2000, plus the number of shares such person
has the right to acquire within 60 days of February 25, 2000.
-2-
<PAGE> 4
(4) Includes 23,375 shares, which could be acquired by Messrs. Davis and
Kidd, respectively, and 34,375 shares, which could be acquired by Mr.
Knox under stock options exercisable within 60 days of February 25,
2000. Includes 258,862 shares held by a Trust as to which Mr. Knox is a
Trustee and partial beneficiary.
(5) Includes shares acquired pursuant to Oak Hill Financial's 401(k) Plan
for which investment power is exercised.
(6) Includes shares held by Mr. Kidd as Trustee of Oak Hill Financial's
401(k) Plan for which Mr. Kidd, as Trustee, exercises voting power.
OWNERSHIP OF COMMON STOCK BY MANAGEMENT
As of February 25, 2000, the directors of the Corporation, the
executive officers of the Corporation named in the Summary Compensation Table,
and all executive officers and directors of the Corporation as a group,
beneficially owned common shares of the Corporation as set forth below.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership Percentage
Name of Common Stock(1) of Class(2)
---- -------------------- -----------
<S> <C> <C>
Evan E. Davis, Chairman and Director 919,987(3) 16.4%
John D. Kidd, President, Chief Executive Officer and
Director 527,046(3)(5)(6) 9.4%
Richard P. LeGrand, Executive Vice President and
Director 52,908(3)(5) *
H. Tim Bichsel, Secretary/Treasurer and Chief
Operations Officer 40,501(3)(5) *
D. Bruce Knox, Chief Information Officer and Director 344,373(3)(4)(5) 6.1%
David G. Ratz, Chief Administrative Officer 35,226(3)(5) *
Ronald J. Copher, Chief Financial Officer 9,750(3) *
Ralph E. Coffman, Jr., Vice President 30,781(3)(5) *
Barry M. Dorsey, Ed.D., Director 19,450(3) *
C. Clayton Johnson, Director 9,750(3) *
Rick A. McNelly, Director 26,784(3) *
Donald R. Seigneur, Director 17,250(3) *
H. Grant Stephenson, Director 15,625(3) *
All directors and executive officers
as a group (13 persons) 2,049,431(7) 36.6%
</TABLE>
(1) For purposes of the above table, a person is considered to
"beneficially own" any shares with respect to which he exercises sole
or shared voting or investment power or as to which he has the right to
acquire the beneficial ownership within 60 days of February 25,
-3-
<PAGE> 5
2000. Unless otherwise indicated, voting power and investment power are
exercised solely by the person named above or shared with members of
his household.
(2) "Percentage of class" is calculated by dividing the number of shares
beneficially owned by the total number of outstanding shares of the
Corporation on February 25, 2000 plus the number of shares such person
has the right to acquire within 60 days of February 25, 2000. An "*"
indicates less than one percent (1%).
(3) Includes 23,375 shares, which could be acquired by Messrs. Davis and
Kidd, respectively, 34,375 shares which could be acquired by Mr. Knox,
31,750 shares which could be acquired by Mr. Ratz, 34,625 shares which
could be acquired by Mr. LeGrand, 26,000 shares which could be acquired
by Mr. Bichsel, 30,250 shares which could be acquired by Mr. Coffman,
7,750 shares which could be acquired by Mr. Copher, 9,750 shares which
could be acquired by Mr. Johnson, and 12,250 shares which could be
acquired by Messrs. Dorsey, McNelly, Seigneur and Stephenson,
respectively, under stock options exercisable within 60 days of
February 25, 2000.
(4) Also includes 258,862 shares held by a Trust as to which Mr. Knox is a
Trustee and partial beneficiary.
(5) Includes shares acquired pursuant to Oak Hill Financial's 401(k) Plan
for which investment power is exercised.
(6) Includes shares held by Mr. Kidd as Trustee of Oak Hill Financial's
401(k) Plan for which Mr. Kidd, as Trustee, exercises voting power.
(7) Includes 270,250 shares, which may be purchased under stock options
exercisable within 60 days of February 25, 2000.
ELECTION OF DIRECTORS
The Board of Directors has nominated four persons for a two-year term
(Class II). The terms of the remaining directors in Class I will continue as
indicated below. The accompanying proxy will be voted for the election of those
four persons named under Class II in the following table unless otherwise
directed. In the event that any of the nominees for director shall become
unavailable (which management does not expect), the proxies may be voted for a
substitute nominee at the discretion of those named as proxies. The election of
each nominee requires the favorable vote of a plurality of all votes cast by the
holders of the Corporation's common stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF EACH NOMINEE FOR CLASS II DIRECTOR.
<TABLE>
<CAPTION>
Position with Corporation and/or Principal Occupation or
Name and Age Employment For the Last Five Years Director Since
---------------------------------- --------------
<S> <C> <C>
NOMINEES - TERMS
EXPIRE IN 2002 (CLASS II):
Barry M. Dorsey, Ed.D, 57 President of the University of Rio Grande and Rio Grande 1995
Community College since July 1991. Mr. Dorsey served as
Associate Director from July 1980 to July 1990 and as Deputy
Director from July 1990 to June 1991 of the State Council for
Higher Education for Virginia.
Rick A. McNelly, 43 Chief Executive Officer of McNelly, Patrick and Associates, 1995
an insurance and employee benefits agency, since 1981.
Donald R. Seigneur, 48 Partner in the public accounting firm of Whited, Seigneur, 1995
Sams & Rahe, Certified Public Accountants, Chillicothe, Ohio,
since 1979.
H. Grant Stephenson, 50 Partner in the law firm of Porter, Wright, Morris & Arthur, 1995
Columbus, Ohio, since 1986.
</TABLE>
-4-
<PAGE> 6
<TABLE>
<S> <C> <C>
CONTINUING DIRECTORS - TERMS
EXPIRE IN 2001 (CLASS I):
Evan E. Davis, 66 Chairman of the Corporation since its formation in 1981. He 1981
served as President of the Corporation from 1981 to June
1995. Mr. Davis' family founded Oak Hill Banks ("Oak Hill")
in 1902, and Mr. Davis has served as Director of the Bank
since 1957 and a Director of the Corporation since 1981.
C. Clayton Johnson, 55 Partner in the law firm of C. Clayton Johnson Co., L.P.A., 1997
Portsmouth, Ohio. He has served as a Director of the
Corporation since March 1997.
John D. Kidd, 60 President of the Corporation since June 1995, Executive Vice 1981
President from 1981 to June 1995, and Chief Executive
Officer since 1981. He has served as President of Oak Hill
from October 1991 to September 1997, and as Chairman since
October 1997. He has served as Chief Executive Officer and
Executive Vice President since joining Oak Hill in 1970. He
served as Director of Oak Hill since 1970 and Director of
the Corporation since 1981.
D. Bruce Knox, 39 Chief Information Officer of the Corporation since January 1997
2000. Executive Vice President of Oak Hill since July 1,
1998, and Senior Vice President of Oak Hill since October 2,
1997. He served as President and a director of Unity Savings
Bank ("Unity") from January 1, 1996 until the merger on
October 1, 1997. He served as Executive Vice President and
Director of Unity and its successors from January 1, 1989
until December 31, 1995.
Richard P. LeGrand, 59 Executive Vice President of the Corporation since October 1987
1991 and Vice President from 1985 to October 1991. He has
served as Director of the Corporation since January 1987 and
as Director of Oak Hill since July 1993. Mr. LeGrand served
as Senior Vice President of Oak Hill from February 1986 to
October 1991, as Executive Vice President from October 1991
to September 1997, and Chief Executive Officer since October
1997.
</TABLE>
-5-
<PAGE> 7
MEETINGS OF THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
During the last fiscal year, the Board of Directors held four regularly
scheduled meetings. All of the incumbent directors and each nominee standing for
re-election attended more than 75% of the regularly scheduled meetings during
the last fiscal year.
Each director received $500 per meeting attended as a director of the
Corporation. No compensation is paid for meetings of committees. Each
non-employee director of the Corporation received a stock option to purchase
3,000 shares on December 14, 1999. The exercise price for each option granted is
100% of the fair market value on the date of grant.
The Board of Directors has a standing Audit Committee, and a standing
Stock Option and Compensation Committee.
The Audit Committee makes recommendations to the Board of Directors
concerning the selection and engagement of the Corporation's independent
auditors and reviews with them the scope and status of the audit, the fees for
services performed by the firm, and the results of the completed audit. The
Audit Committee also reviews and discusses with the internal audit department,
management and the Board of Directors, such matters as accounting policies,
internal controls and procedures for preparation of financial statements. The
members of the Audit Committee are Messrs. Seigneur, Dorsey and Johnson. The
Audit Committee held four meetings during the last fiscal year.
The Stock Option and Compensation Committee (the "Committee") makes
recommendations to the Board of Directors with respect to the compensation of
the executive officers of the Corporation and with respect to the grant of stock
options. The members of the Committee are Messrs. Dorsey, McNelly, and
Stephenson. The Committee held three meetings during the last fiscal year, and
all members attended.
EXECUTIVE OFFICERS
The officers of the Corporation are elected annually by the Board of
Directors and serve at the pleasure of the Board. In addition to Evan E. Davis,
Chairman of the Board; John D. Kidd, President and Chief Executive Officer;
Richard P. LeGrand, Executive Vice President; D. Bruce Knox, Chief Information
Officer, the following persons are officers of the Corporation:
H. Tim Bichsel, age 59, has served as Chief Operations Officer of the
Corporation since January 2000 and Secretary and Treasurer of the Corporation
since February 1995. He served as Vice President of the Corporation from
February 1994 to February 1995. Mr. Bichsel has served as Secretary of Oak Hill
since February 1996. He served as Executive Vice President of Oak Hill from
February 1996 to February 2000. From April 1993 to February 1996 he served as
Senior Vice President and Secretary. From February 1992 to April 1993, he served
as a computer software specialist for Peerless Systems, Inc., a banking computer
software company. Before 1992, Mr. Bichsel was employed in a variety of
positions, including Senior Vice President and Secretary with Fifth Third Bank
of Southern Ohio, formerly known as First Security Bank of Hillsboro, Ohio, from
1973 to November 1991.
David G. Ratz, age 42, has served as Chief Administrative Officer of
the Corporation since January 2000. He served as Vice President of the
Corporation from October 1995 to December 1999. He served as Senior Vice
President of Oak Hill from October 1995 to February 1996, and as Executive Vice
President from July 1998 to February 2000. From December 1986 to September 1995,
he served as a marketing and human relations consultant to community banking
organizations as a Vice President of Young & Associates, Kent, Ohio.
Ronald J. Copher, age 42, has served as Chief Financial Officer of the
Corporation since July 1999. He served as Executive Vice President of Oak Hill
since July 1999. From January 1985 to June 1999, he served in a variety of
positions in the financial services practice of Grant Thornton LLP. He most
recently served as Partner and Practice Leader of the Financial Services
Industry Group of Southern California.
-6-
<PAGE> 8
Ralph E. Coffman, Jr., age 48, has served as Vice President of the
Corporation since June 1999. He has served as President and Chief Executive
Officer and Director of Towne Bank ("Towne") since October 1999. Mr. Coffman
served as Executive Vice President of Oak Hill from July 1998 to September 1999.
From June 1997 to June 1998, he served as Senior Vice President of Oak Hill, and
from September 1996 to May 1997, he served as Area President for Oak Hill. From
September 1995 to August 1996, he served as owner and president of 3C's Snax,
Inc. of New Lexington, Ohio. Before 1995, Mr. Coffman was employed in a variety
of positions, including Chief Executive Officer of American Community Bank of
Lima, Ohio, from November 1992 to February 1994.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation
paid during the last three completed fiscal years by the Corporation and its
subsidiaries to the Chief Executive Officer, and the four other executive
officers of the Corporation whose total salary and bonus annually exceed
$100,000 for services in all capacities for the Corporation:
<TABLE>
SUMMARY COMPENSATION TABLE
--------------------------
<CAPTION>
Long Term
Compensa-
Annual Compensation tion Award
------------------------------------------------------ ------------
(g)
(e) Securities (i)
(a) (b) (c) (d) Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation(1) Options(2) Compensation(3)
--------------------------- ---- ------ ----- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
JOHN D. KIDD 1999 $176,307 -- $3,400 7,000 $ 4,800
President and Chief Executive 1998 $164,856 -- $6,100 7,000 $19,631
Officer 1997 $160,202 -- $6,400 7,500 $16,252
EVAN E. DAVIS 1999 $ 57,394 -- $3,400 7,000 --
Chairman of the Board 1998 $ 52,000 -- $6,400 7,000 $ 2,084
1997 $127,445 -- $6,400 7,500 $ 5,378
RICHARD P. LEGRAND 1999 $161,976 $16,500 $3,400 7,000 $ 4,800
Executive Vice President 1998 $143,710 $22,000 $6,400 7,000 $19,631
1997 $114,179 $21,000 $6,400 7,000 $13,816
D. BRUCE KNOX 1999 $109,800 $ 7,500 $3,400 3,125 $ 3,519
Chief Information Officer 1998 $101,830 $10,000 $6,400 6,250 $12,655
1997 -- -- -- -- --
H. TIM BICHSEL 1999 $ 89,304 $11,250 $2,400 5,500 $ 2,779
Secretary and Treasurer and 1998 $ 83,496 $15,000 -- 4,500 $10,745
Chief Operations Officer 1997 $ 79,512 $15,000 -- 6,250 $ 9,409
RALPH E. COFFMAN, JR 1999 $112,204 $15,000 -- 6,000 $ 3,021
Vice President 1998 $ 81,936 $15,000 -- 5,500 $ 9,697
1997 $ 66,000 $12,000 -- 9,375 --
</TABLE>
(1) Includes amounts paid as director fees for 1997, 1998 and the first six
months of 1999. Beginning in July 1999, directors' fees were included
in salary for all directors who were also employees of the Corporation.
(2) All shares are subject to an option granted under the 1995 Stock Option
Plan.
(3) Includes matching and profit sharing contributions for the
Corporation's 401(k) plan for the fiscal years shown.
-7-
<PAGE> 9
The following table shows all individual grants of stock options to the named
executive officers of the Corporation during the fiscal year ended December 31,
1999.
<TABLE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR(1)
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
--------------------------------------------------- ----------------------------------
% OF TOTAL
OPTIONS
GRANTED
NUMBER OF TO
SECURITIES EMPLOYEES EXERCISE
UNDERLYING IN FISCAL PRICE EXPIRATION
NAME OPTIONS YEAR ($/SHARE) DATE 0%($) 5%($) 10%($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EVAN E. DAVIS
Chairman of the Board 7,000 4.05% $16.4375 12/14/09 $0 $72,362 $183,380
- ------------------------------------------------------------------------------------------------------------------------------
JOHN D. KIDD
President and Chief Executive
Officer 7,000 4.05% $16.4375 12/14/09 $0 $72,362 $183,380
- ------------------------------------------------------------------------------------------------------------------------------
RICHARD P. LEGRAND
Executive Vice President 7,000 4.05% $16.4375 12/14/09 $0 $72,362 $183,380
- ------------------------------------------------------------------------------------------------------------------------------
D. BRUCE KNOX
Chief Information Officer 3,125 1.81% $17.6250 10/1/09 $0 $34,638 $ 87,780
- ------------------------------------------------------------------------------------------------------------------------------
H. TIM BICHSEL
Secretary and Treasurer and
Chief Operations Officer 5,500 3.18% $16.4375 12/14/09 $0 $56,856 $144,084
- ------------------------------------------------------------------------------------------------------------------------------
RALPH E. COFFMAN, JR
Vice President 6,000 3.47% $16.4375 12/14/09 $0 $62,025 $157,183
</TABLE>
- ------------------------------------
(1) All options are granted at 100% of fair market value on the date of
grant. The options are exercisable immediately and expire on the date
specified in the option which, in no event, is later than 10 years
after the date of grant; provided, that the optionee remained in the
employment of the Corporation or its affiliates. The option exercise
period may be shortened upon an optionee's disability, retirement or
death.
(2) The amounts under the columns labeled "5%($)" and "10%($)" are included
by the Corporation pursuant to certain rules promulgated by the
Securities and Exchange Commission and are not intended to forecast
future appreciation, if any, in the price of the Corporation's Common
Stock. Such amounts are based on the assumption that the option holders
hold the options granted for their full term. The actual value of the
options will vary in accordance with the market price of the
Corporation's Common Stock. The column headed "0%($)" is included to
illustrate that the options were granted at fair market value and
option holders will not recognize any gain without an increase in the
stock price, which increase benefits all shareholders commensurately.
-8-
<PAGE> 10
The following table shows aggregate option exercises in the last fiscal year and
year-end values.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
END FISCAL YEAR END ($)(1)
---------------------- -----------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
EVAN E. DAVIS
Chairman -- -- 35,875 -- $73,563 --
JOHN D. KIDD
President and Chief Executive
Officer 12,500 $73,563 23,375 -- -- --
RICHARD P. LEGRAND
Executive Vice President -- -- 34,625 -- $64,531 --
D. BRUCE KNOX
Chief Information Officer -- -- 34,375 -- -- --
H. TIM BICHSEL
Secretary and Treasurer and
Chief Operations Officer -- -- 26,250 -- $55,500 --
RALPH E. COFFMAN, JR.
Vice President -- -- 30,250 -- $50,859 --
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents total gain which would have been realized if all in the
money options held at fiscal year-end had been exercised, determined by
multiplying the number of shares underlying the options by the
difference between the per share option exercise price and per share
fair market value at year-end. The fair market value as determined by
the closing price of the Corporation's common stock on December 31,
1999, was $14.625. An option is in the money if the fair market value
of the underlying shares exceeds the exercise price of the option.
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
PHILOSOPHY AND COMPOSITION OF COMMITTEE
The Corporation's executive compensation program is designed to enable
the Corporation to attract, motivate and retain top quality executive officers
by providing a fully competitive and comprehensive compensation package. It
provides for competitive base salaries that reflect individual performance as
well as variable incentive awards in cash for the achievement of financial
performance goals established by the Compensation Committee and approved by the
Board of Directors. In addition, long-term stock-based incentive awards are
granted to strengthen the mutuality of interest between the executive officers
and the Corporation's shareholders and to motivate and reward the achievement of
important long-term performance objectives of the Corporation.
The Corporation's executive compensation program is administered by the
Stock Option and Compensation Committee (the "Committee") of the Board of
Directors, composed entirely of independent, non-employee directors of the
Corporation: Barry M. Dorsey, Rick A. McNelly, and H. Grant Stephenson.
-9-
<PAGE> 11
The Committee has the authority and responsibility to determine and
administer the Corporation's officer compensation policies and to establish the
salaries of executive officers, the formula for bonus awards to executive
officers, and the grant of stock options to executive officers and other key
employees under the Corporation's 1995 Stock Option Plan. In general, the
philosophy of the Committee is to attract and retain qualified executives,
reward current and past individual performance, provide short-term and long-term
incentives for superior future performance, and relate total compensation to
individual performance and performance of the Corporation. The preferred
compensation policy of the Committee is to set base pay at the lower end of the
comparable market ranges, establish performance-based annual cash bonus
opportunities, and grant significant option positions to key employees to
provide greater long-term incentives.
EXECUTIVE COMPENSATION PROGRAM
The Committee is responsible for the establishment of the base salary,
as well as the award level for the annual bonus compensation program, both
subject to approval by the Board of Directors. The Committee is also responsible
for the award level and administration of the stock option programs for
executive officers, as well as for recommendations regarding other executive
benefits and plans, both of which also are subject to approval by the Board of
Directors. In completing its assignments, the Committee takes into account the
views of the Management of the Corporation.
The Committee has reviewed the executive compensation program being
utilized and compared it with similar programs of banking corporations that
shared one or more common traits with the Corporation (such as market
capitalization, asset size and geographic location). As an overall evaluation
tool in determining levels of compensation for the Corporation's Chief Executive
Officer and other executive officers, the Committee reviews the compensation
policies of other banking companies, as well as published surveys of salaries in
the financial industry. The Committee has not defined or established a specific
comparison group of bank holding companies for determination of compensation.
Those listed in the salary surveys which share one or more common traits with
the Corporation, such as market capitalization, asset size, geographic location,
similar lines of business and financial returns on assets and equity, are given
more weight. The companies listed in the various salary surveys may not be
included in the SNL $500M-$1B Bank Asset-Size Index (an index included in the
Corporation's Performance Graph below). The Committee is unable to make any
comparisons between the two.
COMPONENTS OF THE NAMED EXECUTIVE OFFICER COMPENSATION
For 1999, the executive compensation program for the Executive Officers
Named in this Proxy, Messrs. Kidd, Davis, LeGrand, Knox, Bichsel and Coffman
("the Named Executive Officers") consisted of four primary components: (i) a
base salary; (ii) incentive compensation; (iii) executive benefits, such as
insurance and retirement benefits; and (iv) benefits which are generally
available to all employees. These components are discussed in detail below.
BASE SALARY. The Named Executive Officers' base salaries and
performance are reviewed annually. They are determined primarily by examining
the individual officer's level of responsibility for his position, comparing
that position to similar positions within the Corporation, and comparing the
officer's salary with salaries detailed in the salary surveys for executives
with similar experience and responsibilities outside of the Corporation.
Significant weight also is given to the views of the Management of the
Corporation regarding whether a Named Executive Officer has succeeded in the
annual performance goals established by the Chief Executive Officer for each
Executive Officer. The nature of these goals differs, depending upon each
officer's job responsibilities. Goals are both qualitative in nature--such as
the development and retention of key personnel, the quality of products and
services, and management effectiveness--and quantitative in nature, such as
sales and revenue goals and cost containment.
The Named Executive Officer's base salary is then established by the
Committee, taking into account the items listed above as well as the
Corporation's overall performance during the preceding year. The Committee does
not place a specific value on any of the above-listed factors. The base salary
is subject to approval by the Board of Directors.
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<PAGE> 12
INCENTIVE COMPENSATION. Incentive compensation includes two programs:
the award of cash bonuses and the award of stock options under the 1995 Stock
Option Plan. The participants and awards under the Corporation's incentive plans
are determined by the Committee, subject to approval by the Board of Directors.
CASH INCENTIVE COMPENSATION. The Corporation's policy for cash
incentive compensation is to reward the achievement of financial objectives
established in advance by Management and the Board of Directors to the beginning
of each year. The performance targets focus upon the net operating income (NOI)
of the Corporation and, depending upon the duties of a Named Executive Officer,
the NOI of a subsidiary. Targets also are set for individual performance goals.
In making awards, the Committee has the discretion to consider these goals and
other factors related to the individual performance of the Named Executive
Officer in making an award to him or her.
All incentive bonus awards are currently paid in cash. The bonuses paid
or accrued in 1999 were based upon the Corporation's 1999 performance.
STOCK OPTIONS. The purpose of the Corporation's 1995 Stock Option Plan
is to provide long-term incentives to key employees and to motivate key
employees to improve the performance of the Corporation and thereby increase the
Corporation's Common Stock price.
The number of shares of Common Stock subject to the options granted
during Fiscal Year 1999 was determined based on a subjective evaluation of the
past performance of the individual, the total compensation being paid to the
individual, the individual's scope of responsibility, and the anticipated value
of the individual's contribution to the Corporation's future performance. No
specific weight was given to any of these factors. Options awarded to each
executive officer during previous years were reviewed by Committee in
determining the size of an option awarded for 1999.
Each stock option awarded during 1999 had an exercise price equal to
the fair market value of the underlying Common Stock of the Corporation on the
date of the grant. Generally, stock options granted to new employees of the
Corporation vest and become exercisable immediately and terminate ten years from
the date of grant.
The total number of option grants made in 1999 for all participants in
the 1995 Stock Option Plan was for 172,875 shares of the Corporation's Common
Stock, of which 35,625 shares, or 20.6% were awarded to the Named Executive
Officers.
DETERMINATION OF THE CHIEF EXECUTIVE OFFICER'S COMPENSATION
The compensation package entered into with Mr. Kidd is detailed in this
Proxy Statement under the tables and descriptive paragraphs of the section
entitled Executive Compensation.
Mr. Kidd's base salary for 1999 was determined by the Committee through
an assessment of several areas, including the financial results of the
Corporation as compared with peer companies and his overall performance as a
leader of the Corporation. In determining compensation, the financial results as
compared with peer companies were given the most weight by the Committee;
overall performance as a leader was given significant, but lesser, weight. In
addition to these factors, the Committee also reviewed information to determine
if there were any overall trends in the financial services industry regarding
compensation of chief executive officers that would suggest further adjustments
to the amounts to be paid to Mr. Kidd.
Based on these factors, the Committee established Mr. Kidd's annual
base salary for 1999 at $171,207, an approximate 3.9% increase from his 1998
base salary. Mr. Kidd also was granted options to purchase 7,000 shares of the
Corporation's Common Stock at a per share price equal to 100% of the fair market
value on the date of grant. All of the options granted were Non-Qualified Stock
Options. The grant was made in accordance with the guidelines of the Committee
and amounted to 4.1% of all options granted in 1999 to participants in the 1995
Stock Option Plan.
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<PAGE> 13
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Committee has reviewed the qualifying compensation regulations
issued by the Treasury Department under Code Section 162(m) which provide that
no deduction is allowed for applicable employee remuneration paid by a publicly
held corporation to a covered employee if the remuneration paid to the employee
exceeds $1.0 million for the applicable taxable year, unless certain conditions
are met. Currently, remuneration is not expected to exceed the $1.0 million base
for any employee. Therefore, compensation should not be affected by the
qualifying compensation regulations.
The foregoing report has been respectfully furnished by the members of
the Compensation Committee, being:
Barry M. Dorsey
Rick A. McNelly
H. Grant Stephenson
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<PAGE> 14
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE CORPORATION, THE NASDAQ STOCK MARKET - U.S. INDEX,
THE SNL $500M -$1B BANK ASSET-SIZE INDEX AND
THE SNL $250M-$500M BANK ASSET-SIZE INDEX
The following Performance Graph compares the performance of the
Corporation with that of the Nasdaq Stock Market - U.S. Index, the SNL
$500M-$1BM Bank Asset-Size Index and the SNL $250M-$500M Bank Asset-Size Index,
each of which are published industry indices. The comparison of the cumulative
total return to shareholders for each of the periods assumes that $100 was
invested on October 11, 1995 (the effective date the Corporation's Common Stock
was registered under the Securities and Exchange Act of 1934, as amended), in
the Common Stock of the Corporation, and in the Nasdaq Stock Market - U.S.
Index, the SNL $500M-$1BM Bank Asset-Size Index and the SNL $250M-$500M Bank
Asset-Size Index and that all dividends were reinvested.
Both the SNL $500M-$1B Bank Asset-Size Index and the SNL $250M-$500M
Bank Asset-Size Index are included in the performance graphs in recognition that
the Corporation had total assets of $600.1 million at December 31, 1999, as
compared to $430.0 million in non-restated assets at December 31, 1998.
<TABLE>
[PERFORMANCE GRAPH]
<CAPTION>
PERIOD ENDING
--------------------------------------------------------------------------
INDEX 10/12/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Oak Hill Financial, Inc. 100.00 90.24 129.71 222.55 231.08 191.86
NASDAQ - Total US* 100.00 103.99 127.94 156.77 220.91 399.09
SNL $500M-$1B Bank Asset-Size Index 100.00 107.03 133.80 217.51 213.86 197.97
SNL $250M-$500M Bank Asset-Size Index 100.00 104.62 135.85 234.96 210.42 195.76
</TABLE>
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<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Currently, Messrs. Dorsey, McNelly and Stephenson, who are not
employees of the Corporation, are members of the Stock Option and Compensation
Committee.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
Some of the officers and directors of the Corporation and the companies
with which they are associated were customers of the Bank. The loans to such
officers and directors (a) were made in the ordinary course of business, (b)
were made on substantially the same terms, including interest and nature of
collateral, as those prevailing at the time for comparable transactions with
other persons, and (c) did not involve more than the normal risk of
collectibility or present other unfavorable features.
The Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with directors, officers,
principal shareholders, and their associates on the same terms, including
interest rates and collateral on loans, as those prevailing at the same time for
comparable transactions with others.
MISCELLANEOUS
H. Grant Stephenson, a director of the Corporation, is a partner in the
law firm of Porter, Wright, Morris & Arthur, which provides legal services to
the Corporation. C. Clayton Johnson, a director of the Corporation, is a partner
in the law firm of C. Clayton Johnson Co., L.P.A., which provides legal services
to the Corporation.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's officers and directors, and greater than 10%
shareholders, to file reports of ownership and changes in ownership of the
Corporation's securities with the Securities and Exchange Commission. Copies of
the reports are required by SEC regulation to be furnished to the Corporation.
Based solely on the Corporation's review of the copies of such reports,
the Corporation believes that all its officers, directors, and greater than 10%
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during fiscal 1999.
AMENDMENTS TO THE CORPORATION'S
1995 STOCK OPTION PLAN
The Board of Directors has approved an amendment to the Corporation's
1995 Stock Option Plan (the "Plan"), subject to approval of the amendment by the
shareholders at the Annual Meeting to increase the number of common shares
available for issuance under the Plan from 800,000 to 1,200,000 shares. Approval
of this amendment requires the affirmative vote of the holders of a majority of
the shares of the Corporation's common stock represented at the Annual Meeting.
The following summary does not purport to be complete and is qualified in its
entirety by the terms of the Amended and Restated 1995 Stock Option Plan.
The Plan was adopted by the Board of Directors and approved by the
shareholders of the Corporation on August 8, 1995. The Plan was first amended by
the Board of Directors on March 11, 1997, and such amendment was approved by the
Corporation's shareholders on April 29, 1997. The Plan was amended again by the
Board of Directors on February 9, 1999, and such amendment was approved by the
Corporation's shareholders on April 27, 1999. The current amendment, increasing
the number of shares of the Corporation's Common Stock issuable under the Plan,
was adopted by the Corporation's Board of Directors on February 8, 2000. The
Plan is designed to attract, retain and motivate key employees through stock
ownership. The Plan provides for the grant of options to purchase
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<PAGE> 16
up to an aggregate of 800,000 shares of the common stock of the Corporation. The
proposed amendment to the Plan would increase the number of shares of the
Corporation's common stock subject to the Plan from 800,000 shares to 1,200,000
shares. The options may either meet the requirements of Section 422 of the
Internal Revenue Code ("Incentive Options") or not meet such requirements
("Non-Statutory Options"). Key employees, officers and directors of the
Corporation and consultants and advisers who render services to the Corporation
are eligible to receive options under the Plan.
ADMINISTRATION OF THE 1995 STOCK OPTION PLAN
The 1995 Stock Option Plan provides for the grant of options to key
associates, officers, directors, consultants and advisers who render services to
the Corporation. The options may be either Incentive Options or Non-Statutory
Options. The 1995 Stock Option Plan is administered by the Board of Directors of
the Corporation, which may, and has, delegated all of its powers under the 1995
Stock Option Plan to the Stock Option and Compensation Committee of the Board of
Directors (the "Committee"), which is authorized to determine to whom and at
what time the stock options may be granted, the designation of the option as
either Incentive Options or Non-Statutory Options, the per share exercise price,
the duration of each option, the number of shares subject to each option, any
restrictions on such shares, the rate and manner of exercise and the timing and
form of payment.
An Incentive Option may not have an exercise price less than the fair
market value of the common stock on the date of grant or an exercise period that
exceeds ten years from the date of grant, and is subject to certain other
limitations which allow the option holder to qualify for favorable tax
treatment. None of these restrictions apply to the grant of Non-Statutory
Options, which may have an exercise price less than the fair market value of the
underlying common stock on the date of grant and may be exercisable for an
indeterminate period of time. The Committee also has the discretion under the
Plan to make cash grants to option holders that are intended to offset a portion
of the taxes payable upon exercise of Non-Statutory Options or on certain
dispositions of shares acquired under Incentive Options.
The exercise price of the option may be paid in cash or, with the
consent of the Committee, (i) with previously acquired shares of common stock
valued at their fair market value on the date they are tendered, (ii) by
delivery of a full recourse promissory note, the terms and conditions of which
will be determined by the Committee, or (iii) by delivery of written
instructions to forward the notice of exercise to a broker or dealer and to
deliver to a specified account a certificate for the shares purchased upon
exercise of the option and a copy of irrevocable instructions to the broker or
dealer to deliver the purchase price of the shares to the Corporation.
TRANSFERABILITY
An option is not transferable except by will or by the laws of descent
and distribution, and may be exercised during the lifetime of the optionee only
by the optionee or by the optionee's guardian or legal representative.
Notwithstanding the foregoing, an optionee may transfer a Non-Statutory Option
either (a) to members of his or her immediate family (as defined in Rule 16a-1
promulgated under the 1934 Act), to one or more trusts for the benefit of such
family members or to partnerships in which such family members are the only
partners , or (b) if such transfer is approved by the Committee. Non-Statutory
Options held by such transferees are subject to the same terms and conditions
that applied to such Non-Statutory Options immediately prior to transfer.
TERMINATION OF OPTIONS
Unless the option expires earlier by its terms, any Stock Option
granted under the Plan will terminate automatically (i) on the date of an
employee's termination of employment with the Corporation (other than by reason
of death or disability or if termination is without cause), and (ii) for options
granted before December 14, 1999, three months after the date of termination by
reason of the employee's death or disability or if the termination was without
cause. For options granted on or after December 14, 1999, the period extends to
three years after the date of termination if termination is without cause.
Options not yet exercisable as of the date of a change in control of the
Corporation will become exercisable immediately as of such date.
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<PAGE> 17
TERM OF THE 1995 STOCK OPTION PLAN
The Plan terminates on December 21, 2005, unless earlier terminated by
the Board of Directors.
1995 STOCK OPTION PLAN TABLE
As of February 25, 2000, options to purchase an aggregate of 674,601
shares of the Corporation's common stock had been granted pursuant to the Plan,
options to purchase 63,700 shares had been exercised or forfeited, options to
purchase 610,901 shares remained outstanding, and only 125,399 shares remained
available for future grant. As of February 25, 2000, the market value of all
shares of the Corporation's common stock subject to outstanding options under
the Plan was approximately $8,499,145.13 (based upon the closing sale price of
the Corporation's common stock as reported on the Nasdaq National Market on
February 25, 2000, of $13.875 per share). During the 1999 fiscal year, options
covering 172,875 shares of the Corporation's common stock were granted to
employees of the Corporation under the Plan. Shares underlying presently
exercisable, but unexercised, options will constitute outstanding shares of the
Corporation's common stock for purposes of calculating the Corporation's net
income per share on a fully-diluted basis. The market value of the 1,200,000
shares of the Corporation's common stock to be subject to the Plan was
approximately $16,650,000 as of February 25, 2000.
As of February 25, 2000, the following current directors and executive
officers named in the Corporation's Proxy Statement had been granted options
under the Plan as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS AVERAGE EXERCISE PRICE
----------------- ----------------------
NAME GRANTED PER SHARE
---- ------- ---------
<S> <C> <C>
Evan E. Davis 35,875 $14.34
John D. Kidd 35,875 $14.34
Richard P. LeGrand 34,625 $14.59
H. Tim Bichsel 26,250 $14.16
David G. Ratz 31,750 $13.37
D. Bruce Knox 34,375 $15.97
Ralph E. Coffman, Jr. 30,250 $14.27
Ronald J. Copher 17,750 $17.76
Barry M. Dorsey 12,250 $15.43
C. Clayton Johnson 9,750 $17.31
Rick A. McNelly 12,250 $15.43
Donald R. Seigneur 12,250 $15.43
H. Grant Stephenson 12,250 $15.43
Executive Group 246,750 $14.69
Non-Executive Director Group 58,750 $15.74
Non-Executive Officer Employee Group 369,101 $12.97
</TABLE>
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<PAGE> 18
Since adoption of the Plan: all current executive officers, as a group,
have been granted options under the Plan covering 246,750 shares of the
Corporation's common stock which represents approximately 36.6% of the total
number of options granted pursuant to the Plan; and all current employees,
excluding executive officers, as a group, have been granted options under the
Plan covering 369,101 shares of the Corporation's common stock which represents
approximately 54.7% of the total number of options granted pursuant to the Plan.
FEDERAL INCOME TAX CONSEQUENCES
The 1995 Stock Option Plan permits the granting of Incentive Options as
well as Non-Statutory Options. Generally, no income is recognized when either
type of option is granted to the option holder, but the subsequent tax treatment
differs widely.
Non-Statutory Options. Upon the exercise of a Non-Statutory Option, the
excess of the fair market value of the shares on the date of exercise over the
option price is regular taxable income to the option holder at the time of the
exercise. The tax basis for the shares purchased is their fair market value on
the date of exercise. Any gain or loss realized upon a later sale of the shares
for an amount in excess of or less than their tax basis will be taxed as capital
gain or loss, respectively, with the character of the gain or loss (short-term
or long-term) depending upon how long the shares were held since exercise.
Incentive Options. Generally, no regular taxable income is recognized
upon the exercise of Incentive Options. The tax basis of the shares acquired
will be the exercise price. In order to receive this favorable treatment, shares
acquired pursuant to the exercise of Incentive Options may not be disposed of
within two years after the date the option was granted, nor within one year
after the exercise date (the "Holding Periods"). If the shares are sold before
the end of the Holding Periods, the amount of that gain which equals the lesser
of the difference between the fair market value on the exercise date and the
option price or the difference between the sale price and the option price is
taxed as ordinary income and the balance, if any, as short-term or long-term
capital gain, depending upon how long the shares were held. If the Holding
Periods are met, all gain or loss realized upon a later sale of the shares for
an amount in excess of or less than their tax basis will be taxed as a long-term
capital gain or loss.
Alternative Minimum Tax. For purposes of determining the option
holder's alternative minimum taxable income subject to the alternative minimum
tax, the exercise of Incentive Options by an option holder will result in the
recognition of taxable income at the time of the exercise of the option in an
amount equal to the excess of the fair market value of the shares on the
exercise date over the option price. The alternative minimum tax is paid only to
the extent it exceeds an individual's regular tax. It is imposed at a rate of
26% on the first $175,000 of alternative minimum taxable income in excess of the
applicable exemption amount and at a rate of 28% for any alternative minimum
taxable income over that amount. The exemption amount is phased out for higher
income taxpayers.
Exercise with Previously-Owned Shares. All options granted under the
1995 Stock Option Plan may be exercised with payment either in cash or, if
authorized in advance by the Committee, in previously-owned shares of the
Corporation Common Stock at their then fair market value, or in a combination of
both. When previously-owned shares (the "Old Shares") are used to purchase
shares (the "New Shares") upon the exercise of Incentive Options or
Non-Statutory Options, no gain or loss is recognized by the option holder to the
extent that the total value of the Old Shares surrendered does not exceed the
total value of all of the New Shares received. If, as would almost always be the
case, the value of the New Shares exceeds the value of the Old Shares, the
excess amount is not regular taxable income to the option holder, if the option
exercised is an Incentive Option and the Holding Periods discussed above are met
for the Old Shares at the time of exercise. The New Shares would also be subject
to the Holding Periods discussed above. On the other hand, if the option
exercised is a Non-Statutory Option, the excess amount is taxable as ordinary
income.
The Corporation Deduction. No tax deduction is available to the
Corporation in connection with the exercise of Incentive Options if the Holding
Periods discussed above are met. The Corporation, however, is entitled to a tax
deduction in connection with the exercise of Incentive Options if the Holding
Periods discussed above are not met, in an amount equal to the ordinary income
recognized by the option holder (conditioned upon proper reporting and tax
withholding and subject to possible deduction limitations). The Corporation is
entitled to a tax deduction in connection with a Non-Statutory Stock Option
equal to the compensation income recognized by the option holder
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<PAGE> 19
upon the exercise date (conditioned upon proper reporting and tax withholding
and subject to possible deduction limitations).
Capital Gains Taxation. Capital gains recognized by option holders
generally will be subject to a maximum federal income tax rate of 20%, provided
the shares sold or exchanged are held for more than twelve months. If the shares
are held for less than twelve months, then the capital gains recognized by
option holders may be taxed at ordinary income tax rates.
Section 162(m). Section 162(m) of the Code does not permit the
Corporation to deduct non-performance-based compensation in excess of $1,000,000
per year paid to certain covered officers. The Corporation believes that
compensation paid pursuant to the 1995 Stock Option Plan should qualify as
performance-based compensation and, therefore, Section 162(m) should not cause
the Corporation to be denied a deduction for compensation paid to certain
covered officers pursuant to the 1995 Stock Option Plan.
The purposes of the Plan are to promote the growth and profitability of
the Corporation by increasing the opportunity for key employees to personally
participate as equity owners in the financial success of the Corporation and to
assist the Corporation in attracting and retaining highly qualified employees.
The Board of Directors believes that, in order to accomplish these purposes, the
Plan should be amended to increase the number of shares available for issuance.
The affirmative vote of the holders of a majority of the common shares of the
Corporation present and entitled to vote at the meeting is required to approve
the amendment to the Plan. The persons appointed as proxies will vote FOR
approval, unless otherwise directed. THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT TO THE 1995 STOCK OPTION PLAN.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Grant Thornton LLP, as the
independent auditors for the Corporation and its subsidiaries for the fiscal
year ending December 31, 2000. Although not required, the Board of Directors is
submitting its selection to the shareholders of the Corporation for
ratification. Grant Thornton LLP has served as independent public auditors for
the Corporation and its subsidiaries during the past year. The Board of
Directors believes that the reappointment of Grant Thornton LLP for the fiscal
year ending December 31, 2000, is appropriate because of the firm's reputation,
qualifications, and experience. The Board of Directors will reconsider the
appointment of Grant Thornton LLP if its selection is not ratified by the
shareholders.
Management expects that representatives of Grant Thornton LLP will be
present at the Annual Meeting, will have the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
The affirmative vote of a majority of the votes entitled to be cast by
the holders of the Corporation's common stock present in person or represented
by proxy at the Annual Meeting is required for ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. UNLESS A
CONTRARY CHOICE IS SPECIFIED, PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE VOTED FOR THE PROPOSAL.
SHAREHOLDER PROPOSALS
If an eligible shareholder wishes to present a proposal for action at
the next Annual Meeting of the Corporation to be held in 2001, it shall be
presented to management by certified mail, written receipt requested, not later
than November 15, 2000, for inclusion in the corporation's Proxy Statement and
form of Proxy relating to that meeting. Any such proposal must comply with Rule
14a-8 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). Proposals should
be sent to Oak Hill Financial Inc., Attention: David G. Ratz, Chief
Administrative Officer, 14621 State Route 93, Jackson, Ohio 45640. Any
shareholder proposal submitted outside the processes of Rule 14a-8 under the
1934 Act for presentation to the
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<PAGE> 20
Corporation's 2000 Annual Meeting of Shareholders will be considered untimely
for purposes of Rule 14a-4 and 14a-5 if notice thereof is received by the
Corporation after February 10, 2001.
ANNUAL REPORT
The Corporation's Annual Report for the year ended December 31, 1999,
is being mailed to each shareholder with this Proxy Statement.
The Corporation files annually with the Securities and Exchange
Commission an annual report on Form 10-K. This report includes financial
statements and schedules thereto. A SHAREHOLDER OF THE CORPORATION MAY OBTAIN A
COPY OF THE ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND
SCHEDULES THERETO, FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999, WITHOUT CHARGE
BY SUBMITTING A WRITTEN REQUEST THEREFOR TO THE FOLLOWING ADDRESS:
Oak Hill Financial Inc.,
Attention: David G. Ratz,
14621 State Route 93,
Jackson, Ohio 45640.
OTHER MATTERS
Management and the Board of Directors of the Corporation know of no
business to be brought before the Annual Meeting other than as set forth in this
Proxy Statement. However, if any matters other than those referred to in this
Proxy Statement should properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote such proxy on such
matters in accordance with their best judgment.
EXPENSES
The expense of proxy solicitation will be borne by the Corporation.
Proxies will be solicited by mail and may be solicited, for no additional
compensation, by some of the officers, directors and employees of the
Corporation or its subsidiaries, by telephone, telegraph or in person. Brokerage
houses and other custodians, nominees and fiduciaries may be requested to
forward soliciting material to the beneficial owners of shares of the
Corporation and will be reimbursed for their related expenses.
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<PAGE> 21
REVOCABLE PROXY
OAK HILL FINANCIAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 25, 2000
The undersigned hereby appoints H. Tim Bichsel and Gail Bobst with full power of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of the Corporation which the undersigned is entitled to
vote at the Annual Meeting of Shareholders (the "Meeting"), to be held on April
25, 2000 at the Ohio State University Extension South District Office, 17
Standpipe Road, Jackson, Ohio at 1:00 p.m., local time, and at any adjournments
thereof, as follows:
I. The election as directors of all nominees listed below:
[ ] FOR ALL [ ] WITHHOLD AUTHORITY [ ] FOR ALL EXCEPT*
*INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Barry M. Dorsey, Ed.D. Rick A. McNelly
Donald R. Seigneur H. Grant Stephenson
II. To consider and act upon a proposed amendment to the Corporation's 1995
Stock Option Plan to increase the number of shares of the Corporation's
Common Stock issuable upon exercise of stock options under the
Corporation's 1995 Stock Option Plan from 800,000 to 1,200,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. The ratification of the appointment of Grant Thornton LLP as auditors
of the Corporation for the fiscal year ending December 31, 2000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" the listed proposals.
<PAGE> 22
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS PRESENTED
AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR
BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present to vote at the Meeting or at any adjournment
thereof, and after notification to the Secretary of the Corporation at the
Meeting of the shareholder's decision to terminate this Proxy, then the power of
such attorneys and proxies shall be deemed terminated and of no further force
and effect.
The undersigned acknowledges receipt from the Corporation, prior to the
execution of this Proxy, of Notice of the Annual Meeting, a Proxy Statement
dated March 31, 2000, and the Corporation's Annual Report to Shareholders for
the fiscal year ended December 31, 2000.
Dated:
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Signature Signature
Please sign exactly as your name appears
on this card. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title. If
shares are held jointly, each holder
should sign. PLEASE PROMPTLY COMPLETE,
DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
